ANNUAL REPORT
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Annual Review 2014.indd 2
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CONTENTS
CHAIRMAN AND MANAGING DIRECTOR’S REPORT ... 3
CORPORATE GOVERNANCE STATEMENT ..................... 6
ANNUAL REPORT ........................................................... 16
DIRECTORS’ REPORT ...................................................... 17
COMPREHENSIVE INCOME STATEMENT ...................... 44
STATEMENT OF FINANCIAL POSITION ......................... 45
STATEMENT OF CHANGES IN EQUITY .......................... 46
STATEMENT OF CASH FLOWS ....................................... 47
NOTES TO THE FINANCIAL STATEMENTS ..................... 48
DIRECTORS’ DECLARATION ........................................... 96
INDEPENDENT AUDIT REPORT ..................................... 97
SHAREHOLDER INFORMATION ..................................... 99
NAME OF ENTITY
Super Retail Group Limited
ABN
81 108 676 204
PRINCIPAL REGISTERED OFFICE
751 Gympie Road
LAWNTON QLD 4501
Telephone (07) 3482 7900
Facsimile (07) 3205 8522
SHARE REGISTRY
Link Market Services
Level 12, 680 George Street
SYDNEY NSW 2000
Telephone: 1300 554 474
www.linkmarketservices.com.au
AUDITORS
PricewaterhouseCoopers
SOLICITORS
King & Wood Mallesons
STOCK EXCHANGE LISTING
Super Retail Group Limited (SUL) shares are quoted on
the Australian Securities Exchange
COMPANY SECRETARY
Mr Robert Dawkins
WEBSITE
www.superretailgroup.com
THE ANNUAL GENERAL MEETING
The Annual General Meeting of the Shareholders of
Super Retail Group Limited will be held at Kedron Wavell
Services Club, Long Tan Room, 375 Hamilton Road,
Chermside South, Queensland on
Wednesday, 22 October 2014 at 11.30 am.
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PERFORMANCE TREND GRAPHS
SALES ($m)
EBIT ($m)*
2020.0
2112.1
1654.1
938.0
828.8
1092.3
624.8
715.4
87.5
65.8
55.1
38.1
45.7
182.6
172.3
140.7
JUN 12
JUN 13
JUN 14
JUN 07
JUN 08
JUN 09
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
EPS (c)*
55.1
52.3
JUN 07
*excludes goodwill impairment charge in 2010
JUN 08
JUN 09
JUN 10
JUN 11
Post Tax ROC (%)*
46.4
40.9
13.9
14.1
32.1
28.1
22.6
19.5
16.8
17.3
15.9
15.4
12.6
11.3
JUN 08
JUN 07
* historical EPS adjusted to take into account the bonus element in the 2011
entitlement offer
JUN 09
JUN 10
JUN 13
JUN 12
JUN 11
JUN 14
JUN 08
JUN 07
JUN 10
* return calculation adjusted for goodwill impairment, acquisition costs and
restructuring provisions
JUN 09
JUN 13
JUN 12
JUN 11
JUN 14
Net Debt ($m)
382.6
182.655.1
Dividend (c)
341.0
329.3
38.0
40.0
182.655.1
32.0
29.0
117.8
114.7
93.5
78.8
73.5
21.5
18.0
13.0
10.5
JUN 07
JUN 08
JUN 09
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 07
JUN 08
JUN 09
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
Gearing Ratio (%)
46.7
43.3
42.3
Post Tax ROE (%)*
22.0
18.8
19.8
18.8
19.4
19.5
33.1
31.0
33.5
16.1
14.5
22.6
19.5
JUN 07
JUN 08
JUN 09
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 08
JUN 07
JUN 10
* return calculation adjusted for goodwill impairment, acquisition costs and
restructuring provisions
JUN 09
JUN 13
JUN 12
JUN 11
JUN 14
Value of $1,000 invested on 30 June 2006
Annual Total Shareholder Return (%)
16000
14000
12000
10000
8000
6000
4000
2000
0
JUN 06
JUN 07
JUN 08
JUN 09
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
SUPER RETAIL GROUP LIMITED
S&P/ASX 200 INDEX
182
69
53
37
76
-42
16
-26
JUN 07
JUN 08
JUN 09
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
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CHAIRMAN
AND GROUP
MANAGING
DIRECTOR’S
REPORT
“Today we have eight
retail businesses and three
commercial businesses
with over 640 stores. Over
the 10 years, Group sales
have grown from $383
million to $2.1 billion and
Group EBITDA has grown
from $32 million to
$237 million.”
Fellow Shareholders,
Welcome to the 2014 Annual Report of
Super Retail Group.
July 2014 marked the tenth anniversary of
the listing of our Company in July 2004. The
Company today is very different to the one
that listed back in 2004. Back then we had
one business, Supercheap Auto, with 183
stores across Australia and New Zealand.
Today we have eight retail businesses and
three commercial businesses with over
640 stores. Over the 10 years, Group sales
have grown from $383 million to
$2.1 billion and Group EBITDA has grown
from $32 million to $237 million.
We have seen the share price grow from
$1.97 at listing on 6 July 2004 to $8.46 at
30 June 2014 and over the 10 years we
have paid gross dividends of $2.54. This
represents a total shareholder return of
470% over the 10 years, which compares
to a return of 142% from the ASX 200
Accumulation Index.
OPERATING AND FINANCIAL
PERFORMANCE
The 2014 financial year has been a mixed
one for the Company. We have delivered
our eighth successive year of earnings
growth, with both Group sales and earnings
after tax growing by around 5%. However,
our overall results have been below the
expectations we set at the start of the year.
The Auto Retailing Division has maintained
its 10 year track record of delivering annual
EBITDA growth of around 10% which is
an extremely pleasing performance and
reflects the successful passing of the
leadership of Auto Retailing from David
Ajala to Chris Wilesmith. However, both
the Leisure and Sports Retailing Divisions
delivered an underlying EBITDA result
below the prior year.
In the Leisure Retailing Division, the BCF
business was impacted by a slowdown in
sales in stores that had previously benefited
from investment in the mining industry, a
higher level of sales cannibalisation from
new stores and some internal execution
issues.
The Sports Retailing Division had a solid
start to the year but performance was
impacted by inventory supply challenges
resulting from the implementation of new
merchandise and supply management
systems in October 2013 and from a
slowdown in customer demand following
the federal budget and a warmer start to
winter.
We have made a number of operational
changes to address the areas that impacted
on performance in the 2014 year and we
expect that we will re-establish the earnings
momentum of the BCF, Rebel and Amart
Sports businesses in the 2015 year.
Following the restructuring initiatives
undertaken in the 2013 year, good progress
has been made in the 2014 year in lifting
the performance of the Ray’s Outdoors and
FCO businesses but both businesses are
still generating returns below the Group’s
targets. We will continue to concentrate on
initiatives to both increase the customer
base and the frequency of customer
visitation for both businesses.
We have remained focused on developing
the capabilities that we will need to
operate a successful multi-channel retail
organisation. During the year, the Group
invested circa $47.9 million in capital
expenditure and $9.8 million in operating
expenses on these programs.
We continue to build our loyalty programs
across the Group and now have over
1 million members in each of our
Supercheap Auto, BCF, Ray’s Outdoors and
Rebel clubs. Growth through our online
channels has significantly exceeded our
physical store growth but we have work
to do on improving our online fulfilment
capabilities. We have also successfully
tested store of the future concepts
designed to create a more engaging
customer experience in our Supercheap
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Super Retail Group Limited
ANNUAL REPORT 2014
3
“The Group has now
been recognised by the
Australian Packaging
Covenant in both their
2013 and 2014 annual
report ratings for being
the highest achiever in
the retail industry.”
Auto and BCF businesses and plan to
commence a rollout program in the coming
year.
We opened a new distribution centre in
Western Sydney in April 2014 and are on
track to open a similar facility in Northern
Brisbane in the 2015 financial year.
We have grown our stable of private and
exclusive brands across the Group and
have rolled out the JDA inventory planning
system across the Leisure Retailing Division
and into the Auto Retailing Division.
Although we have encountered some
challenges post implementation, the
establishment of the Group’s SAP platform
into the Sports Retailing Division will
facilitate consistent sourcing and supply
chain processes across the Group.
A full review of the Group’s performance
and plans is included in the Operating and
Financial Review set out on pages 17 to 22
of this Annual Report.
The Directors have declared a fully franked
final dividend of 21.5 cents per share which
results in full year dividends of 40.0 cents
per share, an increase of 5% over the prior
year. The current policy of distributing 55%
to 65% of underlying net profit after tax
in the form of dividends will enable the
Group to balance investment in growth
opportunities and building group capability,
gradually paying down debt and increasing
dividends to shareholders.
SUSTAINABILITY
the year. At the Group level, the focus is
on raising funds for children’s healthcare
charities while at a business level, support
is provided to organisations in areas related
to the activities serviced by the business’
products, for example safe driving at
Supercheap Auto and Coastguard at BCF.
During the year, the Group contributed
$1.03 million including contributions from
our team members and customers to
various charities.
The Group has also maintained its focus
on a number of environmental initiatives
including reducing packaging and power
consumption and increasing recycling.
The Group has now been recognised by
the Australian Packaging Covenant in both
their 2013 and 2014 annual report ratings
for being the highest achiever in the retail
industry.
Some of the Group’s achievements are
summarised in the table below.
Group Waste Recycling - The Group is
a signatory to the Australian Packaging
Covenant and has set increased annual
waste recycling targets as per the agreed
APC Action Plan.
Customer Automotive Battery Recycling
- The Group continues to explore options
to offer our customers the ability to
return directly to our retail stores
selected products which will be collected
and distributed to recycling facilities.
Supercheap Auto accepts used car batteries
in all retail stores for recycling.
The Group has continued its support of a
number of charitable organisations during
SCA Oil Recycling - This new initiative was
trailed in SCA New Zealand and based on its
Sustainability
Initiative
Group Waste
Recycling
Battery Recycling
(Units)
Oil Recycling
(Litres)
Target
2013
51.5%
Actual
2013
51.0%
Target
2014
53.5%
Actual
2014
53.9%
Year on Year
Increase
2.9%
-
-
30,844
34,000
35,871
16.0%
-
-
81,600
-
* New initiative no prior comparative data
4
Super Retail Group Limited
ANNUAL REPORT 2014
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growth of online competitors. We see that
it will be critical for the Group to seek to
maintain differentiated products through
private brands and exclusive products and
to source branded products at global cost
prices. We will work with our trade partners
with a view to both sourcing more exclusive
product and sourcing more products at
lower cost at the point of manufacture.
We will continue to develop our own online
offer across all of our businesses and will
test ‘dark store’ logistics operations to
support our online businesses to more
effectively meet customer demand and
delivery expectations.
This is an exciting time for our Company as
we position ourselves to continue to grow
and operate as a multi-channel business.
We have a full agenda of initiatives
underway and we look forward to reporting
to you on our progress in the year ahead.
P A Birtles
Managing Director and
Chief Executive Officer
R J Wright
Chairman
success is now being rolled out throughout
Australia. The Group provides specialised
recycling bins at retail stores for customers
to dispose of used car oil.
Since the establishment of its international
sourcing operations in China in 2006, the
Group has been committed to ethical
sourcing. The Group undertakes audits
of factories manufacturing products for
the Group to ensure compliance with the
Group’s ethical sourcing policy, a copy of
which is set out on the Group’s website.
The audits cover a number of factors
including workplace health and safety and
employment and payroll practices.
Further information on the Group’s
sustainability initiatives will be included
in the Corporate Review which will be
published on the Group’s website.
TEAM MEMBERS
The driving force behind the Group
continues to be its strong culture
underpinned by the passion and
commitment of its 12,000 team members.
We would like to take this opportunity to
recognise and thank each one of them for
their contribution.
Team retention rates are now above the
long term target of 75%, having improved
by a further 3.4% over the year to 76.1%.
We were particularly encouraged that, in a
mixed year of performance, team member
engagement has also improved further to
68% when assessed in April 2014 compared
to 66% at the last survey in October 2012.
This compares to the retail industry average
of 55% and good employer status at 65%.
We reported last year that we had
introduced a number of initiatives to
improve safety performance and we are
pleased that the Group’s Lost Time Injury
Frequency Rate (LTIFR) reduced from 14.3
in the 2013 year to 12.0 in the 2014 year.
We are aiming to reduce our LTIFR by 15%
each year for the next three years and will
continue to drive the initiatives required to
achieve this key objective.
In August 2014, Steve Doyle and Graham
Chad will retire from the Group after 12
and 9 years’ service respectively. Steve
has led the development of the Leisure
Retailing Division from inception in 2005 to
sales in the 2014 year of $550 million while
Graham has overseen the development and
operation of our Group Logistics function.
Both have made significant contributions to
the growth of the Group and we wish them
well for the future.
LOOKING FORWARD
The year ahead will be a year in which
we will maintain an appropriate balance
between firstly delivering growth in sales
and profit and reducing working capital
in our existing businesses and secondly
building our multi-channel capabilities.
We are planning to open between 20 and
30 new stores and expect to refurbish
between 70 and 80 stores across the Group.
We expect like for like sales growth in the
first part of the year to be relatively low as
we continue to see patchy retail conditions
and the impact of cannibalisation and
reduced promotional discounting in our
Leisure Division, but we expect like for like
growth across the Group to increase as we
move through the year.
We expect to lift EBITDA margins across
the Group although margin growth at
the EBIT level will be more modest as
we incur increased depreciation charges
resulting from the supply chain and systems
investment over the last two years.
We expect to reduce working capital levels
across the Group as we capitalise on the
investment in inventory planning systems
and logistics infrastructure to improve stock
turn to around three times per annum
within three years. We will open the new
distribution centre in Northern Brisbane
and refurbish our Melbourne and Perth
distribution centres.
We recognise the increasing challenge
of both global retailers opening stores
in Australia and New Zealand and the
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Super Retail Group Limited
ANNUAL REPORT 2014
5
CORPORATE
GOVERNANCE
STATEMENT
(ASX Principles). This statement has
been formatted with reference to these
Principles. This statement and copies
of the Company’s policies, charters and
codes relevant to corporate governance
are available on the Company’s website at
www.superretailgroup.com in the Investors
& Media section. The website is updated as
required to ensure that it reflects the most
recent governance information.
Details of the components of the
framework are set out in the following
pages. These arrangements, unless
otherwise stated, were in place throughout
the reporting period and are current as of
the signing of this report.
OUR CORPORATE GOVERNANCE
FRAMEWORK
The following statement sets out the
corporate governance framework adopted
by the Board of Super Retail Group
Limited (“the Company”). The Corporate
Governance Statement was authorised for
issue by the Directors on 20 August 2014.
The Board has responsibility for the
strategic direction of the Company so
as to create value for shareholders and
is committed to act in the best interests
of the Company and its stakeholders.
Corporate governance is at the core of the
Board’s approach. Maintenance of policies
and practices that are of the highest
standards in the critical areas of corporate
governance, risk management and financial
reporting provide a strong foundation for
the fulfilment of this responsibility.
The Board has adopted governance
arrangements that are consistent with
the ASX Corporate Governance Council’s
Principles and Recommendations with
2010 Amendments (2nd Edition)
AN OVERVIEW OF THE GOVERNANCE FRAMEWORK:
THE BOARD
Nomination Committee
Audit and Risk Committee
Human Resources and
Remuneration Committee
Managing Director and CEO
Executive Management
External Audit
Internal Audit
6
Super Retail Group Limited
ANNUAL REPORT 2014
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PRINCIPLE 1: LAY SOLID
FOUNDATIONS FOR MANAGEMENT
AND OVERSIGHT
• monitoring financial performance,
including adopting annual budgets
and approving the Company’s financial
statements;
established three Board Committees to
perform certain functions and provide it
with recommendations and advice:
The role of the Board of Directors
The Board’s role is to protect the rights
and interests of shareholders and is
accountable to them for the management
of the business and affairs of the Company.
The Board’s principal objective is to create
value for shareholders while ensuring the
Company’s activities are properly managed.
The Board has adopted a Board Charter
which sets out the manner in which its
role, powers and responsibilities will be
exercised and discharged, having regard to
principles of good corporate governance,
applicable laws and the interests of all of
the Company’s stakeholders.
The Board’s responsibilities include:
• contributing to and approving the
Company’s goals and strategic direction
and monitoring implementation of those
goals and strategies;
• approving and monitoring the progress of
capital expenditure, capital management,
acquisitions and divestures;
• Nomination Committee;
• Audit and Risk Committee; and
• Human Resources and Remuneration
• approving and monitoring systems of
Committee.
internal control and risk management to
appropriately mitigate material business
risk;
• appointing and removing the Group
Managing Director and Chief Executive
Officer and the Company Secretary;
• reviewing and approving the performance
and remuneration of Senior Executives;
• accountability to shareholders through
effective shareholder communication
and encouraging participation at general
meetings; and
• establishing codes of conduct.
The Board Charter is available on the
Company’s website.
The role of Board Committees
Whilst retaining ultimate responsibility
for strategy and control, the Board has
Each Committee has its own 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.
Committee reports are provided by the
Committee Chair at the subsequent
Board meeting and minutes of committee
meetings are tabled at the next following
Board meeting. Additional requirements
for specific reporting by the Committee to
the Board is addressed in the Charter of
each Committee.
AN OVERVIEW OF COMMITTEE RESPONSIBILITIES:
BOARD OF DIRECTORS
NOMINATION COMMITTEE
AUDIT AND RISK COMMITTEE
• Board size and composition
• Director recruitment and
re-election
• Director induction and
continuing development
• Board and Committee
performance evaluation
• Financial reporting
• Audit strategy
• Risk management and
internal control
• Corporate Governance
HUMAN RESOURCES AND
REMUNERATION COMMITTEE
• Human resources strategy
• Remuneration strategy
• Development and
succession
• Diversity strategy
• Workplace Health & Safety
The Charter of each Committee is available on the Company’s website.
Super Retail Group Limited
ANNUAL REPORT 2014
7
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“The Board has adopted
a policy that it shall be
composed of a majority
of independent,
Non-Executive Directors
who, with Executive
Directors, comprise an
appropriate mix of skills,
expertise, experience
and diversity to meet the
Board’s responsibilities and
objectives.”
The role of the Group Managing
Director and Chief Executive Officer
with the Company’s strategic, financial and
operational position.
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 Group Managing Director provides a
summary of the performance evaluation of
senior executives to the Human Resources
and Remuneration Committee.
The performance evaluation of the Group
Managing Director is completed by the
Chairman, in consultation with the Board.
The performance evaluation, in accordance
with the aforementioned process, was
completed during this reporting period.
Additional information is available in the
Remuneration Report from page 26.
Whilst retaining ultimate responsibility
for strategy and control, the Board has
delegated responsibility for day-to-day
management of the Company to the Group
Managing Director and Chief Executive
Officer. The Group Managing Director
and Chief Executive Officer is supported
in this function by the Senior Executives,
which comprise the direct reports to the
Group Managing Director, including the
retail divisional Managing Directors; Chief
Financial Officer; Support Services General
Managers and the Company Secretary.
The Group Managing Director and Chief
Executive Officer manages the Company
in accordance with the strategy, business
plans and delegations approved by the
Board and is accountable to the Board for
the exercise of the delegated authority
and, with the support of senior executives,
must report to the Board through reports
and presentations to the Board and its
Committees.
The Group Managing Director and Chief
Executive Officer’s responsibilities include:
• developing and making recommendations
to the Board on business strategies,
budgets and policies;
• implementing business plans in
accordance with approved strategies,
budgets and policies; and
• reporting to the Board on Company
performance and key operational issues.
Evaluation of Senior Executives’
Performance
All Senior Executives receive a letter
of appointment which sets out the
Company’s expectations of the role, their
duties, the terms and conditions of their
appointment and their remuneration. All
Senior Executives receive an induction
appropriate to their experience, enabling
them to participate fully and actively as
soon as possible, including familiarisation
8
Super Retail Group Limited
ANNUAL REPORT 2014
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PRINCIPLE 2: STRUCTURE THE
BOARD TO ADD VALUE
COMPOSITION OF THE BOARD
Director
Non
Executive
Executive
Independent Nomination
Committee
Human
Resources and
Remuneration
Committee
Audit
and Risk
Committee
Robert Wright Chair
Director
Chair
Peter Birtles
Director
Reg Rowe
Director
John Skippen
Director
Sally Pitkin
Director
Rob Murray
Director
Member
Member
Member
Member
Member
Member
Member
Chair
Member
Director
Director
Director
Chair
Member
Member
The Board has adopted a policy that
it shall be composed of a majority of
independent, Non-Executive Directors
who, with Executive Directors, comprise
an appropriate mix of skills, expertise,
experience and diversity to meet the
Board’s responsibilities and objectives.
The Board is of the view that its current
composition is appropriate to enable the
Board to discharge its responsibilities and
deliver the Company’s corporate objectives.
