AN NUAL REP ORT
2 0 1 5
INSPIR ING YOU TO LI VE YOU R PA SS I ON
Super Retail Group Limited
ANNUAL REPORT 2015
1
PERFORMANCE TREND GRAPHS
Reported Sales ($m)
Reported Total Segment EBIT ($m)*
2020.0
2112.1
2238.7
1654.1
182.6
172.3
170.2
140.7
938.0
828.8
1092.3
624.8
715.4
87.5
65.8
55.1
38.1
45.7
JUN 07
JUN 08
JUN 09
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 15
JUN 07
* excludes goodwill impairment charge in 2010
JUN 08
JUN 10
JUN 09
JUN 11
JUN 12
JUN 13
JUN 14
JUN 15
Reported EPS (c)*
55.1
52.3
49.4
Reported Post Tax ROC (%)*
16.8
17.3
15.9
15.4
13.9
14.1
46.4
40.9
32.1
28.1
22.6
19.5
12.6
11.3
10.6
JUN 08
JUN 07
* historical EPS adjusted to take into account the bonus element in 2011 entitlement offer.
# June 2015 continuing operations only; June 2014 not adjusted for discontinued operations.
JUN 09
JUN 10
JUN 13
JUN 11
JUN 12
JUN 14#
JUN 15#
JUN 08
JUN 07
* return calculation adjusted for goodwill impairment, acquisition costs and restructuring provisions.
# June 2015 continuing operations only; June 2014 not adjusted for discontinued operations.
JUN 10
JUN 09
JUN 12
JUN 13
JUN 11
JUN 14#
JUN 15#
Net Debt ($m)
382.6
182.655.1
378.9
Dividend (c)
341.0
329.3
38.0
40.0
182.655.1
40.0
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 15
JUN 07
JUN 08
JUN 09
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 15
Gearing Ratio (%)
46.7
43.3
42.3
Reported Post Tax ROE (%)*
22.0
18.8
19.8
18.8
19.4
19.5
33.1
31.0
33.5
33.1
22.6
19.5
16.1
14.5
13.9
JUN 07
JUN 08
JUN 09
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 15
Annual Total Shareholder Return (%)
182
69
53
37
76
-42
16
15
-26
JUN 07
JUN 08
JUN 09
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 15
2
JUN 08
JUN 07
* return calculation adjusted for goodwill impairment, acquisition costs and restructuring provisions.
# June 2015 continuing operations only; June 2014 not adjusted for discontinued operations.
JUN 09
JUN 10
JUN 12
JUN 11
JUN 13
JUN 14#
JUN 15#
Value of $1,000 invested on 30 June 2006
$16,000
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
0
JUN 06
JUN 07
JUN 08
JUN 09
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 15
SUPER RETAIL GROUP LIMITED
S&P/ASX 200 INDEX
Super Retail Group LimitedANNUAL REPORT 2015 C O N T E N T S
Chairman and Group Managing Director’s Report
Diversity Report
Directors’ Report
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
(cid:24)i(cid:396)ect(cid:381)(cid:396)(cid:400)(cid:859) (cid:24)ec(cid:367)(cid:258)(cid:396)(cid:258)(cid:415)(cid:381)n
Independent Auditor’s Report
Sh(cid:258)(cid:396)eh(cid:381)(cid:367)(cid:282)e(cid:396) In(cid:296)(cid:381)(cid:396)m(cid:258)(cid:415)(cid:381)n
Corporate Directory
2
5
7
34
35
36
37
38
(cid:1012)(cid:1007)
84
(cid:1012)(cid:1010)
89
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 principal 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 7 to 32.
The financial report was authorised for issue by the Directors on 20 August 2015. 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 on our Investor’s and
Media page on our website: www.superretailgroup.com.au
Super Retail Group Limited
Super Retail Group Limited
ANNUAL REPORT 2015
ANNUAL REPORT 2015
1
3
CHAIRMAN AND
GROUP MANAGING
DIRECTOR’S REPORT
Our Fellow Shareholders,
Welcome to the 2015 Annual Report of Super Retail Group.
The past year has been another significant one in the long
term development of the Group. While we have generally
been pleased with the performance of our larger businesses, a
number of significant restructuring decisions have been made
to address the underperformance of our smaller businesses.
We have also continued to make good progress with the
investment in the systems and infrastructure needed to build our
multi-channel retail capabilities. We completed the development
of our distribution centre network and now have the capacity
required to support the future growth of the Group.
investments have
The restructuring costs and strategic
resulted in a fall in net profit in the current year. We believe
these investments set us on the path to deliver strong profit
growth in the years ahead. At the same time our strong cash
flow performance has enabled us to continue to invest in the
business and allowed us to sustain dividend levels despite the
fall in net profit.
The progress made has been recognised by the investment
market and our share price, which started the 2014/15 year at
$8.46, closed for the year at $9.40. We are focused on delivering
strong earnings growth and improvement in return on capital to
continue to drive shareholder returns.
Operating and Financial Performance
The Group’s overall result reflected solid performance across the
Group’s larger businesses, weaker performance and restructuring
costs in the Group’s smaller businesses and the investment being
made to develop the multi-channel supply chain and systems
capabilities required to support the Group’s strategy.
The Auto Retailing division has again delivered solid growth despite
the challenge of weaker retail conditions in the business home state
of Queensland and delivered a further uplift in gross margin despite
the lower Australian dollar increasing purchasing costs.
In the Leisure Retailing division, the BCF business was also
impacted by the weaker Queensland economy, but pleasingly
delivered solid like for like sales growth in the second half of
the year as the sales cannibalisation experienced in the 2014
calendar year was largely eliminated.
In the Sports Retailing division, the combined Rebel and Amart
Sports businesses generated both strong like for like sales and
EBIT growth. Overall divisional EBIT growth was constrained by
the disappointing performance of the Workout World business
and the division’s share of losses incurred by the Infinite Retail
business. The division assumed control of the Infinite Retail
2
2
Super Retail Group Limited
ANNUAL REPORT 2015
Super Retail Group LimitedANNUAL REPORT 2015 CHAIRMAN AND
GROUP MANAGING
DIRECTOR’S REPORT
CHAIRMAN AND GROUP MANAGING
DIRECTOR’S REPORT (continued)
business during the year and has started to integrate the business
more closely, recognising additional costs and adjustments
which have resulted in a share of losses of $3.6 million.
A review of our underperforming businesses was completed
during the year and a decision was made that the most value
creating options were to restructure the Ray’s Outdoors
business, integrate the Workout World business within Rebel
and close the Fishing Camping Outdoors (FCO) business.
Restructuring costs of $12.8 million associated with Ray’s
Outdoors and Workout World were incurred during the year and
the FCO business, which has been classified as a discontinued
operation, generated a loss of $16.2 million. These restructures
provide the platform for stronger profit growth over the next
few years.
in our strategic development
Good progress was made
programs which are focused on building the capabilities to
operate successfully as a multi-channel retailer. The three year
programme to build a more efficient distribution centre network
was completed with the opening of our Brendale distribution
centre in October 2014. The Group is now focused on driving
cost efficiencies from this new network.
We have also continued to invest in our store development and
refurbishment programs and the technology and systems to
support our strategy. During the year, the Group invested circa
$72 million in capital expenditure and $18 million in operating
costs on our development programs. Operating cash flow
performance was strong reflecting progress made in improving
stock turns in the Auto and Sports Retailing Divisions. This
remains an area for further improvement in the coming years.
A full review of the Group’s performance and plans is included in
the Operating and Financial Review set out on pages 10 to 16 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. 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 Group has continued its support of the wider communities
in which it operates during the year. At the Group level, the focus
is on raising funds for Red Cross and 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.
During the year, the Group provided $0.7 million in donations
including contributions from our team
and sponsorships
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 a high
performer signatory.
Some of the Group’s achievements are summarised below:
Sustainability Initiative
2013
2014
2015
Year on
Year
Increase
Australia Waste
Recycling
New Zealand Waste
Recycling
51.0%
53.9%
53.2%
(0.7%)
49.0%
54.6%
57.3%
2.7%
Battery Recycling (Units)
30,844
35,871
35,929
58
Oil Recycling (Litres)
n/a(1)
81,600
233,200
151,600
(1) New initiative no prior comparative data
Group Waste Recycling - The Group is a signatory to the
Australian Packaging Covenant (APC) and has achieved its
annual waste recycling targets as per the agreed APC action
plan. The target for the Australian Waste Recycling for 2015 was
52.5%, recognising that time was required to embed recycling
practices in the new distribution centres.
Battery Recycling - Supercheap Auto has actively marketed the
opportunity for customers to return used automotive batteries
in all of its retail stores for recycling.
Oil Recycling - This initiative was initially trialed in New Zealand
and has now been rolled out through many of Supercheap Auto’s
Australian stores. The Group provides specialised recycling bins
at retail stores for customers to dispose of used car oil.
its
the establishment of
Since
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 team member, past and present,
for their contribution.
3
Super Retail Group LimitedANNUAL REPORT 2015 CHAIRMAN AND GROUP MANAGING
DIRECTOR’S REPORT (continued)
We expect that Group EBIT margin will improve as a result of
improvements in gross margin and a reduction in the operating
costs incurred on the Group’s strategic programmes.
Looking further ahead, we will continue to build our network
of stores from around 630 today to circa 800, while at the same
time developing and growing our ecommerce business. We will
look to build on our strength in retailing products to providing
relevant services
that our customers are
recognising
increasingly looking for solutions and not just product.
We expect to increase profit margins across the Group through
a combination of range management, sourcing and supply
chain initiatives, growing our portfolio of private and exclusive
brands and through cost efficiencies. We further expect that
we will be able to deliver working capital efficiencies through
improving stock turn and inventory funding.
Our investment in our multi-channel programs and the
underperformance of some of our businesses has resulted in
no earnings growth over the last two years. The restructuring
programmes in the underperforming businesses that we have
undertaken in the last twelve months and the scaling back of
investment in strategic programs sets us up to deliver solid
earnings growth and an improvement in our return on capital
in the coming years.
We see many opportunities for the growth and development
of our Company into the future and we look forward to
updating you on our progress in the year ahead. Thank you
for your support.
R J Wright
Chairman
P A Birtles
Group Managing Director
and Chief Executive Officer
Team retention rates have continued to be very strong and,
at 75.4%, are significantly better than norms across the
retail industry. We will aim to maintain retention at around
the 75% level.
Team engagement surveys are conducted on an 18 month
cycle, therefore will be next completed in October 2015. The
last survey in April 2014 generated an overall team member
engagement score of 68% which compares to the retail industry
average of 55% and good employer status at 65%.
We have significantly increased our focus on safety during the
year which led to a large increase in the reporting of incidents
and recording of injuries. This has provided a more accurate
gauge of the Group’s safety performance, and the Group’s Lost
Time Injury Frequency Rate (LTIFR) was at 13.2 for the 2015
year which was above the 12.1 recorded for the 2014 year. We
have reviewed our commitment to reducing our LTIFR and have
set a target of reducing LTIFR below 10.0 for the 2016 year and
by at least 30% in subsequent years.
We are committed to ensuring that we develop a diverse
increasing female
workforce and have set a target of
representation of our Board and senior management to over
40% by 2019. Currently 20% of our Board and 28% of senior
management positions are held by females.
Mr Rob Murray stepped down from the Board of Directors
in April 2015 to take on the role of Chairman of Metcash
Limited. Rob made a strong contribution to the Board over
his two years with the Group and we wish him every success
in his future endeavours.
Mr Anthony Heraghty was appointed by the Group to the
position of Managing Director - Leisure Division, commencing
in his role in April 2015. Anthony will be leading the BCF and
Ray’s Outdoors businesses.
Looking Forward
In the year ahead, the Group would aim to deliver top line growth
through increased like for like sales and the opening of new
stores. The Group would also focus on increasing overall gross
margins, through private brand development and range, price and
promotion management. Combined, these activities are aimed at
offsetting the impact of higher purchase costs. The Group would
also focus on increasing working capital efficiency and continuing
to invest in building its multi-channel capabilities.
We expect overall retail growth in our markets to be modest
given patchy consumer confidence and our higher exposure
to the Queensland market, but we expect to achieve solid
like for like sales growth driven by market share growth in all
businesses. We expect to open between 20 and 30 stores across
the Group in the next 12 months and we will continue with our
store refurbishment and store of the future programmes.
4
Super Retail Group LimitedANNUAL REPORT 2015 DIVERSITY REPORT
The Group recognises its talented and diverse workforce as
a key competitive advantage. Our business performance is a
reflection of the quality and skill of our people and behaviours
that are aligned to our Group Values. The Board and the
Super Retail Group Leadership Team are firmly committed to
developing policies and ways of working that support diversity.
We strive to ensure strong business growth and performance,
whilst providing an environment that makes 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, valuing and utilising the
unique talents and contributions of all individuals.
The Group has developed a diversity policy that links directly
to the Group’s corporate vision and strategies. The objectives
of the policy are:
•
to be recognised as a great place to work and a preferred
employer in the specialty retail sector;
to enhance the engagement and retention of our team
members;
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 Group;
to proactively prevent and eliminate harassment and
unlawful discrimination in the workplace;
to ensure that workplace structures, conditions, systems
and procedures foster diversity and flexibility and allow
team members to manage work and personal life;
to promote awareness of the value of diversity in the
workplace;
to provide gender pay equity across the Group;
to provide suitable employment opportunities for
disabled and disadvantaged team members; and
to actively communicate our commitment to diversity.
•
•
•
•
•
•
•
•
•
•
•
•
The Group’s Diversity Policy is based on the following principles:
the behaviours and actions of all team members will be
•
in line with the Group Values;
Group 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;
all communication will recognise our diverse workforce
and use inclusive language; and
decisions affecting team members will be based on fact
and consultation.
•
•
•
team member’s differences. At Super Retail Group we strive
to 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.
1.
Gender Diversity
We are proud that our culture and inclusive policies have
created a workforce in which women represent 45% of the
workforce at 30 June 2015. Many of the Group’s businesses
operate in retail sectors in which the majority of customers are
men and its competitors employ a significant majority of males.
At Super Retail Group, 20% of our Board, 28% of senior
management positions, and 32% of middle and senior
management(1) positions are held by women as at 30 June
2015. This compares to the previous reporting period whereby
17% of our Board, 24% of senior management and 28% of
middle and senior management were held by women on 30
June 2014.
The Group has set targets for 40% of women in Board and
senior management positions by 2019. The Board is therefore
supportive of the Australian Institute of Company Directors
commitment to gender diversity.
To achieve its targets, the Group has identified three focus areas:
1.1 Recruitment Practices
The Group is reviewing its recruitment practices to ensure that
these are supportive of fostering and encouraging diversity and
inclusion. Specific initiatives include:
•
promoting the Group as a true equal opportunity and
inclusive employer through advertising campaigns and
recruitment marketing material;
at least one female to be shortlisted and interviewed for all
Band 1, 2, 3 and 4 positions; and
review of all band 1 to 3 appointments by the Chief
Executive Officer (CEO) and Chief Human Resources Officer.
•
•
1.2 High Potential Development Programs
The Group is reviewing its learning and development programmes
to ensure that these are designed to foster the development of
female future leaders. Specific initiatives include:
•
the Group’s Women in Leadership Development program
which is a specific program tailored to developing high
potential females across the Group;
mentoring program for women; and
a Commitment to diversity of participants on the Group’s
broader leadership development programmes.
•
•
These diversity principles aim to facilitate improved business
outcomes and achievement of our goals through embracing
(1)Senior management is defined as all roles in Bands 1-3, and middle
management is defined as all roles in Band 4.
5
Super Retail Group LimitedANNUAL REPORT 2015 DIVERSITY REPORT
(continued)
1.3
Flexible Working Practices
is
investigating,
The Group
implementing and reviewing
opportunities to increase the flexibility of its work practices
to encourage its team members (importantly both male and
female) to take opportunities to advance their careers while
balancing personal commitments. Specific initiatives include:
•
•
•
•
•
•
•
implementation of working from home and flexible
working policy;
part time work opportunities;
additional shifts to accommodate caring responsibilities
throughout the week;
compressed work weeks;
opportunity to buy out additional annual leave;
understanding usage of flexible work practices, including
focus groups across the organisation to understand
team member preferences and review of work practices
to identify opportunities for flexibility; and
at June 2015, two members of the executive team (one
male and one female) are successfully working under
flexible work arrangements.
2. Other Diversity Initiatives
In addition to the three primary focus areas, the Group has also
implemented a number of other initiatives to foster workplace
diversity. These include:
•
•
•
•
•
•
•
•
•
•
paid maternity leave, above statutory minimum;
parental leave information packs, gifts and keeping in
touch program;
graduated return to work from maternity leave;
monitoring of remuneration for gender differences;
appointment of women into senior non-traditional
roles – e.g. General Manager Retail Operations,
General Manager IS Transformation, General Manager
IS Strategy and Solutions, Retail Operations Manager,
Distribution Centre Manager and Regional Manager;
CEO participation in the Queensland Male Champions
of Change;
exploring the opportunity to engage with National
Disability Recruitment Coordinator services;
analysing diversity and succession related information
from key managers;
domestic and family violence support and
accessibility; and
diversity questions included in Engagement Survey.
leave
3.
Broadening Diversity
In the coming year the Group will be implementing additional
initiatives to maintain our ongoing focus for diversity whilst also
broadening the scope to include ethnicity, age and disability.
6
6
Super Retail Group Limited
ANNUAL REPORT 2015
Super Retail Group LimitedANNUAL REPORT 2015 DIVERSITY REPORT
(continued)
Directors’ Report
The Directors present their report together with the consolidated financial statements of the Group comprising Super Retail
Group Limited (SUL) (the Company) and its subsidiaries for the period ended 27 June 2015.
Directors
1.
The Directors of the Company at any time during or since the end of the period, up to the date of this report are:
R J Wright
P A Birtles
R A Rowe
R J Skippen
S A M Pitkin
R A Murray (resigned 29 April 2015)
1.1.
Details of Directors, their qualifications and experience
R J Wright, BCom, FCPA, MAICD.
Independent Non-Executive Chair.
Robert Wright was appointed a Director of the Company on 19 May 2004 and Chairman on 28 October 2009; he has been
an Independent Non-Executive Director for 11 years and 3 months.
Robert has over 35 years’ financial management experience across a range of industries including Retail, Food Processing
and Fast Moving Consumer Goods. During his executive career he was the Chief Financial Officer of several listed
companies including ten years for David Jones Limited. He has over 25 years’ experience as both an Executive Director
and Non-Executive Director of a number of private and listed companies in the following industry sectors: Retail, Fast
Moving Consumer Goods, Property Development, Manufacturing and Natural Gas Infrastructure.
Robert is currently the Chairman of APA Ethane Limited, the responsible entity of Ethane Pipeline Income Fund, and a
Director of Australian Pipeline Limited, the responsible entity of the registered managed investment schemes that comprise
APA Group. Robert was previously Chairman of SAI Global Limited, Dexion Limited and RCL Group Limited.
P A Birtles, BSc, ACA, MAICD.
Group Managing Director and Chief Executive Officer.
Peter Birtles was appointed a Director of the Company on 5 January 2006 and has been the Managing Director and Chief
Executive Officer for 9 years and 8 months.
Peter is a Chartered Accountant with over 25 years’ experience, in the retail, pharmaceutical and consumer products
industries. Peter joined Super Retail Group Limited in April 2001 as Chief Financial Officer and also served as Secretary of
the Company between May 2004 and January 2006. Prior to joining Super Retail Group, Peter spent 12 years working with
The Boots Company in the United Kingdom and Australia in a variety of senior roles across finance, planning, operations,
supply chain, human resources and information technology. Prior to joining The Boots Company, Peter worked for Coopers
& Lybrand.
Peter is currently a Non-Executive Director of GWA Group Limited.
R A Rowe.
Non-Executive Director.
Reg Rowe was appointed a Director of the Company on 8 April 2004 and has been a Non-Executive Director for 11 years
and 4 months.
Reg and Hazel Rowe founded an automotive accessories mail order business in 1972 which they ran from their Queensland
home. In 1974 they commenced retail operations of the business which evolved into Supercheap Auto. Reg served as
Managing Director until 1996 and then Chairman from 1996 to 2004. Prior to this, Reg had 13 years’ experience in various
retail and merchandise roles at Myer department stores.
Reg brings to the Board extensive retail industry and general management expertise and skills in retail and merchandise
operations, property and strategy.
Reg is a Director of a number of private family companies.
Super Retail Group Limited Annual Report 2015 7
7
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
1.
Directors (continued)
1.1
Details of Directors, their qualifications and experience
R J Skippen, ACA.
Independent Non-Executive Director.
John was appointed a Director of the Company on 16 September 2008. John has been Chairman of the Audit and Risk
Committee since 28 October 2009, and is also a member of the Human Resources and Remuneration Committee.
John has over 36 years’ experience both as an Executive and Non-Executive Director of listed and non-listed public
companies and was Finance Director and Chief Financial Officer of Harvey Norman Holdings Ltd for 12 years and also
operated as a Chartered Accountant for over 30 years.
John has extensive retail, property acquisition and development, mergers and acquisition, and funding experience, both
internationally and in Australia, as well as previous ownership of businesses in the advertising, marketing and construction
industries.
John is currently Non-Executive Chairman of Slater & Gordon Limited and Non-Executive Director of Flexigroup Ltd.
S A Pitkin, LLB, LLM, PhD, FAICD.
Independent Non-Executive Director.
Dr Sally Pitkin was appointed a Director of the Company on 1 July 2010 and has been an Independent Non-Executive
Director for 5 years. Sally is the Chair of the Human Resources and Remuneration Committee.
Sally has nineteen years' experience as a Non-Executive Director in the listed, private, public and non-profit sectors. She
has eleven years' experience as a Non-Executive Director of ASX 200 companies, including experience in international
markets. Industry sectors in which she has experience as a Non-Executive Director include retail, finance and insurance,
technology commercialisation, gaming, energy and transport. She is a lawyer and former partner of Clayton Utz with banking
law, corporate law and corporate governance expertise. Sally is a Non-Executive Director and Fellow of the Australian
Institute of Company Directors and is President of the Queensland Division, a member of the External Advisory Panel of the
Australian Securities and Investments Commission and a Non-Executive Director of the Committee for Economic
Development of Australia.
Sally is presently a Director of ASX listed companies Echo Entertainment Group Limited, Billabong International Ltd, and
IPH Limited.
Sally holds a Doctor of Philosophy (Governance), awarded in 2012.
R A Murray. BA Hons Economics, MA Hons (Cantab).
Independent Non-Executive Director.
Rob Murray was appointed a Director of the Company on 22 April 2013 and was an Independent Non-Executive Director
until his resignation as a Director of the Company on the 29 April 2015.
Rob served as Managing Director and CEO of Lion Limited and predecessor Lion Nathan Limited from October 2004 to
October 2012, prior to which he was CEO of Nestle Oceania. Rob has extensive knowledge of fast moving consumer
goods, sales and marketing.
Rob is currently Chair of Dick Smith Holdings Limited and a Director of Southern Cross Media Group Limited and Metcash
Limited.
1.2
Special Responsibilities of Directors
Director
Audit & Risk Committee
Nomination Committee
Human Resources & Remuneration
R J Wright
P A Birtles
R A Rowe
R J Skippen
S A Pitkin
R A Murray
(1)
n/a
n/a
(2)
(3)
(2)
(3)
n/a
n/a
(2)
(3)
(1) Mr Wright was appointed a member of the Audit and Risk Committee with effect from 29 April 2015, following the resignation of Mr Murray.
(2) Denotes Chair of Committee
(3) Mr Murray was a Director and Committee Member as indicated throughout the reporting period, until his resignation, with effect from 29 April 2015.
Super Retail Group Limited Annual Report 2015 8
8
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
1.
Directors (continued)
1.3
Directorships of listed companies held by members of the Board
Director
Listed Company
Directorship
Key Dates
R J Wright
Super Retail Group Limited
APA Ethane Limited
Australian Pipe Limited
SAI Global Limited
P A Birtles
Super Retail Group Limited
GWA Group Limited
Independent Chair
Independent Non-Executive Director
Chair and Non-Executive
Director
Independent Non-Executive Director
Chair and Non-Executive Director
Group Managing Director and
Chief Executive Officer
Independent Non-Executive Director
Current, appointed 28 October 2009
Appointed 19 May 2004
Current, appointed 10 July 2008
Current, appointed 10 Feb 2000
Former, appointed 17 December 2003
and ceased 29 October 2013
Current, appointed 05 January 2006
Current, appointed 24 November 2010
R A Rowe
Super Retail Group Limited
Non-Executive Director
Current, appointed 08 April 2004
R J Skippen Super Retail Group Limited
Slater & Gordon Limited
S A Pitkin
Flexigroup Limited
Emerging Leaders Investment
Limited (delisted 19/06/2014)
Super Retail Group Limited
Billabong International Limited
Echo Entertainment Group
Limited
IPH Limited
Independent Non-Executive Director
Independent Chairman and Non-
Executive Director
Independent Non-Executive Director
Non-Executive Director
Current, appointed 16 September 2008
Current, appointed 26 May 2010
Current, appointed 20 November 2006
Former, appointed 12 October 2010
and ceased 15 September 2014
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Current, appointed 01 July 2010
Current, appointed 28 February 2012
Current, appointed 31 July 2014
Independent Non-Executive Director
Current, appointed 23 September 2014
R A Murray Super Retail Group Limited
Independent Non-Executive Director
Dick Smith Holdings Limited
Southern Cross Media Group
Limited
Metcash Limited
Independent Chair and Non-Executive
Director
Independent Non-Executive Director
Former, appointed 22 April 2013
and ceased 29 April 2015
Current, appointed 12 August 2014
Chair, appointed 28 February 2015
Current, appointed 01 September 2014
Independent Non-Executive Director
Current, appointed 29 April 2015
Directors’ Meetings
1.4
The number of meetings of the Company’s Board of Directors and each Board Committee held during the period ended
27 June 2015 is set out below:
Meetings of Committees
Board Meetings
Audit and Risk
Nomination
Attended
Held(1)
Attended
Held(1)
Attended
Held(1)
R J Wright
P A Birtles
R A Rowe
R J Skippen
S A Pitkin
R A Murray
9
9
9
9
9
7
9
9
9
9
9
8
1
n/a
n/a
4
4
3
1
n/a
n/a
4
4
3
1
1
1
1
1
1
1
1
1
1
1
1
(1)Number of meeting held during the time the Director held office during the year.
Human Resources
and Remuneration
Held(1)
Attended
n/a
n/a
2
2
2
2
n/a
n/a
2
2
2
2
Super Retail Group Limited Annual Report 2015 9
9
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
1.
Directors (continued)
1.5
Directors’ Interests
The relevant interest of each Director in shares and options over such instruments issued by the companies within the
Group and other related bodies corporate, as notified by the Directors to the Australian Securities Exchange (ASX) in
accordance with section 205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Director
R J Wright
P A Birtles
R A Rowe
R J Skippen
S A Pitkin
R A Murray
Number of Ordinary Shares
Options over Ordinary Shares
78,175
1,424,246
57,047,015
-
26,453
n/a
-
-
-
-
-
n/a
Company Secretary
2.
The Company Secretary (and Chief Legal and Property Officer) 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.
3.
Operating and Financial Review
3.1
Overview of the Group
The Group is a for-profit entity and is primarily involved in the retail industry. Founded in 1972, as an automotive accessories
mail order business which evolved into Supercheap Auto, the Group has grown through both organic growth and mergers
and acquisitions evolving its principal activities to include:
•
•
•
retailing of auto parts and accessories, tools and equipment;
retailing of boating, camping, outdoor equipment, fishing equipment and apparel; and
retailing of sporting equipment, bicycles, bicycle accessories and apparel.
3.2
(a)
Review of Financial Condition
Group Results
The Group has delivered strong sales growth of 7.1% from its continuing operations while it has undertaken significant
restructuring activity to address performance issues in a number of the smaller businesses during the year. Whilst these
restructuring activities have a material impact on the reported statutory results for the Group, the financial performance for
future periods are expected to improve. The total restructuring impact this financial year is $12.8 million (before tax)
including costs to restructure the Ray’s Outdoors and Workout World businesses. The FCO Fishing Camping Outdoors
(FCO) business was closed in May 2015 and an associated loss of $16.2 million has been recognised as discontinued
operations.
For the 52 weeks to 27 June 2015 total sales for the Group increased 7.1% to $2,238.7 million. Net profit after tax
attributable to members was $81.1 million compared to $108.4 million in the prior period. After excluding discontinued
operations and restructuring activities, the normalised net profit after tax was $106.3 million compared to $112.2 million in
the previous comparative period. The table below provides the reconciliation to the statutory profit:
Profit for the period
Loss for the period attributable to non-controlling interests
Profit for the period attributable to members of Super Retail Group Limited
Loss from discontinued operations
Profit for the period attributable to members of Super Retail Group Limited
from continuing operations
Business restructuring costs
Normalised net profit after tax
Business restructuring costs comprise:
- Ray’s Outdoors
- Workout World
- Tax benefit
Total business restructuring costs
2015
$m
76.9
4.2
81.1
16.2
97.3
9.0
106.3
10.3
2.5
(3.8)
9.0
2014
$m
108.4
-
108.4
3.8
112.2
-
112.2
-
-
-
-
Super Retail Group Limited Annual Report 2015 10
10
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
3.
3.2
Operating and Financial Review (continued)
Review of Financial Condition (continued)
(a)
Group Results (continued)
Overall sales growth was delivered in each division. In the Auto Retailing Division, new stores sales growth and like for like
sales growth 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 Leisure Retailing Division were below the prior comparative period. Sports Retailing reported sales increased due to
strong underlying like for like sales growth and new store growth. Included in the Sports Retailing results is the full year
results of the Infinite Retail Pty Ltd (Infinite Retail) (formerly VBM Retail Pty Ltd) business. In July 2014 the Group took a
50.05% controlling interest in Infinite Retail resulting in consolidation of the entities results and net assets. The entity had
been equity accounted in the prior comparative period.
The Group has continued to invest in the development of its businesses and supporting capability with $33.1 million in
information technology projects, supply chain development projects and general capital expenditure and $38.8 million capital
expenditure on new stores and refurbishment programs. $18.2 million of operating costs have been incurred associated with
multi-channel and group projects.
Group net debt at $378.9 million was $3.7 million below the prior year reflecting the investment in the Group’s strong
underlying operating cash flow performance and continued investment in the store network and multi-channel projects.
(b)
Auto Retailing
Divisional sales at $854.3 million were 4.4% higher than the prior comparative period with like for like sales growth being
2.2%. Segment EBIT at $96.0 million was 1.6% higher than the comparative period.
Like for like sales growth of 2.2% was driven by an increase in average unit value. Gross margin improved by a further 20
percentage points, again driven by ranging and sourcing initiatives. Operating costs as a percentage of sales increased 30
percentage points, due to higher store operating expenses.
Membership of the Supercheap Auto Club Plus increased to 1.35 million by June 2015, with active members (members that
have purchased in the last 12 months) totalling over one million. Sales attributable to club members are increasing and club
members continue to have higher average transaction values than non-club members.
The business has continued to focus on sales and margin growth with particular focus on store refurbishment, ranging
initiatives, private brand development, partnering with the world’s best automotive brands and team engagement.
All the major product categories, with the exception of the tools categories, delivered positive growth during the year with
particularly strong growth being achieved in the power, car care, paint and panel and spare parts categories. Like for like
sales growth was achieved in New Zealand and all Australian states, except Queensland.
The business opened nine new stores during the year, while 29 stores were refurbished including two converted to
superstores. At the end of June there were 300 stores across Australia and New Zealand with the business targeting an
additional 40 stores over the next 3 years.
Over the last two 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 and is
now deployed to 36 stores in the store network and the business is planning to refurbish around 65 stores in the new format
in the coming year.
The trial of a new trade supply business, Auto Trade Direct (ATD) in the North Island of New Zealand has been completed.
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. The ATD business is being fully integrated into the Supercheap retail trade offer.
This will allow an extension of the Auto Trade Direct business into the Australian market over the next year to provide a
stronger trade offering to existing and new trade customers.
(c)
Leisure Retailing
The Group undertook a strategic review of the Ray’s Outdoors and FCO businesses during the year. It was determined to
undertake a repositioning of the Ray’s Outdoors business and to close the FCO business. The Group ceased trading FCO in
New Zealand in May 2015. This business is now accounted for as discontinued operations. As a consequence the Leisure
Division comparatives have been restated to exclude the FCO business.
Divisional sales at $543.2 million were 2.4% higher with like for like sales across the division 0.6% lower than the prior
comparative period.
Super Retail Group Limited Annual Report 2015 11
11
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
3.
3.2
Operating and Financial Review (continued)
Review of Financial Condition (continued)
(c)
Leisure Retailing (continued)
The Leisure Segment EBIT result at $32.3 million was $5.9 million below the prior comparative period. Segment EBIT
margin was 5.9%, which was 130 percentage points lower than the prior comparative period. This decline reflected a
decrease in gross margin, 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 business was impacted by the weaker Queensland retail market but delivered solid like for like sales growth in the
second half of the year as the sales cannibalisation experienced in the 2014 calendar year was largely eliminated. Positive
like for like sales growth was delivered in the second half supported by positive like for like growth in customer transactions
with higher units per transaction and average unit values compared to the prior corresponding period. The strongest
recovery has been in boating and camping while the fishing category remains more subdued.
The BCF club loyalty program continued to grow in the financial year with active membership totalling over nine hundred
thousand members. The BCF club membership group have higher levels of visitation, average transaction value and
engagement than other customers. Increasing engagement with our BCF club members has been a key focus for the
business for last year and for the year ahead.
The business opened three new stores during the year taking total store numbers to 117. BCF expects to reach 137 stores
in the next four years. The business has continued to refine its store of the future concept initiating a pilot store to test a new
format and a large refurbishment program is planned for the 2016 financial year.
During the year the business commenced the conversion of trade partners from direct to store product delivery to direct
delivery into the Group distribution centres. This initiative will be continue in the 2016 financial year. Inventory performance
within BCF remains a key focus to improve inventory investment without impacting the customer experience.
As outlined earlier a review of the Ray’s Outdoors business was completed in the year with a decision made to reposition the
business to focus on ‘an outdoor adventure for all’ retailing offer built around a wide range of quality outdoor products at
constant fair value. The repositioning will involve changes to the Ray’s Outdoors brand, product range, store format,
customer service experience and website. Pilot stores are in development to trial the new Ray’s Outdoors format and will be
launched in the second quarter of the 2016 financial year.
A restructuring cost has been incurred in the 2015 financial year to close four stores, accelerate clearance of the existing
range of stock that does not meet the future business model and undertake activities to support the brand re-positioning
including new website development.
As expected the Ray’s Outdoors gross margin was lower than the prior comparative period due to the inventory clearance
program, which is expected to be completed by the end of August 2015. Gross margins will continue to be lower in the first
half of the 2016 financial year due to the inventory clearance activity, and are expect to lift in the second half due to a
cleaner stock position and improvements associated with the re-positioning. Four stores were closed during the year. At the
end of June 2015 the Ray’s Outdoor network comprised 53 stores. The business is targeting to re-position the store network
with all stores to be subject to refurbishment or relocation and to grow the store network to 66 stores within four years.
As outlined earlier, a review of the FCO business was completed this year. The review identified that it was unlikely the
business would achieve the Group’s return on capital targets within a reasonable time period. As a consequence, in
February 2015 the Group announced its intention to close the business, which ceased trading in May 2015.
In April 2015, Anthony Heragthy commenced in the role of Managing Director - Leisure Division. His broad experience in
customer and brand strategies will be important to improving the performance of Leisure Retailing.
(d)
Sports Retailing
Divisional sales at $835.0 million were 13.8% higher than the prior period and Segment EBIT at $65.6 million was 4.5%
higher than the prior period. As outlined earlier the Group increased its investment in Infinite Retail to a controlling interest,
which resulted in consolidation of the entity’s’ results and net assets.
Like for like sales growth for Rebel and Amart Sports was 6.6%, driven by increases in customer transactions, units sold and
unit value. Rebel and Amart Sports gross margins declined 100 percentage points reflecting strong growth in low margin
categories (eg. fitness technologies), promotional activity and first half clearance of excess inventory. Rebel and Amart
Sports operating costs as a percentage of sales were 120 percentage points favourable to the prior corresponding period.
Overall the Rebel and Amart Sports EBIT contribution increased $7.6 million to $73.8 million representing an EBIT margin of
9.4%, 20 percentage points higher than the prior corresponding period.
Super Retail Group Limited Annual Report 2015 12
12
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
3.
3.2
Operating and Financial Review (continued)
Review of Financial Condition (continued)
(d)
Sports Retailing (continued)
Like for like sale growth was achieved in all categories with Clothing, Footwear and Cycling all over indexing. Hard goods
sales growth was softer due to negative growth from fitness equipment. In the Hard Goods category, strong sales growth
was achieved in the technology category (which includes heart rate monitors) at lower gross margins, bringing the overall
category gross margin performance down compared to the prior comparative period.
Rebel Active and Team Amart loyalty programs have grown strongly in the year with active members now totalling 1.28
million and 0.54 million respectively. This represents an increase in active members of 79% and 37% respectively. Members
of the loyalty programs have higher average transaction values and higher visitation levels.
The division has continued to build the Amart Sports network in Victoria and New South Wales with six new stores opened
during the year. Additionally two Amart Sports stores were closed. One Rebel store was closed and one store was converted
to an Amart Sports store and a further seven stores were refurbished. At the end of June there were 90 Rebel stores and 56
Amart Sports stores.
Sports Retailing inventory closed the 2015 financial year at $161.8 million, reflecting an increase on the prior year of 4.8%
on a per store basis for the Rebel and Amart Sports businesses. This is attributable to increased private and exclusive brand
sourcing with longer inventory lead times. Total inventory also increased due to the consolidation of the Infinite Retail
business.
In May 2015, the Group announced the restructuring of the Workout World business to more closely integrate it with the
Rebel business. This has resulted in the closure of five stores in May 2015 with a further five stores to be closed in the 2016
financial year. At the end of June 2015 there were 17 Workout World stores. The store closures and associated restructuring
costs incurred in the financial year totalled $2.5 million. The Workout World business lost circa $5 million during the financial
year. It is expected that the restructuring will reduce this loss to breakeven in the 2016 financial year.
In July 2014 the Group took a 50.05% controlling interest in Infinite Retail. Infinite Retail operates the Fangear.com website,
a number of other merchandising websites and event activity for major sporting codes. Integration of the business has
commenced generating additional costs and adjustments which have resulted in a share of losses of $3.6 million.
(e)
Group Costs
Group costs for the period were $23.7 million, including $5.5 million in public company costs and $5.8 million in costs
associated with other projects. Group costs also include $12.4 million of costs associated with the Group’s multi-channel
development programs and unutilised distribution centre space.
(f)
Review of Financial Position
Cash flow from operations was $182.0 million, an increase of $14.8 million on the prior comparative period, primarily due to
improved working capital management. Total inventory investment across the Group at the end of June was $505.6 million,
an increase of $15.5 million compared to the prior comparative period.
Group capital expenditure was $71.9 million which included $38.8 million in new and refurbished store fit out, and $33.1
million in information technology projects, supply chain development projects and general capital expenditure.
At the end of June, Group Net Debt was $378.9 million, which was comfortably within the Group’s facility limits. The Group
remains within its banking covenants.
(g)
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 more efficiently;
leverage common business systems across the Group; and
attract, engage and retain a passionate, capable and engaged team.
Super Retail Group Limited Annual Report 2015 13
13
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
3.
3.2
Operating and Financial Review (continued)
Review of Financial Condition (continued)
(g)
Group Strategy (continued)
The Group is aiming to achieve long term sustainable advantage by exceling in six areas:
•
•
•
•
•
•
understanding our customers;
engaging and inspiring our customers across all channels;
developing innovative and relevant solutions;
building 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:
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 and solution development;
private and exclusive brand development.
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.
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;
implementation of demand planning, replenishment and assortment systems;
development of inventory management systems.
Increasing the efficiency and productivity of the Group’s operations
•
right sizing of the store portfolio;
•
group procurement synergies;
•
productivity focus;
• management systems.
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.
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;
trial of on-line micro sites;
assessment of acquisition opportunities.
The Group anticipates a capital expenditure program amounting to circa $100.0 million in the 2016 financial year associated
with the development programs across the Group.
Super Retail Group Limited Annual Report 2015 14
14
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
3.
3.2
Operating and Financial Review (continued)
Review of Financial Condition (continued)
(h)
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 offering 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.
• Digital disruption - The ever increasing pace of change driven by technology advances creates opportunities and
challenges including the development of digital marketing and sales channels. Digital disruption requires new and agile
forms of development and consequentially impact on the Group’s business models and ways of working. 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. With digitally enabled 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.