Details of these Directors’ qualifications and
attendance at Board meetings are set out in
the Directors’ Report on pages 22 to 24.
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 six
directors.
The Chair is elected from the independent,
Non-Executive Directors.
The Chair 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.
Additional information of the Directors’
experience, expertise, qualifications and
independent status are profiled in the
Directors’ Report on pages 22 to 24.
Directors’ Independence
A Director is considered to be independent
if they are free of any interest or
relationship that might influence, or
reasonably be perceived to influence, in a
material respect their capacity to exercise
independent judgement on issues before
the Board and to act in the best interests
of the Company and its shareholders
generally.
Any Director who considers that they
may have a conflict of interest or
material interest, other than solely as a
consequence of being a Director, in any
matter concerning the Company is required
to give the Board immediate notice of
such interest. The Board regularly reviews
the independence of each Non-Executive
Director in light of the interests disclosed
by them. Any change to a Director’s
independence status will be reported to the
market.
Throughout the reporting period, the Board
has adopted the independence criteria
detailed in the Board Charter. In addition,
the Board reviewed the independence
of Directors having regard for the ASX
Corporate Governance Council’s Principles
and Recommendations (3rd Edition)
in June 2014 and shall have regard for
these Principles and Recommendations,
in conjunction with the Board Charter,
pending review and, if appropriate,
amendment of the Board Charter.
With the exception of the Group Managing
Director, Mr P A Birtles, all of the Directors
are Non-Executive Directors.
Four of the five Non-Executive Directors are
considered to be independent with
Mr R A Rowe deemed not to be
independent. Additional information
regarding Mr R A Rowe’s interests are
detailed in the Directors’ Report and in
Note 31 on page 87 of this Annual Report.
Mr R J Wright has served as a Director for
more than ten years. The Board considers
that Mr Wright makes a significant
contribution to the work of the Board and
that his deep knowledge of the Company
and broad business experience remains
especially important. The Board believes
that Mr Wright has retained independence
of character and judgement and has not
formed interests or associations that
might compromise his ability to exercise
independent judgement or to act in the
best interests of the Company.
Annual Review 2014.indd 9
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Super Retail Group Limited
ANNUAL REPORT 2014
9
“The Board undertakes
an annual performance
evaluation of the Board, its
Committees and individual
Directors. The evaluation
for the 2014 financial year
commenced in June 2014
and will be completed in
September 2014.”
“All new Directors receive
an induction appropriate to
their experience, enabling
them to participate fully
and actively as soon
as possible, including
familiarisation with the
operation of the Board, the
Board’s Committees and
the Company’s financial,
strategic, operational and
risk management position.”
To the extent that a Director has a conflict
of interest, they would not receive Board
papers on the relevant matter and would
absent themselves from any discussion
at the Board meeting in relation to the
relevant matter.
The Non-Executive Directors periodically
meet without the Managing Director or
other management being present.
Access to Information
The Directors, the Board and the
Board Committees are entitled to seek
independent professional advice at
the Company’s expense as considered
necessary, subject to the approval of the
Chair or the Board as a whole.
All Directors have access to Company
records and may communicate directly
with management at any time considered
necessary.
Nomination Committee
The Nomination Committee is comprised of
all Directors and is chaired by independent,
Non-Executive Director, Mr R J Wright.
The Board is of the view that its current
composition is appropriate to enable
the Committee to discharge its mandate
effectively.
The composition of the Board is reviewed
annually by the Nomination Committee to
ensure that it has available an appropriate
mix of skills, expertise and experience
to ensure the interests of shareholders
are served. There were no new Director
appointments during the reporting period.
Details of these Directors’ qualifications
and attendance at Nomination Committee
meetings are set out in the Directors’
Report on pages 22 to 24.
The Nomination Committee Charter details
the Company’s policy and procedure
for selection and appointment of new
Directors.
The Committee Charter is available on the
Company’s website.
Company Secretary
The Company Secretary is accountable
to the Board, through the Chair, on all
governance matters and all Directors have
direct access to the Company Secretary.
The Company Secretary is responsible
for co-ordination of all Board business
including agendas, board papers, minutes,
communication with the Australian
Securities Exchange (ASX) and statutory
filings.
The Board has appointed Mr R W Dawkins
as Company Secretary. Details of the
experience and qualifications of the
Company Secretary are set out in the
Directors’ Report on page 24.
Performance Assessment
The Board undertakes an annual
performance evaluation of the Board,
its Committees and individual Directors.
The evaluation for the 2014 financial year
commenced in June 2014 and will be
completed in September 2014.
The performance review process during the
reporting period was comprised of reviews
of the Board as a whole, its Committees
and its individual Directors. The reviews
were based on individual questionnaires
completed by each Director and Senior
Executives and the one on one discussion
between the Chair and each Director. The
questionnaire responses and insights from
discussions are collated and the Board
meets to discuss and consider the results
and to determine any actions arising from
the review.
Matters covered by the review include the
role, structure, procedures, behaviours,
performance, Directors’ understanding of
the strategy, objectives and key risks to
the business and achievement of those
objectives, succession planning and the
effectiveness of the Chair.
10
Super Retail Group Limited
ANNUAL REPORT 2014
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Induction and Education
to maintain confidence in the Company’s
integrity.
New Directors receive a letter of
appointment which sets out the Company’s
expectations of the role, their duties, the
terms and conditions of their appointment
and their remuneration.
All new Directors receive an induction
appropriate to their experience, enabling
them to participate fully and actively as
soon as possible, including familiarisation
with the operation of the Board, the
Board’s Committees and the Company’s
financial, strategic, operational and risk
management position. This induction
includes meetings with the Chair, the
Audit and Risk Committee Chair, the Group
Managing Director, divisional Managing
Directors and other key Senior Executives.
To assist Directors in maintaining an
appropriate level of knowledge of the
Company’s operations, Directors undertake
site visits each year to some of the
Company’s Support Office, Distribution
Centre and/or store operations.
All Directors are expected to maintain
the skills required to exercise their
responsibilities and discharge their
obligations to the Company. Directors
are encouraged to undertake continuing
education and training and are on an
ongoing basis provided with papers and
presentations on matters which may affect
the business or operations of the Company.
PRINCIPLE 3: PROMOTE ETHICAL
AND RESPONSIBLE DECISION
MAKING
Code of Conduct
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 necessary
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. Any suspected breach of the
Code is investigated accordingly. The
Code is supported by the Company’s
Whistleblowing Policy and system of
reporting activity suspected of breaching
the Code to the Company’s Integrity Officer.
The Company’s Integrity Officer is also the
Company Secretary.
The Code of Conduct is available on the
Company’s website.
Dealing in Shares
The Company has established a policy for
Directors and team members with respect
to trading in the Company’s securities
(“Securities Trading Policy”). Directors,
Senior Executives and other designated
team members are subject to prohibitions
to the trading of Company securities.
Generally, this includes the restriction of
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 Chair before they buy or
sell Company securities and confirm once
the transaction is complete.
Consistent with the legal prohibitions on
insider trading, in all instances, all persons
are prohibited from dealing in Company
securities at any time while in possession of
price sensitive information not available to
the market.
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.
The ASX is notified of all relevant
transactions involving securities conducted
by Directors.
The Securities Trading Policy is available on
the Company’s website.
Ethical Sourcing Policy
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 environmental practices, and protect
our corporate reputation and that of our
individual businesses and brands.
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 Diversity on page 40.
The Diversity Policy is available on the
Company’s website.
PRINCIPLE 4: SAFEGUARD
INTEGRITY IN FINANCIAL
REPORTING
Audit and Risk Committee
The Audit and Risk Committee is comprised
of independent, Non-Executive Directors
and is chaired by independent, Non-
Executive Director, Mr R J Skippen. The
Board is of the view that its current
composition is appropriate to enable
the Committee to discharge its mandate
effectively.
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Super Retail Group Limited
ANNUAL REPORT 2014
11
Effective from 22 July 2013, Mr R A Murray
replaced Mr R J Wright as a member of the
Audit and Risk Committee.
All members of the Audit and Risk
Committee are financially literate and have
the requisite financial expertise. Details
of these Directors’ qualifications and
attendance at Audit and Risk Committee
meetings are set out in the Directors’
Report on pages 22 to 24.
The Audit and Risk Committee operates
in accordance with its Charter and in a
manner compliant with ASX Listing Rule
12.7. In brief, the Committee provides
advice and assistance to the Board in
fulfilling the Board’s responsibilities relating
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;
Committee monitors and reports to
the Board on the responsiveness to
Internal Audit reports, findings and any
recommendations.
This Committee provides ongoing assurance
in the areas of:
• financial administration and reporting;
• audit control and independence; and
• accounting policies and standards.
The Committee Charter is available on the
Company’s website.
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 and removal of External
Auditors and their fee;
• reviews the performance of the External
• establishing and monitoring a sound
Auditors;
system of risk oversight and management
and internal control; and
• establishing and monitoring a sound
system of compliance with laws and
regulations, internal compliance
guidelines, policies, procedures and
control systems and prescribed internal
standards of behaviour.
The Group Managing Director and Chief
Executive Officer, Chief Financial Officer
and Company Secretary attend Audit and
Risk Committee meetings. The External
Auditors, Internal Auditors and other
Senior Executives attend Audit and Risk
Committee meetings at the invitation of the
Committee. The Non-Executive Directors
periodically meet the External Auditors
without the Managing Director or other
management being present.
The Company has policies and processes
for addressing these and other compliance
areas and the Committee receive
management reports accordingly. The
• 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 Company and its subsidiaries
and oversees the scope of audits to be
conducted; and
• ensures that no management restrictions
are placed upon access by External
Auditors to relevant information or
personnel.
The performance of the External Auditor
is reviewed annually, including compliance
with the policy covering the provision of
non-audit services.
An analysis of fees paid to the External
Auditors, including a break-down of fees
for non-audit services is provided in
Note 28 on page 85 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: MAKE TIMELY AND
BALANCED DISCLOSURE
Continuous Disclosure
The Company is committed to maintaining
the highest standards of disclosure,
providing shareholders and the investment
community with the same access to full and
accurate information about its activities in
an accessible and timely manner.
The Continuous Disclosure Policy has been
designed to ensure compliance with ASX
Listing Rule disclosure requirements and
to embed accountability across all levels
of the Company for that compliance. This
includes:
• initial disclosure of all market sensitive
information on the ASX Market
Announcements Platform;
• all briefings and one on one meetings
with shareholders and analysts are limited
to an explanation of previously published
material and general discussion of non-
price sensitive information. A register and
summary record is maintained for internal
use of all issues discussed; and
• periodic and specific disclosure
obligations.
The Continuous Disclosure Policy is
available on the Company’s website.
12
Super Retail Group Limited
ANNUAL REPORT 2014
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PRINCIPLE 6: RESPECT THE RIGHTS
OF SHAREHOLDERS
Shareholder Communication
The Company is committed to dealing fairly,
transparently and openly with shareholders
and the investment community.
An overview of the Company’s business,
including our brands, history and leadership
is available on the Company’s website.
The Company’s Shareholder
Communications Policy outlines the
Company’s approach to communicating
information to shareholders and other
stakeholders through a range of forums and
publications. This includes:
• presentations by the Chair and the Group
Managing Director and Chief Executive
Officer regarding the Company’s activities
and state of affairs at the Annual General
Meeting with the transcript of these
presentations disclosed via the ASX
Market Announcements Platform and the
Company’s website;
• attendance of Directors and the External
Auditor at the Annual General Meeting
to answer questions of shareholders as
required;
• advanced notification of all major
shareholder and analyst briefings;
• all recent Company announcements,
media briefings, press releases, analyst
presentations and Annual Reports and
information on corporate governance
practices are placed on the Company
website; and
• facilitating electronic, postal and facsimile
communications.
The Shareholder Communications Policy is
available on the Company’s website.
PRINCIPLE 7: RECOGNISE AND
MANAGE RISK
The Company recognises that aspects of
our business operate in an environment
of uncertainty. The Company is committed
to managing the potential risks associated
with this uncertainty in a continuous,
proactive and systematic way through
competent risk management incorporating
the integrated application of high quality
risk management policies and processes
to all facets of our business by all levels of
management.
Integrated risk management within the
Company constitutes:
• recognising risk management as a
business process that is owned by all
management;
• requiring its integration into key business
processes, including risk based decisions
in strategy, business planning and
investment setting;
• applying it at all levels of the organisation
and across all departments; and
• viewing it as an ongoing process.
The risk management framework has
regard to relevant regulations, standards
and guidelines including the ASX Principles
and Recommendations and the Australian
/ New Zealand standard AS/NZS ISO
31000:2009 Risk management – Principles
and guidelines. Additional information
regarding material business risks is set out
in the Directors’ Report on pages 17 to 41.
The Risk Management Policy is available on
the Company’s website.
Audit and Risk Committee
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.
The Company has policies and processes
for addressing the risk management,
compliance and internal control systems
and the Committee receives management
reports accordingly.
“The Company is
committed to maintaining
the highest standards
of disclosure, providing
shareholders and the
investment community
with the same access to full
and accurate information
about its activities in an
accessible and timely
manner.”
“The Company is
committed to dealing fairly,
transparently and openly
with shareholders and the
investment community.”
Annual Review 2014.indd 13
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Super Retail Group Limited
ANNUAL REPORT 2014
13
“The role of Internal Audit
as part of the Group’s risk
management framework
is to understand the key
risks of the Company
and to examine and
evaluate the adequacy and
effectiveness of the system
of risk management and
internal controls used by
management.”
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 Company
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.
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,
discussing internal control or compliance
issues with line management, and reaching
agreement on the actions to be taken.
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.
Pursuant to section 295A of the
Corporations Act, the Company’s financial
report preparation and approval process
for each financial year involves the Group
Managing Director and Chief Executive
Officer and the Chief Financial Officer
making the following declarations to the
Board that:
• the Company’s financial records for the
reporting period have been properly kept
in accordance with Section 286 of the
Corporations Act 2001;
• the financial statements and associated
notes comply in all material respects with
the accounting standards as required by
Section 296 of the Corporations Act 2001;
and
• in accordance with Section 297 of the
Corporations Act 2001, the Group’s
financial reports and accompanying
notes represent a true and fair view, in all
material respects, of the Group’s financial
condition and operational results and are
in accordance with relevant accounting
standards. This statement is founded on
a sound system of risk management and
internal compliance and control which
implements the policies adopted by the
Board. The Group’s risk management and
internal compliance and control system
is operating effectively in all material
respects.
The Board has received the declaration in
respect of the reporting period.
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
14
Super Retail Group Limited
ANNUAL REPORT 2014
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Information on Directors’ and key
management personnel’s remuneration is
set out in the Directors’ Report under the
heading ‘Remuneration Report’ on page 36
of this Annual Report.
The Committee operates in accordance
with its Charter which is available on the
Company’s website, and as described in the
Remuneration Report on page 27 of this
Annual Report.
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
900 team members participated in one or
both plans.
Additional information regarding share-
based payments under the rights/options
plan is detailed in Note 39 on page 93 of
this annual report.
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 independent,
Non-Executive Directors and is chaired by
independent, Non-Executive Director,
Dr S A Pitkin. The Board is of the view that
its current composition is appropriate to
enable the Committee to discharge its
mandate effectively.
Effective from 22 July 2013, Mr R A Murray
replaced Mr R J Wright as a member of
the Human Resources and Remuneration
Committee.
Details of these Directors’ qualifications
and attendance at Human Resource and
Remuneration Committee meetings are set
out in the Directors’ Report on pages 22
to 24.
The Board has charged the Human
Resources and Remuneration Committee
with corporate governance and oversight
responsibilities in relation to the Company’s
human resources strategy including:
• team member attraction, retention and
engagement;
• remuneration policy, including
remuneration of the Group Managing
Director and Chief Executive Officer and
Non-Executive Directors;
• performance management and
accountability frameworks;
• development and succession activities;
• diversity policy; and
• diversity and remuneration reporting.
The Company has policies and processes
for addressing these and other compliance
areas and the Committee receive
management reports accordingly.
Annual Review 2014.indd 15
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Super Retail Group Limited
ANNUAL REPORT 2014
15
ANNUAL
REPORT
Super Retail Group Limited
FOR THE PERIOD ENDING
28 June 2014
16
Super Retail Group Limited
ANNUAL REPORT 2014
Annual Review 2014.indd 16
9/8/14 10:32 AM
DIRECTORS’ REPORT
Super Retail Group Limited
for the period ended 28 June 2014
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 28 June 2014.
Directors
The following persons were Directors of Super Retail Group Limited during the period and up to the date of this report.
R J Wright
P A Birtles
R A Rowe
R J Skippen
S A M Pitkin
R A Murray
Information on qualifications and experience of Directors is included on pages 22 to 24.
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 equipment and fishing equipment and apparel; and
retailing of sporting equipment, bicycles, bicycle accessories and apparel.
Dividends – Super Retail Group Limited
The Directors declared a fully franked dividend of 21.5 cents per share be paid on 2 October 2014 (total dividend, fully
franked - $42,297,299). This will take the total dividends paid and payable to 40.0 cents for the 2014 year which is a 5.3%
increase on 2013.
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
$
2013 final fully franked dividend (21¢ per share)
2014 interim fully franked dividend (18.5¢ per share)
2 October 2013
3 April 2014
41,259,290
36,395,361
77,654,651
2014 Operating and Financial Review
Group Results
Both Group sales and profit after tax grew by around 5% to $2.11 billion and $108.4 million respectively. This overall result
reflected a strong increase in profit contribution from the Auto Retailing Division partly offset by a decline in underlying profit
contribution from the Leisure and Sports Retailing Divisions.
Group underlying net profit after tax decreased by 7% after excluding current one off tax benefits and prior year restructuring
provisions. The underlying net profit for 2014 was $106.2 million (being the profit after tax of $108.4 million, decreased by
the $2.2 million tax benefit). The underlying net profit for 2013 was $114.0 million (being the profit after tax of $102.7 million,
increased by the tax effected Ray’s Outdoors restructuring provisioning in the Leisure Retailing Division of $4.2 million, and
increased by the tax effected Goldcross restructuring provisioning in the Sports Retailing Division of $7.1 million).
The Auto and Sports Retailing Divisions delivered overall sales growth ahead of their category market growth through a
combination of modest like for like sales growth and contribution from new stores. In the Auto Retailing Division, this was
supported by an increase in gross margin. The Leisure Retailing Division also delivered solid overall sales growth although
this was driven by new store openings slightly offset by a small decline in like for like sales. Gross margins in the Sports and
Leisure Retailing Division were below the prior comparative period.
The Group has continued to invest in the development of its businesses and supporting capability with $47.9 million capital
expenditure and $9.8 million operating costs associated with the Group’s multi-channel development projects and $45.6
million capital expenditure associated with new and refurbished stores. The Group completed a review of its taxation
arrangements during the year and as a result recognised a net profit after tax benefit of $2.2 million. This consisted of net
imported goods tax refund benefit of $10.9 million offset by an under provision of income tax relating to depreciation claims
Page 17
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
of $4.3 million, the derecognition of tax losses of $3.4 million and additional indirect tax expenses of $1.0 million.
Group Net Debt at $382.6 million was $53.3 million above the prior year reflecting the investment in the Group’s multi-
channel development projects, higher inventory levels in the Sports Retailing Division and a receivable relating to prior year
tax which was received within a week of the end of the period.
Auto Retailing
Divisional sales at $818 million were 3.7% higher than the prior comparative period with like for like sales growth being
2.4%. Divisional EBIT at $94.5 million was 8.5% higher than the comparative period.
The Supercheap Auto business has again performed strongly with EBIT margins increasing by 50 basis points to 11.5%.
Like for like sales growth was a modest 2.4% driven by small increases in transaction numbers, units sold and average unit
value. Gross margin improved by a further 70 basis points again driven by ranging and sourcing initiatives. Cash operating
costs as a percentage of sales were slightly below the prior year but depreciation increased as a percentage of sales
reflecting the investment in the development of the Group’s multi-channel capabilities.
The business continued to build membership of its customer loyalty program Supercheap Auto Club Plus with membership
growing to just short of one million by June 2014, reaching this target one year ahead of plan.
The business has continued to focus on store refurbishment, ranging initiatives, private brand development, partnering with
the world’s best automotive brands and team engagement as drivers of underlying consistent growth.
All the major product categories, with the exception of a subset of the tools categories, delivered positive growth during the
year with particularly strong growth being achieved in the car care, paint and panel and spare parts categories. Like for like
sales growth was inconsistent across the States and Territories of Australia and in New Zealand with strong growth in New
Zealand and Western Australia partly offset by flat growth in Queensland and a small decline in Tasmania.
The business opened a further five stores and closed two stores during the year while five stores were refurbished and
seven were converted to superstores. At the end of June there were 291 stores across Australia and New Zealand with the
business targeting an additional 35 stores over the next four years.
The business has continued to test and refine its store of the future concept which is designed to create a more engaging
interactive shopping experience for the customer. The concept had been successfully tested in seven stores by June 2014
and the business is planning to refurbish around 50 stores in the new format in the coming year.
The Division has also continued to trial its new trade supply business, Auto Trade Direct in the North Island of New Zealand.
This business supplies auto parts and accessories to auto mechanics from a number of hub stores and directly from its
distribution centre and from trade partners. Further refinement is required before the concept can be rolled out more widely.
Leisure Retailing
Divisional sales at $552.5 million were 5.7% higher with like for like sales across the division 0.2% lower than the prior
comparative period.
Divisional EBIT at $33.0 million was in line with the prior comparative period at a reported level but 16% below the prior
period on an underlying basis after excluding the impact of costs of $6.0 million associated with restructuring the Ray’s
Outdoors business in the prior period. EBIT margin was 6.0% which was 1.5 percentage points lower than the prior
comparative period. This decline reflected a decrease in gross margin resulting from additional discounting across the
Division and higher depreciation costs associated with new store rollout and the Division’s share of the investment in the
Group’s development programs.
The BCF Boating Camping Fishing business had a disappointing year with like for like sales decline of circa 1% and a
decline in gross margin. The weakness in like for like sales was driven by a combination of falling demand experienced by
stores in areas in which mining related investment has slowed, cannibalisation of existing store sales from new stores and
the drop in consumer sentiment experienced towards the end of the year. Like for like customer transactions and units per
transaction were below the prior year while average unit value increased.
The business opened nine new stores during the year taking total store numbers to 114. The business expects to reach
125 stores in the next four years. The business has continued to refine its store of the future concept and a rollout program
is commencing in the 2015 Financial Year.
The business completed the rollout of the new inventory demand planning and replenishment system, which had been
piloted in the prior period. Inventory investment has run at round 10% lower as a consequence.
The business expects to deliver positive like for like sales growth in the 2015 financial year with momentum increasing
through the year as the effects of cannibalisation cycle out of the business by the half year.
Following the repositioning of the Ray’s Outdoors business undertaken in the previous year, the business benefitted from
sales activities to clear deleted merchandise in the first half of the year. Like for like sales growth across the camping, fishing
Page 18
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
and footwear categories was strong through the year but apparel sales were impacted by the warmer weather in the
important winter season and traded below the prior period.
Further work is required to deliver an engaging customer experience in the Ray’s Outdoors stores and although the new
format that has been tested at Frankston and Preston is a step in the right direction, improvements are required before the
business commences a wider rollout. Customer traffic was below the prior year with a proportion of customers providing
feedback that they believe that changes the business has made to its loyalty scheme are detrimental. The loyalty scheme
will be reviewed in the coming year.
Gross margins were lower than the prior year as expected through the clearance activity undertaken in the year. It is
expected that gross margins will increase in the 2015 financial year as the business now has a much cleaner stock position.
Two new stores were opened and one store was closed during the year resulting in 56 stores trading by the end of June.
The business is undertaking a full review of its store portfolio considering location and size,
In New Zealand, the FCO Fishing Camping Outdoors business had another year of strong like for like sales growth at
around 18%. Importantly this was driven primarily through growth in customer numbers. The repositioning of the business
outlined in the previous year’s report has been successful and sales growth in the camping, boating and apparel categories
has been stronger than that achieved in the fishing category reflecting the lower profile given to fishing in the business’
marketing program. Although sales growth has been strong, the business needs further growth to achieve an acceptable
level of return on capital so there will be a continued focus on driving like for like sales growth in the coming year and on
increasing gross margin performance. The business will continue at 13 stores until performance reaches targeted returns.
A business review was conducted in the second half of the year which highlighted improvement opportunities including
adopting a more aggressive pricing and promotional strategy and changes to brand marketing. The review also identified
opportunities for the business to extend its range into adjacent areas. Consequential changes to the business are underway
and will continue into the new year targeted towards improving sales per store and lifting operating margins.
David Ajala has been appointed to the role of Managing Director Leisure Retailing on an interim basis and he will be bringing
his considerable expertise and experience to lead the work required to lift the performance of the three Leisure Retailing
businesses in the coming year.
Sports Retailing
Divisional sales at $734 million were 4.3% higher than the prior period and EBIT at $62.8 million was 1% below the prior
period. On an underlying basis, EBIT was 15% below the prior period after excluding the costs incurred in the prior period
associated with restructuring the Goldcross Cycles business.
Like for like sales growth across the division was 2.6%, which was below expectations as second half performance was
impacted by challenges arising from systems changes implemented during the year and the challenging consumer
environment experienced towards the end of the year. Overall like for like sales growth was driven by modest increases in
customer transactions, units sold and unit value.
Growth was solid in the footwear and equipment categories (with the exception of fitness equipment) but relatively flat in the
apparel categories within the Rebel and Amart Sports businesses. The fitness equipment category was flat when compared
to the prior year which had delivered strong growth on the year before.
During the year, the business implemented the Group’s merchandise and supply chain management IT systems. This was a
major change program and the business encountered challenges with both the replenishment of inventory and the reporting
of merchandise performance as the systems were implemented. This had the impact of weakening the merchandise offer in
store with a consequential impact on sales. The business is working through a program of addressing all the issues
encountered with the change in systems and replenishment processes are in a stronger position as we move into the new
financial year.
The change in systems also impacted the Division’s gross margin and inventory management performance. Gross margin
was 45.7% which was 40 basis points lower than the prior year and below expectations set at the start of the year. Inventory
closed the year at $151 million reflecting additional inventory purchased to manage risk through the systems implementation
and the lower sales experienced in the second half. The business expects to reduce inventory in the coming year without a
detrimental impact on gross margin.
The Division has continued to build the Amart Sports network in Victoria and launched the brand in New South Wales with
nine new stores opened during the year. It will take around three years for these stores to reach maturity and as a result
these stores operate at a lower profit contribution during their early years. This has had the effect of reducing overall EBIT
margins in the Amart Sports business given the proportion of new stores compared to the overall store base. 18 new Amart
Sports stores have been opened in the past two years bringing total store numbers to 51.
One new Rebel store was opened and a further five stores were refurbished with the new store design launched last year.
The business also opened a Rebel Fit store which is a pilot store designed to test the opportunity for the Rebel brand in
small stores in high street locations. At the end of June there were 92 Rebel stores.
Page 19
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
The remaining standalone Goldcross Cycles stores were closed during the year with trading losses of circa $1.0 million
incurred prior to closure. 32 Amart Sports stores now have a Goldcross Cycles store in store concept and the performance
of the store in store concepts has been promising.
The Division acquired the 21 store network of Workout World during the year at a cost of $4.4 million. Two former Workout
World franchise stores have subsequently been acquired. The business has traded at a small loss to date with performance
being impacted by stock supply issues dating back prior to the acquisition. A number of business improvement initiatives
have been implemented and a new general manager for the business commenced at the start of the 2015 financial year.
Group Costs
Group costs for the period were $7.7 million including $5.8 million in public company costs and $3.0 million in costs
associated with the development of the Group’s commercial businesses. Group Costs also included $9.8 million of costs
associated with the Group’s multi-channel development programs and unutilised distribution centre and office space. Further
information on these programs is included in the section on Group Strategy in this report. Income of $10.9 million relating to
the net imported goods tax refund and other revenue adjustments was recognised in the period as a reduction to Group
Costs.
The contribution from the VBM Retail licenced sports merchandise on-line and event sales business which is 50% owned by
the Group is shown as part of Group costs. The business experienced high growth in the year winning distribution and event
business from Tennis Australia and the Australian Football League. Strong sales growth has been delivered although
expansion costs and some underperforming event contracts have resulted in a small trading loss.
Review of Financial Position
Cash flow from operations was $167.2 million, a decrease of $57.9 million over the prior period, reflecting increases in
inventory levels in the Sports division to manage risk of systems integration and timing benefits in the prior period relating to
trade payables. Progress has been made on increasing stock turns in the Auto and Leisure Retailing Divisions but there
remains scope for further significant improvement in the next five years. Total inventory investment across the Group at the
end of June was $490.1 million, an increase of $37.5 million compared to the prior comparative period.
Group capital expenditure was $105.8 million which included $45.6 million in new and refurbished store fit out, $8.6 million in
information technology projects, $26.2 million in supply chain development projects, $21.7 million in the Sports Retailing
SAP project and $3.7 million in general capital expenditure.
At the end of June, Group Net Debt was $382.6 million, which was comfortably within the Group’s facility limits and
associated banking covenants.
Group Strategy
The Group’s strategy is to develop and grow its portfolio of retail businesses providing solutions and engaging experiences
which enable its customers to make the most of their leisure time. Core components of the strategy are to:
•
•
•
•
•
•
provide an engaging and integrated experience for all customers across all channels;
understand and communicate with customers at an individual or segment level;
develop excellence in sourcing, brand development and supply chain management;
operate at least as efficiently as competitors;
leverage common business systems across the Group; and
attract, engage and retain a passionate, capable and engaged team.
The Group is aiming to achieve long term sustainable advantage by exceling in six areas:
•
•
•
•
•
•
understanding our customers;
engaging our customers across all channels;
innovative and relevant ranging;
leading private and exclusive brands;
optimising our supply chain; and
engaging and developing our team.
The Group’s supporting strategic plan is built around six core programs which contain a number of projects:
1) The growth and development of the Group’s existing businesses
•
•
•
•
•
•
new store development;
development of an engaging and interactive integrated store and on-line experience;
development of customer loyalty programs;
development of informative and targeted marketing;
range development;
private brand development.
Page 20
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
2) The development of the Group customer analysis and insight capabilities
• development of CRM analytics;
• development of direct marketing driven by customer analytics;
• development of automated customer response marketing.
3) The development of the Group’s supply chain and inventory management capabilities
• development of the distribution centre network including new facilities in Northern Brisbane;
• development of off shore consolidation centres and faster response supply methods;
•
• development of inventory management systems.
implementation of demand planning, replenishment and assortment systems;
4)
right sizing of the store portfolio;
Increasing the efficiency and productivity of the Group’s operations
•
• group procurement synergies;
• productivity focus;
• management systems.
5) Engaging our team and developing their capabilities
team engagement focus ;
learning and development programs;
•
•
• performance management and succession planning;
• developing the team member value proposition;
• safety focus;
• diversity focus.
6) Opportunities for growth in leisure retail categories through organic development or acquisition
• development of the Auto Trade Direct Model;
• development of the Super Retail Commercial business;
•
• assessment of acquisition opportunities.
trial of on-line micro sites;
The Group anticipates a capital expenditure program amounting to circa $90 million and related operational expenses of
circa $11 million in the next financial year associated with the development programs across the Group.
Material business risks
The Group recognises that all of its businesses operate in an environment of change and uncertainty and is committed to
managing the potential risks associated with this uncertainty in a continuous, proactive and systematic way. The Group
regularly reviews the possible impact of these risks and seeks to minimise this impact through a commitment to its corporate
governance principles and its various risk management functions.
The material business risks faced by the Group that are likely to have an effect on the financial prospects of the Group and
how the Group manages these risks include:
• Global Competition - The Retail market is becoming increasingly a global market place through the impact of on-line
shopping and overseas retailers’ inward investment into Australasia which expose the Group to a new higher level of
competition. Therefore the Group has to increasingly benchmark its customer offer and business model against global
on-line and physical retail businesses. The Group’s strategic change programs have been developed to build the
capabilities we require to be successful in the global market place. With competitors constantly seeking to enter our
market with improved designs, we see this risk increasing in the future.
• Proliferation of sales and marketing channels - The proliferation and growth of new sales and marketing channels
will make it increasingly challenging to ‘stand out from the crowd’ and to develop customer loyalty. A continued focus on
target customers and their expectations is crucial which includes on-going review of price competitiveness against
internet and competitor models maximising efficiencies in supply chain (supply to customer) and the development of
multi-channel marketing initiatives. With competitors constantly seeking to enter our market with improved designs, we
see this risk increasing in the future.
•
The breakdown of traditional business models - The breakdown of traditional business models with retailers
becoming manufacturers and brand owners, while brand owners and manufacturers are becoming retailers, is
increasing competition risk and cost pressures. The Group continues to develop its sourcing and product and brand
development capabilities. These risks are continuously monitored and mitigation strategies updated. Some of these
actions include an annual review of brand strategies, regular customer research, and external research of brand
perception. Targets are in place for private brand sales for each business. The Group is also discussing opportunities to
reduce the cost of supply chain with its major trade partners and to develop mutual business opportunities. We do not
expect any significant change in this risk over the next couple of years.
Page 21
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
• Changing customer expectations - Customer expectations have changed significantly over the last few years with an
increasing expectation of engaging experiences, solutions rather than products and “do it for me” rather than “do it
yourself”. The Group’s businesses are all considering opportunities to add the provision of information and services to
its customers as well as product. In addition the Group has added a focus on customer engagement to its strategic
programs. This will cover interaction with the customer across all channels – store, on-line, social media and traditional
media. We believe that this will remain a consistent risk in the retail market for years to come and if not adequately
managed will result in loss of sales to alternative suppliers.
• Changing workforce demographics - Attraction, retention, engagement, safety and succession of Team Members are
key risks to be managed to maximise financial growth in the retail sector. We consider this is unlikely to have any
significant impact on our financial results in the next year, but could potentially be significant in future years if not
managed on an on-going basis. The Group's retention ratio has significantly increased and is currently tracking at 77 %
up from below 59% in 2006. To manage this aspect of the business “Attracting and Engaging our Team” has been
included as one of the six strategic programmes within the Group.
•
•
Increase in regulatory controls - The increase in regulatory controls and compliance obligations and impact of
increased Corporate Social Responsibility expectations (direct and indirect) has a direct cost implication for the Group.
The Group has developed strong compliance processes and a clear focus on Corporate Social Responsibility. On-going
review of changes to regulation is required to assess the impact on the Group and develop appropriate response
strategies. We believe that this will remain a consistent risk in the retail market.
Financial risk - The Group’s activities expose it to a number of financial risks. The Group adopts a financial risk
management program which seeks to minimise the potential adverse impacts on financial performance of the Group.
Financial risks and specific risk management approaches are reported in more detail in Note 2 of the Notes to the
Consolidated Financial Statements.
• Change management risk - The Group is undertaking a significant period of change through the execution of the
Group’s strategic initiatives. The program of initiatives to build capability has involved and will continue to involve broad
organisational, process and systems changes transforming current work practices for many team members. This brings
substantial change management execution risk that needs to be carefully managed to deliver underlying benefits from
the strategic programs. Management and development of the organisation’s change management capability is a key
focus of the Senior Executives of the Group.
Significant changes in the state of affairs
There were no significant changes in affairs during the period.
Matters subsequent to the end of the financial year
Since 28 June 2014 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 is included in this report under the section 2014 Operating
and Financial Review (page 17). Further information on the expected results of operations has not been included in this
Annual 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 Group during the period ended 28 June 2014.
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 Chair Non-Executive. Age 65
Experience and expertise
Appointed Chair on 28 October 2009 and has been an Independent Non-Executive Director for 10 years 3 months. Robert
has over 30 years financial management experience, having held a number of Chief Financial Officer positions, including
Finance Director of David Jones Limited and Director of a number of major retail companies over the last 20 years.
Other current directorships
Chair 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) the responsible entity of the registered managed
investment schemes that comprise the APA Group.
Page 22
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
Former directorships in the last 3 years
Chair and Non-Executive Director of SAI Global Limited (October 2003 – October 2013), Dexion Limited (March 2005 –
August 2010) and RCL Group (formerly Babcock & Brown Residential Land Partners Group) (May 2006 – February 2012).
Special responsibilities
Chair of the Board
Chair of the Nomination Committee
Interest in shares and options
76,344 ordinary shares in Super Retail Group Limited
P A Birtles, BSc, ACA, MAICD. Group Managing Director and Chief Executive Officer. Age 50
Experience and expertise
Group Managing Director and Chief Executive Officer for 8 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
Group Managing Director and Chief Executive Officer
Member of the Nomination Committee
Interests in shares and options
1,392,596 ordinary shares in Super Retail Group Limited
395,000 performance rights over ordinary shares in Super Retail Group Limited
R A Rowe. Non-Executive Director. Age 70
Experience and expertise
Founder of the business in 1972. Non-Executive Director for 10 years 4 months. Previously 8 years as Chair of the Board
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 Nomination Committee
Member of the Human Resources and Remuneration Committee
Interests in shares and options
57,047,015 ordinary shares in Super Retail Group Limited
R J Skippen, ACA Independent Non-Executive Director. Age 66
Experience and expertise
Independent Non-Executive Director for 5 years 9 months. John is a former Finance Director of Harvey Norman Holdings
Ltd, a position held for 12 years and has over 30 years' experience as a chartered accountant specialising in mergers,
acquisitions, management services and taxation.
Other current directorships
Chairman and Non-Executive Director of Slater & Gordon Limited.
Non-Executive Director of Flexigroup Limited.
Non-Executive Director of Emerging Leaders Investment Limited.
Former directorships in the last 3 years
Non-Executive Director of Briscoe Group Limited (NZ) (March 2004 – September 2011).
Special responsibilities
Chairman of the Audit and Risk Committee
Member of the Nomination Committee
Member of the Human Resources and Remuneration Committee
Interest in shares and options
Nil.
Page 23
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
S A Pitkin, LLB, LLM, PhD, FAICD. Independent Non-Executive Director. Age 54
Experience and expertise
Independent Non-Executive Director for 4 years. Sally has eighteen years' experience as a non-executive Director across
diverse industries and sectors. She is a lawyer and former partner of Clayton Utz with corporate law and corporate
governance expertise.
Other current public company directorships
Non-Executive Director of Billabong International Limited.
Non-Executive Director of the Committee for Economic Development of Australia.
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 Nomination Committee
Interest in shares and options
26,453 ordinary shares in Super Retail Group Limited
R A Murray. BA Hons Economics, MA Hons (Cantab), Independent Non-Executive Director. Age 51
Experience and expertise
Independent Non-Executive Director for 1 year and 4 months. Rob was the Chief Executive Officer and Executive Director of
Lion (formerly Lion Nathan & Lion Nathan National Foods) (April 2004 - September 2012).
Other current directorships
Non-Executive Director of Linfox Logistics Pty Ltd.
Non-Executive Director of Dick Smith Holdings Limited.
Non-Executive Director of Southern Cross Media Group Limited.
Member of Kirin’s International Advisory Board.
Former directorships in the last 3 years
Chief Executive Officer (April 2004-September 2012) and Executive Director (April 2004 – March 2013) of Lion (formerly
Lion Nathan & Lion Nathan National Foods). Non-Executive Director of Lion (April 2013- April 2014).
Special responsibilities
Member of the Nomination Committee
Member of the Audit and Risk Committee
Member of the Human Resources and Remuneration Committee
Interest in shares and options
Nil
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.
Meetings of directors
The number of meetings of the Company’s Board of Directors and each Board Committee held during the period ended
28 June 2014 is set out below:
Full meetings
directors
B
10
10
10
10
10
10
A
10
10
10
10
9
10
Audit & Risk
Nomination
Meetings of Committees
A
n/a
n/a
n/a
4
3
4
B
n/a
n/a
n/a
4
4
4
A
1
1
1
1
1
1
B
1
1
1
1
1
1
Human Resources
and Remuneration
A
n/a
n/a
2
2
2
2
B
n/a
n/a
2
2
2
2
R J Wright
P A Birtles
R A Rowe
R J Skippen
S A Pitkin
R A Murray
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
Page 24
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
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.
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 PricewaterhouseCoopers
(PwC) of the parent entity and its network firms for audit and non-audit services provided during the year is set out below:
Audit Services
PricewaterhouseCoopers Australian firm:
Remuneration for audit and review services
Audit of subsidiaries
Other assurance
Total remuneration for audit and review services
Taxation and Other Services
PricewaterhouseCoopers Australian firm:
Taxation Services
Advisory Services
Network firms of PricewaterhouseCoopers Australia:
Taxation Services
Total remuneration for non-audit services
Auditors Independence Declaration
Consolidated Entity
2013
$
2014
$
468,435
46,100
10,000
524,535
297,347
3,060
65,106
365,513
430,000
20,000
17,500
467,500
214,987
-
59,509
274,496
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 42.
Loans to key management personnel
There are no loans to key management personnel as at 28 June 2014 and no loans were made during the period.
Insurance of officers
During the financial year, Super Retail Group Limited paid a premium of $94,722 to insure the Officers of the Group
including 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.
Page 25
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
Remuneration report - Audited
Contents
Section 1
Section 2
Section 3
Section 4
Section 5
Section 6
Section 7
Section 8
Remuneration Strategy and Policy (page 26)
Role of the Human Resources and Remuneration Committee (page 27)
Senior Executive Remuneration Structure (page 27)
Non-Executive Directors Remuneration Structure (page 33)
Relationship of Remuneration to Group Performance (page 34)
Remuneration Outcomes for 2014 (page 36)
Service Agreements (page 38)
Period of Restraint (page 40)
Section 1: Remuneration Strategy and Policy
One of Super Retail Group’s core principles is that the attraction, development, engagement and retention of passionate
team members provides 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, engagement and retention of passionate team members and that
are aligned with the interests of shareholders.