• 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 2016 financial 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
75.4% 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.
•
• Stakeholder sustainability expectations - 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 and
sustainable business practices. On-going review of changes to regulation and stakeholder sustainability expectations 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 - Summary of Significant
Accounting Policies, included in 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. The
requirement is to develop multi-channel capabilities quickly and cost effectively. To leverage the capital investments
made it is necessary to implement new logistics networks and methods and effective inventory management. The
effective analysis of data to drive decisions and an information technology platform that supports digital capability and
growth are key foundational requirements. 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.
Super Retail Group Limited Annual Report 2015 15
15
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
3.
Operating and Financial Review (continued)
3.2
Review of Financial Condition (continued)
(i)
Sustainability
Sustainability is strongly linked to our business strategy and is a long-term priority for the Group.
During the 2015 financial year we continued to take steps to limit the environmental impact of our business operations and
meet our legal, social and ethical obligations.
This year we have included our sustainability performance, in accordance with the Global Reporting Initiative (GRI) G4
Sustainability Reporting Guidelines, in our annual Corporate Review. The publication provides an overview of our
performance and risk mitigation strategies in the areas that are most material to the long-term sustainability of our business:
•
•
•
•
•
Environmental footprint;
Ethical supply chain management;
Product material stewardship;
Resource consumption and efficiency measures;
Community impacts and contributions.
Our Corporate Review is available to view online at www.superretailgroup.com.
(j)
Significant Changes in the State of Affairs
During the period, the FCO Operations were closed and the Ray’s Outdoors and Workout World businesses were
restructured. For further details, refer to note 4(b) and note 34. Discontinued Operations, included in the Notes to the
Consolidated Financial Statements.
(k)
Matters Subsequent to the End of the Financial Year
Since 27 June 2015 Super Retail Group Limited does not have any matters subsequent to the end of the financial year to be
disclosed.
(l)
Likely Developments and Future Prospects
Information on likely developments in the operations of the Group is included in this report under this section - Operating and
Financial Review. 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.
(m)
Environmental Regulation
The Group’s environmental obligations are regulated under State, Territory and Federal Law. The Group has an
Environmental Management System in place and a policy of complying with its environmental performance obligations. All
material environmental performance obligations are monitored by the Board. No environmental breaches have been notified
to the Group during the period ended 27 June 2015.
Super Retail Group Limited Annual Report 2015 16
16
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
4. Remuneration Report - Audited
Contents
Section 1
Section 2
Section 3
Section 4
Section 5
Section 6
Section 7
Section 8
Section 9
Remuneration Strategy and Policy
Role of the Human Resources and Remuneration Committee
Senior Executive Remuneration Structure
Non-Executive Directors Remuneration Structure
Relationship of Remuneration to Group Performance
Remuneration Outcomes for 2015
Service Agreements
Period of Restraint
Additional Information
Section 1: Remuneration Strategy and Policy
One of the 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 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 2nd quartile of relevant
market remuneration levels, subject to individual performance;
to provide gender pay equity across the Group through regular analysis and review;
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.
•
•
•
•
•
•
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.
SUL Remuneration Policy
Market Competitive
Aligned to Shareholders
Sustainable Value
Pay for Performance
Environment –
specific and measurable
Equitable,
fair and consistent
across the Group
Flexible – recognise
performance, experience
and qualifications
Group Managing Director and
Chief Executive Officer and Senior Executives
Remuneration Framework
Super Retail Group Limited Annual Report 2015 17
17
Base Salary
Short Term Incentive
Long Term Incentive
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
4.
Remuneration Report – Audited (continued)
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 at least once in each financial year. The Charter was revised having regard for the ASX
Corporate Governance Council, Corporate Governance Principles and recommendations, 3rd edition (ASX Principles) and
adopted by the Board in September 2014. The revision provided clarity of the alignment of the Charter with both the ASX
Principles and the Company’s governance practices.
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 executive key management personnel,
are remunerated under a Total Reward structure consisting of three 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.
(a)
Key Management Personnel
The names and titles of the Group’s key management personnel (KMP) (being those persons having authority and
responsibility for planning, directing and controlling the activities of the entity) are set out below. There have been no
changes to KMP since the end of the financial year.
Non-Executive Directors
Current:
R J Wright
R A Rowe
R J Skippen
S A M Pitkin
Former:
R A Murray
Chair and Independent Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director (ceased 29 April 2015)
Super Retail Group Limited Annual Report 2015 18
18
Super Retail Group LimitedANNUAL REPORT 2015
4.
Remuneration Report – Audited (continued)
Section 3: Senior Executive Remuneration Structure (continued)
(a)
Key Management Personnel (continued)
Executive Director
P A Birtles
Group Managing Director and Chief Executive Officer
Other KMP
Chief Financial Officer
Managing Director – Commercial
Current:
D J Burns
D F Ajala
E A Berchtold Managing Director – Sports Division
C D Wilesmith Managing Director – Auto Division (commenced as KMP 29 June 2014)
A M Heraghty Managing Director – Leisure Division (commenced as KMP 27 April 2015)
G G Carroll
Chief Supply Chain Officer
Former:
S J Doyle
Managing Director – Leisure Retailing (ceased as KMP 1 August 2014)
Reward Structure Split
(i)
The mix of fixed and at risk components for each of the Group Managing Director and Chief Executive Officer and Executive
KMPs disclosed in the Remuneration Report, as a percentage of total target annual remuneration for the 2015 financial year,
is as follows:
Figure 1
TOTAL REWARD STRUCTURE - KEY MANAGEMENT PERSONNEL
36%
36%
Group Managing Director and Chief Executive Officer
45%
27%
Divisional Managing Directors
28%
28%
50%
25%
25%
Chief Financial Officer and Chief Supply Chain Officer
FIXED REMUNERATION
STI
LTI
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.
(b)
Base Salary Package
The Remuneration Policy provides Executive 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.
the Human Resources and Remuneration Committee and
Base salary packages are reviewed annually by
recommendations are made to the Board. There is no guaranteed base salary increases in any Executive KMP’s service
contract. Approved amendments to base salary packages are effective from the commencement of the new financial year.
Super Retail Group Limited Annual Report 2015 19
19
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
4.
Remuneration Report – Audited (continued)
Section 3: Senior Executive Remuneration Structure (continued)
(b)
Base Salary Package (continued)
Market information is sourced from Remuneration Consultants and Salary Surveys and the Company extracts relevant
information from listed Annual Reports. In 2015, information has been sourced from Ernst & Young (EY) Remuneration
Consultants for KMP. The Board referenced 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, the comparator benchmarks show that while we have closed the gap, as in the previous year, the comparator
benchmarks disclosed that the base salary packages for the majority of KMP remain 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 KMP
to align with the market median. The increases for the Executive KMP (excluding the Group Managing Director and Chief
Executive Officer) from 1 July 2015 was set in the range of 4% to 15% which will bring the base salary packages at or near
the market median. The base salary increase for Group Managing Director and Chief Executive Officer from 1 July 2015
were set at 2.1% reflecting the lower earnings achieved in the prior financial year.
(c)
Short Term Incentive (STI)
The Group Managing Director and Chief Executive Officer and 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.
The scheme is directly linked to the Group’s overall performance and takes into consideration both company performance
measures and individual performance targets.
Company Performance Measures
(i)
Achievement of company performance measures determines the STI bonus pool from which the Group Managing Director
and Chief Executive Officer and Executive KMP are paid.
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.
Should actual profit before tax exceed the profit before tax target, a STI bonus pool is created to a value of 20% of the
amount that Company profit before tax exceeds the target. To achieve the maximum bonus potential the actual profit before
tax needs to exceed target by 10%.
For the year to 27 June 2015, the profit before tax target was set at $165.6 million, 4.4% higher than the profit before tax
achieved in the period to 28 June 2014 of $158.6 million. This target was not achieved.
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 key performance indicators (KPI) targets that are established at the beginning of the year.
Individual Performance Measures
(ii)
Individual performance targets include both Individual KPI targets and Divisional Profit targets. The Group Managing
Director and Chief Executive Officer and all Executive KMP are eligible for reward for individual achievement of KPI targets,
with Divisional Managing Directors also eligible for reward on divisional performance – refer to section 3(c) – Divisional
Profit. Achievement of individual performance targets determines the value of the STI payment rewarded.
Individual KPI Targets
The Human Resources and Remuneration Committee is responsible for setting KPI targets for the Group Managing Director
and Chief Executive Officer, with the Group Managing Director and Chief Executive Officer cascading these KPI targets to
his Senior Executives as appropriate. These KPI targets cover the achievement of financial and operational results and the
successful implementation of strategic and people development initiatives. The KPI targets are consistent with the overall
performance targets and objectives set out in the Group’s business plan. The level of participation is dependent on the
achievement of these KPI targets relevant to their area of responsibility.
Super Retail Group Limited Annual Report 2015 20
20
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
4. Remuneration Report – Audited (continued)
Section 3: Senior Executive Remuneration Structure (continued)
(c)
Short Term Incentive (STI) (continued)
The KPI targets are divided into the following categories:
Safety
Team
Operational
Strategy
development
and
implementation
Group Managing Director and
Chief Executive Officer
Improvement in Group LTIFR
Delivery of Group safety plan.
Group organisation and culture
review.
Group Leadership Team
structure review and succession
planning.
n/a
Group Strategy development
and seven Group strategy
implementation initiatives,
covering Auto Retailing,
Leisure Retailing, Sports
Retailing, Supply Chain, IT
transformation and Customer
insights.
Chief Financial Officer and the
Chief Supply Chain Officer
Divisional Managing
Directors
Improvement in Supply Chain
LTIFR (Chief Supply Chain
Officer).
Two initiatives covering
department organisation and
team engagement/succession.
Improvement in Divisional
LTIFR.
One Divisional team
engagement initiative.
Department operational
efficiency initiatives (six for CFO
and five for Chief Supply Chain
Officer).
Four Departmental strategy
implementation initiatives.
Six Divisional financial
measures and operational
initiatives.
Four Divisional strategy
implementation initiatives.
The Human Resources and Remuneration Committee is also responsible for assessing whether the KPI targets are
achieved and for approving STI payments. The Committee receives reports from management to assist in the assessment.
Divisional Profit
The Divisional Managing Directors are eligible to achieve an additional individual performance related bonus in the form of a
Divisional Profit bonus. The maximum opportunity is capped at 30% of base salary, the outcome of which is determined by
achieving the divisional profit included in the Group’s strategic plan, as approved by the Board. Divisional profit is measured
by segment EBIT performance. For the year to 27 June 2015 the divisional profit targets were not met and no Divisional
Profit Bonus was paid.
The following table summarises the components of total STI, the maximum STI opportunity and the percentage achieved.
KMP
Maximum
STI
Opportunity(1)
Company Measures
Group Profit
Opportunity
Components of Total STI
Individual Performance
Divisional
Profit
Individual
KPIs
Group Managing Director and
Chief Executive Officer
100%
90%
Chief Financial Officer and
Chief Supply Chain Officer
Divisional Managing Directors
50%
60%
(1)As a percentage of base salary package.
40%
20%
Achieved
Opportunity Achieved
Opportunity Achieved
nil
nil
nil
10%
10%
n/a
10%
10%
7.5-10%
7.5-10%
n/a
30%
n/a
n/a
nil
The Committee has again this year considered the deferral of a portion of the STI award into equity. This has not been
introduced due to the Board’s assessment that:
•
•
•
the nature of the business is one where revenue is not dependent on long term contracts;
the Group has a strong risk management framework;
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 STI and part payment in equity may cause confusion between STI and LTI arrangements.
•
Super Retail Group Limited Annual Report 2015 21
21
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
4. Remuneration Report – Audited (continued)
Section 3: Senior Executive Remuneration Structure (continued)
(c)
Short Term Incentive (STI) (continued)
STI Performance Measure Changes for Financial Year 2016
(iii)
The Human Resources and Remuneration Committee have reviewed the STI arrangement for the 2016 financial year and
made changes to further align STI performance with shareholder value and each individual’s contribution in delivering the
strategic plan. As a result, the performance measures of the STI scheme have changed for the 2016 financial year. The
maximum STI pool remains unchanged at 20% of the amount that the actual profit before tax exceeds the profit target
approved by the Board. The maximum STI opportunity of the KMP also remains unchanged.
The measures of Group Profit (Net Profit Before Tax) (for all KMP) and Divisional Profit (for Divisional Managing Directors
only) shall determine the potential bonus entitlement. The maximum potential bonus entitlement is achieved when the actual
profit exceeds the profit target by 10%.
The achievement of individual KPI targets (independent of profit performance) shall determine the proportion of the potential
bonus entitlement that will be granted. The individual KPI targets comprises:
Category
Safety
Team
Customer
# of Performance Goals
2
2
2
Weighting
20%
20%
20%
Business Improvement / Financial
4
40%
As the KPI targets are stretch targets – a performance rating of 80% or higher will result in 100% of the potential bonus
entitlement being rewarded. This is on the basis that the Safety KPI targets have been fully met. Any shortfall on the Safety
KPI targets will be deducted from the 100% potential.
The Human Resources and Remuneration Committee have the authority to adjust the payment to reflect any special
circumstances that may have prevented the achievement of the KPI targets.
(d)
Long Term Incentive (LTI)
The Group’s remuneration structure aims to align long term incentives for Executive 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 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 KMP and Executive Officers 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 Executive 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 as
detailed in the Super Retail Employee Performance Rights Plan Rules available on the Group’s external website.
The performance conditions were amended as approved at the 2014 Annual General Meeting and will be satisfied if the
Group achieves certain earnings per share (EPS) performance hurdle and return on capital (ROC) performance hurdle over
a three year period (Performance Period) as determined by the Board.
The EPS Performance Hurdle – Cumulative EPS growth (50% of Grant)
At the end of the Performance Period the cumulative EPS growth of ordinary shares is calculated. If the cumulative EPS
growth is equal to 10%, then 50% of the Performance Rights will be available to vest. If the cumulative EPS growth is 15%
or better, all the Performance Rights will be available to vest. Between 10% and 15%, Performance Rights will vest on a pro
rata basis.
The ROC Performance Hurdle – Averaged ROC (50% of Grant)
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 vest on a pro rata basis.
Under these performance hurdles, for the plan to achieve 100% vesting the cumulative EPS growth must be at least 15%,
and averaged 15% ROC.
Super Retail Group Limited Annual Report 2015 22
22
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
Directors’ Report (continued)
4. Remuneration Report – Audited (continued)
4. Remuneration Report – Audited (continued)
Section 3: Senior Executive Remuneration Structure (continued)
Section 3: Senior Executive Remuneration Structure (continued)
(d)
Long Term Incentive (LTI) (continued)
(d)
LTI Vested Based on Hurdle Achievement
Long Term Incentive (LTI) (continued)
g
n
i
t
s
e
V
I
T
L
%
50%
40%
30%
20%
10%
0
9%
10%
11%
12%
13%
14%
15%
Hurdles Achievement
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:
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 Rights % of Performance Rights that vest
ROC
EPS
Time after grant of Performance Rights % of Performance Rights that vest
3 years
4 years
3 years
5 years
4 years
5 years
50%
25%
50%
25%
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 Executive KMP and other Executives is determined using the VWAP
Participating Executives are prohibited from entering into any hedging arrangements in relation to Performance Rights.
for SRG shares traded on the ASX on the five trading days from and including the release of the Group’s results for the
The notional value of Performance Rights granted to Executive KMP and other Executives is determined using the VWAP
preceding reporting period. The number of Performance Rights granted to each KMP is determined in accordance with the
for SRG shares traded on the ASX on the five trading days from and including the release of the Group’s results for the
Executive Remuneration Structure outlined above, and have a value of between 50% and 78% of their base salary. The
preceding reporting period. The number of Performance Rights granted to each KMP is determined in accordance with the
value of Performance Rights for grant purposes may differ from the accounting valuation which considers probability of
Executive Remuneration Structure outlined above, and have a value of between 50% and 78% of their base salary. The
vesting and other factors.
value of Performance Rights for grant purposes may differ from the accounting valuation which considers probability of
vesting and other factors.
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 Executive KMP and other Executives
Executives must be employed at the time of vesting to receive the Performance Rights grant. The Board has discretion to
leaving. The Board plans to exercise its discretion where an employee leaves due to retirement, retrenchment or
amend the employment requirement based on the circumstances associated with the Executive KMP and other Executives
redundancy, or termination by mutual consent. The employee may retain entitlement to a portion of the Performance Rights
leaving. The Board plans to exercise its discretion where an employee leaves due to retirement, retrenchment or
prorated to reflect the period of service from the start of the Performance Period to the date of departure. After the
redundancy, or termination by mutual consent. The employee may retain entitlement to a portion of the Performance Rights
employees’ departure the Performance Rights would only be available to vest to the extent that the performance conditions
prorated to reflect the period of service from the start of the Performance Period to the date of departure. After the
are met. Where an employee leaves due to resignation or termination with cause, all unvested Performance Rights will
employees’ departure the Performance Rights would only be available to vest to the extent that the performance conditions
lapse.
are met. Where an employee leaves due to resignation or termination with cause, all unvested Performance Rights will
lapse.
Section 4: Non-Executive Directors Remuneration Structure
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
The Group’s remuneration strategy is designed to attract and retain experienced, qualified Non-Executive Directors and to
of fees are reviewed annually by the Human Resources and Remuneration Committee.
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.
In 2015, 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
In 2015, the Human Resources and Remuneration Committee engaged the services of Ernst & Young as an independent
represent the responsibilities and time spent by the Directors on Company matters. The Board referenced two sets of
remuneration consultant to prepare comparative information for review to ensure that fees are market based and fairly
comparator groups to benchmark salaries, being:
represent the responsibilities and time spent by the Directors on Company matters. The Board referenced two sets of
• Market Capitalisation and revenue comparator group: S&P/ASX 200 companies within 50% to 200% of Super Retail
comparator groups to benchmark salaries, being:
Group’s 12 month average market capitalisation and within 50% to 200% of Super Retail Group’s budgeted sales
• Market Capitalisation and revenue comparator group: S&P/ASX 200 companies within 50% to 200% of Super Retail
revenue;
Group’s 12 month average market capitalisation and within 50% to 200% of Super Retail Group’s budgeted sales
• Market Capitalisation and GICS comparator group: S&P/ASX 200 companies within the ‘Consumer Discretionary
revenue;
Sector’ Global Industry Classification Standard (GICS) and also within 50% to 200% of Super Retail Group’s 12 month
• Market Capitalisation and GICS comparator group: S&P/ASX 200 companies within the ‘Consumer Discretionary
average market capitalisation.
Sector’ Global Industry Classification Standard (GICS) and also within 50% to 200% of Super Retail Group’s 12 month
average market capitalisation.
The Market comparative information provided by Ernst & Young disclosed that the level of fees being paid are in accordance
with the Remuneration Policy of paying fees at the median of fees paid to comparative companies. With Director fees now
The Market comparative information provided by Ernst & Young disclosed that the level of fees being paid are in accordance
in line with the market median and there will be no increase to Directors fees in the 2016 financial year.
with the Remuneration Policy of paying fees at the median of fees paid to comparative companies. With Director fees now
in line with the market median and there will be no increase to Directors fees in the 2016 financial year.
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.
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.
Super Retail Group Limited Annual Report 2015 23
Super Retail Group Limited Annual Report 2015 23
23
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
4.
Remuneration Report – Audited (continued)
Section 4: Non-Executive Directors Remuneration Structure (continued)
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 for the 2016 financial year.
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.
Directors’ Fees
(a)
The fees paid to Non-Executive Directors are set out in the table below and are annual fees, inclusive of superannuation,
unless otherwise stated:
Chairman(2)
Other Non-Executive Directors
Chair of the Audit and Risk Committee
Chair of the Human Resources and Remuneration Committee
Committee Member(3)
(1) Reflective of the 2015 Directors’ fees increase, effected in July 2014
(2) Committee fees are not paid to the Chairman.
(3) Committee fees are not paid to members of the Nomination Committee.
2014
280,000
125,000
25,000
20,000
10,000
2015(1)
300,000
135,000
25,000
20,000
10,000
2016
300,000
135,000
25,000
20,000
10,000
Minimum Securities Holding Policy
(b)
Commencing from the 2016 financial year, the Board has approved a minimum shareholding requirement for Non-Executive
Directors to be 100% of base fees, the Group Managing Director and Chief Executive Officer to be 150% of fixed
remuneration and for other Executive KMP 100% of fixed remuneration. This is to be achieved by October 2020 or within
five years from the commencement of employment. This is to further align the interest of Non-Executive Directors and
Executive KMP with those of shareholders.