The 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 Remuneration 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 2
market remuneration levels, subject to individual performance;
to provide arrangements with the flexibility to recognise individuals based on performance, experience and
qualifications; and
to provide equitable, fair and consistent pay arrangements across the Group through a systematic methodology
involving job value and market positioning.
quartile of relevant
nd
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. The Group Managing Director and Chief Executive Officer and his direct reports (Senior Executives) are
remunerated under a Total Reward Structure.
Page 26
DIRECTORS’ REPORT
Super Retail Group Limited
for the period ended 28 June 2014
Section 2: 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, engagement, 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, high
standards of governance and compliance with regulatory standards.
The Committee reviews and recommends to the Board for approval, remuneration arrangements for the Group Managing
Director and Chief Executive Officer and other Senior Executives. The Committee reviews the arrangements on an annual
basis against the Remuneration Policy, 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 also verifies 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 and 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.
The Committee reviews its charter every year in July.
Section 3: Senior Executive Remuneration Structure
The Senior Executive remuneration structure is reviewed annually by the Human Resources and Remuneration Committee
against the Remuneration Policy, external remuneration practices, market expectations and regulatory standards.
The Group Managing Director and Chief Executive Officer, together with the other key management personnel, are
remunerated under a Total Reward structure consisting 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 determined having regard to the seniority of the role, the
responsibilities of the role for driving business performance and for developing and implementing business strategy and
external remuneration practices.
Key Management Personnel
The Key Management Personnel (KMP) 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, Group Managing Director and Chief Executive Officer
• D J Burns, Chief Financial Officer
• D F Ajala, Managing Director – Auto and Commercial Retailing
• S J Doyle, Managing Director – Leisure Retailing
• E A Berchtold, Managing Director – Sports Retailing
• G G Carroll, General Manager Group Development
• G L Chad, General Manager Group Logistics
C D Wilesmith was appointed to the position of Supercheap Auto Managing Director on 1 July 2013. Mr Wilesmith continued
to report to the Managing Director Auto and Commercial Retailing Division until 30 June 2014. He reports directly to the
Group Managing Director and Chief Executive Officer from this date.
The KMP are a sub group of the Senior Executives of the Company.
Page 27
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
The mix of fixed and at risk components for each of the Group Managing Director and Chief Executive Officer and KMPs
disclosed in the Remuneration Report, as a percentage of total target annual remuneration for the 2014 financial year, is as
follows:
Figure 1
Figure 1 assumes that a full STI is received and that the LTI fully vests – the actual reward is dependent 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 Remuneration Policy provides KMP 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 KMP’s
performance, skills and experience are also considered in determining the base salary package.
The base salary package comprises base pay and superannuation and may include prescribed non-financial benefits at the
Executives’ discretion on a salary sacrifice basis. The Group provides superannuation contributions in line with statutory
obligations.
Base salary packages are reviewed annually and are effective from the commencement of the new financial year. There is
no guaranteed base salary increases in any KMP’s service contract.
Market information is sourced from Remuneration Consultants and Salary Surveys and the Company extracts relevant
information from listed Annual Reports. In 2013 and 2014, information has been sourced from Ernst & Young (EY)
Remuneration Consultants for KMP. EY Remuneration Consultants used two sets of comparator groups to benchmark
salaries, being:
• Market Capitalisation and revenue comparator group: S&P/ASX 200 companies within 50% to 200% of Super Retail
Group’s 12 month average market capitalisation and within 50% to 200% of Super Retail Group’s budgeted sales
revenue;
• Market Capitalisation and GICS comparator group: S&P/ASX 200 companies within the ‘Consumer Discretionary
Sector’ Global Industry Classification Standard (GICS) and also within 50% to 200% of Super Retail Group’s 12 month
average market capitalisation.
This year, as in the previous year, the comparator benchmarks disclosed that the base salary packages for the Group
Managing Director and Chief Executive Officer and other KMP were below market median. The Board has continued with
the strategy commenced in the 2013 financial year to increase over a three year period the salaries of the Group Managing
Director and Chief Executive Officer and other KMP, so that at the end of the three years base salaries will be in accordance
with the Remuneration Policy of paying at market median. By continuing with this policy, base salary increases for Group
Managing Director and Chief Executive Officer and KMP from 1 July 2013 have been in the range of 3.6% to 15%. Details
of base salary packages for 1 July 2014 for KMP are shown in Section 7.
All KMP base salary proposals are reviewed by the Human Resources and Remuneration Committee and recommendations
are made to the Board.
Page 28
DIRECTORS’ REPORT
Super Retail Group Limited
for the period ended 28 June 2014
Short Term Incentive (STI)
The Group Managing Director and Chief Executive Officer and other KMP are invited to participate in a short term incentive
scheme that provides cash rewards 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.
As advised to the ASX on 26 March 2014, the Group Managing Director and Chief Executive Officer’s target STI opportunity
for 2014 was up to 100% of total fixed remuneration per annum. Senior Executives have the opportunity to achieve STI
bonus up to the maximum value of between 40% and 60% of their base salary as shown in Figure 1 (page 28).
Total STI is based on a combination of Group Profit, Divisional profit (in the case of Divisional Managing Directors) and
individual achievement of Key Performance Indicators (KPIs).
The total STI is calculated as the total of the Group profit before tax bonus plus the individual achievement bonus. The
maximum STI potential percentage of base salary is 100% for the Group Managing Director and Chief Executive Officer.
For the Group Managing Director and Chief Executive Officer, Group profit before tax bonus is determined by reference to
Table A.
The individual achievement bonus is calculated by multiplying the individual achievement potential (Refer Table A) by the
individual achievement factor (Refer table B below)
Table A - Group Managing Director and Chief Executive Officer
Group Profit before tax
($)
Profit
before tax
bonus (a)
Individual
achievement
potential (b)
> Target + 10%
> Target + 9%
> Target + 8%
> Target + 7%
> Target + 6%
> Target + 5%
> Target + 4%
> Target + 3%
< Target + 3%
50.00%
44.00%
38.50%
33.00%
27.50%
21.50%
16.00%
10.50%
Nil
50.00%
44.00%
38.50%
33.00%
27.50%
21.50%
16.00%
10.50%
10.00%
Table B – Group Managing Director and Chief Executive Officer and KMP
Number of Performance
Contract KPIs Achieved
(out of 12)
Individual Achievement
Factor
10 or more
8 or more
6 or more
4 or more
Less than 4
100%
75%
50%
25%
Nil
For example for the Group Managing Director and Chief Executive Officer to receive 100% of his STI opportunity, the Group
profit before tax would need to be 10% above the Group profit before tax target and he would need to achieve 10 or more of
the 12 individual performance metrics.
Page 29
DIRECTORS’ REPORT
Super Retail Group Limited
for the period ended 28 June 2014
The maximum STI potential percentage of base salary is 30% for the Divisional Managing Directors, 50% for the Chief
Financial Officer and General Manager Group Development and 40% for the General Manager Group Logistics. In addition
for the Divisional Managing Directors there is a Divisional EBIT bonus of 30% of base salary as illustrated in the table below.
Divisional Managing Directors
Divisional EBIT($)
> Target + 10%
> Target + 9%
> Target + 8%
> Target + 7%
> Target + 6%
> Target + 5%
> Target + 4%
> Target + 3%
< Target + 3%
Divisional EBIT bonus
30.0%
26.5%
23.0%
19.5%
16.0%
12.0%
8.0%
4.0%
NIL
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 28 June 2014, the profit before tax target was set at $176.4 million, 20% higher than the profit before tax
achieved in the period to 29 June 2013 of $146.8 million and 8.5% above underlying profit before tax of $161.1 million.
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. KMPs and other executives are paid out of the bonus pool based on the bonus category into which
they are allocated. To achieve the maximum bonus potential the profit before tax needs to exceed target by 10%.
If the profit target is not met, KMPs can still earn STI up to a value of 10% of their base salary for individual performance,
against a set of 12 KPIs that are established at the beginning of the year.
The level of participation is dependent on the achievement of 12 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 and objectives set out in the Group’s
business plan.
The KPIs included in the Group Managing Director and Chief Executive Officer’s Performance Contract are divided into
three categories:
•
•
financial KPIs - Group sales, Group profit before tax and Group operating cash flow targets relative to budget;
strategy development and implementation milestones including the progress of strategic initiatives in the Auto, Leisure
and Sports Retailing Divisions, the multi-channel customer programme and mutli-channel supply chain and inventory
programme and the update of the Group Strategic Plan; and
team KPIs including the achievement of improvement in the areas of team safety, engagement and succession
planning.
•
The KPIs for Divisional Managing Directors are also divided into three categories:
•
•
•
financial KPIs – Divisional sales, Divisional EBIT and Divisional Inventory;
strategy implementation milestones monitoring the progress of strategic initiatives in the Divisional business plan; and
team KPIs including the achievement of improvement in the areas of team safety, engagement and development.
The KPIs for the Chief Financial Officer, General Manager of Group Development and General Manager of Group Logistics
were divided into four categories:
•
•
•
•
financial KPIs – three metrics including cost control in their areas of responsibilities;
operational KPIs – three metrics based on operational efficiencies;
strategy implementation milestones monitoring the progress of strategic initiatives of the Group; and
team KPIs including the achievement of improvement in the areas of team safety, engagement and development.
Page 30
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
The Human Resources and Remuneration Committee is responsible for assessing whether the KPIs are achieved and for
approving STI payments. The Committee receives reports from management to assist in the assessment.
The Committee has again this year considered the deferral of a portion of the STI award into equity with deferred access.
This has not been introduced due to the Board’s assessment that:
•
•
•
given the nature of the business where revenue is not dependent on long term contracts;
overall remuneration arrangements are below market medians;
STI payment arrangements are not excessive and the Company can demonstrate a clear link between STI payments
and the Company performance over a number of years; and
deferral of short term incentive and part payment in equity may cause confusion between STI and LTI arrangements.
•
During the year the Committee has established a policy on the treatment of one off adjustments to the STI target and
determined that one off adjustments will only be considered by the Committee in exceptional circumstances and if they occur
as a result of matters that are outside the control of management. The Committee expects such events to be very rare. For
example, in the 2013 financial year, the Directors determined that the STI bonus pool be calculated by comparing underlying
profit before tax rather than reported profit before tax against the profit target. Costs associated with the restructuring of the
Goldcross Cycles and Rays Outdoors businesses were excluded from underlying profit before tax as the Directors
determined that this measure was more representative of the underlying operating performance of the Group. Underlying
profit before tax was determined to be $161.1million compared to reported profit before tax of $146.8million.
No adjustments have been made to reported profit in determining the STI bonus pool in the 2014 financial year.
Long Term Incentive (LTI)
The Group’s remuneration structure aims to align long term incentives for KMPs and other executives with the delivery of
sustainable value to shareholders. The alignment of interests is important in ensuring that KMPs and 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 (Plan). The Plan 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 Plan is by invitation only as determined by the Board.
The Plan allows for the annual grant of Performance Rights to KMP and other executives. The grant of Performance Rights
entitles the 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 and service conditions.
The performance conditions will be satisfied if the Group achieves certain earnings per share growth and return on capital
hurdles over a three year period (Performance Period) as determined by the Board.
The performance conditions determined by the Board in 2009 were:
•
•
a 10% cumulative earnings per share (EPS) growth; and
an averaged return on capital (ROC) of more than 15%
For the Performance Rights to vest, both hurdles must be satisfied. The structure creates a cliff vesting, such that
executives are either granted all the Performance Rights they have been allocated or none.
If the performance conditions are satisfied within the Performance Period, the Performance Rights will vest over the
subsequent years 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%
Participating Executives are prohibited from entering into any hedging arrangements in relation to Performance Rights.
The notional value of Performance Rights granted to each Executive is based on the share price of the Group at the time of
grant. The number of Performance Rights granted to each KMP is determined in accordance with the Executive
Remuneration Structure outlined above and have a value of between 42% and 78% of their base salary. The value of
Performance Rights for grant purposes may differ from the accounting valuation which considers probability of vesting and
other factors.
Page 31
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
The Board reviewed the vesting conditions in the context of market practice and the significant change in the Company’s
capital structure following the capital raising and acquisition of the Rebel business in the 2012 financial year and resolved to:
• maintain cumulative EPS growth and ROC as the performance metrics. The Board considers that the combination of
EPS growth and maintenance of ROC growth ensures that executives maintain a focus on value creating growth that
will deliver sustainable returns for shareholders;
remove the cliff impact;
separate the two hurdles and apply equal weighting to each;
recognise the significant change to the capital structure to the company and change the percentages of the metrics as
detailed below; and
ensure that the achievement of the performance conditions continues to be aligned with shareholders interests.
•
•
•
•
Details of the new performance hurdles are:
The EPS Performance Hurdle – 15% cumulative EPS growth
At the end of the Performance Period the compound EPS growth of ordinary shares is calculated. If the compound EPS
growth is equal to 10%, then 50% of the Performance Rights will be available to vest. If the compound EPS growth is 15% or
better, all the Performance Rights will be available to vest. Between 10% and 15%, Performance Rights will be available to
vest on a pro rata basis.
The ROC Performance Hurdle – 15% averaged ROC
At the end of the Performance Period the averaged ROC is calculated. If the averaged ROC is 12%, then 50% of the
Performance Rights will be available to vest. If the averaged ROC is 15% or better, all the Performance Rights will be
available to vest. Between 12% and 15%, Performance Rights will be available to vest on a pro rata basis.
Under the new performance hurdles for KMP, to achieve 100% vesting the cumulative EPS growth must be at least 15%,
and averaged 15% ROC, compared with the previous performance hurdles of 10% cumulative EPS growth and 15% ROC.
The new EPS performance hurdle is more challenging than the previous hurdle to better reflect the potential of the business
following the Rebel Sport acquisition which has had a positive impact on EPS growth. The new ROC hurdle allows for partial
achievement for Executives for an averaged ROC between 12% and 15%. Recognising that the Group’s Cost of Capital is
circa 10%, a ROC of 12% plus produces an economic profit and creates value for shareholders. This range takes into
account the changed capital structure following the Rebel Sport acquisition, capital raising and the investments made over
the past two years and this year to implement strategic initiatives such as the multi-channel customer programme and the
multi-channel supply chain programme.
Although these investments have been approved on the basis of achieving ROC of greater than 15% over the long term,
they have, and will have, a negative impact on ROC in the short term as it will take some years for the resulting benefits to
fully crystallise. The Board is of the view that these investments are essential for the long term success of the business.
Page 32
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
The Board will seek Shareholder approval at the 2014 Annual General Meeting to amend the performance metrics for the
tranches of performance rights issued in financial years 2012, 2013 and 2014 to the Group Managing Director and Chief
Executive Officer and other executives.
A total of 1,447,091 existing Performance Rights will be subject to the change in performance hurdles. Of this total 443,152
are subject to testing against the performance hurdles at 28 June 2014. Applying the new performance hurdles to these
rights results in the following outcome:
Cumulative EPS growth for the three years ended 28 June 2014
Averaged ROC over the three years ended 28 June 2014
10.5%
13.3%
This will result in 269,423 Performance Rights satisfying the performance conditions and 156,205 Performance Rights
lapsing. A further 17,524 Performance Rights issued in 2011 have lapsed on Executives leaving the Company before the
end of the Performance Period.
The Board has also reviewed the Plan rules in light of feedback from shareholders and evolving market practice. The Plan
rules have been substantially revised, including the introduction of clawback provisions in exceptional circumstances, such
as a subsequent material restatement of EPS or ROC. In the event of a change in control, the treatment of Performance
Rights will be at the discretion of the Board. The Board can exercise discretion such that Performance Rights will vest pro
rata to reflect the period since the start of the Performance Period and the extent that the performance hurdles have been
met.
Executives must be employed at the time of vesting to receive the Performance Rights grant. The Board has discretion to
amend the employment requirement based on the circumstances associated with the Executives leaving. The Board plans
to exercise its discretion where an employee leaves due to retirement, retrenchment or redundancy, or termination by mutual
consent. The employee may retain entitlement to a portion of the Performance Rights prorated to reflect the period of service
from the start of the Performance Period to the date of departure. After the employees departure the Performance Rights
would only be available to vest to the extent that the performance conditions are met. Where an employee leaves due to
resignation or termination with cause, all unvested Performance Rights will lapse. The revised Plan rules will apply for
awards of Performance Rights for the 2015 financial year and beyond.
Section 4: Non-Executive Directors Remuneration Structure
The Group’s remuneration strategy is designed to attract and retain experienced, qualified Non-Executive Directors and to
remunerate appropriately to reflect the demands which are made on them and the responsibilities of the position. 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.
In 2013 and 2014, the Human Resources and Remuneration Committee engaged the services of Ernst & Young 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.
The Market comparative information provided by Ernst & Young in 2013 and again in 2014 disclosed that the level of fees
being paid are substantially below that paid to Non-Executive Directors in the comparator group. This year we have
continued with the strategy commenced last year to increase Directors’ fees progressively over a three year period so that
at the end of that period, fees will be paid in accordance with the Remuneration Policy of paying fees at the median of fees
paid to comparative companies.
Additional fees are paid to the Chairs and members of the Audit and Risk, and the Human Resources and Remuneration
Committees. This reflects the additional time commitment required by the Chairs and members of these committees.
Non-Executive Director Fees are determined within an aggregate Directors’ fee pool approved by shareholders. The current
fee pool of $1,200,000 per annum was approved at the Annual General Meeting on 23 October 2013. This pool provides the
capacity to appoint additional directors to facilitate board succession and regeneration and to apply the Group’s
remuneration policy. No increase in the pool is proposed.
Non-Executive Directors’ fees are inclusive of statutory superannuation contributions. The focus of the Board is on the
strategic direction of the Group and the creation of sustainable shareholder value. 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.
Page 33
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
Directors’ Fees
The following fees apply:
Chairman
Other Non Executive Directors
Chair of the Audit and Risk Committee
Chair of the Human Resources and Remuneration Committee
Committee Member *
* Committee fees are not paid to members of the Nomination Committee
Section 5: Relationship of Remuneration to Group Performance
2014
$
280,000
125,000
25,000
20,000
10,000
2015
$
300,000
135,000
25,000
20,000
10,000
The performance of the Group and remuneration paid to KMP over the last 6 years is summarised in the following table:
2009
2010
2011
2012
2013
2014
CAGR
Last
6 years*
Financial performance
Sales ($m)
Profit before tax ($m)
Post Tax ROC (%)
Shareholder value created
Earnings Per Share (¢)
Dividends Per Share (¢)
30 June Share Price ($)
829.8
41.9
15.4
938.0
53.9
16.8
1,092.3
77.7
1,654.1
120.1
2,020.0
146.8
2,112.1
158.6
20%
28%
17.3
15.9
12.6
11.3
28.1
18.0
3.61
32.1
21.5
5.27
40.9
29.0
7.00
46.4
32.0
7.19
52.3
38.0
11.97
55.1
40.0
8.46
16%
20%
24%
*Percentage movement shown is the Compound Annual Growth Rate over the last 6 years
Remuneration Expense of Key Management Personnel
2009
2010
2011
2012
2013
2014
Base Salary Package ($m)
Short Term Incentive ($m)
Long Term Incentive ($m)
Total ($m)
2.5
0.8
0.2
3.5
2.5
1.2
0.4
4.1
2.7
1.1
0.7
4.5
3.1
1.1
1.1
5.3
3.9
1.5
1.5
6.9
4.8
0.4
0.4
5.6
Since 2009 earnings per share have increased by 96%, dividends per share have increased by 122% and the share price
has increased by 134% demonstrating a balance between strategic growth and shareholder value.
During the same period, total remuneration paid to KMP has increased by 60% whilst base salary has increased by 92%.
The amount of total remuneration is significantly impacted by the value of incentive payments which have varied over the
years in line with Group performance. The main factor increasing the amount of base pay has been an increase in the
number of KMP from five to seven as the Group has increased in scale.
Total remuneration paid to KMP as a proportion of profit before tax was 8.4% in 2009 and had reduced to 3.5% in 2014.
Page 34
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
KMP STI paid compared to EPS over the last 6 financial years:
KMP LTI expense compared to EPS over the last 6 financial years:
Page 35
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
Section 6: Remuneration Outcomes of 2014
Details of the remuneration of the Directors and KMP of the Group are set out in the following tables:
2014
Name
Short-term benefits
Post-
employment
benefits
Share-based
payment
Cash
salary and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Performance
Rights
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
776,704
1,119,810
17,775
37,972
14,800
14,337
13,412
280,000
135,000
160,000
155,000
145,000
262,225
97,028
145,200
140,663
131,588
Non-Executive Directors
R J Wright Chairman
R A Rowe
R J Skippen
S A Pitkin
R A Murray
Sub-total Non-Executive
Directors
Executive Directors
P A Birtles
Other KMP
D J Burns (a)
512,225
D F Ajala (b)
383,147
S J Doyle(c)
467,225
467,225
E A Berchtold
442,225
G G Carroll
G L Chad (d)
377,191
Total Executives’ remuneration 3,769,048
Totals
4,545,752
(a) Comprises salary for full year as opposed to prior year where D J Burns was employed for a seven month period.