Section 5: Relationship of Remuneration to Group Performance
The performance of the Group and remuneration paid to KMP over the last 6 years is summarised in the following table:
Financial performance
Sales ($m)
Profit before tax ($m)
Post Tax ROC (%)
Shareholder value created
Earnings Per Share (¢)
Dividends Per Share (¢)
June Share Price ($)
2010
938.0
53.9
16.8
32.1
21.5
5.27
2011
2012
2013
2014
1,092.3
77.7
17.3
1,654.1
120.1
15.9
2,020.0
146.8
12.6
2,112.1
158.6
11.3
40.9
29.0
7.00
46.4
32.0
7.19
52.3
38.0
11.97
55.1
40.0
8.46
2015(1)
2,238.7
131.6
10.6
49.4
40.0
9.40
CAGR(2)
19%
20%
9%
13%
12%
(1) Results from continuing operations.
(2) Percentage movement shown is the Compound Annual Growth Rate over the last 5 years.
Remuneration Expense of Key Management Personnel
Base Salary Package
Short Term Incentive
Long Term Incentive
Total
2010
$m
2.5
1.2
0.4
4.1
2011
$m
2.7
1.1
0.7
4.5
2012
$m
3.1
1.1
1.1
5.3
2013
$m
3.9
1.5
1.5
6.9
2014
$m
4.8
0.4
0.4
5.6
2015
$m
4.9
0.4
0.1
5.4
Since 2010 earnings per share has increased by 53.9%, dividends per share have increased by 8.6% and the share price
has increased by 7.8% demonstrating a balance between strategic growth and shareholder value.
During the same period, total remuneration paid to KMP has increased by 31.7% whilst total base salary has increased by
96.0%. During this period the number of Executive KMP increased from 5 to 7. 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.
Total remuneration paid to KMP as a proportion of profit before tax was 7.6% in 2010 and had reduced to 4.1% in 2015.
Super Retail Group Limited Annual Report 2015 24
24
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
4.
Remuneration Report – Audited (continued)
Section 5: Relationship of Remuneration to Group Performance (continued)
KMP STI paid compared to EPS over the last 6 financial years:
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
$
n
o
ti
a
r
e
n
u
m
e
R
2010
2011
2012
2013
2014
2015
STI
EPS
KMP LTI expense compared to EPS over the last 6 financial years:
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
$
n
o
ti
a
r
e
n
u
m
e
R
2010
2011
2012
2013
2014
2015
LTI
EPS
60
50
40
30
20
10
0
60
50
40
30
20
10
0
)
e
r
a
h
s
r
e
p
s
t
n
e
c
(
S
P
E
s
n
o
ti
a
r
e
p
o
g
n
u
n
ti
n
o
c
i
r
o
f
)
e
r
a
h
s
r
e
p
s
t
n
e
c
(
S
P
E
s
n
o
ti
a
r
e
p
o
g
n
u
n
ti
n
o
c
i
r
o
f
Super Retail Group Limited Annual Report 2015 25
25
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
Remuneration Report – Audited (continued)
4.
Section 6: Remuneration Outcomes of 2015
Details of the remuneration of the Directors and KMP of the Group are set out in the following tables:
2015
Name
Cash
salary
and fees
Short-term Benefits
Short-term benefits
Cash
bonus
$
$
Non-
monetary
benefits
Post-employment
benefits
Super-
annuation
Termination
Benefits
Share-based
payments
Performance
Rights(1)
$
Other(2)
$
Total
$
$
$
$
Non-Executive Directors
R J Wright
R A Rowe
R J Skippen
S A Pitkin
R A Murray(3)
Subtotal
Executive Director
P A Birtles
281,217
116,280
155,251
150,685
117,961
821,394
-
-
-
-
-
-
-
-
-
-
-
-
18,783
28,720
14,749
14,315
11,206
87,773
1,153,145
117,500
3,072
18,783
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
145,000
170,000
165,000
129,167
909,167
145,162
52,184
1,489,846
Other KMP
D J Burns
D F Ajala(4)
E A Berchtold(5)
C D Wilesmith(6)
A M Heraghty(7)
G G Carroll
S J Doyle(8)
G L Chad(9)
Subtotal
Total
2014
Name
581,117
401,817
490,122
476,217
120,499
481,181
35,940
-
3,740,038
4,561,432
60,000
58,000
42,375
54,000
-
37,500
-
-
369,375
369,375
100
-
27,346
45,000
-
36
-
-
75,554
75,554
18,783
33,183
18,783
18,783
4,696
18,783
4,696
-
136,490
224,263
-
-
-
-
-
-
232,004
-
232,004
232,004
2,452
(7,172)
(50,079)
(1,587)
-
(18,656)
26,413
-
96,533
96,533
10,207
22,398
(23,091)
12,050
63,353
6,155
-
-
143,256
143,256
672,659
508,226
505,456
604,463
188,548
524,999
299,053
-
4,793,250
5,702,417
Short-term Benefits
Cash
salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Post-employment
benefits
Super-
annuation
$
Termination
Benefits
$
Share-based
payments
Performance
Rights(1)
$
Other(2)
$
Total
$
Non-Executive Directors
R J Wright
R A Rowe
R J Skippen
S A Pitkin
R A Murray
Subtotal
Executive Director
P A Birtles
262,225
97,028
145,200
140,663
131,588
776,704
-
-
-
-
-
-
-
-
-
-
-
-
17,775
37,972
14,800
14,337
13,412
98,296
1,119,810
57,000
2,415
17,775
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
280,000
135,000
160,000
155,000
145,000
875,000
254,854
30,778
1,482,632
Other KMP
D J Burns
D F Ajala(4)
E A Berchtold
G G Carroll
S J Doyle(8)
G L Chad(9)
Subtotal
Total
(1)As a result of confirming that prior issues of Performance Rights will not vest into shares, the Performance Rights value reflects the
512,225
383,147
467,225
442,225
467,225
377,191
3,769,048
4,545,752
51,977
46,733
34,653
41,896
(50,039)
(25,542)
354,532
354,532
10,199
27,078
23,551
28,760
8,871
11,520
140,757
140,757
53,000
86,900
51,500
34,500
36,375
42,000
361,275
361,275
17,775
25,110
17,775
17,775
17,775
23,110
137,095
235,391
-
-
30,000
-
-
-
32,415
32,415
-
-
-
-
-
-
-
-
645,176
568,968
624,704
565,156
480,207
428,279
4,795,122
5,670,122
reversal of amounts reported in prior periods. This results in certain positions displaying as negative values.
(2) Includes accruals for annual leave and long service leave entitlements.
(3) R A Murray resigned effective 29 April 2015.
(4) D F Ajala performed his role on a part-time basis from 1 September 2013 which is reflected in his adjusted base salary.
(5) E A Berchtold adjusted base salary is reflective of a period of unpaid leave taken during the financial year.
(6) C D Wilesmith commenced as KMP on 29 June 2014.
(7) A M Heraghty commenced with the Group and as KMP on 27 April 2015.
(8) S J Doyle resigned effective 1 August 2014 and ceased as KMP on this date.
(9) G L Chad ceased as KMP on 28 June 2014.
Super Retail Group Limited Annual Report 2015 26
26
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
4.
Remuneration Report – Audited (continued)
Section 6: Remuneration Outcomes of 2015 (continued)
(a)
Remuneration related to performance
Both STI and LTI are awarded based on performance. The achievement rates of both STI and LTI are detailed below,
indicating the relative proportions paid and forfeited linked to each performance based remuneration.
Short Term Incentives
(i)
STI is dependent on the satisfaction of performance conditions as set out in Section 3(c) - Short Term Incentives. The 2015
STI cash bonus was awarded on 19 August 2015. For each cash bonus included in Section 6 - Remuneration Outcomes of
2015, 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.
STI Achievement 2015
10% 90%
P A Birtles
10% 90%
D J Burns
10% 90%
D F Ajala
7.5% 92.5%
E A Berchtold
10% 90%
C D Wilesmith
7.5% 92.5%
G G Carroll
PAID
FORFEITED
A M Heraghty was not eligible for STI due to length of service.
Long Term Incentives
(ii)
LTI is dependent on the satisfaction of performance conditions and service conditions as set out in Section 3(d) - Long Term
Incentives.
Performance Rights over equity instruments of Super Retail Group Limited
The movement during the reporting period in the number of performance rights over ordinary shares in the Company held
directly or indirectly or beneficially, by each KMP, including their related parties is as per the table over page.
Super Retail Group Limited Annual Report 2015 27
27
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
Remuneration Report – Audited (continued)
4.
Section 6: Remuneration Outcomes of 2015 (continued)
(a)
Remuneration related to performance (continued)
(ii)
Performance Rights over equity instruments of Super Retail Group Limited (continued)
Long Term Incentives (continued)
Held at
28 June
2014
Number
Commenced
as KMP
Number
Granted(1)
Number
Vested
Number
Held at
Ceased
27 June
Other
2015(3)
Changes(2)
as KMP
Number Number Number
Value of
Performance
Rights granted
in year
$
Financial year
in which grant
vests(4)
Year
25,000
50,000
100,000
110,000
110,000
-
21,615
-
9,708
18,162
45,977
37,200
20,047
-
35,712
26,137
-
n/a
n/a
n/a
n/a
n/a
n/a
n/a
6,293
11,544
30,788
26,432
18,760
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,365
6,290
13,699
11,687
22,838
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
(25,000)
(25,000)
(31,650)
-
-
-
-
-
(36,700)
-
-
-
-
32,017
-
-
-
-
-
38,515
-
-
37,519
-
-
-
-
-
35,859
-
-
-
-
-
-
26,681
-
-
-
-
(9,708)
(9,081)
(14,552)
-
-
-
-
-
(16,874)
-
-
-
-
-
-
(3,365)
(3,145)
(4,336)
-
-
-
-
(6,293)
(5,772)
(9,745)
-
-
-
-
-
-
-
-
(5,028)
-
-
-
-
-
-
(11,299)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,000
31,650
110,000
110,000
100,000
21,615
32,017
-
(9,081)
(14,551)
(37,200)
(20,047)
(38,515)
35,712
26,137
37,519
-
3,145
4,335
11,687
22,838
35,859
-
-
5,772
9,744
26,432
18,760
26,681
n/a
n/a
n/a
n/a
n/a
603,404
n/a
2016
2016, 2017
2016, 2017, 2018
2017, 2018, 2019
2018, 2019, 2020
193,192
n/a
n/a
n/a
n/a
n/a
232,401
226,391
n/a
n/a
n/a
n/a
n/a
216,375
-
n/a
n/a
n/a
n/a
n/a
160,994
2017, 2018, 2019
2018, 2019, 2020
n/a
2016
2016, 2017
2016, 2017, 2018
2017, 2018, 2019
2018, 2019, 2020
2016, 2017, 2018
2017, 2018, 2019
2018, 2019, 2020
n/a
2016
2016, 2017
2016, 2017, 2018
2017, 2018, 2019
2018, 2019, 2020
n/a
2016
2016, 2017
2016, 2017, 2018
2017, 2018, 2019
2018, 2019, 2020
2015
P A Birtles
2010
2011
2012(5)
2013(5)
2014(5)
2015
D J Burns
2014(5)
2015
D F Ajala
2010
2011
2012(5)
2013(5)
2014(5)
2015
E A Berchtold
2013(5)
2014(5)
2015
C D Wilesmith
2010
2011
2012(5)
2013(5)
2014(5)
2015
A M Heraghty
G G Carroll
2010
2011
2012(5)
2013(5)
2014(5)
2015
S J Doyle
2010
2011
2012(5)
-
-
-
-
-
-
8,859
16,666
42,401
(8,859)
(8,333)
(13,420)
-
-
(15,561)
n/a
n/a
n/a
(1)Performance Rights provided as remuneration to each of the KMP of the Group during the financial year.
(2)Other changes represent Performance Rights that lapsed or were forfeited during the financial year.
(3)The maximum possible total financial value in future years is dependent on the Group share price at exercise date, the minimum possible
total value is nil.
(4)Performance rights vest progressively three to five years after grant date and have no expiry date. The final tranche of the 2010 grant fully
vested on 01 September 2014.
(5) From 22 October 2014, the performance hurdles affecting the total number of performance rights that will vest changed from those at the
original grant date from the requirement to achieve both a 10% cumulative earnings per share growth and an average return on capital of
more than 15% to those detailed in Section 3(d). This resulted in an additional 269,423 of Performance Rights being vested in the current
financial year.
-
8,333
13,420
n/a
n/a
-
n/a
2016
2016, 2017
The Performance Rights granted in the current reporting period were valued using a share price of $6.03. The Performance
Rights are expensed over a five year period in-line with the vesting conditions of the Performance Rights; refer to Section
3(d) - Long Term Incentives, for details of these vesting conditions. Plan participants may not enter into any transaction
designed to remove the at risk aspect of the Performance Rights before they vest. The value at exercise date for
Performance Rights is the Group share price. There are no amounts unpaid on the shares issued as a result of the exercise
of the options in the 2015 financial year.
Super Retail Group Limited Annual Report 2015 28
28
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
4.
Remuneration Report – Audited (continued)
Section 6: Remuneration Outcomes of 2015 (continued)
(a)
Remuneration related to performance (continued)
(ii)
Option over equity instruments of Super Retail Group Limited
Long Term Incentives (continued)
No Options were granted or vested during the financial year.
Section 7: Service Agreements
Remuneration and other terms of employment for KMP 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
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:
Name
Term of Agreement
Commencement Date(1)
P A Birtles
D J Burns
D F Ajala
E A Berchtold
C D Wilesmith
A M Heraghty
G G Carroll
3 years
5 years, 10 months
1 years, 7 months
4 years, 11 months
5 years, 3 months
4 years, 8 months
5 years, 5 months
1 January 2014
3 December 2012
1 May 2015
5 November 2011
1 July 2013
27 April 2015
17 April 2011
Review
Term(2)
Annual
Annual
Annual
Annual
Annual
Annual
Annual
Termination
payment
12 months(3)
6 months(4)
6 months(4)
6 months(4)
6 months(4)
6 months(3)
6 months(4)
(1)Commencement date of service agreement
(2)Reviewed annually by the Human Resource and Remuneration Committee.
(3)Payment of a termination benefit on early termination by the Company, other than for cause, equal to the base salary for the period
detailed.
(4)Payment of a termination benefit on early termination by the Company, other than for cause, equal to the base salary for period detailed 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.
Section 8: Period of Restraint
The above KMP have the following post-employment restraints within their service 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.
Ref: Post-employment Restraints
A
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.
B
C
D
Period
12 months
9 months
6 months
3 months
Super Retail Group Limited Annual Report 2015 29
29
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
Remuneration Report – Audited (continued)
4.
Section 9: Additional Information
(a)
(i)
The table below lists the ordinary shares in the Company issued during the year as a result of the exercise of Performance
Rights. There were no shares issued during the year ended 27 June 2015 on the exercise of Options.
Equity instruments held by KMP
Shares provided on exercise of Performance Rights and Options
Name(1)
Incentive Scheme(2)
Number of Ordinary Shares Issued on
Exercise of Share Plans During the Year(3)
Market Value at
Exercise Date(4)
P A Birtles
D J Burns
D F Ajala
E A Berchtold
C D Wilesmith
A M Heraghty
G G Carroll
S J Doyle
Total
Performance Rights
n/a
Performance Rights
n/a
Performance Rights
n/a
Performance Rights
Performance Rights
81,650
n/a
33,341
n/a
10,846
n/a
21,810
30,612
178,259
605,843
n/a
247,398
n/a
80,485
n/a
161,830
227,148
1,322,704
(1)D J Burns, E A Berchtold, A M Heraghty were not employees of the Company at the time of the grant of performance rights detailed above
and were therefore not eligible to participate in these incentive schemes.
(2)Refer to Section 3(d) Long Term Incentives.
(3)Both the 2010 and 2011 grants were exercised on 1 September 2014, with the 2012 grant being exercised on 27 November 2014.
(4)The value at exercise date for Performance Rights was determined using the Group share price.
Movement in shares
(ii)
The movement during the year in the number of ordinary shares in the Company held directly or indirectly or beneficially, by
each KMP, including their related parties is as follows:
2015
Non-Executive
Directors
R J Wright
R A Rowe
R J Skippen
S A Pitkin
R A Murray
Executive Director
P A Birtles
Held at
28 June 2014
Commenced
as KMP
Granted(1) Purchases
In lieu of
dividends(2)
Sales
Ceased
as KMP
Held at
27 June 2015
104,926
59,270,028
-
26,453
-
-
-
-
-
-
-
-
-
-
-
1,392,596
-
81,650
-
-
-
-
-
-
1,831
13,059
-
-
-
-
-
-
-
-
-
(50,000)
-
-
-
-
-
-
106,757
59,283,087
-
26,453
n/a
1,424,246
Other KMP
D J Burns
D F Ajala
E A Berchtold
C D Wilesmith
A M Heraghty
G G Carroll
S J Doyle
-
-
-
931
-
-
-
(1)Granted on exercise of performance rights awarded under the Group’s Performance Rights and Options plans.
(2)Shareholders are eligible to receive dividends in cash or choose to participate in the dividend reinvestment plan.
-
(28,789)
-
(10,799)
-
(21,810)
-
-
-
-
n/a
n/a
90,000
53,000
-
33,341
-
10,846
-
21,810
30,612
1
-
-
41
-
-
-
75
-
-
-
-
-
-
-
-
-
-
-
-
83,612
76
4,552
-
1,019
-
90,000
n/a
Unissued shares under Performance Rights and Options plans
(iii)
Unissued ordinary shares of Super Retail Group Limited under the Performance Rights Plan at the date of this report are:
Number of Performance
Rights
Vesting Date
Grant date
1 September 2009
1 September 2010
1 September 2011
1 September 2012
1 September 2013
1 September 2014
Total
(1)
(1)
(1)
(1)
(1)
(1)
Value per Performance Right
at Grant Date
$5.15
$5.85
$6.09
$7.95
$10.83
$6.03
-
80,980
131,535
448,156
403,999
561,081
1,625,751
(1)Performance rights vest progressively three to five years after grant date and have no expiry date. Refer to Section 3(d) Long Term
Incentives, for details of these vesting conditions.
Plan participants may not enter into any transaction designed to remove the at risk aspect of Performance Rights.
As at the date of this report there are no remaining unissued ordinary shares of Super Retail Group Limited under Option.
Super Retail Group Limited Annual Report 2015 30
30
Super Retail Group LimitedANNUAL REPORT 2015
Directors’ Report (continued)
4.
Remuneration Report – Audited (continued)
Section 9: Additional Information (continued)
(b)
Loans to KMP and their Related Parties
There are no loans to KMP and their related parties as at 27 June 2015 and no loans were made during the financial year.
(c)
Other Transactions with KMP
KMP may hold positions in other companies that transacted with the Group in the reporting period. Refer to note 30 to the
consolidated financial statements, Related Party Transactions, for further details.
(d)
Insurance of Officers
During the financial year, the Group paid a premium of $93,378 (2014: $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 Group. It is not possible to apportion the premium between
amounts relating to the insurance against legal costs and those relating to other liabilities.
5.
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 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
2015
$
2014
$
473,854
20,000
10,000
503,854
124,367
-
26,025
150,392
468,435
46,100
10,000
524,535
297,347
3,060
65,106
365,513
Super Retail Group Limited Annual Report 2015 31
31
Super Retail Group LimitedANNUAL REPORT 2015
6.
Corporate Governance Statement
The Group’s Corporate Governance Statement sets out the corporate governance framework adopted by the Board of Super
Retail Group Limited. This statement
the Super Retail Group external website:
http://www.superretailgroup.com.au.
is publically available on
7.
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.
8.
Auditors Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 33.
9.
Rounding of amounts
The Company is of a kind referred to in Class Order 98/100, 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 or in certain cases to the nearest
dollar.
This report is made in accordance with a resolution of the Directors.