(b) D F Ajala performed his role on a part-time basis from 1 September resulting in a decrease in his base salary.
(c) Resignation effective date of 1 August 2014. As a result of confirming that prior issues of Performance Rights will not vest into shares,
the Performance Rights value for the period is negative reflecting the reversal of amounts reported in prior periods.
(d) Resignation effective date of 22 August 2014. As a result of confirming that prior issues of Performance Rights will not vest into shares,
the Performance Rights value for the period is negative reflecting the reversal of amounts reported in prior periods.
51,977
46,733
(50,039)
34,653
41,896
(25,542)
354,532
354,532
17,775
25,110
17,775
17,775
17,775
23,110
137,095
235,391
53,000
86,900
36,375
51,500
34,500
42,000
361,275
361,275
634,977
541,890
471,336
601,153
536,396
416,759
4,654,365
5,529,365
-
-
-
30,000
-
-
32,415
32,415
1,451,854
254,854
875,000
17,775
57,000
98,296
2,415
-
2013
Name
Short-term benefits
Cash
salary and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Post-
employment
benefits
Share-based
payment
Super-
annuation
$
Performance
Rights
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
495,845
16,470
22,125
9,495
9,495
1,659
183,530
82,875
105,505
105,505
18,430
Non-Executive Directors
R J Wright Chairman
R A Rowe
R J Skippen
S A Pitkin
R A Murray (a)
Sub-total Non-Executive
Directors
Executive Directors
P A Birtles
Other KMP
D J Burns (b)
198,224
450,730
D F Ajala
407,023
S J Doyle
409,530
E A Berchtold
403,530
G G Carroll
G L Chad
377,251
Total Executives’ remuneration 3,222,403
Totals
3,718,248
(a) appointed 22 April 2013
(b) appointed 3 December 2012
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
58,200
232,750
169,650
223,440
151,200
116,000
1,438,790
1,438,790
-
242,529
222,645
79,208
163,280
151,034
1,494,020
1,494,020
9,068
24,270
16,470
16,470
16,470
22,749
121,967
181,211
-
-
11,507
30,000
-
-
43,922
43,922
635,324
487,550
976,115
16,470
59,244
2,415
-
-
-
Total
$
200,000
105,000
115,000
115,000
20,089
555,089
2,117,874
265,492
950,279
827,295
758,648
734,480
667,034
6,321,102
6,876,191
Page 36
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
Name
P A Birtles
D J Burns
D F Ajala
S J Doyle
E A Berchtold
G G Carroll
G L Chad
Fixed Remuneration
2014
2013
47.02%
78.52%
78.08%
83.46%
50.02%
75.34%
52.62%
92.28%
60.15%
85.67%
57.23%
85.76%
60.01%
89.92%
At Risk – STI
At Risk – LTI
2014
3.93%
8.35%
16.04%
7.72%
8.57%
6.43%
10.08%
2013
23.00%
21.92%
24.47%
20.49%
29.42%
20.57%
17.37%
2014
17.55%
8.19%
8.62%
0.00%
5.76%
7.81%
0.00%
2013
29.98%
0.00%
25.51%
26.89%
10.43%
22.20%
22.62%
Details of remuneration: Short Term Incentives
STI is 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.
Details of remuneration: Long Term Incentives
Performance Rights
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.
Name
Directors
thgirW J R
ewoR A R
neppikS J R
niktiP A S
yarruM A R
seltriB A P
Other KMP
snruB J D
alajA F D
elyoD J S
dlothcreB A E
llorraC G G
dahC L G
Number of Performance
Rights granted during the
period
4102
Value of Performance
Rights at Grant Date
$
4102
Number of Performance
Rights vested during the
period
4102
-
-
-
-
-
000,011
516,12
740,02
516,42
731,62
067,81
091,41
-
-
-
-
-
754,191,1
121,432
831,712
616,662
101,382
891,302
893,351
-
-
-
-
-
000,57
-
278,72
625,52
-
838,71
042,02
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 $10.83. The Performance Rights are expensed over a five 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.
Page 37
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
Shares under option
No options were granted or vested during the period.
Shares provided on exercise of remuneration options and performance rights
The table below lists the ordinary shares in the Company issued during the year as a result of the exercise of remuneration
options and Performance Rights.
Name
Incentive Scheme
Date of Exercise of
Share plan
P A Birtles
D F Ajala
S J Doyle
G G Carroll
G L Chad
Performance Rights
Performance Rights
Performance Rights
Performance Rights
Performance Rights
1 Sept 2013
1 Sept 2013
1 Sept 2013
1 Sept 2013
1 Sept 2013
Number of Ordinary
Shares Issued on
Exercise of Share Plans
During the Year
75,000
27,872
25,526
17,838
20,240
Market Value at Exercise
Date*
919,500
341,711
312,949
218,694
248,142
*The value at exercise date of options and Performance Rights exercised during the period was determined using the five-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
1 September 2012
1 September 2013
**
**
**
**
**
$5.15
$5.85
$6.09
$7.95
$10.83
83,421
171,058
443,152
534,019
469,920
1,701,570
**Performance rights vest progressively three to five 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 or share
options.
As at the date of this report there are no remaining unissued ordinary shares of Super Retail Group Limited under option.
Shares issued on the exercise of options
There were no shares issued during the year ended 28 June 2014 on the exercise of options.
Section 7: 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 Plans and Option Plans. Restraint provisions are detailed in Section 8.
All contracts with KMP may be terminated early by either party with three months notice, subject to termination payments as
detailed below:
P A Birtles, Group Managing Director and Chief Executive Officer
Term of Agreement – 3 years commencing 1 January 2014
Base salary, inclusive of superannuation for the period ended 28 June 2014 was $1,140,000 per annum to be reviewed
annually with effect from 1 July by the Human Resource and Remuneration Committee. Base salary, inclusive of
superannuation will be $1,175,000 from 1 July 2014.
Payment of a termination benefit on early termination by the Company, other than for cause, equal to 12 months base
salary.
Page 38
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
D J Burns, Chief Financial Officer
Term of Agreement – 5 years and 10 months commencing 3 December 2012
Base salary, inclusive of superannuation, for the period ended 28 June 2014 of $530,000 to be reviewed annually by
the Human Resource and Remuneration Committee. Base salary, inclusive of superannuation will be $600,000 from 1
July 2014.
Payment of a termination benefit on early termination by the Company, other than for cause, equal to six months base
salary if the termination is effective more than 12 months before the expiry date or three months base salary if the
termination is effective within 12 months before the expiry date.
D F Ajala, Managing Director – Auto & Commercial Retailing / Managing Director – Leisure & Commercial Retailing from 1
August 2014
Term of Agreement – 2 years and 2 months commencing 1 August 2013
(30 hours per week from 1 September 2013)
Base salary, inclusive of superannuation, for the period ended 28 June 2014 of $395,000 (on a part time basis) to be
reviewed annually by the Human Resource and Remuneration Committee. Base salary, inclusive of superannuation
will be $580,000 from 1 July 2014 (on a full time basis).
Payment of a termination benefit on early termination by the Company, other than for cause, equal to six months base
salary if the termination is effective more than 12 months before the expiry date or three months base salary if the
termination is effective within 12 months before the expiry date.
S J Doyle, Managing Director – Leisure Retailing
Resignation effective date 1 August 2014
Term of Agreement – 4 years and 8 months commencing 27 January 2011
Base salary, inclusive of superannuation, for the period ended 28 June 2014 of $485,000 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 six months base
salary if the termination is effective more than 12 months before the expiry date or three 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 28 June 2014 of $515,000 to be reviewed annually by
the Human Resource and Remuneration Committee. Base salary, inclusive of superannuation will be $565,000 from 1
July 2014.
Payment of a termination benefit on early termination by the Company, other than for cause, equal to six months base
salary if the termination is effective more than 12 months before the expiry date or three months base salary if the
termination is effective within 12 months before the expiry date.
G G Carroll, General Manager Group Development / General Manager Group Logistics from 30 June 2014
Term of Agreement – 5 years and 5 months commencing 17 April 2011
Base salary, inclusive of superannuation, for the period ended 28 June 2014 of $460,000 to be reviewed annually by
the Human Resource and Remuneration Committee. Base salary, inclusive of superannuation will be $500,000 from 1
July 2014.
Payment of a termination benefit on early termination by the Company, other than for cause, equal to six months base
salary if the termination is effective more than 12 months before the expiry date or three months base salary if the
termination is effective within 12 months before the expiry date.
G L Chad, General Manager Group Logistics - Resignation effective date 22 August 2014
Base salary, inclusive of superannuation, for the period ended 28 June 2014 of $416,000 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 three months
base salary.
Page 39
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
Section 8: Period of Restraint
The above key management personnel have the following post-employment restraints within their employment contracts.
After cessation of employment for any reason, for the period set out below, the employee must not compete with the
Company’s relevant speciality retailing businesses (including direct or indirect involvement as a principal, agent, partner,
employee, shareholder, unit holder, director, trustee, beneficiary, manager, contractor, adviser or financier), without first
obtaining the consent of the Company in writing.
A
B
C
D
Solicit or compete for the custom of or engage or be involved in any business with any person, firm
or corporation who or which was a Customer, supplier, or client of the Company at any time during
the 12 months preceding the cessation of the employment with the Company and with whom the
Employee had contact with, or gained knowledge of, in the course of carrying out the employee’s
duties for the Company;
Engage or be involved in any capacity in any entity, firm or corporation which competes with the
Company in connection with the said business;
Interfere with, disrupt, attempt to disrupt the relationship, contractual or otherwise, between any
member of the Group and any of the Group’s customers, suppliers, or potential customers or
potential suppliers, with whom the employee had contact with, or gained knowledge of, at any time
during the 12 month preceding the cessation of employment in the course of carrying out duties for
the Company; or
Induce, encourage or solicit any person who is an employee, contractor or agent of any member of
the Group, with whom the employee had contact with during the 12 months preceding the cessation
of the employment in the course of carrying out duties for the Company, to terminate their
employment or engagement with any member of the Group.
12 months
9 months
6 months
3 months
Diversity
The Company 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:
•
•
•
•
•
•
•
•
•
•
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.
The Company Diversity Policy is based on the following principles:
the behaviours and actions of all Team Members will be in line with the Group Values;
•
• Company and Team Member decisions will not have discriminatory consequences;
• workplace structures and conditions will enable all Team Members to contribute to their full potential at work while
taking into account personal commitments;
decisions affecting Team Members will take into account their individual needs and differences subject to business
requirements;
all communication will recognise our diverse workforce and use inclusive language; and
decisions affecting Team Members will be based on facts.
•
•
•
These diversity principles aim to facilitate improved business outcomes and achievement of our goals through embracing
Team Member’s differences. At Super Retail Group, we value these differences and utilise them to build better business
practices. We desire our Retail Stores, Support Office and Distribution Centres to be reflective of the communities in which
we operate.
Page 40
DIRECTORS’ REPORT (continued)
Super Retail Group Limited
for the period ended 28 June 2014
Gender Diversity
We are proud that our culture and inclusive policies have created a workforce in which females represent 45% of the
workforce at 28 June 2014. Many of the Group’s business operate in retail sectors in which the majority of customers are
males and its competitors employ a significant majority of males. At Super Retail Group, 28% of middle and senior
management positions and 24% of senior management positions are held by females as at 28 June 2014. The Company
set targets for 40% of females in Board and Senior Management positions by 2019.
Under gender diversity, the Human Resources and Remuneration Committee have identified three key focus areas for the
2014/15 year:
•
•
•
recruitment practices;
high potential development programs; and
flexible working practices.
To promote diversity, the Company has implemented the following initiatives:
appointment of females into senior non-traditional roles – e.g. General Manager Retail Operations, Retail Operations
Manager, Distribution Centre Manager;
leadership development program specifically for females;
paid maternity leave, above statutory minimum;
parental leave information packs, gifts and keeping in touch program;
graduated return to work from maternity leave;
implementation of working from home and flexible working policy;
part time work opportunities;
•
•
•
•
•
• monitoring of remuneration for gender differences;
•
•
• mentoring for females;
• My Mentor program run – Challenging women to make it happen;
• CEO participation in the Queensland Male Champions of Change;
•
•
•
•
purchased leave scheme;
gathered diversity and succession related information from key managers;
understanding usage of flexible work practices; and
diversity questions included in engagement survey.
Broadening Diversity
In the coming year the Group will be implementing additional initiatives to maintain our ongoing focus for diversity, but also
broadening the scope to include ethnicity, age and disability.
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 hundred thousand dollars.
This report is made in accordance with a resolution of the Directors.
R J Wright
Chairman
Brisbane
20 August 2014
P A Birtles
Group Managing Director and Chief Executive Officer
Page 41
Super Retail Group Limited
for the period ended 28 June 2014
Auditor’s Independence Declaration
As lead auditor for the audit of Super Retail Group Limited for the period ended 28 June 2014, 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.
maharGKM
rentraP
PricewaterhouseCoopers
enabsirB
4102tsuguA02
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 73257 5 999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Page 42
Super Retail Group Limited ABN 81 108 676 204
Annual financial report – 28 June 2014
Contents
Financial report
Consolidated comprehensive income statement
Consolidated balance sheet
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
44
45
46
47
48
96
97
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 principle 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 17 to 41, which is not part of this financial report.
The financial report was authorised for issue by the Directors on 20 August 2014. The directors have 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 43
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
Super Retail Group Limited
For the period ended 28 June 2014
Notes
4
5
6
7
23
23
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
Net finance costs
Share of net loss of associates accounted for using the equity method
Total expenses
Profit before income tax
Income tax expense
Profit attributable to Owners of Super Retail Group Limited
Other comprehensive income
Items that may be reclassified to profit or loss
Changes in the fair value of cash flow hedges
Exchange differences on translation of foreign operations
`
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Total comprehensive income for the year is attributable to:
Owners of Super Retail Group Limited
Consolidated
2014
$m
2,112.1
13.0
2,125.1
(1,171.4)
(274.6)
(87.2)
(175.3)
(233.2)
(24.0)
(0.8)
(1,966.5)
158.6
(50.2)
108.4
(6.3)
4.3
(2.0)
106.4
106.4
2013
$m
2,020.0
3.0
2,023.0
(1,121.9)
(261.7)
(88.0)
(165.5)
(213.6)
(25.5)
-
(1,876.2)
146.8
(44.1)
102.7
4.4
3.1
7.5
110.2
110.2
Earnings per share for profit attributable to the ordinary equity
holders of the Company:
Basic earnings per share
Diluted earnings per share
Cents
Cents
38
38
55.1
54.6
52.3
51.9
The above consolidated comprehensive income statement should be read in conjunction with the accompanying notes.
Page 44
CONSOLIDATED BALANCE SHEET
Super Retail Group Limited
As at 28 June 2014
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Total current assets
Non-current assets
Trade and other receivables
Investments accounted for using the equity method
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Derivative financial instruments
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 owners of Super Retail Group Limited
Consolidated
Notes
2014
$m
2013
$m
8
9
10
25
9
33
11
13
14
15
16
25
17
18
19
20
21
22
23
23
24.2
41.1
490.1
-
555.4
3.7
4.7
197.6
813.4
1,019.4
22.3
21.9
452.6
6.0
502.8
-
-
192.6
769.7
962.3
1,574.8
1,465.1
278.8
2.7
1.1
6.3
28.8
317.7
27.0
404.1
52.6
13.0
496.7
814.4
760.4
542.3
7.7
210.4
760.4
260.2
3.3
7.8
3.1
27.9
302.3
19.4
348.3
53.5
10.1
431.3
733.6
731.5
542.3
9.5
179.7
731.5
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Page 45
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Super Retail Group Limited
For the period ended 28 June 2014
Contributed
Equity
$m
Reserves
$m
Retained
Earnings
$m
Total
$m
Notes
Balance at 1 July 2012
541.8
(0.8)
147.7
688.7
Profit for the period
Other comprehensive income
Total comprehensive income for the period
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 29 June 2013
Profit for the period
Other comprehensive income
Total comprehensive income for the period
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
22
26
23
22
26
23
-
-
-
0.5
-
-
0.5
542.3
-
-
-
-
-
-
-
Balance at 28 June 2014
542.3
-
7.5
7.5
-
-
2.8
2.8
9.5
-
(2.0)
(2.0)
-
-
0.2
0.2
7.7
102.7
-
102.7
102.7
7.5
110.2
-
(70.7)
-
(70.7)
0.5
(70.7)
2.8
(67.4)
179.7
731.5
108.4
-
108.4
-
(77.7)
-
(77.7)
108.4
(2.0)
106.4
-
(77.7)
0.2
(77.5)
210.4
760.4
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Page 46
CONSOLIDATED STATEMENT OF CASH FLOWS
Super Retail Group Limited
For the period ended 28 June 2014
Consolidated
Notes
2014
$m
2013
$m
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)
2,335.5
2,217.6
(1,913.2)
(1,755.0)
Rental payments
- external
- related parties
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment and computer software
Proceeds from sale of property, plant and equipment
Payments for business acquired/payments for purchase of associate, net
of cash acquired
Loans to related parties
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Finance lease payments
Net Interest paid
Dividends paid to Company’s shareholders
Proceeds from issue of shares
Net cash (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 charges on cash and cash equivalents
Cash and cash equivalents at end of year
37
26
8
(188.8)
(11.3)
(55.0)
167.2
(111.6)
1.0
(4.4)
(3.7)
(118.7)
894.5
(832.6)
(3.2)
(27.9)
(77.7)
-
(46.9)
1.6
22.3
0.3
24.2
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
(178.8)
(10.7)
(48.0)
225.1
(103.4)
-
(6.0)
-
(109.4)
578.9
(621.7)
(2.9)
(24.7)
(70.7)
0.6
(140.5)
(24.8)
47.0
0.1
22.3
Page 47
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
SUPER RETAIL GROUP LIMITED
FOR THE PERIOD ENDED
28 JUNE 2014
Page 48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Super Retail Group Limited
For the period ended 28 June 2014
Contents of the notes to the consolidated financial statements
Summary of significant accounting policies .............................................................................................................................. 50
1
Critical accounting estimates and judgements .......................................................................................................................... 60
2
Segment information ................................................................................................................................................................. 61
3
Revenue ................................................................................................................................................................................... 63
4
Other income ............................................................................................................................................................................ 63
5
Expenses .................................................................................................................................................................................. 63
6
Income tax expense .................................................................................................................................................................. 64
7
Current assets – Cash and cash equivalents............................................................................................................................ 65
8
9
Trade and other receivables ..................................................................................................................................................... 65
10 Current assets – Inventories ..................................................................................................................................................... 66
11 Non-current assets – Property, plant and equipment ................................................................................................................ 66
12 Non-current assets – Deferred tax assets ................................................................................................................................ 67
13 Non-current assets – Intangible assets ..................................................................................................................................... 68
14 Current liabilities – Trade and other payables........................................................................................................................... 69
15 Current liabilities – Borrowings ................................................................................................................................................. 70
16 Current liabilities – Current tax liabilities ................................................................................................................................... 70
17 Current liabilities – Provisions ................................................................................................................................................... 70
18 Non-current liabilities – Trade and other payables .................................................................................................................... 71
19 Non-current liabilities – Borrowings .......................................................................................................................................... 71
20 Non-current liabilities – Deferred tax liabilities .......................................................................................................................... 71
21 Non-current liabilities – Provisions ............................................................................................................................................ 72
22 Contributed equity ..................................................................................................................................................................... 72
23 Reserves and retained profits ................................................................................................................................................... 73
24
Financial assets and financial liabilities .................................................................................................................................... 74
Financial risk management ....................................................................................................................................................... 76
25
26 Capital management ................................................................................................................................................................. 82
27 Key management personnel disclosures .................................................................................................................................. 84
28 Remuneration of auditors.......................................................................................................................................................... 85
29 Contingencies ........................................................................................................................................................................... 85
30 Commitments ............................................................................................................................................................................ 86
31 Related party transactions ........................................................................................................................................................ 87
Investments in controlled entities .............................................................................................................................................. 88
32
33
Interests in associates .............................................................................................................................................................. 89
34 Business combinations ............................................................................................................................................................. 89
35 Net tangible asset backing ........................................................................................................................................................ 89
36 Deed of cross guarantee........................................................................................................................................................... 90
37 Reconciliation of profit from ordinary activities after income tax to net cash inflow from operating activities ............................ 92
38 Earnings per share ................................................................................................................................................................... 92
39 Share-based payments ............................................................................................................................................................. 93
40 Events occurring after balance date ......................................................................................................................................... 95
41 Parent entity financial information ............................................................................................................................................. 95
Page 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
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
Statement of compliance
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. Super Retail Group Limited is a for-profit entity for the purpose of preparing the financial statements.
The 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.
Basis of measurement
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 28 June 2014 and the results of its controlled entities for the period then ended. Super
Retail Group Limited and its controlled entities comprise the “consolidated entity” or the Group. The effects of all transactions
between entities in the consolidated entity are fully eliminated.
Transactions eliminated on consolidation
(i)
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised
gains, but only to the extent that there is no evidence of impairment.
Subsidiaries
(ii)
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. These are deconsolidated from the date that control ceases. The acquisition method of accounting is
used to account for business combinations by the Group (refer Note 24).
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement,
statement of comprehensive income, statement of changes in equity and balance sheet respectively.
Business combinations
(iii)
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 a financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
Acquisition-related costs are expensed as incurred.
Page 50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
1
Summary of significant accounting policies (continued)
Joint arrangements
(iv)
Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures.
The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint
arrangement. Super Retail Group Limited only has joint ventures.
Interests in joint ventures are accounted for using the equity method (see (v) below), after initially being recognised at cost in the
consolidated balance sheet.
Equity method
(v)
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the
Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other
comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint
ventures are recognised as a reduction in the carrying amount of the investment.
When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other
unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments
on behalf of the other entity.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the
Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment
of the asset transferred. Accounting policies of equity accounted investees have been changes where necessary to ensure
consistency with the policies adopted by the Group.
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners
of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-
controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-
controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to the
owners of Super Retail Group Limited.
Comparatives
(vi)
Where applicable, various comparative balances have been reclassified to align with current period presentation. These
amendments have no material impact on the consolidated financial statements.
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Group Managing Director and
Chief Executive Officer, who is responsible for allocating resources and assessing performance of the operating segments.
Unallocated items comprise mainly of corporate assets (primarily the Support Office, Support Office expenses, and income tax
assets and liabilities).
(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.
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.
Page 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
1
Summary of significant accounting policies (continued)
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 standalone taxpayer in its own right.
(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.
(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.
Page 52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
1 Summary of significant accounting policies (continued)
(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. Collectability of trade receivables is
reviewed on an ongoing basis. Debts which are known to be uncollectable 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 in bringing them to their existing location and condition. 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.
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.
(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 are included in current assets, except for those with maturities greater than 12 months after the end of the reporting
period which are classified as non-current assets.
Recognition and derecognition
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. 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.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through profit or loss are expensed in profit or loss.
Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Page 53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
1
Summary of significant accounting policies (continued)
(k)
Impairment of financial assets
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if
there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a
‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of
financial assets that can be reliably estimated.
Evidence of impairment may include indications that the receivable or a group of receivables is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial
reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as
changes in arrears or economic conditions that correlate with defaults.
Assets carried at amortised cost
(i)
For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and
the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the
financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is
recognised in the consolidated income statement.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously
recognised impairment loss is recognised in the consolidated income statement.
(l)
Derivative financial instruments and hedging activities
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: hedges of the fair
value of recognised assets or liabilities or a firm commitment (fair value hedge); or 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 hedges
(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 payment 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.
Page 54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
1
Summary of significant accounting policies (continued)
(m)
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.
(n)
Property, plant & equipment
Property, plant and equipment are stated at historical cost, less any accumulated depreciation or amortisation. Historical costs
include expenditure that is directly attributable to the acquisition of the items.
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 repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
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
10% – 37.5%
Capitalised leased plant and equipment
10% – 37.5%
Motor vehicles
Computer equipment
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.
(o)
Impairment of non-financial 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 assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash generating units).
(p)
Leases
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 55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
1
Summary of significant accounting policies (continued)
The Group leases certain property, plant and equipment. 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. Property, plant and equipment acquired under finance leases are depreciated
over the shorter of the asset’s useful life and the lease term.
(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. Any impairment is recognised as an expense and is not subsequently reversed.
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.
(ii)
Intangible assets with indefinite useful lives
Separately acquired trademarks and licences are shown at historical cost. Trademarks and licences acquired in a business
combination are recognised at fair value at the acquisition date. Trademarks have an indefinite useful life and are carried at cost
less impairment losses.
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. Specific brand names have an indefinite useful life.
(iii) Other intangible assets
The amortisation rates used for each class of intangible assets are as follows:-
Computer software
Brand names
Supplier agreement
10% – 33.3%
Nil to 5%
5%
Computer software
(a)
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, employee costs and an appropriate portion of relevant overheads.
IT development costs include only those costs directly attributable to the development phase and are only recognised following
completion of technical feasibility and where the Group has an intention and ability to use the asset.
Brand names
(b)
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 brand names estimated useful lives, which is 20 years or indefinite.
Supplier agreements
(c)
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.
Page 56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
1
Summary of significant accounting policies (continued)
Research and development
(iv)
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and
testing of new or improved products) are recognised as intangible assets when it is probable that the project will, after considering
its commercial and technical feasibility, be completed and generate future economic benefits and its costs can be measured
reliably. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour
and an appropriate proportion of overheads. Other development expenditures that do not meet these criteria are recognised as an
expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent
period. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready
for use.
Other items of expenditure
(v)
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 60 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 value 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)
Dividend distribution
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.
(v)
Employee benefits
Short-term obligations
(i)
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the
end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end
of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. All other short-term
employee benefit obligations are presented as payables.
Other long-term employee benefit obligations
(ii)
The liabilities for long service leave and annual leave are not expected to be settled wholly within 12 months after the end of the
period in which the employees render the related service. They are therefore 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 end
of the reporting period 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 end
of the reporting period of government bonds with terms and currencies that match, as closely as possible, the estimated future cash
outflows. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or
loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer
settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
(iii) Retirement benefit obligations
Contributions are made by the economic entity to an employee superannuation fund and are charged as expenses when incurred.
Page 57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
1
Summary of significant accounting policies (continued)
(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 and performance rights, 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 and
performance rights that are expected to become exercisable. The employee benefit expense recognised each period takes into
account the most recent estimate.
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;
finance lease charges; and
interest revenue.
(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. In these circumstances the goods and services tax is 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)
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 38).
Page 58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
1
Summary of significant accounting policies (continued)
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.
(aa) 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 hundred thousand dollars.
(ab) 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 28 June 2014, the Group is reporting on the 52 week period that
began 30 June 2013 and ended 28 June 2014. For the period to 29 June 2013, the Group is reporting on the 52 week period that
began 1 July 2012 and ended 29 June 2013.
(ac) New and amended standards adopted by the Group
The Group has applied the following standards and amendments for the first time for their annual reporting period commencing
30 June 2013.
• AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities,
AASB 128 Investments in Associates and Joint Ventures, AASB 127 Separate Financial Statements and AASB 2011-7
Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards;
• AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and other Amendments which provides
an exemption from the requirement to disclose the impact of the change in accounting policy on the current period;
• AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13;
• AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian Accounting Standards arising
from AASB 119 (September 2011);
• AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle; and
• AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial
Liabilities.
The group also elected to adopt the following standard early being AASB 2013-3 Amendments to AASB 136 – Recoverable
Amount Disclosures for Non-Financial Assets, which had a small impact on the impairment disclosures.
The adoption of AASB 11, AASB 13 and AASB 119 resulted in an immaterial impact and therefore no adjustments to the amounts
recognised in the financial statements. These are explained and summarised below. The other standards only affected the
disclosures in the notes to the financial statements.
Change in accounting policy: consolidated financial statements and joint arrangements
AASB 10 Consolidated Financial Statements was issued in August 2011 and replaces the guidance on control and consolidation in
AASB 127 Consolidated and Separate Financial Statements and in Interpretation 112 Consolidation – Special Purpose Entities.
The Group has reviewed its investments in other entities to assess whether the conclusion to consolidate is different under AASB
10 than under AASB 127. No differences were found and therefore no adjustments to any of the carrying amounts in the financial
statements are required as a result of the adoption of AASB 10.
Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures
depending on the contractual rights and obligations of each investor.
VBM Retail Pty Limited was previously accounted for as a jointly controlled entity using the proportionate consolidation method.
Under AASB11 VBM Retail Pty Limited is now accounted for using the equity method. The impact of this change is immaterial and
comparative figures have not been restated.
Certain new accounting standards and interpretations have been published that are not mandatory for the 28 June 2014 reporting
period and have not been early adopted by the Group. This includes AASB 9 Financial Instruments which addresses the
classification, measurement and derecognition of financial assets and financial liabilities. Since December 2013 it also sets out new
rules for hedge accounting. The new standard must be applied for financial years commencing on or after 1 January 2017.
Page 59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
1
Summary of significant accounting policies (continued)
The Group has not yet assessed how its own hedging arrangements would be affected by the new rules, and it has not yet decided
whether to adopt any parts of AASB 9 early. In order to apply the new hedging rules, the Group would have to adopt AASB 9 and
the consequential amendments to AASB 7 and AASB 139 in their entirety.
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.
(ad) Parent entity financial information
The financial information for the parent entity, Super Retail Group Limited, disclosed in note 41 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
standalone 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.
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
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 13 for details of these assumptions.
Page 60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
2
Critical accounting estimates and assumptions (continued)
Capitalised software costs and useful lives
(ii)
The Group has undertaken significant development of software in relation to the multi-channel customer programme and mutli-
channel supply chain and inventory programme. The useful lives have been determined based on the intended period of use of
this software.
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.
3
Segment information
(a)
Description of segments
The Board has determined the operating segments based on the reports reviewed by the Group Managing Director and Chief
Executive Officer that are used to make strategic decisions.
This results in the following business segments:
Auto: Retail and distribution of motor vehicle spare parts, tools and equipment.
Leisure: Retail and distribution of boating, camping, fishing, outdoor equipment and apparel.
Sports: Retail and distribution of sporting equipment, bicycle accessories and apparel.
(b)
Segment information provided to the Group Managing Director and Chief Executive Officer
The segment information provided to the Group Managing Director and Chief Executive Officer for the reportable segments for the
year ended 28 June 2014 is as follows:
2014
Auto
$m
Leisure
$m
Sports
$m
Total
continuing
operations
$m
Inter-segment
eliminations/
unallocated
$m
Consolidated
$m
Segment Revenue
Sales to external customers
Inter segment sales
Other revenue/income
Total revenue
Segment result (pre-finance
costs)
Finance costs
Profit before income tax
Income tax expense
Profit for the period
Acquisitions of property, plant
and equipment and other non-
current segment assets
Depreciation and amortisation
expense
818.2
-
1.5
819.7
94.5
552.5
-
-
552.5
33.0
734.0
-
0.6
2,104.7
-
2.1
734.6
2,106.8
62.8
190.3
8.5
(1.1)
10.9
18.3
(7.7)
2,113.2
(1.1)
13.0
2,125.1
182.6
(24.0)
158.6
(50.2)
108.4
16.5
12.4
22.1
51.0
54.8
105.8
21.2
14.9
17.8
53.9
1.0
54.9
Page 61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
3 Segment information (continued)
The segment information provided to the Group Managing Director and Chief Executive Officer for the reportable segments
for the year ended 29 June 2013 is as follows:
2013
Auto
$m
Leisure
$m
Sports
$m
Total
continuing
operations
$m
Inter-segment
eliminations/
unallocated
$m
Consolidated
$m
Segment Revenue
Sales to external customers
Inter segment sales
Other revenue/income
Total sales revenue
789.0
-
1.8
790.8
522.5
-
-
522.5
703.5
-
1.2
2,015.0
-
3.0
704.7
2,018.0
7.2
(2.2)
-
5.0
2,022.2
(2.2)
3.0
2,023.0
Segment result (pre-finance
costs)
Finance costs
Profit before income tax
Income tax expense
Profit for the period
Acquisitions of property, plant
and equipment and other non-
current segment assets
Depreciation and amortisation
expense
(c) Other information
87.1
33.2
63.4
183.7
(11.4)
172.3
(25.5)
146.8
(44.1)
102.7
17.0
12.8
22.8
52.6
54.1
106.7
17.5
10.4
16.7
44.6
1.7
46.3
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:
• motor vehicles, spare parts, tools and equipment;
• boating, camping, outdoor equipment and fishing;
• sporting equipment, bicycles, bicycle accessories and apparel.
New Zealand
Motor vehicles, spare parts, tools and equipment and boating, camping, outdoor equipment and fishing operate in New Zealand.
(i) Revenue
Australia
New Zealand
2014
$m
2,002.7
122.4
2,125.1
Consolidated
2013
$m
1,933.8
89.2
2,023.0
Page 62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
4
Revenue
From continuing operations
Sale of goods
5
Other income
Income for store closure
Insurance claims
Sundry income
Net imported goods tax refund and revenue adjustments
6
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
Total amortisation and impairment
Finance costs
Interest and finance charges
Accretion of put option
Interest revenue
Finance costs expensed
Employee benefits expense
Superannuation
Salaries and wages
Total employee benefits expense
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
Page 63
Consolidated
Consolidated
2014
$m
2,112.1
2,112.1
2014
$m
-
1.2
0.9
10.9
13.0
2013
$m
2,020.0
2,020.0
2013
$m
1.0
0.7
1.3
-
3.0
Consolidated
2014
$m
2013
$m
0.8
33.5
0.2
8.8
42.5
12.3
0.1
12.4
24.5
-
(0.5)
24.0
27.0
360.9
387.9
185.2
11.0
196.2
1.0
4.5
30.1
0.4
8.5
39.0
7.2
0.1
7.3
26.4
0.1
(1.0)
25.5
23.8
339.8
363.6
171.3
11.3
182.6
1.2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
7
Income tax expense
(a)
Income tax expense
Current tax
Deferred tax
Adjustments to tax expense of prior periods
Deferred income tax expense / (revenue) included in income tax expense
comprises:
Increase in deferred tax assets (note 12)
Increase in deferred tax liabilities (note 20)
(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% (2013: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
Tax consolidation adjustments regarding NZ branches
R & D credits and sundry items
Difference in overseas tax rates
Derecognition of tax losses
Adjustments to tax expense of prior periods
Income tax expense
(c) 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 (credited) / debited directly to equity (notes 12 and 20)
Tax (income) / expense relating to items of other comprehensive income
Cash flow hedges
Consolidated
2014
$m
2013
$m
44.3
1.6
4.3
50.2
(1.3)
2.9
1.6
158.6
47.6
(3.5)
(1.1)
43.0
(0.5)
3.4
4.3
50.2
(2.3)
(2.3)
(1.0)
(1.0)
46.4
(3.2)
0.9
44.1
(6.5)
3.3
(3.2)
146.8
44.0
1.0
(1.0)
44.0
(0.8)
-
0.9
44.1
1.9
1.9
1.9
1.9
(d) 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 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 64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
8
Current assets – Cash and cash equivalents
Cash at bank and in hand
9
Trade and other receivables
Current
Trade receivables
Provision for impairment of receivables (a)
Other receivables
Prepayments
Non- Current
Trade receivables due from related parties - associate
Consolidated
2014
$m
2013
$m
24.2
22.3
Consolidated
2014
$m
2013
$m
28.2
(0.5)
27.7
6.8
6.6
41.1
12.0
(0.2)
11.8
3.9
6.2
21.9
3.7
-
The 2013 Trade receivables number has been adjusted to reflect amounts which are net settled against Trade payable accounts.
(a)
Impaired trade receivables
As at 28 June 2014 current trade receivables of the Group with a nominal value of $0.5 million (2013: $0.2 million) 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 2013
Provision for impairment recognised during the year
Receivables written off during the year as uncollectable
As at 28 June 2014
Consolidated
2014
$m
2013
$m
(0.2)
(0.3)
-
(0.5)
(0.2)
(0.1)
0.1
(0.2)
The creation and release of the provision for the 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 cost.
(b) Past due but not impaired
As of 28 June 2014, trade receivables of $7.5 million (2013: $5.0 million) 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:
30 to 60 days
60 to 90 days
90 days and over
Page 65
Consolidated
2014
$m
2013
$m
4.2
1.3
2.0
7.5
1.6
0.6
2.8
5.0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
10
Current assets – Inventories
Finished goods
- at lower of cost or net realisable value
(a)
Inventory expense
Consolidated
2014
$m
2013
$m
490.1
452.6
Inventories recognised as expense during the year ended 28 June 2014 amounted to $1,118.5 million (2013: $1,079.2 million).
The reversal of write-downs of inventories to net realisable value recognised as reduction of cost of goods sold expense during
the year ended 28 June 2014 amounted to $0.4 million (2013: write-downs recognised as expense of $9.1million). The revenue
has been offset against ‘cost of sales of goods’ in the income statement.
11
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 equipment, at cost
Less accumulated depreciation
Net computer equipment
Total net property, plant and equipment
Assets pledged as security are detailed in Note 26
Reconciliations - consolidated entity
Carrying amounts at 30 June 2013
Additions
Disposals
Depreciation
Foreign currency exchange differences
Carrying amounts at 28 June 2014
Reconciliations - consolidated entity
Carrying amounts at 1 July 2012
Additions
Reclassification of finance lease
Disposals
Depreciation
Foreign currency exchange differences
Carrying amounts at 29 June 2013
Consolidated
2014
$m
2013
$m
306.8
(133.9)
172.9
0.5
(0.4)
0.1
76.8
(52.2)
24.6
197.6
277.1
(106.4)
170.7
1.0
(0.5)
0.5
66.8
(45.4)
21.4
192.6
Plant and
equipment
$m
Motor
vehicles
$m
Computer
equipment
$m
Total
$m
170.7
35.3
(1.1)
(33.5)
1.5
172.9
154.3
50.8
-
(5.3)
(30.1)
1.0
170.7
0.5
-
(0.2)
(0.2)
-
0.1
1.2
-
-
(0.3)
(0.4)
-
0.5
21.4
11.9
(0.1)
(8.8)
0.2
24.6
17.1
7.2
5.8
(0.2)
(8.5)
-
21.4
192.6
47.2
(1.4)
(42.5)
1.7
197.6
172.6
58.0
5.8
(5.8)
(39.0)
1.0
192.6
Page 66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
12
Non-current assets – Deferred tax assets
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Provisions
Accruals and prepayments
Depreciation
Tax losses
Sundry temporary differences
Amounts recognised directly in equity
Cash flow hedges
Share placement costs
Set off with deferred tax liabilities (note 20)
Net deferred tax assets
Movements:
Opening balance
Credited to the income statement
Credited / (charged) to equity
Closing balance
Deferred tax assets to be recovered after more than 12 months
Deferred tax assets to be recovered within 12 months
Consolidated
2014
$m
2013
$m
21.4
1.5
8.3
-
2.6
33.8
1.9
0.8
36.5
(36.5)
-
34.7
1.3
0.5
36.5
20.2
16.3
36.5
22.4
1.1
5.5
2.5
1.0
32.5
0.9
1.3
34.7
(34.7)
-
28.4
6.5
(0.2)
34.7
29.4
5.3
34.7
Page 67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
13 Non-current assets – Intangible assets
Goodwill, at cost
Less accumulated impairment charge
Net goodwill
Computer software
Less accumulated amortisation
Net computer software
Brand names, at cost
Less amortisation
Net brand names
Supplier agreement
Less amortisation
Net Supplier agreements
Total net intangibles
Reconciliations – consolidated
entity – 2014
Carrying amounts at 30 June 2013
Additions
Acquisition of business
Deconsolidation as required under
AASB11 (Refer Note 1 (ac))
Disposals
Amortisation charge
Carrying amounts at 28 June 2014
Reconciliations – consolidated
entity – 2013
Carrying amounts at 1 July 2012
Additions
Acquisition of business
Reclassification of finance lease
Amortisation charge
Carrying amounts at 29 June 2013
Consolidated
2014
$m
2013
$m
443.5
(2.1)
441.4
149.4
(44.5)
104.9
267.5
(0.7)
266.8
0.4
(0.1)
0.3
445.6
(2.1)
443.5
91.2
(32.2)
59.0
267.5
(0.6)
266.9
0.4
(0.1)
0.3
Goodwill
$m
Computer
Software
$m
Brand Name
$m
Supplier
Agreement
$m
Totals
$m
813.4
769.7
443.5
-
2.4
(4.5)
-
-
441.4
59.0
58.6
-
-
(0.4)
(12.3)
104.9
266.9
-
-
-
-
(0.1)
266.8
0.3
-
-
-
-
-
0.3
Goodwill
$m
Computer
Software
$m
Brand Name
$m
Supplier
Agreement
$m
438.2
-
5.3
-
-
443.5
15.0
48.7
-
2.5
(7.2)
59.0
267.0
-
-
-
(0.1)
266.9
0.3
-
-
-
-
0.3
769.7
58.6
2.4
(4.5)
(0.4)
(12.4)
813.4
Totals
$m
720.5
48.7
5.3
2.5
(7.3)
769.7
Amortisation of $12.4 million (2013: $7.3 million) 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 68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
13
Non-current assets – Intangible assets (continued)
A CGU level summary of the goodwill allocation is presented below:
CGU
Auto
Leisure
Sports
Total
Consolidated
2014
$m
45.3
24.8
371.3
441.4
2013
$m
45.3
24.8
373.4
443.5
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow
projections based on financial business plans 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.