R J Wright
Chairman
Brisbane
20 August 2015
P A Birtles
Group Managing Director and
Chief Executive Officer
Super Retail Group Limited Annual Report 2015 32
32
Super Retail Group LimitedANNUAL REPORT 2015
Super Retail Group Limited
ANNUAL REPORT 2015
33
Consolidated Statement of Comprehensive Income
For the period ended 27 June 2015
CONTINUING OPERATIONS
Revenue from continuing operations
Other income from continuing operations
Total revenues and other income
Notes
5
6
Expenses
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 from continuing operations
Income tax expense
Profit for the period from continuing operations
DISCONTINUED OPERATIONS
Loss from discontinued operations
Profit for the period
Profit for the period is attributable to:
Owners of Super Retail Group Limited
Non-controlling interests
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 period is attributable to:
Continuing operations
Discontinued operations
Total comprehensive income for the year is attributable to:
Owners of Super Retail Group Limited
Non-controlling interests
Earnings per share for profit from continuing operations
attributable to the ordinary equity holders of the Company:
Basic earnings per share
Diluted earnings per share
Earnings per share for profit attributable to the ordinary equity
holders of the Company:
Basic earnings per share
Diluted earnings per share
7
8
34
22
22
38
38
38
38
2015.
$m.
2,238.7
2.5
2,241.2
2014.
$m.
2,090.1.
11.6.
2,101.7.
(1,273.3)
(1,156.4)
(290.2)
(81.9)
(186.2)
(256.1)
(21.9)
-
(2,109.6)
(271.6)
(84.6)
(171.3)
(230.6)
(24.0)
(0.8)
(1,939.3)
131.6
(38.5)
93.1
(16.2)
76.9
81.1
(4.2)
76.9
6.3
(0.6)
5.7
82.6
98.5
(15.9)
82.6
86.8
(4.2)
82.6
Cents
49.4
49.0
41.2
40.8
162.4.
(50.2)
112.2.
(3.8)
108.4.
108.4.
-.
108.4.
(6.3)
4.3.
(2.0)
106.4.
110.2.
(3.8).
106.4.
106.4.
-.
106.4.
Cents
57.0.
556.5.
55.1.
54.6.
The above consolidated comprehensive income statement should be read in conjunction with the accompanying notes.
Super Retail Group Limited Annual Report 2015 34
34
Super Retail Group LimitedANNUAL REPORT 2015
Consolidated Balance Sheet
As at 27 June 2015
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Derivative financial instruments
Inventories
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
Interest-bearing liabilities
Current tax liabilities
Derivative financial instruments
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Interest-bearing liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings
Capital and reserves attributable to owners of
Super Retail Group Limited
Non-controlling interests
TOTAL EQUITY
Notes
9
10
11
24
12
10
32
14
15
16
17
18
24
19
16
17
20
19
21
22
22
2015
$m
13.1
29.3
2.9
6.8
505.6
557.7
-
-
224.1
801.3
1,025.4
1,583.1
268.6
2.2
-
4.1
48.6
323.5
36.7
389.8
51.5
16.3
494.3
817.8
765.3
542.3
13.2
212.8
768.3
(3.0)
765.3
2014
$m
24.2
41.1
-
-
490.1
555.4
3.7
4.7
197.6
813.4
1,019.4
1,574.8
271.4
2.7
1.1
6.3
36.2
317.7
27.0
404.1
52.6
13.0
496.7
814.4
760.4
542.3
7.7
210.4
760.4
-
760.4
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Super Retail Group Limited Annual Report 2015 35
35
Super Retail Group LimitedANNUAL REPORT 2015
Consolidated Statement of Changes in Equity
For the period ended 27 June 2015
Contributed.
Notes
Equity. Reserves.
$m.
$m
Retained.
Earnings.
$m.
Non-
Controlling
Interests
$m
Total.
$m.
Balance at 29 June 2013
542.3.
9.5.
179.7.
731.5.
-.
(2.0)
(2.0)
108.4.
-.
108.4.
108.4.
(2.0)
106.4.
(77.7)
-.
-.
(77.7)
(77.7)
0.2.
-.
(77.5)
210.4.
760.4.
Profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
Transactions with owners in
their capacity as owners
Dividends provided for or paid
Employee performance rights
Acquisition of non-controlling interests
25
22
-..
-..
-..
-..
-..
-..
-..
Balance at 28 June 2014
542.3.
Profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
Transactions with owners in
their capacity as owners
Dividends provided for or paid
Employee performance rights
Acquisition of non-controlling interests
25
22
-
-
-
-
-
-
-
Balance at 27 June 2015
542.3
-.
0.2.
-.
0.2.
7.7.
-
5.7
5.7
-
(0.2)
-
(0.2)
13.2
81.1
-
81.1
81.1
5.7
86.8
(4.2)
-
(4.2)
76.9
5.7
82.6
(78.7)
-
-
(78.7)
(78.7)
(0.2)
-
(78.9)
-
-
1.2
1.2
(78.7)
(0.2)
1.2
(77.7)
212.8
768.3
(3.0)
765.3
Total
Equity.
$m.
731.5.
108.4.
(2.0)
106.4.
(77.7)
0.2.
-.
(77.5)
760.4.
-.
.
-.
-.
-.
-.
-.
-.
-.
-.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Super Retail Group Limited Annual Report 2015 36
36
Super Retail Group LimitedANNUAL REPORT 2015
Consolidated Statement of Cash Flows
For the period ended 27 June 2015
Notes
2015
$m
2014
$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)
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, 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
Interest paid
Interest received
Dividends paid to Company’s shareholders
Net cash (outflow) from financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of the period
37
33
25
9
2,530.0
(2,103.4)
2,335.5.
(1,913.2)
(187.4)
(10.8)
(46.4)
182.0
(72.8)
0.9
-
-
(71.9)
785.4
(803.5)
(2.5)
(22.1)
0.3
(78.7)
(121.1)
(11.0)
24.2
(0.1)
13.1
(188.5)
(11.6)
(55.0)
167.2.
(111.6)
1.0.
(4.4)
(3.7)
(118.7)
894.5.
(832.6)
(3.2)
(28.1)
0.2
(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.
Super Retail Group Limited Annual Report 2015 37
37
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
For the period ended 27 June 2015
Contents of the notes to the consolidated financial statements
Reporting entity ......................................................................................................................................................................... 39
1.
Summary of significant accounting policies .............................................................................................................................. 39
2.
Critical accounting estimates and judgements .......................................................................................................................... 49
3.
Segment information ................................................................................................................................................................. 50
4.
5.
Revenue from continuing operations ........................................................................................................................................ 51
6. Other income from continuing operations ................................................................................................................................. 51
Expenses from continuing operations ....................................................................................................................................... 52
7.
Income tax expense .................................................................................................................................................................. 52
8.
9.
Cash and cash equivalents ....................................................................................................................................................... 53
10. Trade and other receivables ..................................................................................................................................................... 54
11. Current tax assets ..................................................................................................................................................................... 55
12.
Inventories ................................................................................................................................................................................ 55
13. Deferred tax assets ................................................................................................................................................................... 55
14. Property, plant and equipment .................................................................................................................................................. 56
15.
Intangible assets ....................................................................................................................................................................... 57
16. Trade and other payables ......................................................................................................................................................... 59
17.
Interest-bearing liabilities .......................................................................................................................................................... 59
18. Current tax liabilities ................................................................................................................................................................. 59
19. Provisions ................................................................................................................................................................................. 59
20. Deferred tax liabilities ............................................................................................................................................................... 60
21. Contributed equity ..................................................................................................................................................................... 61
22. Reserves and retained earnings ............................................................................................................................................... 61
23. Financial assets and financial liabilities .................................................................................................................................... 62
24. Financial risk management ....................................................................................................................................................... 64
25. Capital management ................................................................................................................................................................. 70
26. Key management personnel disclosures .................................................................................................................................. 72
27. Remuneration of auditors.......................................................................................................................................................... 72
28. Contingencies ........................................................................................................................................................................... 73
29. Commitments ............................................................................................................................................................................ 73
30. Related party transactions ........................................................................................................................................................ 74
Investments in controlled entities .............................................................................................................................................. 75
31.
32.
Interests in associates .............................................................................................................................................................. 76
33. Business combinations ............................................................................................................................................................. 76
34. Discontinued operations ........................................................................................................................................................... 78
35. Net tangible asset backing ........................................................................................................................................................ 78
36. Deed of cross guarantee........................................................................................................................................................... 78
37. Reconciliation of profit from ordinary activities after income tax to net cash inflow from operating activities ............................ 80
38. Earnings per share ................................................................................................................................................................... 80
39. Share-based payments ............................................................................................................................................................. 81
40. Events occurring after balance date ......................................................................................................................................... 82
41. Parent entity financial information ............................................................................................................................................. 82
Super Retail Group Limited Annual Report 2015 38
38
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
1.
Reporting entity
Super Retail Group Limited (the Company) is a company domiciled in Australia. The address of the Company’s registered office
and principal place of business is 751 Gympie Road, Lawnton, Queensland.
The consolidated annual financial report of the Company as at and for the period ended 27 June 2015 comprises: the Company and
its subsidiaries (together referred to as the Group, and individually as Group entities).
The Group is a for-profit entity and is primarily involved in the retail industry. Principal activities of the Group consist of:
•
•
•
retailing of auto parts and accessories, tools and equipment;
retailing of boating, camping, outdoor equipment, fishing equipment and apparel; and
retailing of sporting equipment, bicycles, bicycle accessories and apparel.
2.
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.
(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.
The consolidated financial statements and accompanying 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 27 June 2015 and the results of its controlled entities for the period then ended. 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 33 - Business combinations).
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, balance sheet and statement of changes in equity 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.
Super Retail Group Limited Annual Report 2015 39
39
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
2.
Summary of significant accounting policies (continued)
(b)
Principles of consolidation (continued)
Business combinations (continued)
(iii)
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.
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.
Super Retail Group Limited Annual Report 2015 40
40
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
2.
(d)
Summary of significant accounting policies (continued)
Income tax (continued)
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.
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 account for current and
deferred tax amounts under the Separate taxpayer within Group approach in accordance with AASB Interpretation 1052, Tax
Consolidation Accounting.
(e)
Foreign currency translation
Functional and presentation currency
(i)
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.
Transactions and balances
(ii)
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.
Group companies
(iii)
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.
Super Retail Group Limited Annual Report 2015 41
41
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
2.
(f)
Summary of significant accounting policies (continued)
Revenue recognition (continued)
Revenue is recognised for the major business activities as follows:
Sale of goods – retail
(i)
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.
Interest income
(ii)
Interest income is recognised using the effective interest method. When a receivable is impaired, the Group reduces the carrying
amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the
instrument. Interest income on impaired loans is recognised using the original effective interest rate.
(g)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful
debts. Trade receivables are due for settlement 30 days from the end of the month after sale. 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
(i)
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
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 balance sheet date.
Loans and receivables
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.
Super Retail Group Limited Annual Report 2015 42
42
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
2.
(j)
Summary of significant accounting policies (continued)
Financial assets (continued)
Recognition and derecognition
(ii)
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
(iii)
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.
(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.
Super Retail Group Limited Annual Report 2015 43
43
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
2.
(l)
Summary of significant accounting policies (continued)
Derivative financial instruments and hedging activities (continued)
(ii)
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges.
Net investment 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.
(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
(i)
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
7.5% – 37.5%
Capitalised leased plant and equipment
10% – 37.5%
Motor vehicles
Computer equipment
25%
20% – 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.
Super Retail Group Limited Annual Report 2015 44
44
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
2.
Summary of significant accounting policies (continued)
(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.
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.
Intangible assets with indefinite useful lives
(ii)
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.
(iii) Other intangible assets
Amortisation is calculated on a straight line basis. 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
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
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
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.
Super Retail Group Limited Annual Report 2015 45
45
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
2.
Summary of significant accounting policies (continued)
(q)
Intangible assets (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 payables 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.
(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.
Super Retail Group Limited Annual Report 2015 46
46
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
2.
Summary of significant accounting policies (continued)
(v)
Employee benefits (continued)
Share-based payments (continued)
(iv)
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
interest on bank overdrafts and short-term and long-term borrowings;
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:
•
• 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:
•
• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares;
ordinary shares issued during the year and excluding treasury shares (note 38. Earnings Per Share).
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.
Super Retail Group Limited Annual Report 2015 47
47
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
2.
Summary of significant accounting policies (continued)
(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 27 June 2015, the Group is reporting on the 52 week period that
began 29 June 2014 and ended 27 June 2015. 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.
(ac)
New and amended standards adopted by the Group
The following new accounting standards and amendments to accounting standards became applicable in the current reporting
period.
• AASB 2013-3 Limited amendment of impairment disclosures amends the disclosures required by AASB 136 Impairment of
Assets, removing the requirement to disclose the recoverable amount of all cash generating units (CGU) that contain goodwill or
identifiable assets with indefinite lives if there has been no impairment, requires disclosure of the recoverable amount of an
asset or CGU when an impairment loss has been recognised or reversed and requires detailed disclosure of how the fair value
less costs of disposal has been measured when an impairment loss has been recognised or reversed. The Group has applied
the new rules effective 1 July 2014 and has assessed there are no impacts for the Group.
• AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities amends
AASB 132 Financial Instruments: Presentation to clarify some of the requirements for offsetting financial assets and financial
liabilities in the balance sheet. The Group has applied the new rules effective 1 July 2014 and has assessed there are no
significant impacts for the Group.
• AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments
amends chapters 1 and 3 of the IASB’s Conceptual Framework for Financial Reporting into the AASB’s Framework for the
Preparation and Presentation of Financial Statements and removes Australian specific guidance on materiality from AASB 1031
Materiality. The Group has applied the new rules effective 1 July 2014 and has assessed there are no significant impacts for the
Group.
• AASB 2014-1 Amendments to Australian Accounting Standards Part A: Annual Improvements 2010-2012, 2011-2013 and
2012-2014 cycles. In June 2014 the AASB approved a number of amendments to Australian Accounting Standards as a result
of the annual improvements project. The Group has applied the new rules effective 1 July 2014 and has assessed there are no
significant impacts for the Group.
Certain new accounting standards and interpretations have been published that are not mandatory to the 30 June 2015 reporting
period and have not been early adopted by the Group. This includes:
• AASB 9 Financial Instruments which addresses the classification, measurement and de-recognition of financial assets and
financial liabilities and new rules for hedge accounting. The new standard must be applied for financial years commencing on
or after 1 January 2018. The Group has not yet assessed how its own hedging arrangement would be affected by the new
rules, and it has not yet decided whether to adopt 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 Financial Instruments: Disclosures and AASB 139
Financial Instruments: Recognition and Measurement in their entirety.
IFRS 15 Revenue from Contracts with Customers establishes the principles that an entity shall apply to report useful
information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising
from a contract with a customer. Application of the standard is available for early adoption and is mandatory for annual
reporting periods from 1 January 2018.
•
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.
(i)
Investments in subsidiaries are accounted for at cost in the financial statements of Super Retail Group Limited.
Investments in subsidiaries
(ii)
Super Retail Group Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation.
Tax consolidation legislation
The head entity, Super Retail Group Limited, and the controlled entities in the tax consolidated group account for current and
deferred tax amounts under the Separate taxpayer within Group approach in accordance with AASB Interpretation 1052, Tax
Consolidation Accounting.
Super Retail Group Limited Annual Report 2015 48
48
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
2.
Summary of significant accounting policies (continued)
(ad)
Parent entity financial information (continued)
Tax consolidation legislation (continued)
(ii)
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.
Financial guarantees
(iii)
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.
3.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the
circumstances.
(a)
Critical accounting estimates and assumptions
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 indefinite useful life non-financial assets
(i)
The Group tests annually whether indefinite useful life non-financial assets has suffered any impairment, in accordance with the
accounting policy stated in note 2(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 15 for details of these assumptions.
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.
Net realisable value
(iv)
The Group records inventory at net realisable value. This is the estimated selling price in the normal course of business, less the
estimated cost of completion and the estimate costs necessary to make the sale.
Long service leave
(v)
Judgement is required in determining the following key assumptions used in the calculation of long service leave at balance date.
•
•
•
Future increase in salaries and wages;
Future on-cost rates; and
Experience of employee departures and period of service.
Surplus Leases
(vi)
The Group estimates the period that it will take to exit surplus lease space (onerous contracts). It then records a liability for the
present value of these future lease payments that the Group is obliged to make for the estimated exit period less estimated future
sub-lease revenue.
Super Retail Group Limited Annual Report 2015 49
49
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
4.
Segment information
Description of segments
(a)
Management 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. No operating segments have been aggregated to form the below
reportable operating segments. This results in the following business segments:
Auto: retailing of auto parts and accessories, tools and equipment;
Leisure: retailing of boating, camping, outdoor equipment, fishing equipment and apparel; and
Sports: retailing of sporting equipment, bicycles, bicycle accessories and apparel.
(b)
Detailed below is the information provided to the Group Managing Director and Chief Executive Officer for reportable segments:
Segment information provided to the Group Managing Director and Chief Executive Officer
For the period ended 27 June 2015
Auto
$m
Leisure.
$m.
Sports.
$m.
Total.
continuing.
operations.
$m.
Inter-segment.
eliminations/.
unallocated.
$m
Consolidated.
$m.
854.3
-
0.7
855.0
119.4
Segment Revenue and Other Income
External segment revenue
Inter segment sales
Other income
Total segment revenue and other income
Segment EBITDA(1)
Segment depreciation and amortisation(2)
Segment EBIT result
Net finance costs(3)
Total segment NPBT
Segment income tax expense(4)
Normalised NPAT
Other items not included in the total segment NPAT(5)
Loss from discontinuing operations
Profit for the period attributable to:
(23.4)
96.0
Owners of Super Retail Group Limited
Non-controlling interests
Profit for the period
543.2
-
-
543.2
48.8
(16.5)
32.3
835.0
-
0.9
835.9
85.8
(20.2)
65.6
2,232.5
-
1.6
2,234.1
254.0
(60.1)
193.9
8.2
(2.0)
0.9
7.1
(23.0)
(0.7)
(23.7)
2,240.7
(2.0)
2.5
2,241.2
231.0
(60.8)
170.2
(21.6)
148.6
(42.3)
106.3
(9.0)
(16.2)
81.1
(4.2)
76.9
For the period ended 28 June 2014
Auto
$m
Leisure.
$m.
Sports.
$m.
Total.
continuing.
operations.
$m.
Inter-segment.
eliminations/.
unallocated.
$m
Consolidated.
$m.
818.2
-
1.5
819.7
115.7
Segment Revenue and Other Income
External segment revenue
Inter segment sales
Other income
Total segment revenue and other income
Segment EBITDA(1)
Segment depreciation and amortisation(2)
Segment EBIT result
Net finance costs(3)
Total segment NPBT
Segment income tax expense(4)
Normalised NPAT
Other items not included in the total segment NPAT(5)
Loss from discontinuing operations
Profit for the period attributable to:
(21.2)
94.5
Owners of Super Retail Group Limited
Non-controlling interests
Profit for the period
530.5
-
-
530.5
52.1
(13.9)
38.2
734.0
-
0.6
734.6
80.6
(17.8)
62.8
2,082.7
-
2.1
2,084.8
248.4
(52.9)
195.5
8.5
(1.1)
9.5
16.9
(8.1)
(1.0)
(9.1)
2,091.2
(1.1)
11.6
2,101.7
240.3
(53.9)
186.4
(24.0)
162.4
(50.2)
112.2
-
(3.8)
108.4
-
108.4
(1)Adjusted for business restructuring costs for continuing operations and discontinuing operations (2014: nil).
(2)Adjusted for expenses pertaining to discontinued operations of $5.9 million (2014: nil) and business restructuring costs for continuing operations of $0.4m (2014: nil).
(3)Adjusted for non-controlling interest (NCI) interest of $0.3 million (2014: nil).
(4)Segment income tax expense of $42.3 million excludes $3.8 million relating to the tax effect of business restructuring costs with a value of $12.8 million, refer to note
4(b)(i) Business restructuring (2014: nil).
(5)Includes $12.8 million of business restructuring costs, the related income tax effect of $3.8 million (2014: nil).
Super Retail Group Limited Annual Report 2015 50
50
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
4.
(b)
Segment information (continued)
Segment information provided to the Group Managing Director and Chief Executive Officer (continued)
Business restructuring
(i)
During the period ended 27 June 2015, Super Retail Group Limited conducted a strategic review of the Ray’s Outdoors, FCO
Fishing Camping Outdoors (FCO), and Workout World businesses.
Leisure - Ray’s Outdoors
The strategic review of Ray’s Outdoors determined to reposition Ray’s Outdoors from a broad camping and outdoor offering to ‘an
outdoor adventure for all’ retail offering, focusing on providing a wide range of quality outdoor products at constant fair value. $10.3
million of restructuring expenses have been incurred during the period, with five stores being closed or downsized, and the
commencement of clearance of inventory lines that have been identified to be exited under the new strategic direction. As at the
end of the financial year, provisions recorded in the consolidated balance sheet in relation to this activity comprise $2.7 million for
inventories, $0.4 million for property, plant and equipment, $2.2 million for onerous leases.