(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 are shown below.
Auto
Leisure
Sports
(c) Useful life for brands
Terminal Growth rate
Discount rate
2014
%
3
3
3
2013
%
4
5
5
2014
%
14
14
14
2013
%
12
12
12
No amortisation is provided against the carrying value of the purchased Ray’s Outdoors, Rebel Sport and Amart 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 Sport and Amart Sports brands; and
there are currently no legal, technical or commercial factors indicating that the life should be considered limited.
The Goldcross Cycles brand has been determined to have a 20 year life and is amortised over this period.
The carrying values of the purchased brand names are:
Brand
Rebel Sport
Amart Sports
Ray’s Outdoors
Goldcross Cycles
Total
Consolidated
2014
$m
209.0
36.0
20.0
1.8
266.8
2013
$m
209.0
36.0
20.0
1.9
266.9
The recoverable amount of the Group’s brand names currently exceeds its carrying value. The Ray’s Outdoors brand name
recoverable amount exceeds its carrying value by $10.8 million. The re-positioning of Ray’s Outdoors product lines commenced in
the 2013 financial year with the recording of restructuring provisions. The re-positioning activity is indicating success. However the
recoverable amount is sensitive to future sales growth. The current business plan assumes an average sales growth over the next
two years of 6.8%. If there was no average sales growth rate for this period the recoverable value would equal its carrying value.
14
Current liabilities – Trade and other payables
Trade payables
Other payables
Straight line lease adjustment
Page 69
Consolidated
2014
$m
204.8
70.7
3.3
278.8
2013
$m
182.2
74.6
3.4
260.2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
15
Current liabilities – Borrowings
Secured
Finance leases
Total current liabilities – secured interest bearing liabilities
Security
Consolidated
2014
$m
2.7
2.7
2013
$m
3.3
3.3
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 26.
16
Current liabilities – Current tax liabilities
Income tax payable
17
Current liabilities – Provisions
Employee benefits(a)
Surplus leases(b)
Make good provision(c)
Put option provision(d)
(a)
Employee benefits
Consolidated
2014
$m
1.1
2013
$m
7.8
Consolidated
2014
$m
25.9
1.3
1.1
0.5
28.8
2013
$m
23.9
2.4
1.1
0.5
27.9
The current provision for employee benefits includes accrued annual leave and long service leave.
(b)
Surplus leases
The provision for surplus lease space (onerous contracts) represents the present value of the future lease payments that the Group
is obligated to make in respect of surplus lease space under non-cancellable operating lease agreements, less estimated future
sub-lease revenue.
(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)
Put option provision
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.
(e)
Movements in provisions
Refer to Note 21 for a consolidated movement in provisions analysis.
Page 70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
18
Non-current liabilities – Trade and other payables
Straight line lease adjustment
19
Non-current liabilities – Borrowings
Secured
Finance lease
Bank debt funding facility
Less borrowing costs capitalised, net
Unsecured
Bank debt funding facility
Less borrowing costs capitalised, net
Total
20
Non-current liabilities – Deferred tax liabilities
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Brand values
Depreciation
Amounts recognised directly in equity
Foreign exchange revaluation reserve
Set-off of deferred tax assets (note 12)
Net deferred tax liabilities
Movements:
Opening balance
Charged to the income statement
(Credited) / charged to equity
Closing balance
Deferred tax liabilities to be settled after more than 12 months
Deferred tax liabilities to be settled within 12 months
Page 71
Consolidated
2014
$m
27.0
2013
$m
19.4
Consolidated
2014
$m
2.4
-
-
2.4
403.5
(1.8)
401.7
404.1
2013
$m
5.0
344.5
(1.2)
348.3
-
-
-
348.3
Consolidated
2014
$m
2013
$m
80.3
8.8
89.1
-
89.1
(36.5)
52.6
88.2
2.9
(1.8)
89.3
89.3
-
89.3
80.2
6.2
86.4
1.8
88.2
(34.7)
53.5
83.2
3.3
1.7
88.2
86.4
1.8
88.2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
21
Non-current liabilities – Provisions
Make good provision
Employee benefits
(a) Movements in provisions (consolidated entity) (notes 17 & 21)
Consolidated
2014
$m
2013
$m
6.0
7.0
13.0
4.2
5.9
10.1
Surplus leases
$m
Make good
$m
2.4
-
-
(1.1)
1.3
5.3
2.5
0.9
(1.6)
7.1
Put option
$m
0.5
-
-
-
0.5
Total
$m
8.2
2.5
0.9
(2.7)
8.9
Opening balance as at 30 June 2013
Additional provisions recognised
Indexing of provisions
Amounts used during the period
Closing balance as at 28 June 2014
22
Contributed equity
(a) Share capital
Ordinary shares fully paid
(b) Movement in ordinary share capital
Opening Balance 1 July 2012
Shares issued under share option
Shares issued under performance rights
Balance 29 June 2013
Shares issued under performance rights
Closing balance 28 June 2014
Parent Entity
2014
$m
542.3
2013
$m
542.3
Number of
Shares
Issue Price
$m
196,152,971
150,000
169,841
196,472,812
258,808
196,731,620
3.23
-
-
541.8
0.5
-
542.3
-
542.3
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
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.
Performance rights over 469,920 (2013: 544,019) ordinary shares were issued during the period with 258,808 (2013: 169,841)
performance rights vesting during the period. Under the share option plan Nil (2013: 150,000) ordinary shares were issued
during the period. Information relating to options outstanding at the end of the financial period are set out in Note 39.
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 shares purchased on market rather than by being paid in cash.
Page 72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
23
Reserves and retained profits
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 entities
Balance at the end of the financial period
Share based payments reserve
Balance at the beginning of the financial period
Options and performance rights expense
Balance at the end of the financial period
Hedging reserve
Balance at the beginning of the financial period
Revaluation – gross
Deferred tax
Balance at the end of the financial period
Retained earnings
Balance at the beginning of the financial period
Net profit for the period
Dividends
Retained profits at the end of the financial period
Nature and purpose of reserves
Consolidated
2014
$m
2013
$m
4.1
8.0
(4.4)
7.7
(0.2)
4.3
4.1
7.8
0.2
8.0
1.9
(9.3)
3.0
(4.4)
(0.2)
7.8
1.9
9.5
(3.3)
3.1
(0.2)
5.0
2.8
7.8
(2.5)
6.3
(1.9)
1.9
179.7
108.4
(77.7)
210.4
147.7
102.7
(70.7)
179.7
(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(l). 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 grant date fair value of options and performance rights issued.
(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 73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
24
Financial assets and financial liabilities
(a)
Financial instruments
The Group holds the following financial instruments:
Financial assets
Derivatives used for
hedging
$m
Financial assets at
amortised cost $m
Total
$m
2014
Financial assets
Cash and cash equivalents
Trade and other receivables
Total
2013
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Total
Financial liabilities
2014
Financial liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Total
2013
Financial liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Total
Notes
8
9
8
9
25
Notes
14,16,18
15,19
25
14,16,18
15,19
25
-
-
-
-
-
6.0
6.0
24.2
41.1
65.3
22.3
21.9
-
44.2
Derivatives used for
hedging
$m
Financial liabilities
at amortised cost
$m
-
-
6.3
6.3
-
-
3.1
3.1
306.9
406.8
-
713.7
287.4
351.6
-
639.0
24.2
41.1
65.3
22.3
21.9
6.0
50.2
Total
$m
306.9
406.8
6.3
720.0
287.4
351.6
3.1
642.1
The Group’s exposure to various risks associated with the financial instruments is discussed in note 25. The maximum exposure to
credit risk at the end of the reporting period is the carrying amount of each class of financial assets mentioned above.
(b) Recognised fair value measurements
(i) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are
recognised and measure at fair value in the financial statements. To provide an indication about the reliability of the inputs used in
determining fair value, the Group has classified its financial instruments into the three levels prescribed under the accounting
standards. An explanation of each level follows underneath the table.
The fair value of forward exchange contracts is determined using forward exchange market rates at the statement of financial
position date.
Page 74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
24 Financial assets and financial liabilities (continued)
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.
The following tables present the Group’s entity’s assets and liabilities measured and recognised at fair value.
Group – at 28 June 2014
Financial assets
Derivatives used for hedging
Total
Financial liabilities
Derivatives used for hedging
Total
Group – at 29 June 2013
Financial assets
Derivatives used for hedging
Total
Financial liabilities
Derivatives used for hedging
Total
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
-
-
-
-
-
-
6.3
6.3
-
-
-
-
-
-
6.3
6.3
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
-
-
-
-
6.0
6.0
3.1
3.1
-
-
-
-
6.0
6.0
3.1
3.1
There were no transfers between any levels for recurring fair value measurements during the year. The Group’s policy is to
recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
Level 1: 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.
Level 2: 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 which maximise the use of observable market data and rely as little as
possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is
included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
This is the case for unlisted equity securities.
(ii) Valuation techniques used to determine fair value
Specific valuation techniques used to value financial instruments include:
•
•
•
•
the use of quoted market prices or dealer quotes for similar instruments
the fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on
observable yield curves
the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date
the fair value of the remaining financial instruments is determined using discounted cash flow analysis.
All of the resulting fair value estimates are included in level 2 except for unlisted equity securities, a contingent consideration
receivable and certain derivative contracts, where the fair values have been determined based on present values and the
discount rates used were adjusted for counterparty or own credit risk.
Page 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
25
Financial risk management
This note explains the Group’s exposure to financial risks and how these risks could affect the Group’s future financial performance.
Current year profit and loss information has been included where relevant to add further context.
Risk
Exposure arising from
Measurement
Management
Market risk –
foreign exchange
Market risk –
interest rate
Credit risk
Future commercial transactions
Recognised financial assets and
liabilities not denominated in AUD
Long-term borrowings at variable
rates
Cash and cash equivalents, trade and
other receivables and derivative
financial instruments
Liquidity risk
Borrowings and other liabilities
Cash flow forecasting
Sensitivity analysis
Forward foreign exchange
contracts and options
Sensitivity analysis
Interest rate swaps
Aging analysis
Credit ratings
Rolling cash flow
forecasts
Credit limits and retention of
title over goods sold
Availability of committed
credit lines and borrowing
facilities
The Group’s risk management is carried out by the finance department under policies approved by the Board of Directors. The
finance department identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The
Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange
risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of
excess liquidity.
(a) Derivatives
Derivatives are only used for economic hedging purposes and not as trading or speculative instruments. The Group has the
following derivative financial instruments:
Current assets
Forward foreign exchange contracts – cash flow hedges
Total current derivative financial instrument assets
Current liabilities
Forward foreign exchange contracts – cash flow hedges
Interest rate swap contracts – cash flow hedges
Total current derivative financial instrument liabilities
Consolidated
2014
$m
2013
$m
-
-
4.0
2.3
6.3
6.0
6.0
-
3.1
3.1
(i) Classification of derivatives
Derivatives are classified as held for trading and accounted for at fair value through profit or loss unless they are designated as
hedges. They are presented as current assets or liabilities if they are expected to be settled within 12 months after the end of the
reporting period.
The Group’s accounting policy for its cash flow hedges is set out in note 1(l). For hedged forecast transactions that result in the
recognition of a non-financial asset, the Group has elected to include related hedging gains and losses in the initial measurement of
the cost of the asset.
(ii) Change in accounting policy
The Group has applied the new standard on fair value measurement from 30 June 2013 on the fair value of derivatives. This has
had an immaterial impact.
Page 76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
25
Financial risk management (continued)
(iii) Fair value measurement
For information about the methods and assumptions used in determining the fair value of derivatives please refer to note 1(m).
(b) Market risk
(i) Foreign exchange risk
Group companies are required to hedge their foreign exchange risk exposure using forward contracts transacted with the finance
department.
The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures to the United States
dollar, New Zealand dollar and Euro.
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 foreign currency purchases for the
subsequent 4 months and up to 40% of anticipated foreign currency purchases for the following 5 to 12 month period.
Instruments used by the Group
The economic entity retails products including some that have been imported from 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 twelve
months on a rolling basis.
Exposure
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in
Australian dollar, was as follows
Trade receivables
Trade payables
Forward exchange contracts
- buy foreign currency (cash flow hedges)
Buy United States dollars and sell Australian dollars with maturity
- 0 to 4 months
- 5 to 12 months
Buy Euro and sell Australian dollars with maturity 0 to 4 months
28 June 2014
USD
$m
29 June 2013
USD
$m
1.4
10.4
66.5
30.0
96.5
-
1.3
11.9
40.7
15.0
55.7
0.9
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 28 June 2014, no hedges were designated as
ineffective (2013: 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 (losses) / gains on foreign exchange contracts
- unrealised (losses) on interest rate swaps
Total (losses) / gains
$m
(4.0)
(2.3)
(6.3)
$m
6.0
(3.1)
2.9
Page 77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
25
Financial risk management (continued)
Group sensitivity
Based on the financial instruments held at 28 June 2014, 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.
Equity would have been $8.0 million lower/$9.8 million higher (2013: $5.9 million lower/$7.2 million 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) Cashflow and fair value interest rate risk
Instruments used by the Group - interest rate swap contracts
Bank loans of the economic entity currently bear an average variable interest rate of 4.25% (2013: 4.88%). It is policy to protect
part of the forecasted debt 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 $120 million (2013: $140
million). The Group also has $80 million interest rate swaps in place for future periods up until November 2016 at an average
rate of 3.56%.
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 on the current debt balance cover approximately 30%
(2013: 36%) of the loan principal outstanding. The average fixed interest rate is 4.39% (2013: 4.43%).
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:
Fixed interest maturing in
1 year or
less
$m
Over 1 to
5 years
$m
More than
5 years
$m
Non-
interest
bearing
$m
Notes
8
9
14,16,18
15,19
17,21
2014
Financial assets
Cash and deposits
Receivables
Total financial assets
Weighted average rate of
interest
Financial liabilities
Trade and other payables
Finance lease/bank debt
Employee entitlements
Total financial liabilities
Weighted average rate of
interest
Net financial (liabilities) / assets
Floating
interest
rate
$m
22.6
-
22.6
2.50%
-
401.7
-
401.7
4.25%
(379.1)
Total
$m
24.2
44.8
69.0
306.9
406.8
32.9
746.6
-
-
-
-
-
-
-
1.6
41.1
42.7
306.9
-
32.9
339.8
-
(297.1)
(677.6)
-
-
-
-
2.7
-
2.7
(2.7)
-
3.7
3.7
-
2.4
-
2.4
1.3
Page 78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
25
Financial risk management (continued)
Notes
8
9
14,16,18
15,19
17,21
Floating
interest
rate
$m
20.6
-
20.6
2.48%
-
343.3
-
343.3
4.88%
(322.7)
2013
Financial assets
Cash and deposits
Receivables
Total financial assets
Weighted average rate of
interest
Financial liabilities
Trade and other payables
Finance lease/bank debt
Employee entitlements
Total financial liabilities
Weighted average rate of
interest
Net financial (liabilities)
Group sensitivity
Fixed interest maturing in
1 year or
less
$m
Over 1 to
5 years
$m
More than
5 years
$m
Non-
interest
bearing
$m
Total
$m
22.3
21.9
44.2
287.4
351.6
29.8
668.8
-
-
-
-
3.3
-
3.3
-
-
-
-
5.0
-
5.0
(3.3)
(5.0)
-
-
-
-
-
-
-
-
1.7
21.9
23.6
287.4
-
29.8
317.2
(293.6)
(624.6)
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 2014 and
2013, 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 (d) below.
28 June 2014
Balance
$m
29 June 2013
Balance
$m
403.5
120.0
344.5
140.0
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 28 June 2014, 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 $1.9 million lower/higher (2013: $1.4 million lower/higher),
mainly as a result of higher/lower interest expense on bank loans.
(c) Credit risk
Credit risk arises from cash and cash equivalents, favourable derivative financial instruments and deposits with banks and
financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables and
committed transactions.
(i) Risk management
Credit risk is managed on a Group basis. For banks and financial institutions, only independently rated parties with a minimum
rating of ‘A’ are accepted.
Page 79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
25
Financial risk management (continued)
If wholesale customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control
assesses the credit quality of the customer, taking into account its financial position, past experience and other factors.
Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The compliance with
credit limits by wholesale customers is regularly monitored by line management.
Sales to retail customers are required to be settled in cash or using major credit cards, mitigating credit risk. There are no
significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or
regions.
(ii) Security
For wholesale customers without credit rating, the Group generally retains title over the goods sold until full payment is received,
thus limiting the loss from a possible default to the profit margin made on the sale. For some trade receivables the Group may
also obtain security in the form of guarantees, deeds of undertaking or letters of credit which can be called upon if the
counterparty is in default under the terms of the agreement.
(d) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of
committed credit facilities to meet obligations when due. Due to the dynamic nature of the underlying businesses, finance
department maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Group’s liquidity reserve (comprising the undrawn borrowing facilities below) and cash
and cash equivalents (note 8) on the basis of expected cash flows. In addition, the Group’s liquidity management policy involves
projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these.
(i) 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)
Total
Facilities used at balance date
- Bank debt funding facility
- Multi-option facility (including indemnity/guarantee)
Total
Unused balance of facilities at balance date
- Bank debt funding facility
- Multi-option facility (including indemnity/guarantee)
Total
Consolidated
2014
$m
2013
$m
580.0
20.0
600.0
403.5
6.6
410.1
176.5
13.4
189.9
500.0
17.0
517.0
344.5
7.6
352.1
155.5
9.4
164.9
Current interest rates on bank loans of the economic entity are 3.83% - 4.52% (2013: 4.52% - 5.01%).
(ii) Maturities of financial liabilities
The following tables analyse the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities
for:
-
-
all non-derivative financial liabilities; and
net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of
the timing of the cash flows.
Page 80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
25
Financial risk management (continued)
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their
carrying balances as the impact of discounting is not significant. For interest rate swaps the cash flows have been estimated using
forward interest rates applicable at the end of the reporting period.
Group – at 28 June
2014
Non-derivatives
Trade & other
payables
Borrowings (excluding
finance leases)
Finance lease
liabilities
Total non-derivatives
Derivatives
Net settled (IRS)
Forward exchange
contracts used for
hedging:
Gross settled
- (inflow)
- outflow
Total derivatives
Group – at 29 June
2013
Non-derivatives
Trade & other
payables
Borrowings (excluding
finance leases)
Finance lease
liabilities
Total non-derivatives
Derivatives
Net settled (IRS)
Forward exchange
contracts used for
hedging:
Gross settled
- (inflow)
- outflow
Total derivatives
Less than 6
months
$m
6-12 months
$m
Between 1
and 2 years
$m
Between 2
and 5 years
$m
Over 5
years
$m
278.8
8.6
1.5
288.9
-
8.6
1.2
9.8
-
89.3
1.6
90.9
-
349.5
0.8
350.3
(0.9)
(0.5)
(1.0)
(0.3)
(70.5)
74.0
2.6
(31.8)
33.6
1.3
-
-
(1.0)
-
-
(0.3)
-
-
-
-
-
-
-
-
Less than 6
months
$m
6-12 months
$m
Between 1
and 2 years
$m
Between 2
and 5 years
$m
Over 5
years
$m
260.2
8.4
1.6
270.2
-
8.4
1.7
10.1
-
249.1
2.7
251.8
(1.1)
(1.0)
(0.8)
(47.9)
43.6
(5.4)
(13.0)
11.8
(2.2)
-
-
(0.8)
-
87.3
2.3
89.6
-
-
-
-
-
-
-
-
-
-
-
-
Total
contractual
cash flows
$m
278.8
456.0
5.1
Carrying
amount
(assets) /
liabilities
$m
278.8
403.3
5.1
735.3
687.2
(2.7)
(2.3)
(102.3)
107.6
2.6
(4.0)
-
(6.3)
Total
contractual
cash flows
$m
Carrying
amount
(assets) /
liabilities
$m
260.2
353.2
8.3
621.7
260.2
344.5
8.3
613.0
(2.9)
(3.1)
(60.9)
55.4
(8.4)
-
6.0
2.9
Page 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
26
Capital management
(a) 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 maintain an optimal capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
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 2014 the Group’s strategy, which was unchanged from 2013, 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 28 June 2014 and 29 June 2013
were as follows:
Consolidated
Total borrowings
Less: Cash & cash equivalents
Net Debt
Total Equity
Total Capital
Gearing Ratio
2014
$m
406.8
(24.2)
382.6
760.4
1,143.0
33.5%
2013
$m
351.6
(22.3)
329.3
731.5
1,060.8
31.0%
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 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 2014 the Group’s strategy, which was unchanged from 2013, was to maintain a fixed charge cover ratio of around 2.0 times.