Leisure - Fishing Camping Outdoors
The Group has exited the FCO business with all 13 stores closed by the end of the financial year incurring a loss from operations
for the financial year of $16.2 million - $14.1 million loss generated from trading in the second half of the financial year. As at the
end of the financial year, provisions recorded in the consolidated balance sheet in relation to this activity comprise $5.5 million for
onerous leases, $0.5 for make good provisions and other accruals of $0.6 million. Refer to note 34. Discontinued Operations.
Sports - Workout World
A plan has been developed to integrate the Workout World stores into the Rebel business with a combined buying and marketing
team. Workout World will be rebranded as a fitness brand. $2.5 million of restructuring expenses have been incurred during the
period with five stores closed at the end of the financial year and another five to close in the 2016 financial year. As at the end of the
financial year, provisions recorded in the consolidated balance sheet in relation to this activity comprise $0.4 million for inventories
and $1.0 million for onerous leases.
(c)
Other information
Revenue is attributable to the country where the sale of goods has transacted. The consolidated entity’s divisions are operated
in two main geographical areas with the following areas of operation:
Australia; the home country of the parent entity.
Auto: retailing of auto parts and accessories, tools and equipment;
Leisure: retailing of boating, camping, outdoor equipment, fishing equipment and apparel; and
Sports: retailing of sporting equipment, bicycles, bicycle accessories and apparel.
New Zealand
Auto: retailing of auto parts and accessories, tools and equipment;
Leisure: retailing of boating, camping, outdoor equipment, fishing equipment and apparel, which forms part of discontinued
operations, refer to note 34 - Discontinued operations.
(i)
Total revenue and other income from continuing operations
Australia
New Zealand
5.
Revenue from continuing operations
From continuing operations:
Sale of goods
6.
Other income from continuing operations
Insurance claims
Sundry income
Net imported goods tax refund and revenue adjustments
Fair value gain on gain of control in investee – refer note 33(a)
2015
$m
2,146.1
95.1
2,241.2
2015
$m
2014
$m
2,002.7
99.0
2,101.7
2014
$m
2,238.7
2,090.1
2015
$m
0.8
1.1
-
0.6
2.5
2014
$m
1.2
0.9
9.5
-
11.6
Super Retail Group Limited Annual Report 2015 51
51
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
7.
Expenses from continuing operations
2015
$m
2014
$m
Profit before income tax from continuing operations 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(1)
(1)An additional $5.9 million depreciation expense pertains to discontinued operations (2014: $1.0 million).
Amortisation
Computer software
Brand name and supplier agreement
Total amortisation
Net finance costs
Interest and finance charges
Interest revenue
Net finance costs
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(2)
(2)An additional $9.0 million rental expense pertains to discontinued operations (2014: $3.9 million).
Foreign exchange gains and losses
Net foreign exchange loss
8.
Income tax expense
(a)
Income tax expense
Current tax expense
Deferred tax (benefit) / expense
Adjustments to tax expense of prior periods
Deferred income tax (revenue) / expense included in income tax expense
comprises:
(Increase) in deferred tax assets (note 13)
Increase in deferred tax liabilities (note 20)
0.4
34.1
0.1
9.2
43.4
17.3
0.5
17.8
22.2
(0.3)
21.9
30.5
397.2
427.7
203.2
10.1
213.3
0.8
32.8
0.2
8.5
41.5
12.3
0.1
12.4
24.5
(0.5)
24.0
27.0
357.5
384.5
181.0
11.0
192.0
1.7
1.0
2015
$m
41.3
(4.2)
1.4
38.5
(9.2)
5.0
(4.2)
2014
$m
44.3
1.6
4.3
50.2
(1.3)
2.9
1.6
Super Retail Group Limited Annual Report 2015 52
52
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
8.
Income tax expense (continued)
1(b)
Numerical reconciliation of income tax expense to
prima facie tax payable
Profit before income tax from continuing operations
Tax at the Australian tax rate of 30% (2014: 30%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Tax consolidation adjustments regarding NZ branches
Research and development credits and sundry items
Difference in overseas tax rates
Derecognition of tax losses and deferred tax assets
Previously unrecognised tax losses now recouped to reduce tax expense
Adjustments to tax expense of prior periods
Income tax expense
Amounts recognised directly in equity
(c)
Aggregate current and deferred tax arising in the reporting period and not
recognised in net profit or loss but directly debited or credited to equity:
Net deferred tax debited / (credited) directly to equity (notes 13 and 20)
Tax expenses / (income) relating to items of other comprehensive income
Cash flow hedges
2015
$m
131.6
39.5
(2.2)
(0.5)
36.8
(0.1)
2.9
(0.4)
(0.7)
38.5
3.1
3.1
2.7
2.7
2014
$m
162.4
48.7
(3.5)
(2.2)
43.0
(0.5)
3.4
-
4.3
50.2
(2.3)
(2.3)
(1.0)
(1.0)
(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 2(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.
9.
Cash and cash equivalents
Cash at bank and in hand
2015
$m
13.1
2014
$m
24.2
Super Retail Group Limited Annual Report 2015 53
53
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
10.
Trade and other receivables
Current
Trade receivables
Provision for impairment of receivables
Net trade receivables
Other receivables
Prepayments
Net current trade and other receivables
Non-current
Trade receivables due from related parties - associate
Total non-current trade and other receivables
(a)
Impaired trade receivables
2015
$m
12.8
(0.3)
12.5
7.8
9.0
29.3
-
-
2014
$m
28.9
(0.5)
28.4
6.1
6.6
41.1
3.7
3.7
As at 27 June 2015 current trade receivables of the Group with a nominal value of $0.3 million (2014: $0.5 million) were impaired
and provided for. The individually impaired receivables mainly relate to wholesalers with whom the Group no longer trade.
Movements in the provision for impairment of receivables are as follows:
Opening balance
Provision for impairment recognised during the period
Receivables written off during the year as uncollectable
Closing balance
2015
$m
(0.5)
(0.7)
0.9
(0.3)
2014
$m
(0.2)
(0.3)
-
(0.5)
The creation and release of the provision for the impaired receivables has been included in administration expenses within the
consolidated 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 at 27 June 2015, trade receivables of $6.3 million (2014: $7.5 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
2015
$m
3.1
1.3
1.9
6.3
2014
$m
4.2
1.3
2.0
7.5
Super Retail Group Limited Annual Report 2015 54
54
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
11.
Current tax assets
Income tax receivable
12.
Inventories
Finished goods, at lower of cost or net realisable value
(a)
Inventory expense
2015
$m
2.9
2015
$m
505.6
2014
$m
-
2014
$m
490.1
Inventories recognised as expense during the period ended 27 June 2015 amounted to $1,222.7 million (2014: $1,118.5
million).
Write-downs of inventories to net realisable value recognised as an expense during the period ended 27 June 2015
amounted to $6.3 million (2014: reversal of write-downs recognised as a reduction in expenses of $0.4 million). This
expense has been included in cost of sales of goods within the consolidated statement of comprehensive income.
13.
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
(Charged) / credited to equity
Closing balance
Deferred tax assets to be recovered after more than 12 months
Deferred tax assets to be recovered within 12 months
2015
$m
26.1
1.5
12.8
1.3
1.3
43.0
-
0.4
43.4
(43.4)
-
36.5
9.2
(2.3)
43.4
30.2
13.2
43.4
2014
$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
Super Retail Group Limited Annual Report 2015 55
55
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
14.
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
(a) Reconciliations
2015
$m
360.7
(161.2)
199.5
0.5
(0.3)
0.2
83.9
(59.5)
24.4
224.1
Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below:
2015
Carrying amounts at 28 June 2014
Additions
Disposals
Acquisition of subsidiary
Depreciation(1)
Transfers between asset class(2)
Foreign currency exchange differences
Carrying amounts at 27 June 2015
2014
Carrying amounts at 29 June 2013
Additions
Disposals
Acquisition of subsidiary
Depreciation(1)
Transfers between asset class(2)
Foreign currency exchange differences
Carrying amounts at 28 June 2014
Plant and
equipment
$m
172.9
50.5
(0.3)
0.4
(39.2)
15.6
(0.4)
199.5
170.7
35.3
(1.1)
-
(33.5)
-
1.5
172.9
Motor
vehicles
$m
0.1
0.1
(0.1)
0.2
(0.1)
-
-
0.2
Computer
equipment
$m
24.6
9.8
(0.1)
0.1
(10.0)
-
-
24.4
0.5
-
(0.2)
-
(0.2)
-
-
0.1
21.4
11.9
(0.1)
-
(8.8)
-
0.2
24.6
2014
$m
306.8
(133.9)
172.9
0.5
(0.4)
0.1
76.8
(52.2)
24.6
197.6
Total
$m
197.6
60.4
(0.5)
0.7
(49.3)
15.6
(0.4)
224.1
192.6
47.2
(1.4)
-
(42.5)
-
1.7
197.6
(1) Depreciation of $43.4 million (2014: $41.5 million) is included in administration expenses in the consolidated statement of comprehensive income
relating to continuing operations. Total depreciation for the Group including discontinued operations is $49.3 million (2014: $42.5 million).
(2) Transfers relates to amounts for computer hardware disclosed within Intangible Assets work-in-progress at 28 June 2014, which were capitalised
as Plant and Equipment assets during the 2015 financial year.
Finance Leases
The carrying value of computer equipment held under finance leases as at 27 June 2015 was $2.6 million (2014: $5.1million).
Finance leases with a value of $0.2 million were acquired on acquisition of subsidiary during the financial year. There were no other
additions during the year. Leased assets are pledged as security for the related finance lease liability.
Super Retail Group Limited Annual Report 2015 56
56
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
15.
Intangible assets
Goodwill, at cost
Less accumulated impairment charge
Net goodwill
Computer software, at cost
Less accumulated amortisation
Net computer software
Brand names, at cost
Less accumulated amortisation
Net brand names
Supplier agreement, at cost
Less accumulated amortisation
Net supplier agreements
Total net intangible assets
(a)
Reconciliations
2015
$m
449.7
(2.1)
447.6
147.7
(60.6)
87.1
267.5
(0.9)
266.6
0.4
(0.4)
-
2014
$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
801.3
813.4
Reconciliations of the carrying amounts for each class of intangible asset are set out below:
2015
Carrying amounts at 28 June 2014
Additions
Acquisition of business
Deconsolidation as required under AASB11
Disposals
Amortisation charge(1)
Transfers between asset class(2)
Carrying amounts at 27 June 2015
2014
Carrying amounts at 29 June 2013
Additions - internally developed
Acquisition of business
Deconsolidation as required under AASB11
Disposals
Amortisation charge(1)
Transfers between asset class(2)
Carrying amounts at 28 June 2014
Goodwill
$m
Computer
Software
$m
Brand
Name
$m
Supplier
Agreement
$m
441.4
-
6.2
-
-
-
-
447.6
104.9
14.8
0.4
-
(0.1)
(17.3)
(15.6)
87.1
266.8
-
-
-
-
(0.2)
-
266.6
0.3
-
-
-
-
(0.3)
-
-
Goodwill
$m
Computer
Software
$m
Brand
Name
$m
Supplier
Agreement
$m
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
Totals
$m
813.4
14.8
6.6
-
(0.1)
(17.8)
(15.6)
801.3
Totals
$m
769.7
58.6
2.4
(4.5)
(0.4)
(12.4)
-
813.4
(1) Amortisation of $17.8 million (2014: $12.4 million) is included in administration expenses in the consolidated statement of comprehensive income
relating to continuing operations. There was nil (2014: nil) amortisation expense included in discontinued operations.
(2) Transfers relates to amounts disclosed within computer software work-in-progress at 28 June 2014, which were capitalised as Plant and
Equipment assets during the 2015 financial year.
Super Retail Group Limited Annual Report 2015 57
57
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
15.
Intangible assets (continued)
(b)
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.
A CGU level summary of the goodwill allocation is presented below:
CGU
Auto
Leisure
Sports
Group
Total
2015
$m
45.3
25.1
376.5
0.7
447.6
2014
$m
45.3
24.8
371.3
-
441.4
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.
Key assumptions used for value-in-use calculations
Management have consistently applied two key assumptions in the value-in-use analysis across each business segment CGU, a
pre-tax discount rate of 14.0% (2014: 14.0%) and terminal growth rate of 3.0% (2014: 3.0%). Budgeted gross margin is determined
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 recoverable amount of the Group’s goodwill currently exceeds its carrying value.
(c)
Impairment tests for the useful life for brands
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 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
2015
$m
209.0
36.0
20.0
1.6
266.6
2014
$m
209.0
36.0
20.0
1.8
266.8
Key assumptions used for value-in-use calculations
Management have consistently applied two key assumptions in the value-in-use analysis across each brand, a pre-tax discount rate
of 14.0% (2014: 14.0%) and terminal growth rate of 3.0% (2014: 3.0%). Budgeted gross margin is determined 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 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 $20.7 million (2014: $10.8 million). The recoverable amount is sensitive to future
sales growth which relies on the execution of the repositioning strategy. The current business plan assumes an average sales
growth over the next five years of 4.5%. If the average sales growth for this period is 3.6% the recoverable amount would equal its
carrying value.
Super Retail Group Limited Annual Report 2015 58
58
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
16.
Trade and other payables
Current
Trade payables
Other payables
Straight line lease adjustment
Total current trade and other payables
Non-current
Straight line lease adjustment
Total non-current trade and other payables
17.
Interest-bearing liabilities
Current
Finance leases - secured by leased asset
Bank debt funding facility - secured
Total current interest-bearing liabilities
Non-current
Finance lease - secured by leased asset
Bank debt funding facility - secured
Bank debt funding facility - unsecured(1)
Loan from related party - unsecured
Total non-current interest-bearing liabilities
(1)Net of borrowing costs capitalised of $1.7 million (2014: $1.8 million).
18.
Current tax liabilities
Income tax payable
19.
Provisions
Current
Employee benefits(a)
Surplus leases(b)
Make good provision(c)
Put option provision(d)
Other provisions(e)
Total current provisions
Non-current
Employee benefits(a)
Surplus leases(b)
Make good provision(c)
Total non-current provisions
2015
$m
194.9
70.1
3.6
268.6
36.7
36.7
2015
$m
1.6
0.6
2.2
1.0
0.1
387.8
0.9
389.8
2015
$m
-
2015
$m
37.9
7.2
1.5
-
2.0
48.6
7.6
2.2
6.5
16.3
2014
$m
204.8
63.3
3.3
271.4
27.0
27.0
2014
$m
2.7
-
2.7
2.4
-
401.7
-
404.1
2014
$m
1.1
2014
$m
32.9
1.3
1.1
0.5
0.4
36.2
7.0
-
6.0
13.0
Employee benefits
(a)
Provisions for employee benefits includes accrued annual leave, long service leave and accrued bonuses.
Surplus leases
(b)
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.
Super Retail Group Limited Annual Report 2015 59
59
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
19.
Provisions (continued)
Make good provision
(c)
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.
Put option provision
(d)
The Group had acquired an initial 50% shareholding in Oceania Bicycles Pty Ltd on 23 June 2008. On acquisition a put option
liability was recognised, reflecting an estimate of the potential obligation under the put agreement. This liability was extinguished
through the Deed of Settlement and Release on 25 June 2015, when the Group acquired the 50% non-controlling interest
shareholding. Refer to note 33(c) - Business combinations.
(e)
The current provision for other items includes the provision for store refunds.
Other provisions
(f)
Movements in each class of provision during the period, except for employee benefits and other, are set out below:
Movement in provisions
2015
Opening balance as at 28 June 2014
Provisions made
Indexing of provisions
Provisions used
Closing balance as at 27 June 2015
20.
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss
Brand values
Depreciation
Amounts recognised directly in equity
Cash flow hedges
Set-off of deferred tax assets (note 13)
Net deferred tax liabilities
Movements:
Opening balance
Charged to the income statement
Charged / (credited) to equity
Closing balance
Deferred tax liabilities to be settled after more than 12 months
Deferred tax liabilities to be settled within 12 months
Surplus leases
$m
1.3
8.7
-
(0.6)
9.4
Make good
$m
7.1
1.4
0.5
(1.0)
8.0
Put option
$m
0.5
-
-
(0.5)
-
2015
$m
80.0
14.1
94.1
0.8
94.9
(43.4)
51.5
89.1
5.0
0.8
94.9
94.1
0.8
94.9
Total
$m
8.9
10.1
0.5
(2.1)
17.4
2014
$m
80.3
8.8
89.1
-
89.1
(36.5)
52.6
88.2
2.9
(2.0)
89.1
89.1
-
89.1
Super Retail Group Limited Annual Report 2015 60
60
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
21.
(a)
Contributed equity
Share capital
Ordinary shares fully paid (197,030,571 ordinary shares as at 27 June 2015)
2015
$m
542.3
2014
$m
542.3
(i)
Movement in ordinary share capital
Opening Balance 29 June 2013
Shares issued under performance rights
Balance 28 June 2014
Shares issued under performance rights
Closing balance 27 June 2015
Number of Shares
Issue Price
$m
196,472,812
258,808
196,731,620
298,951
197,030,571
-
-
542.3
-
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 579,192 (2014: 469,920) ordinary shares were issued during the period with 298,951 (2014: 258,808)
performance rights vesting during the period. Under the share option plan, nil (2014: nil) ordinary shares were issued during the
period. Information relating to performance rights and options outstanding at the end of the financial period are set out in Note 39 -
Share-based Payments.
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.
22.
Reserves and retained earnings
Reserves
(a)
Foreign currency translation reserve
Share based payments reserve
Hedging reserve
Total
Movements
(i)
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
2015
$m
3.5
7.8
1.9
13.2
4.1
(0.6)
3.5
8.0
(0.2)
7.8
(4.4)
9.0
(2.7)
1.9
2014
$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)
Super Retail Group Limited Annual Report 2015 61
61
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
22.
Reserves and retained earnings (continued)
(a)
Reserves (continued)
Nature and purpose of reserves
(ii)
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 2(l). Amounts are recognised in profit and loss when the associated hedged transaction affects profit
and loss.
Share-based payments reserve
The share-based payments reserve is used to recognise the grant date fair value of options and performance rights issued.
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 2(e). The reserve is recognised in profit and loss when the net investment is disposed of.
(b)
Retained earnings
Balance at the beginning of the financial period
Net profit for the period attributable to owners of Super Retail Group Limited
Dividends paid
Retained profits at the end of the financial period
23.
(a)
Financial assets and financial liabilities
Financial instruments
The Group holds the following financial instruments:
2015
$m
210.4
81.1
(78.7)
212.8
Financial assets
2015
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Total
2014
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Total
Financial liabilities
2015
Trade and other payables
Interest-bearing liabilities
Derivative financial instruments
Total
2014
Trade and other payables
Interest-bearing liabilities
Derivative financial instruments
Total
Derivatives used
for hedging
$m
Financial assets
at amortised
cost $m
Notes
9
10
24
9
10
24
-
-
6.8
6.8
-
-
-
-
13.1
29.3
-
42.4
24.2
41.1
-
65.3
Derivatives used
for hedging
$m
Notes
Financial
liabilities at
amortised cost
$m
16
17
24
16
17
24
-
-
4.1
4.1
-
-
6.3
6.3
305.3
392.0
-
697.3
298.4
406.8
-
705.2
2014
$m
179.7
108.4
(77.7)
210.4
Total
$m
13.1
29.3
6.8
49.2
24.2
41.1
-
65.3
Total
$m
305.3
392.0
4.1
701.4
298.4
406.8
6.3
711.5
The Group’s exposure to various risks associated with the financial instruments is discussed in note 24. 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.
Super Retail Group Limited Annual Report 2015 62
62
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
23.
Financial assets and financial liabilities (continued)
(b)
Recognised fair value measurements
Fair value hierarchy
(i)
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are
recognised and measured 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 balance sheet date.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to
their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.
The following tables present the Group’s entity’s assets and liabilities measured and recognised at fair value.
Level 3
$m
Level 2
$m
Level 1
$m
2015
Financial assets
Derivatives used for hedging
Total
Financial liabilities
Derivatives used for hedging
Total
2014
Financial assets
Derivatives used for hedging
Total
Financial liabilities
Derivatives used for hedging
Total
-
-
-
-
6.8
6.8
4.1
4.1
-
-
-
-
Total
$m
6.8
6.8
4.1
4.1
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
-
-
-
-
-
-
6.3
6.3
-
-
-
-
-
-
6.3
6.3
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.
Valuation techniques used to determine fair value
(ii)
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, where the fair values have been determined based on present
values and the discount rates used were adjusted for counterparty or own credit risk.
Super Retail Group Limited Annual Report 2015 63
63
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
24.
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.
Market risk
Credit risk
Liquidity risk
Foreign exchange
Interest rate
Exposure
arising from
Future commercial transactions
Recognised financial assets and
liabilities not denominated in AUD
Long-term
borrowings at
variable rates
Measurement
Cash flow forecasting
Sensitivity analysis
Sensitivity
analysis
Cash and cash equivalents,
trade and other receivables
and derivative financial
instruments
Aging analysis
Credit ratings
Management
Forward foreign exchange
contracts and options
Interest rate
swaps
Rolling cash flow
forecasts
Borrowings and other
liabilities
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)
Derivative Financial Instruments
Derivative Financial Instruments 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
2015
$m
6.8
6.8
-
4.1
4.1
2014
$m
-
-
4.0
2.3
6.3
Classification of derivatives
(i)
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 2(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)
For information about the methods and assumptions used in determining the fair value of derivatives please refer to note 2(m).
Fair value measurement
Super Retail Group Limited Annual Report 2015 64
64
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
24.
Financial risk management (continued)
(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 (USD) and Chinese Yuan (CNY).
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 50% and 75% of anticipated foreign currency purchases for the
subsequent 4 months and up to 50% 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, with contract pricing denominated in USD.
In order to protect against exchange rate movements, the economic entity has entered into forward exchange rate contracts to
purchase USD. The contracts are timed to mature in line with forecasted payments for imports and cover forecast purchases for
the subsequent twelve months, on a rolling basis. The Group does not currently enter into forward exchange rate contracts to
purchase CNY.
Exposure
The Group’s exposure to foreign currency risk at the end of the reporting period was as follows:
Trade receivables
Trade payables
Forward exchange contract - foreign currency (cash flow hedges)
Buy United States dollars and sell Australian dollars with maturity
- 0 to 4 months
- 5 to 12 months
Trade receivables
Trade payables
2015
USD
$m
1.5
8.0
54.0
80.0
134.0
2015
CNY
$m
0.2
3.9
2014
USD
$m
1.4
10.4
66.5
30.0
96.5
2014
CNY
$m
n/a
n/a
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 consolidated
balance sheet by the related amount deferred in equity. In the year ended 27 June 2015, no hedges were designated as
ineffective (2014: nil).
Gains and losses arising from hedging contracts terminated prior to maturity are also carried forward until the designated
hedged transaction occurs.
The following gains, losses and costs have been deferred as at the balance date:
- unrealised gains / (losses) on USD foreign exchange contracts
- unrealised (losses) on interest rate swaps
Total unrealised gains / (losses)
2015
$m
6.8
(4.1)
2.7
2014
$m
(4.0)
(2.3)
(6.3)
Super Retail Group Limited Annual Report 2015 65
65
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
24.
Financial risk management (continued)
(b) Market risk (continued)
(i) Foreign exchange risk (continued)
Group sensitivity
Based on the financial instruments held at 27 June 2015, 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 $11.9 million lower/$14.5 million higher (2014: $8.0 million lower/$9.8 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 3.49% (2014: 4.25%). 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
receivables or other payables.
At period end, the Group was a party to multiple interest rate swaps for a total nominal value of $175.0 million (2014: $120.0
million). The Group also has $75.0 million (2014: $80.0 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 45%
(2014: 30%) of the loan principal outstanding. The average fixed interest rate is 3.37% (2014: 4.39%).
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
Floating
interest
rate
$m
Notes
1 year or
less
$m
Over 1 to
5 years
$m
More than
5 years
$m
Non-
interest
bearing
$m
Total
$m
2015
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Weighted average rate of interest
Financial liabilities
Trade and other payables
Interest-bearing liabilities
Provisions (employee benefits)
Total financial liabilities
Weighted average rate of interest
Net financial (liabilities) / assets
9
10
16
17
19
11.4
-
11.4
2.00%
-
389.4
-
389.4
3.49%
(378.0)
-
-
-
-
1.6
-
1.6
-
-
-
-
1.0
-
1.0
(1.6)
(1.0)
-
-
-
-
-
-
-
-
1.7
29.3
31.0
13.1
29.3
42.4
305.3
-
45.5
350.8
305.3
392.0
45.5
742.8
(319.8)
(700.4)
Super Retail Group Limited Annual Report 2015 66
66
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
Fixed interest maturing in
1 year or
less
$m
Over 1 to
5 years
$m
More than
5 years
$m
24.
Financial risk management (continued)
(b) Market risk (continued)
(ii) Cashflow and fair value interest rate risk(continued)
Notes
9
10
16
17
19
2014
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Weighted average rate of interest
Financial liabilities
Trade and other payables
Interest-bearing liabilities
Provisions (employee benefits)
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)
-
-
-
-
2.7
-
2.7
(2.7)
-
3.7
3.7
-
2.4
-
2.4
1.3
Non-
interest
bearing
$m
1.6
41.1
42.7
298.4
-
39.9
338.3
Total
$m
24.2
44.8
69.0
298.4
406.8
39.9
745.1
-
-
-
-
-
-
-
-
(295.6)
(676.1)
Group sensitivity
The Group’s main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. During the 2015
and 2014 financial years, 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 note 24(d).
2015
$m
390.2
175.0
2014
$m
403.5
120.0
The Group risk management policy is to maintain fixed interest rate hedges of approximately 45% of anticipated debt levels over
a 3 year period. The Group utilises interest rate swaps to hedge its interest rate exposure on borrowings.
As at 27 June 2015, 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 $1.7 million lower/higher (2014: $1.9 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.
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.
Super Retail Group Limited Annual Report 2015 67
67
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
24.
Financial risk management (continued)
(c) Credit risk (continued)
(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 9) 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
2015
$m
615.0
20.0
635.0
389.5
4.8
394.3
225.5
15.2
240.7
2014
$m
580.0
20.0
600.0
403.5
6.6
410.1
176.5
13.4
189.9
Current interest rates on bank loans of the economic entity are 3.19% - 3.68% (2014: 3.83% - 4.52%).
Super Retail Group Limited Annual Report 2015 68
68
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
24.
Financial risk management (continued)
(d)
Liquidity risk (continued)
Maturities of financial liabilities
(ii)
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.
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.
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
Total
contractual
cash flows
$m
Carrying
amount
(assets) /
liabilities
$m
265.0
7.4
0.9
273.3
-
6.8
0.7
7.5
-
101.8
1.0
102.8
-
313.2
-
313.2
1.1
1.0
1.9
0.6
(112.9)
108.3
(3.5)
(61.0)
60.5
0.5
-
-
1.9
-
-
0.6
-
-
-
-
-
-
-
-
265.0
429.2
2.6
696.8
265.0
390.2
2.6
657.8
4.6
4.1
(173.9)
168.8
(0.5)
(6.8)
-
(2.7)
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
Total
contractual
cash flows
$m
Carrying
amount
(assets) /
liabilities
$m
268.1
8.6
1.5
278.2
-
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
4.4
(31.8)
33.6
2.3
-
-
1.0
-
-
0.3
-
-
-
-
-
-
-
-
268.1
456.0
5.1
729.2
268.1
403.5
5.1
676.7
2.7
2.3
(102.3)
107.6
8.0
4.0
-
6.3
2015
Non-derivatives
Trade and other payables
Interest-bearing liabilities(1)
Finance lease liabilities
Total non-derivatives
Derivatives
Net settled (Interest Rate Swaps)
Forward exchange contracts used for
hedging:
Gross settled
- (inflow)
- outflow
Total derivatives
(1)Excludes finance leases.
2014
Non-derivatives
Trade & other payables
Interest-bearing liabilities(1)
Finance lease liabilities
Total non-derivatives
Derivatives
Net settled (Interest Rate Swaps)
Forward exchange contracts used for
hedging:
Gross settled
- (inflow)
- outflow
Total derivatives
(1)Excludes finance leases.
Super Retail Group Limited Annual Report 2015 69
69
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
25.
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
consolidated balance sheet (including non-controlling interests) plus net debt.
During 2015 the Group’s strategy, which was unchanged from 2014, 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 27 June 2015 and 28 June 2014 were
as follows:
Total borrowings
Less: Cash & cash equivalents
Net Debt
Total Equity
Total Capital
Gearing Ratio
2015
$m
392.0
(13.1)
378.9
765.3
1,144.2
33.1%
2014
$m
406.8
(24.2)
382.6
760.4
1,143.0
33.5%
The Group monitors ongoing capital on the basis of the fixed charge cover ratio. The ratio is calculated as earnings before net
finance costs, income tax, depreciation, amortisation and store and rental expense divided by fixed charge obligations (being
finance costs and store and distribution centre 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 2015 the Group’s strategy, which was unchanged from 2014, was to maintain a fixed charge cover ratio of around 2.0 times.
The fixed charge cover ratios at 27 June 2015 and 28 June 2014 were as follows:
Profit attributable to Owners of Super Retail Group Limited
Add: Taxation expense
Net finance costs
Depreciation and amortisation
Rental expense
EBITDAR
Net finance costs
Rental expense
Fixed charges
Fixed charge cover ratio
(1) Includes continuing and discontinued operations.
2015(1)
$m
81.1
38.5
21.9
67.1
222.3
430.9
21.9
222.3
244.2
1.76
2014
$m
108.4
50.2
24.0
54.9
196.2
433.7
24.0
196.2
220.2
1.97
Fixed charge cover ratio from normalised net profit after tax
1.89
2.00
Loan Covenants
(i)
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 2015 and 2014
financial years. There are no assets pledged as security in relation to the unsecured debt in the 2015 financial year (2014: nil).
Super Retail Group Limited Annual Report 2015 70
70
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
25.
Capital management (continued)
(b) Dividends
Ordinary shares
Dividends paid by Super Retail Group Limited during the 2015 financial year were as
follows:
Interim dividend for the period ended 27 December 2014 of 18.5 cents (2014: 18.5
cents per share) paid on 2 April 2015. Fully franked based on tax paid @ 30%
Final dividend for the period ended 28 June 2014 of 21.5 cents per share (2013: 21.0
cents per share) paid on 2 October 2014. 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 (2014: 21.5 cents per ordinary share), fully franked
based on tax paid at 30%.
The aggregate amount of the dividend expected to be paid on 02 October 2015, out
of retained profits at 27 June 2015, but not recognised as a liability at year end, is
Franking credits
The franked portions of dividends paid after 27 June 2015 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 27 June 2015.
Franking credits remaining at balance date available for dividends declared after the
current balance date based on a tax rate of 30%
2015
$m
2014
$m
36.5
42.2
78.7
74.6
4.1
78.7
36.4
41.3
77.7
71.9
5.8
77.7
42.4
42.2
106.7
98.3
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 will be a reduction in the
franking account of $18,154,960 (2014: $18,127,414). The recommended dividend has not been recognised as a liability at year
end.
Super Retail Group Limited Annual Report 2015 71
71
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
26.
Key management personnel disclosures
(a)
Key management personnel compensation
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Share based payments
Termination benefits
2015
$
5,098,434
51,183
224,263
96,533
232,004
5,702,417
2014
$
5,030,056
50,143
235,391
354,532
-
5,670,122
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
27.
Remuneration of auditors
2015
$
23,192,162
2014
$
23,175,389
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.
Taxation services
PricewaterhouseCoopers Australia
Assurance services
(a)
1 (i)
Audit and review of financial statements
Audit and review of subsidiaries
Other assurance
Total remuneration for audit and other assurance services
(ii)
Tax compliance services, including review of Company income tax returns
Customs Advice
Total remuneration for taxation services
(iii)
Business Consulting
Total remuneration for advisory services
Total remuneration of PricewaterhouseCoopers Australia
Other services
Taxation services
(b) Network firms of PricewaterhouseCoopers Australia
(i)
Tax compliance services, including review of Company income tax returns
Total remuneration for taxation services
Total remuneration of network firms of PricewaterhouseCoopers Australia
Total auditors’ remuneration
2015
$
2014
$
473,854
20,000
10,000
503,854
101,692
22,675
124,367
-
-
628,221
468,435
46,100
10,000
524,535
295,207
2,140
297,347
3,060
3,060
824,942
26,025
26,025
26,025
65,106
65,106
65,106
654,246
890,048
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.
Super Retail Group Limited Annual Report 2015 72
72
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
28.
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:
2015
$m
2014
$m
5.3
7.1
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.
29.
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 for property and motor vehicles
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 16)
Total lease commitments
Future minimum lease payments expected to be received in relation to non-cancellable
sub-leases of operating leases
2015
$m
4.5
4.5
193.0
561.5
201.0
(40.3)
915.2
0.2
2014
$m
5.9
5.9
181.6
531.7
159.3
(30.3)
842.3
0.9
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.
Finance leases
The Group leases various plant and equipment with a carrying amount of $2.6m (2014: $5.1m) under finance leases expiring within
one to three 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 17)
Non-current (note 17)
2015
$m
1.8
1.0
2.8
(0.2)
2.6
1.6
1.0
2.6
2014
$m
3.0
2.6
5.6
(0.5)
5.1
2.7
2.4
5.1
Super Retail Group Limited Annual Report 2015 73
73
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
30.
Related party transactions
Transactions with related parties are at arm’s length unless otherwise stated.
(a)
The parent entity within the Group is Super Retail Group Limited, which is the ultimate Australian parent.
Parent entities
(b)
Interests in subsidiaries are set out in note 31.
Subsidiaries
(c)
Disclosures relating to key management personnel are set out in note 26.
Key Management Personnel
Directors
(d)
The names of the persons who were Directors of Super Retail Group Limited during the financial period are R J Wright, R A Rowe,
R J Skippen, S A Pitkin, R A Murray and P A Birtles. R A Murray resigned, effective 29 April 2015.
(e)
Amounts due from Directors of the consolidated entity and their director-related entities are shown below in note 30(f).
Amounts due from related parties
(f)
Loans to / (from) Related Parties
Loans to / (from) Related Parties
Loan from related parties(1)
Loan to related parties(2)
2015
$
(955,687)
50,000
2014
$
-
-
(1)Loan from Sports and Entertainment Limited (SEL), an entity with a non-controlling interest in Infinite Retail Pty Ltd, a controlled entity of the Group. The loan is
deemed to be on an arms-length basis, attracting interest at a rate of 6.9%
(2)Loan to James Woodford Pty Ltd, an entity with a non-controlling interest in Youcamp Pty Ltd, a controlled entity of the Group. The loan was extended as part of the
Group’s acquisition arrangements with Youcamp Pty Ltd, refer to note 33(d) - Business combinations.
Transactions with other related parties
(g)
Aggregate amounts included in the determination of profit from ordinary activities before income tax that resulted from transactions
with related parties:
Purchase of goods and services
Store lease payment(1)
Inventories(2)
Royalties for brand name(3)
Management fees(4)
Finance costs(5)
Consideration paid for acquisition of controlled entity(6)
2015
$
2014
$
11,087,692
2,237,048
486,157
275,000
11,575,217
n/a
n/a
n/a
158,102
464,500
n/a
n/a
(1) Rent on properties, with rates which are deemed to be on an arms-length basis. Rent payable at year-end was nil (2014: nil).
(2) Inventories sourced from Velocity Brand Management Pty Ltd (VBML) a sports licensing agency and it’s operating entities Velocity Brand Management NZ Limited and
VBM Manufacturing Pty Ltd which are deemed to be on an arms-length basis.
(3) Royalties are payable to VBML which are deemed to be on an arms-length basis.
(4) Management services are provided by VBML which are determined to be on an arms-length basis.
(5) Interest paid and accrued relating to the related party loan to SEL at a rate of 6.9% (2014: n/a), in addition to motor vehicle finance lease charges paid to VBML at a
rate of 6.22% (2014: n/a), These transactions are determined to be on an arms-length basis.
(6) To acquire the remaining 50% non-controlling interest shareholding in Oceania Bicycles Pty Ltd, see note 33(c) - Business combinations.
Super Retail Group Limited Annual Report 2015 74
74
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
31.
Investments in controlled entities
The Group’s subsidiaries at 27 June 2015 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.
Principal Activities
Equity Holding
2014
2015
%
%
Country of
Incorporation
Australia
New Zealand
Australia
New Zealand
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Hong Kong
United Kingdom
New Zealand
Australia
New Zealand
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Name of Entity
A-Mart All Sports Pty Ltd(1)
Auto Trade Direct (NZ) Limited
Auto Trade Direct Pty Ltd(1)
BCF New Zealand Limited
Coyote Retail Investments Pty Limited(1)
Coyote Retail Pty Limited(1)
FCO New Zealand Limited
Fixed Price Car Service Australia Pty Ltd(2)
Foghorn Holdings Pty Ltd(1)
Goldcross Cycles Pty Ltd(1)
Infinite Retail Pty Ltd(3)
VBM Retail (HK) Limited(4)
Infinite Retail UK Limited(4)
VBM Retail NZ Limited(4)
Oceania Bicycles Pty Ltd(5)
Oceania Bicycles Limited(6)
Quinns Rock Pty Ltd(1)
Ray’s Outdoors New Zealand Limited
Ray’s Outdoors Pty Ltd(1)
Rebel Group Limited(1)
Rebel Management Services Pty Limited(1)
Rebel Sport Limited(1)
Rebel Wholesale Pty Limited(1)
Rebelsport.com Pty Limited(1)
SCA Equity Plan Pty Ltd
SRG Leisure Retail Pty Ltd(1)
SRGS (New Zealand) Limited
SRGS Pty Ltd(1)
Super Cheap Auto (New Zealand) Pty Ltd
Super Cheap Auto Pty Ltd(1)
Super Retail Commercial Pty Ltd(1)
Super Retail Group Services (New Zealand) Limited
Super Retail Group Services Pty Ltd(1)
Super Retail Group Trading (Shanghai) Ltd
Youcamp Pty Ltd(7)
Sports retail
Auto retail
Auto retail
Leisure retail
Sports retail
Sports retail
Leisure retail
Auto services
Sports retail
Sports retail
Sports retail
Sports 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
New Zealand Product acquisition and distribution
Product acquisition and distribution
Auto retail
Auto retail
Auto retail
Support services
Support services
Product sourcing
Leisure services
Australia
New Zealand
Australia
Australia
New Zealand
Australia
China
Australia
100
100
100
100
100
100
100
51
100
100
50.05
50.05
50.05
50.05
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
n/a
100
100
n/a
n/a
n/a
n/a
50
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
n/a
(1) 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.
(2) The Group acquired a 51% shareholding in Fixed Price Car Service Australia Pty Ltd. Refer to note 33(b) - Business combinations.
(3) On 14 July 2014, an additional 2 shares were acquired, resulting in the ownership interest in Infinite Retail Pty Ltd (formerly known as VBM Retail Pty Ltd) increasing to
50.05%. The entity changed from being an associate to a controlled entity. Refer to note 33(a) - Business combinations.
(4) Investment is held directly by Infinite Retail Pty Ltd.
(5) On 25 June 2015, the Group acquired the remaining 50% non-controlling interest shareholding, resulting in the ownership interest in these entities increasing to 100%.
Refer to note 33(c) of the consolidated financial statements, Business Combinations.
(6) Investment is held directly by Oceania Bicycles Pty Ltd.
(7) The Group acquired a 51% controlling shareholding in Youcamp Pty Ltd. Refer to note 33(d) - Business combinations.
Super Retail Group Limited Annual Report 2015 75
75
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
32.
Interests in associates
In the prior financial year, the Group held a direct interest in the entity detailed below, the share capital of which consisting solely of
ordinary shares. 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
Infinite Retail Pty Ltd(1)
(1) Formerly known as VBM Retail Pty Ltd.
(2) Refer Note 33(a) – business combinations.
Place of business/
country of
incorporation
Australia
Nature of
relationship
Associate
Measurement
method
Equity method
% of ownership interest
2015 2014
% %
n/a(2)
50
33.