The fixed charge cover ratios at 28 June 2014 and 29 June 2013 were as follows:
Earnings
Add:
Taxation expense
Net finance costs
Depreciation and amortisation
Rental expense
EBITDAR
Net finance costs
Rental expense
Fixed charges
Fixed charge cover ratio
(i) Loan Covenants
Consolidated
2014
$m
108.4
50.2
24.0
54.9
196.2
433.7
24.0
196.2
220.2
1.97
2013
$m
102.7
44.1
25.5
46.3
182.6
401.2
25.5
182.6
208.1
1.93
Financial covenants are provided by Super Retail Group Limited with respect to leverage, gearing, fixed charges coverage and
shareholder funds. The Group has complied with the financial covenants of its borrowing facilities during the 2014 and 2013
reporting period. There are no assets pledged as security in relation to the unsecured debt in 2014 (2013 – the carrying amount of
assets pledged as security were equal to those shown in the consolidated statement of financial position).
Page 82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
26
Capital management (continued)
(b) Dividends
Parent Entity
2014
$m
2013
$m
Ordinary shares
Dividends paid by Super Retail Group Limited during the reporting period were as
follows:
Interim dividend for the period ended 28 December 2013 of 18.5 cents (2012: 17
cents per share) paid on 3 April 2014. Fully franked based on tax paid @ 30%
36.4
33.4
Final dividend for the period ended 29 June 2013 of 21 cents per share (2012: 19
cents per share) paid on 2 October 2013. Fully franked based on tax paid @ 30%
Total dividends provided and paid
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 purchased on market
Dividends not recognised at year end
Subsequent to year end, the Directors have declared the payment of a final dividend
of 21.5 cents per ordinary share (2013: 21.0 cents per ordinary share), fully franked
based on tax paid at 30%.
41.3
77.7
71.9
5.8
77.7
37.3
70.7
68.6
2.1
70.7
The aggregate amount of the dividend expected to be paid on 2 October 2014, out of
retained profits at 28 June 2014, but not recognised as a liability at year end, is
42.3
41.2
Franking credits
The franked portions of dividends paid after 28 June 2014 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 28 June 2014.
Franking credits remaining at balance date available for dividends declared after the
current balance date based on a tax rate of 30%
98.3
79.5
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 $18,127,414 (2013: $17,682,553).
Page 83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
27
Key management personnel disclosures
(a) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2014
$
2013
$
4,939,442
235,391
354,532
5,529,365
5,200,960
181,211
1,494,020
6,876,191
The key management personnel remuneration in some instances has been paid by a subsidiary.
Loans to key management personnel
There were no loans to individuals at any time.
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
2014
$m
2013
$m
23.2
21.1
Page 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
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) PricewaterhouseCoopers Australia
(i) Assurance services
Audit and review of financial statements
Audit and review of subsidiaries
Other assurance
Total remuneration for audit and other assurance services
(ii) Taxation services
Tax compliance services, including review of Company income tax returns
Customs Advice
Total remuneration for taxation services
(iii) Other services
Business Consulting
Total remuneration for advisory services
Total remuneration of PricewaterhouseCoopers Australia
(b) Network firms of PricewaterhouseCoopers Australia
(i) Taxation services
Consolidated
2014
$
2013
$
468,435
46,100
10,000
524,535
295,207
2,140
297,347
3,060
3,060
430,000
20,000
17,500
467,500
179,120
35,867
214,987
-
-
824,942
682,487
Tax compliance services, including review of Company income tax returns
Total remuneration for taxation services
65,106
65,106
59,509
59,509
Total remuneration of network firms of PricewaterhouseCoopers Australia
Total auditors’ remuneration
65,106
59,509
890,048
741,996
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
Guarantees
Guarantees issued by the bankers of the Group in support
of various rental arrangements for certain retail outlets and
support of banking arrangements for associates.
The maximum future rental payments guaranteed amount
to:
Consolidated
Parent
2014
$m
2013
$m
2014
$m
2013
$m
7.1
5.4
3.5
2.3
From time to time the Group is subject to legal claims as a result of its operations. An immaterial contingent liability may exist for
any exposure over and above current provisioning levels.
Page 85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
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
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 14 and 18)
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
2014
$m
2013
$m
5.9
5.9
7.5
7.5
181.6
531.7
159.3
(30.3)
842.3
0.9
162.2
462.5
94.2
(22.8)
696.1
1.2
3.1
3.8
-
6.9
3.0
6.9
0.4
10.3
Amounts disclosed as remuneration commitments include commitments arising from the service contracts of key management
personnel referred to in the Remuneration Report on pages 26 to 40 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 $5.1m (2013: $8.3m) 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 15)
Non-current (note 19)
Consolidated
2014
$m
3.0
2.6
5.6
(0.5)
5.1
2.7
2.4
5.1
2013
$m
3.9
5.5
9.4
(1.1)
8.3
3.3
5.0
8.3
Page 86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
31
Related party transactions
Transactions with related parties are at arm’s length unless otherwise stated.
(a)
Parent entities
The parent entity within the Group is Super Retail Group Limited, which is the ultimate Australian parent.
(b)
Subsidiaries
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.
(d)
Directors
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, R A Murray and P A Birtles.
(e)
Amounts due from related parties
Amounts due from Directors of the consolidated entity and their director-related entities are shown below in note 31(g).
(f)
Transactions with other related parties
Aggregate amounts included in the determination of profit from ordinary activities before income tax that resulted from
transactions with related parties:
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 $nil (2013: $19,617).
(g) Loans to/(from) Related Parties
Loans to/(from) Directors
There are no loans to or from related parties at 28 June 2014 (2013 :$nil).
Consolidated
2014
$
2013
$
9,389,763
2,326,854
9,752,519
2,674,704
Page 87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
32
Investments in controlled entities
The Group’s subsidiaries at 28 June 2014 are set out below. Unless otherwise stated, they have share capital consisting of
ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights
held by the Group. The country of incorporation is also their principal place of business.
Name of Entity
A-Mart All Sports Pty Ltd(a)
Auto Trade Direct (NZ) Limited
Auto Trade Direct Pty Ltd (formerly Super
Cheap Pty Ltd)(a)
BCF New Zealand Limited
Coyote Retail Investments Pty Limited(a)
Coyote Retail Pty Limited(a)
FCO New Zealand Limited
Foghorn Holdings Pty Ltd(a)
Goldcross Cycles Pty Ltd(a)
Oceania Bicycles Limited(b)(c)
Oceania Bicycles Pty Ltd(c)
Quinns Rock Pty Ltd(a)
Ray’s Outdoors New Zealand Limited
Ray’s Outdoors Pty Ltd(a)
Rebel Group Limited(a)
Rebel Management Services Pty Limited(a)
Rebel Sport Limited(a)
Rebel Wholesale Pty Limited(a)
Rebelsport.com Pty Limited(a)
SCA Equity Plan Pty Ltd
SRG Leisure Retail Pty Ltd (formerly BCF
Australia Pty Ltd)(a)
SRGS (New Zealand) Limited
SRGS Pty Ltd(a)
Super Cheap Auto (New Zealand) Pty Ltd
Super Cheap Auto Pty Ltd(a)
Super Retail Commercial Pty Ltd(a)
Super Retail Group Services (New Zealand)
Limited
Super Retail Group Services Pty Ltd(a)
Super Retail Group Trading (Shanghai) Ltd
Country of
Incorporation
Principal Activities
Equity Holding
2014
%
2013
%
Australia
New Zealand
Australia
New Zealand
Australia
Australia
New Zealand
Australia
Australia
New Zealand
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
New Zealand
Australia
Australia
Sports retail
Auto retail
Auto retail
Leisure retail
Sports retail
Sports retail
Leisure retail
Sports retail
Sports retail
Sports retail
Sports retail
Sports retail
Leisure retail
Leisure retail
Sports retail
Sports retail
Sports retail
Sports retail
Sports retail
Investments
Leisure retail
Product acquisition
and distribution
Product acquisition
and distribution
Auto retail
Auto retail
Auto retail
New Zealand
Support services
Australia
China
Support services
Product sourcing
100
100
100
100
100
100
100
100
100
50
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
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 Oceania Bicycles Pty Ltd.
(c)
The Company consolidates this entity despite only holding half of its voting power as the Company has the ability to govern
this entity’s financial and operating policies through contractual arrangements so as to benefit from its activities.
Page 88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
33
Interests in associates
The entity below has share capital consisting solely of ordinary shares, which is held directly by the Group. The country of
incorporation or registration is also its principal place of business, and the proportion of ownership interest is the same as the
proportion of voting rights held.
The entity is a private entity with no quoted price available.
Name of Entity
Place of business/
country of
incorporation
Nature of
relationship
Measurement
method
% of ownership interest
2014
%
2013
%
VBM Retail Pty Limited
Australia
Associate
Equity method
50
50
34
Business combinations
(a) Workout World
On 22 November 2013 the business net assets of fitness retailer, Workout World were acquired. A subsequent store
location was acquired in May 2014. The acquisition note is shown below.
Net assets acquired and provisional goodwill are as follows:
Toal Purchase consideration - Cash Paid
Fair value of net identifiable assets acquired (refer below)
Provisional Goodwill
The goodwill is attributable mainly to the skills of Workout World’s work force and the synergies
expected to be achieved from integrating the businesses into the Group’s existing Sporting Business. It
will not be deductible for tax purposes.
Inventory (net of provisions)
Trade and other payables
Provisions for employee benefits and make good
Deferred tax asset
$m
4.4
(2.0)
2.4
$m
2.6
(0.7)
(1.0)
1.1
2.0
The acquired business contributed revenues of $10.7 million for the period 22 November 2013 to 28 June 2014 and a
loss after tax of $1.4 million to the Group’s results. If the acquisition had occurred on 30 June 2013, the contribution to
the Group revenue would have been $17.8 million, while the contribution to Group net profit after tax would have been a
loss $2.3 million in the current year. In determining these amounts, management have assumed that the fair value
adjustments, determined provisionally, that arose on the acquisition date would have been the same if the acquisition
had occurred on 30 June 2013.
35
Net tangible asset backing
Net tangible asset per ordinary share
Consolidated Entity
2014
Cents
$0.14
2013
Cents
$0.21
Page 89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
36
Deed of cross guarantee
Super Retail Group Limited, A-Mart All Sports Pty Ltd, Auto Trade Direct Pty Ltd, Coyote Retail Investments Pty Limited, Coyote
Retail Pty Limited, Foghorn Holdings Pty Ltd, Goldcross Cycles Pty Ltd, Quinns Rock Pty Ltd, Ray’s Outdoors Pty Ltd, Rebel Group
Limited, Rebel Management Services Pty Limited, Rebel Sport Limited, Rebel Wholesale Pty Limited,Rebelsport.com Pty Limited,
SRG Leisure Retail Pty Ltd, SRGS Pty Ltd, Super Cheap Auto Pty Ltd, Super Retail Commercial Pty Ltd and Super Retail Group
Services Pty Ltd are parties to a Deed of Cross Guarantee under which each company guarantees the debts of the others. 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) 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 28 June 2014 of the Closed Group consisting of Super Retail Group Limited, A-Mart All Sports Pty Ltd, Auto Trade Direct Pty
Ltd, Coyote Retail Investments Pty Limited, Coyote Retail Pty Limited, Foghorn Holdings Pty Ltd, Goldcross Cycles Pty Ltd, Quinns
Rock Pty Ltd, Ray’s Outdoors Pty Ltd, Rebel Group Limited, Rebel Management Services Pty Limited, Rebel Sport Limited, Rebel
Wholesale Pty Limited,Rebelsport.com Pty Limited, SRG Leisure Retail Pty Ltd, SRGS Pty Ltd, Super Cheap Auto Pty Ltd, Super
Retail Commercial Pty Ltd and Super Retail Group Services 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)
Profit for the period
Statement of comprehensive income
Profit for the year
Other comprehensive income
Cash flow hedges
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 90
Consolidated
2014
$m
2013
$m
1,997.2
0.9
1,998.1
1,918.1
2.6
1,920.7
(1,100.7)
(1,049.0)
(259.3)
(81.4)
(164.2)
(224.1)
(22.3)
(1,852.0)
146.1
(45.7)
100.4
100.4
(9.3)
3.0
(6.3)
94.1
178.2
100.4
(77.7)
200.9
(244.7)
(84.0)
(154.0)
(221.2)
(23.1)
(1,776.0)
144.7
(43.7)
101.0
101.0
4.4
3.1
7.5
108.5
147.9
101.0
(70.7)
178.2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
36
Deed of cross guarantee (continued)
(b) Balance Sheet
Set out below is a balance sheet as at 28 June 2014 of the Closed Group consisting of Super Retail Group Limited, A-Mart All
Sports Pty Ltd, Auto Trade Direct Pty Ltd, Coyote Retail Investments Pty Limited, Coyote Retail Pty Limited, Foghorn Holdings Pty
Ltd, Goldcross Cycles Pty Ltd, Quinns Rock Pty Ltd, Ray’s Outdoors Pty Ltd, Rebel Group Limited, Rebel Management Services
Pty Limited, Rebel Sport Limited, Rebel Wholesale Pty Limited, Rebelsport.com Pty Limited, SRG Leisure Retail Pty Ltd, SRGS Pty
Ltd, Super Cheap Auto Pty Ltd, Super Retail Commercial Pty Ltd and Super Retail Group Services Pty Ltd.
Consolidated
2014
$m
2013
$m
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
16.7
40.5
451.7
508.9
14.7
194.2
-
798.6
1,007.5
1,516.4
244.0
1.2
(0.9)
29.0
273.3
23.3
404.9
52.9
11.5
492.6
765.9
750.5
542.3
7.3
200.9
750.5
19.4
39.4
410.4
469.2
2.8
173.8
-
767.9
944.5
1,413.7
218.3
2.8
7.8
26.3
255.2
17.1
348.3
55.7
10.0
431.1
686.3
727.4
541.7
7.5
178.2
727.4
Page 91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
37
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 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
- increase in provisions
- increase/(decrease) in deferred tax
Net cash inflow from operating activities
38
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
2014
$m
108.4
54.9
0.8
0.2
24.0
(19.0)
(34.6)
28.0
2.8
1.7
167.2
2013
$m
102.7
46.3
4.5
2.7
25.5
7.6
(34.3)
64.4
8.7
(3.0)
225.1
Consolidated Entity
2014
Cents
55.1
54.6
2013
Cents
52.3
51.9
Consolidated Entity
2014
Number
2013
Number
196,685,531
1,701,570
196,372,758
1,509,770
198,387,101
197,882,528
2014
$m
2013
$m
108.4
102.7
108.4
102.7
(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 92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
39
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 – 2014
1 September 2009
1 September 2010
1 September 2011
1 September 2012
1 September 2013
Consolidated – 2013
1 September 2009
1 September 2010
1 September 2011
1 September 2012
(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)
169,842
347,758
448,151
544,019
-
1,509,770
339,683
347,758
453,151
-
1,140,592
-
-
-
-
469,920
469,920
-
-
-
544,019
544,019
84,920
173,888
-
-
-
258,808
169,841
-
-
-
169,841
(1,501)
(2,812)
(4,999)
(10,000)
-
(19,312)
83,421
171,058
443,152
534,019
469,920
1,701,570
83,421
171,058
443,152
534,019
469,920
1,701,570
-
-
(5,000)
-
(5,000)
169,842
347,758
448,151
544,019
1,509,770
169,842
347,758
448,151
544,019
1,509,770
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.
Page 93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
39
Share-based payments (continued)
Set out below are summaries of options granted under the plan:
Grant Date
Exercise date Exercise price
Original
Balance at start
of the year
Number
Consolidated – 2014
nil
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
Consolidated – 2013
27 Jan 2006
23 Aug 2007
1 August 2008 1 August 2011
Total
5 Jan 2011
24 Jul 2010
$2.44
$4.37
$2.49
50,000
60,000
40,000
150,000
-
-
-
-
50,000
60,000
40,000
150,000
-
-
-
-
-
-
-
-
-
-
-
-
Weighted average exercise price
$3.23
Nil
$3.23
Nil
Nil
Nil
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.
At any one time, the total number of options on issue under the Performance Rights or 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.
Expenses arising from share based payments transactions:
Executive Performance Rights
2014
$m
0.2
2013
$m
2.8
Page 94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Super Retail Group Limited
For the period ended 28 June 2014
40
Events occurring after balance date
No matter or circumstance has arisen since 28 June 2014 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.
41
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.
2014
$m
378.1
1,159.5
191.8
589.0
542.3
8.0
(4.4)
24.6
570.5
44.3
44.3
2013
$m
290.9
1,068.4
128.9
470.6
542.3
7.8
(2.2)
49.8
597.7
84.2
84.2
Page 95
DIRECTORS’ DECLARATION
Super Retail Group Limited
For the period ended 28 June 2014
In the Directors’ opinion:
(a)
(b)
(c)
the financial statements and notes set out on pages 43 to 95 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 28 June 2014 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 36 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 36.
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 Group 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
20 August 2014
Page 96
AUDIT REPORT
Super Retail Group Limited
For the period 28 June 2014
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 consolidated statement of financial position as at 28 June 2014, the consolidated
comprehensive income statement, consolidated statement of changes in equity and consolidated
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 Super Retail Group (the consolidated entity).
The consolidated entity comprises the company and the entities it controlled at period’s end or from
time to time during the period.
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 control 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. Those 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 consolidated
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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
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 73257 5 999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Page 97
AUDIT REPORT (continued)
Super Retail Group Limited
For the period 28 June 2014
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 28 June
2014 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.
(b)
the financial report and notes also comply with International Financial Reporting Standards as
disclosed in Note 1.
Report on the Remuneration Report
We have audited the remuneration report included in pages 26 to 40 of the directors’ report for the
period ended 28 June 2014. 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 period 28 June 2014
complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
MK Graham
Partner
Brisbane
20 August 2014
Page 98
SHAREHOLDER INFORMATION
Super Retail Group Limited
For the period ended 28 June 2014
The shareholder information set out below was applicable as at 18 August 2014.
Number of Shareholders
There were 7,854 shareholders, holding 196,731,620 fully paid ordinary shares.
A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Range
1-1000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total
Ordinary Shareholders
Performance Rights & Option holders
3,837
3,216
464
292
45
7,854
-
9
11
33
2
55
There were 480 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
J P MORGAN NOMINEES AUSTRALIA LIMITED
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
RBC INVESTOR SERVICES
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
WARBONT NOMINEES PTY LTD
UBS NOMINEES PTY LTD
RBC INVESTOR SERVICES
RBC INVESTOR SERVICES
HSBC CUSTODY NOMINEES
AMP LIFE LIMITED
CITICORP NOMINEES PTY LIMITED
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
MR PETER ALAN BIRTLES
MR PETER ALAN BIRTLES
EQUITAS NOMINEES PTY LIMITED
MR ROBERT EDWARD THORN
EQUITAS NOMINEES PTY LIMITED
Ordinary shares
Number held
Percentage of
issued shares
57,047,015
30,674,762
22,202,836
18,215,698
10,537,454
9,417,518
5,588,044
3,384,961
2,706,052
2,193,260
1,582,462
1,397,611
1,392,678
1,330,608
741,768
675,000
665,000
568,089
566,281
557,008
29.00%
15.59%
11.29%
9.26%
5.36%
4.79%
2.84%
1.72%
1.38%
1.11%
0.80%
0.71%
0.71%
0.68%
0.38%
0.34%
0.34%
0.29%
0.29%
0.28%
171,444,105
87.16%
C. Substantial Shareholdings
As at 18 August 2014, there are five substantial shareholders that the Company is aware of:
Name
SCA FT PTY LTD
PERPETUAL LIMITED
GOLDMAN SACHS GROUP
BENNELONG FUNDS MANAGEMENT
AUSTRALIAN SUPER
Ordinary shares
Number held
Percentage of
issued shares
Date of most
Recent notice
56,954,670
27,984,855
17,824,136
13,038,257
9,937,180
28.99%
14.22%
9.06%
6.63%
5.05%
02/08/2013
08/05/2014
15/08/2014
23/04/2014
02/06/2014
Page 99
SHAREHOLDER INFORMATION (continued)
Super Retail Group Limited
For the period ended 28 June 2014
D. Unquoted Equity Securities
As at 18 August 2014, there were 1,582,051 unlisted performance rights, granted to 55 holders, over unissued ordinary shares in
the Company.
E.
Voting rights
The voting rights relating to each class of equity securities is as follows:
a) Ordinary Shares
On a show of hands at a General Meeting of the Company, every member present in person or by proxy shall have one vote
and upon poll each person present in person or by proxy shall have one vote for each ordinary share held.
b) Options and Performance Rights
Performance Rights and Options do not have any voting rights.
F. Market buy-back
There is currently no on market buy-back.
Page 100
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