Business combinations
During the financial year, the Group entered into several strategic business combination transactions, enhancing the Group’s
diverse business segment portfolio. The details of each business combination, consideration paid, net assets acquired, and
provisional goodwill assumed are outlined below. Entities acquired include:
Infinite Retail Pty Ltd (Infinite Retail)
Fixed Price Car Service Australia Pty Ltd (FPCS)
•
•
• Oceania Bicycles Pty Ltd (Oceania)
• Youcamp Pty Ltd (Youcamp)
2015
(i) Consideration
Cash paid
Fair value of the Group’s previous equity accounted holding
Fair value of non-controlling interest previous equity accounted holding
Total consideration
(ii) Net assets
ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Property, plant & equipment
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Trade and other payables
Provisions
Total current liabilities
Interest-bearing liabilities
Total non-current liabilities
Total liabilities
NET ASSETS
Infinite
Retail(a)
$m.
-
5.3.
5.3.
10.6.
0.5
3.4
6.9
10.8
1.0
-
1.0
11.8
5.7
0.1
5.8
5.8
5.8
11.6
0.2
FPCS(b) Oceania(c) Youcamp(d)
$m.
$m.
$m.
1.5
-
1.5
3.0
1.5
-
-
1.5
-
0.2
0.2
1.7
-
-
-
-
-
-
1.7
0.5
-
-
0.5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.5
-
0.5
1.0
0.5
-
-
0.5
-
-
-
0.5
-
-
-
-
-
-
0.5
Total
$m.
2.5
5.3
7.3
15.1
2.5
3.4
6.9
12.8
1.0
0.2
1.2
14.0
5.7
0.1
5.8
5.8
5.8
11.6
2.4
(iii) Goodwill
Total consideration
Fair value of net identifiable assets acquired
Fair value of put option liability extinguished(1)
Provisional goodwill
Attributable to the Group
Attributable to non-controlling interests
(1) On acquisition of Oceania in 2008 a put option liability was recognised, reflecting an estimate of the potential obligation under the put agreement. This liability was
10.6.
(0.2)
-
10.4.
5.2.
5.2.
1.0
(0.5)
-
0.5
0.3
0.2
3.0
(1.7)
-
1.3
0.7
0.6
0.5
-
(0.5)
-
-
-
15.1
(2.4)
(0.5)
12.2
6.2
6.0
extinguished as part of the wider business combination transaction. Refer to note 33(c) - Business combinations for further detail.
Super Retail Group Limited Annual Report 2015 76
76
Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
33.
Business combinations (continued)
(a)
Infinite Retail Pty Ltd
On 14 July 2014, an additional 2 shares were acquired, increasing the ownership from 50% to 50.05%, for a cash consideration of
$5,300 per share. Infinite Retail Pty Ltd (Infinite Retail) is a sports merchandising business specialist. The entity changed from
being an associate to a controlled entity in accordance with AASB 10 Consolidated Financial Statements.
As at the acquisition date, 14 July 2014, the Group elected to measure the non-controlling interest in the acquiree at the
proportionate share of its interest in the acquiree’s identifiable net assets. The previously held interests were fair valued and formed
part of the consideration transferred. The Group recognised a gain of $0.6 million as a result of measuring at fair value it 50% equity
interest in Infinite Retail Pty Ltd held before the business combination. The gain is included in other income in the Group’s
statement of comprehensive income for the year ended 27 June 2015.
The goodwill is attributable mainly to the licensing and brand management programs developed in Australia, New Zealand and
internationally and the synergies expected to be achieved from integrating the businesses into the Group’s existing Sporting
Business. Goodwill will not be deductible for tax purposes.
The acquired business contributed revenues of $29.1 million for the period 14 July 2014 to 27 June 2015 and a loss after tax of $3.9
million attributable to the Owners of Super Retail Group Limited. Included in the Sports Division segment result is a loss of $3.6
million. The Group has accounted for the entity as if it had been acquired on 29 June 2014, based on insignificant net trading during
the period from 29 June 2014 to 14 July 2014.
(b)
Fixed Price Car Service Australia Pty Ltd
On 24 December 2014, the Group acquired a 51% shareholding in Fixed Price Car Service Australia Pty Ltd, an online car servicing
solution, for a cash consideration of $1.5 million.
The Group elected to measure the non-controlling interest in the acquiree at the proportionate share of its interest in the acquiree’s
identifiable net assets. The goodwill is attributable mainly to the internally developed software and access to management, which is
not separately recognised. Goodwill will not be deductible for tax purposes.
The acquired business contributed revenues of $0.1 million for the period 24 December 2014 to 27 June 2015 and a loss after tax
of $0.3 million attributable to the Owners of Super Retail Group Limited. As the acquired business was non-trading prior to the
acquisition date, these results are reflective of the contribution to the Group’s results as if it the acquisition date had been 29 June
2014.
(c)
Oceania Bicycles Pty Ltd
On 25 June 2015, the Group entered into a Deed of Settlement and Release to acquire the remaining 50% non-controlling interest
shareholding in Oceania Bicycles Pty Ltd (Oceania), an Australian bicycle, parts and accessories distributor, for a cash
consideration of $0.5 million, resulting in the ownership interest in this entity increasing to 100%. Oceania Bicycles Limited is a
subsidiary of Oceania Bicycles Pty Ltd and as such, 100% ownership interest was also gained of this entity as part of this
transaction.
The Group had acquired an initial 50% shareholding in Oceania on 23 June 2008. The Group had elected to deem control had
passed on acquisition due to the provisions of a put agreement on the remaining 50% shares, entered into at this date. As such the
Group consolidated 100% of their results and net assets since acquisition date. No additional net assets were recognised at 25
June 2015.
(d)
Youcamp Pty Ltd
On 24 June 2015, the Group completed the acquisition of a 51% shareholding in Youcamp Pty Ltd, an online accommodation
solution connecting a community of private landowners and customers, for a cash consideration of $0.5 million.
The Group elected to measure the non-controlling interest in the acquiree at the proportionate share of its interest in the acquiree’s
identifiable net assets. The goodwill is attributable mainly to access to management which is not separately recognised. Goodwill
will not be deductible for tax purposes.
The acquired business contributed revenues of $nil million for the period 24 June 2015 to 27 June 2015 and a profit after tax of $nil
million to the Group’s results. As the acquired business was non-trading prior to the acquisition date, these results are reflective of
the contribution to the Group’s results as if it the acquisition date had been 29 June 2014.
(e)
Prior year comparatives
On 22 November 2013 a 100% interest in the business net assets of fitness retailer, Workout World was acquired for a cash
consideration of $4.4 million. Net assets of $2.0 million were acquired, with Goodwill of $2.4 million recognised. Refer to the Super
Retail Group Limited 2014 Annual Report, publically available on the Group’s external website:http://www.superretailgroup.com.au/.
Super Retail Group Limited Annual Report 2015 77
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Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
34. Discontinued operations
Description
(a)
On 19 February 2015 the Group announced the decision to exit the FCO business with an objective of ceasing operations by the
end of the financial year. As at the end of the financial year, all stores had ceased trading.
(b)
Financial performance and cash flow information
Revenue
Expenses
Loss before income tax of discontinued operations
Income tax expense / (benefit)
Loss after income tax of discontinued operations
Net cash (outflow) / inflow from operating activities
Net (decrease) / increase in cash generated by the division
35. Net tangible asset backing
Net tangible asset per ordinary share
2015
$m
31.2
(47.4)
(16.2)
-
(16.2)
(0.5)
(0.5)
2015
Cents
$0.22
2014
$m
23.4
(27.2)
(3.8)
-
(3.8)
0.4
0.4
2014
Cents
$0.14
Net tangible asset per ordinary share is calculated based on Net Assets of $765.3 million (2014: $760.4 million) less intangible
assets of $801.3 million (2014: $813.4 million) adjusted for the associated deferred tax liability of $80.1 million (2014: $80.1 million).
The number of shares used in the calculation was 197,030,571 (2014: 196,731,620).
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,
SCA Equity Plan Pty Ltd, 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 Comprehensive Income Statement and 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 comprehensive income statement and a summary of movements in consolidated retained earnings
for the period ended 27 June 2015 of the Closed Group.
Consolidated Comprehensive Income Statement
Revenue from continuing operations
Other income from continuing operations
Total revenues and other income
Cost of sales of goods
Other expenses from ordinary activities
- selling and distribution
- marketing
- occupancy
- administration
Impairment of related party loans
Net finance costs
Total expenses
Profit before income tax
Income tax expense
Profit for the period
2015
$m
2,110.9
11.3
2,122.2
2014
$m
1,997.2
0.9
1,998.1
(1,184.3)
(1,100.7)
(276.6)
(77.1)
(178.2)
(230.9)
(36.2)
(19.1)
(2,002.4)
119.8
(38.2)
81.6
(259.3)
(81.4)
(164.2)
(224.1)
-
(22.3)
(1,852.0)
146.1
(45.7)
100.4
Super Retail Group Limited Annual Report 2015 78
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Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
36.
(a)
Deed of cross guarantee (continued)
Consolidated Comprehensive Income Statement and Summary of Movements in Consolidated Retained Earnings
Statement of comprehensive income
Profit for the period
Other comprehensive income
Items that may be reclassified to profit or loss
Changes in the fair value of cash flow hedges
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Summary of movements in consolidated retained earnings
Retained profits at the beginning of the financial period
Profit for the period
Dividends paid
Retained profits at the end of the financial period
Consolidated Balance Sheet
(b)
Set out below is a consolidated balance sheet as at 27 June 2015 of the Closed Group.
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Derivative financial instruments
Inventories
Total current assets
Non-current assets
Other financial assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Interest-bearing liabilities
Derivative financial instruments
Provisions
Total non-current liabilities
Non-current liabilities
Trade and other payables
Interest-bearing liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained profits
TOTAL EQUITY
2015
$m
81.6
6.3
6.3
87.9
200.9
81.6
(78.7)
203.8
2015
$m
4.6
38.7
2.9
6.8
469.6
522.6
18.9
211.0
792.1
1,022.0
1,544.6
249.3
1.4
4.1
40.7
295.5
35.8
388.6
53.7
15.2
493.3
788.8
755.8
542.3
9.7
203.8
755.8
2014
$m
100.4
(6.3)
(6.3)
94.1
178.2
100.4
(77.7)
200.9
2014
$m
16.7
40.5
0.9
-
451.7
509.8
14.7
194.2
798.6
1,007.5
1,517.3
230.7
1.2
6.3
36.0
274.2
23.3
404.9
52.9
11.5
492.6
766.8
750.5
542.3
7.3
200.9
750.5
Super Retail Group Limited Annual Report 2015 79
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Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
37.
Reconciliation of profit from ordinary activities after income tax to net cash inflow from
operating activities
Profit from ordinary activities after related income tax
Depreciation and amortisation
Net gain on sale of non-current assets
Non-cash employee benefits (benefit)/expense/share based payments
Movement in provision for bad debt
Fair value gain on acquisition of associate
Profit for the period attributable to non-controlling interests
Net 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) / decrease in net current tax asset
- (increase) / decrease in inventories
- (decrease) / increase in payables
- (decrease) / increase in provisions
- (decrease) / increase in deferred tax liability
Net cash inflow from operating activities
(1) Continuing and discontinued operations results.
38.
Earnings per share
Basic earnings per share
(a)
From continuing operations attributable to the ordinary equity holders of the company
From discontinued operations
Total basic earnings per share attributable to the ordinary equity holders of the company
Diluted earnings per share
(b)
From continuing operations attributable to the ordinary equity holders of the company
From discontinued operations
Total diluted earnings per share attributable to the ordinary equity holders of the company
(c) Normalised earnings per share(1)
From continuing operations attributable to the ordinary equity holders of the company
(1) Normalised profit per share attributable to ordinary equity holders is $106.3 million (2014: $112.2 million) – note 4(b).
(d) Weighted average number of shares used as the denominator
Weighted average number of shares used as the denominator in calculating basic EPS
Adjustments for calculation of diluted earnings per share options
Weighted average potential ordinary shares used as the denominator in
calculating diluted earnings per share
(e) Reconciliations of earnings used in calculating earnings per share
Basic earnings and diluted earnings per share
Profit attributable to the ordinary equity holders of the company used in EPS
calculating basic earnings per share:
From continuing operations
From discontinued operations
(f)
Information concerning the classification of securities
2015
$m(1)
81.1
67.1
(0.6)
(0.2)
0.2
(0.6)
(4.2)
21.9
15.5
(4.0)
(15.5)
6.7
15.7
(1.1)
182.0
2015
Cents
49.4
(8.2)
41.2
49.0
(8.2)
40.8
2014
$m
108.4
54.9
0.8
0.2
(0.3)
-
-
24.0
(19.0)
2.7
(34.6)
28.3
2.8
(1.0)
167.2
2014
Cents
57.0
(1.9)
55.1
56.5
(1.9)
54.6
54.0
57.0
2015
Number
196,944,779
1,617,360
2014
Number
196,685,531
1,701,570
198,562,139
198,387,101
2015
$m
97.3
(16.2)
81.1
2014
$m
112.2
(3.8)
108.4
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.
Super Retail Group Limited Annual Report 2015 80
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Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
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
2015
1 September 2009
1 September 2010
1 September 2011
1 September 2012
1 September 2013
1 September 2014
2014
1 September 2009
1 September 2010
1 September 2011
1 September 2012
1 September 2013
(b)
Executive Option Plan
Balance
at start of
the year
(Number)
83,421
171,058
443,152
534,019
469,920
-
1,701,570
169,842
347,758
448,151
544,019
-
1,509,770
Granted
during
the year
(Number)
-
-
-
-
-
579,192
579,192
Exercised
during
the year
(Number)
(83,421)
(82,389)
(133,141)
-
-
-
(298,951)
-
-
-
-
469,920
469,920
(84,920)
(173,888)
-
-
-
(258,808)
Forfeited
during
the year
(Number)
-
(7,689)
(178,476)
(85,863)
(65,921)
(18,111)
(356,060)
(1,501)
(2,812)
(4,999)
(10,000)
-
(19,312)
Balance at
the end of
the year
(Number)
-
80,980
131,535
448,156
403,999
561,081
1,625,751
83,421
171,058
443,152
534,019
469,920
1,701,570
Unvested
at the end
of the year
(Number)
-
80,980
131,535
448,156
403,999
561,081
1,625,751
83,421
171,058
443,152
534,019
469,920
1,701,570
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 Retail Group (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 the ASX for official quotation of
Shares issued on the exercise of the options.
There were no options granted under the Option Plan during the 2015 financial year (2014: 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.
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
2015
$m
(0.2)
2014
$m
0.2
Super Retail Group Limited Annual Report 2015 81
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Super Retail Group LimitedANNUAL REPORT 2015
Notes to the Consolidated Financial Statements (continued)
For the period ended 27 June 2015
40.
Events occurring after balance date
No matter or circumstance has arisen since 27 June 2015 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:
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
Total Equity
Contributed equity
Reserves
- share-based payments
- cash flow hedges
Retained earnings
Profit for the year
Total comprehensive income
2015
$m
392.5
1,176.6
190.7
578.3
542.3
7.8
(2.9)
51.1
598.3
29.0
29.0
Restated(1)
2014
$m
456.3
1,237.7
191.2
588.2
542.3
8.0
(1.6)
100.8
649.5
64.1
64.1
(1)The 2014 comparative results have been restated to reflect a change in the Group’s accounting policy regarding the method adopted for
measuring the current and deferred tax amounts. The Group considers it more appropriate to apply the Separate taxpayer within Group approach,
rather than the Stand-Alone Taxpayer approach previously applied, in accordance with AASB Interpretation 1052, Tax Consolidation Accounting. In
addition, the accounting treatment of derivative financial instruments which are ineffective for the parent entity, but effective for the Group, have
been revised, with the ineffectiveness recorded in the statement of comprehensive income. These changes have been applied retrospectively, with
a life-to-date adjustment impacting the 2014 comparative position of current tax assets, $76.2 million, retained earnings, $76.2 million, profit for the
year, $19.8 million and total comprehensive income $19.8 million. These changes impact the parent entity financial information only.
Super Retail Group Limited Annual Report 2015 82
82
Super Retail Group LimitedANNUAL REPORT 2015
In the Directors’ opinion:
(a)
(b)
(c)
the financial statements and notes set out on pages 34 to 82 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 27 June 2015 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 2(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
Brisbane
20 August 2015
P A Birtles
Director
Super Retail Group Limited Annual Report 2015 83
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Super Retail Group LimitedANNUAL REPORT 2015
84
Super Retail Group Limited
ANNUAL REPORT 2015
Super Retail Group Limited
ANNUAL REPORT 2015
85
Shareholder Information
For the period ended 27 June 2015
The shareholder information set out below was applicable as at 18 August 2015.
Number of Shareholders
There were 7,669 shareholders, holding 197,030,571 fully paid ordinary shares.
Distribution of equity securities
A.
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
3,773
3,115
450
290
41
7,669
-
15
8
41
2
66
There were 509 holders of less than a marketable parcel of ordinary shares.
Equity security holders
B.
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
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
UBS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
AVANTEOS INVESTEMENTS LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
AMP LIFE LIMITED
CITICORP NOMINEES PTY LIMITED
MR PETER ALAN BIRTLES
MR PETER ALAN BIRTLES
EQUITAS NOMINEES PTY LIMITED
MR ROBERT EDWARD THORN
EQUITAS NOMINEES PTY LIMITED
EQUITAS NOMINEES PTY LIMITED
Ordinary shares
Number held
Percentage of
issued shares
57,047,015
30,568,108
25,305,617
22,397,651
8,652,976
8,175,932
7,603,647
3,100,892
1,475,843
940,165
859,563
851,519
847,967
787,018
675,000
665,000
575,577
566,281
561,898
547,135
28.95%
15.51%
12.84%
11.37%
4.39%
4.15%
3.86%
1.57%
0.75%
0.48%
0.44%
0.43%
0.43%
0.40%
0.34%
0.34%
0.29%
0.29%
0.29%
0.28%
172,204,804
87.40%
Super Retail Group Limited Annual Report 2015 86
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Super Retail Group LimitedANNUAL REPORT 2015
Shareholder Information (continued)
For the period ended 27 June 2015
C.
Substantial Shareholdings
As at 18 August 2015, there are four substantial shareholders that the Company is aware of:
Name
SCA FT PTY LTD
PERPETUAL LIMITED
GOLDMAN SACHS GROUP
ELLERSTON CAPITAL LIMITED
D.
Unquoted Equity Securities
Ordinary shares
Number held
Percentage of
issued shares
Date of most
Recent notice
56,954,670
15,937,197
20,016,437
13,996,824
28.99%
8.09%
10.17%
7.10%
02/08/2013
12/08/2015
28/10/2014
24/06/2015
As at 18 August 2015, there were 1,625,751 unlisted performance rights, granted to 66 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.
Super Retail Group Limited Annual Report 2015 87
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Super Retail Group LimitedANNUAL REPORT 2015
88
88 Super Retail Group Limited
ANNUAL REPORT 2015
Super Retail Group LimitedANNUAL REPORT 2015 CORPORATE DIRECTORY
Name of Entity
SUPER RETAIL GROUP LIMITED
ABN
81 108 676 204
Company Secretary
Mr Robert Dawkins
Principal Registered Office
751 Gympie Road
LAWNTON QLD 4501 Australia
Telephone +61 7 3482 7900
Facsimile +61 7 3205 8522
Share Registry
Link Market Services
Level 12, 680 George Street
SYDNEY NSW 2000 Australia
Telephone 1300 554 474
+61 2 8280 7100
www.linkmarketservices.com.au
Securities Exchange
Super Retail Group Limited (SUL) shares are quoted on the
Australian Securities Exchange
Solicitors
King & Wood Mallesons
Auditors
PricewaterhouseCoopers
Website Address
www.superretailgroup.com.au
Key Dates for Shareholders
Event
Date(1)
Annual General Meeting(2)
Wednesday, 21 October 2015
Final Dividend Ex-Date
Final Dividend Record Date
DRP Election Date
Final Dividend Payment Date
Interim Results Announcement
Interim Dividend Ex-Date
Interim Dividend Record Date
DRP Election Date
Interim Dividend Payment Date
Friday, 28 August 2015
Tuesday, 1 September 2015
Wednesday, 2 September 2015
Friday, 2 October 2015
Thursday, 25 February 2016
Friday, 4 March 2016
Tuesday, 8 March 2016
Wednesday, 9 March 2016
Friday, 8 April 2016
(1)If there are any changes to these dates, the Australian Securities Exchange will be notified accordingly.
(2) The 2015 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.
Super Retail Group Limited
Super Retail Group Limited
ANNUAL REPORT 2015
ANNUAL REPORT 2015
89
89
www.superretailgroup.com
90
Super Retail Group Limited
ANNUAL REPORT 2015