2019
ANNUAL
REPORT
Inspiring you to live
your passion
2
1
Table
of Contents
Chair’s Message
CEO’s Message
Our Business
2019 Performance Highlights
Customer Loyalty and Omni-retail Execution
Our Brands
Supercheap Auto
Rebel
BCF
Macpac
Paving the way for a career in retail
2
4
6
8
9
10
10
12
14
16
18
Driving improved outcomes in our supply chain
19
Board of Directors
Executive Leadership Team
Our Team
Corporate Governance
Directors’ Report
Remuneration Report (Audited)
Financial Statements
Shareholder Information
Financial Calendar and Corporate Directory
20
22
24
26
28
40
64
126
128
About Us
Super Retail Group (ASX:SUL) is
the proud owner of four iconic
brands: Supercheap Auto, Rebel,
BCF and Macpac, and is one
of Australia and New Zealand’s
largest retailers.
Each of our powerful brands
have established market
leading positions in growing high
involvement lifestyle categories of
auto, sports and outdoor leisure.
One of our unique differentiators
is our passionate and capable
team of more than 12,000
team members. All of us are
committed to delivering our
purpose of providing solutions
and engaging experiences,
which inspire our customers to
enjoy their leisure passions.
We provide our customers and
highly engaged 6.1 million active
loyalty club members with the
option to experience our brands
whenever and however they
choose – whether that’s via
our network of 690 stores or via
our digital capabilities, which
we continue to invest in and
enhance.
ABOUT THIS REPORT
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 Australian dollars.
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.
the power to amend and reissue the
financial report.
A description of the nature of the
consolidated entity’s operations
and its principal activities is included
in the Directors’ Report and
Remuneration Report on pages
28 to 63.
The financial report was authorised
for issue by the Directors on
14 August 2019. The Directors have
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
Investors and Media page on our
website: www.superretailgroup.com.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 2
3
Chair’s
Message
DEAR SHAREHOLDER
In presenting our 2019 financial year results, I am pleased to
report that Super Retail Group has made significant progress
in building a stronger omni-retail business, well positioned for
sustainable growth and enduring success.
supported the continued success of
the Group’s endeavours.
This year your Board made a
significant decision relating to the
Group Managing Director and Chief
Executive Officer’s position following
a well-planned succession process.
After a comprehensive global
executive search, the Board
determined in January that Anthony
Heraghty would succeed Peter Birtles
as Group Managing Director and
Chief Executive Officer. Anthony,
who was previously Managing
Director of the Outdoor division,
is an experienced and customer-
focused leader who will reshape
the capability of the business, and
lead our evolution to a leading
omni-retailer.
With a wealth of retail experience
and expertise, the Board is very
confident that Anthony and his
strengthened senior executive
team is well equipped to drive the
next chapter of growth and meet
the challenges of an increasingly
competitive and technology-driven
retail environment.
In appointing Anthony, the business
farewelled Peter Birtles who had
been with the company for 18
years, including 13 years as Group
Managing Director and Chief
Executive Officer. Peter led the
growth of Super Retail Group, adding
the BCF, Rebel and Macpac brands
to the business, and expanding and
strengthening the Supercheap Auto
business. Under Peter’s leadership the
Group has market-leading brands
and highly engaged team members
helping customers make the most of
their leisure time. We wish him all the
best for the future.
Regrettably, the Board was
confronted with a difficult issue
around remuneration for our retail
managers after significant historical
underpayments were identified.
While all those affected will receive
back payments with interest, the
Board was disappointed with the
lack of executive oversight that
led to this issue. Both FY18 and
FY19 Key Management Personnel
remuneration outcomes are a
reflection of this concern. New
measures have been introduced –
including quarterly reviews of team
While there is no doubt the past
year was a challenging period for
your company and the broader
retail sector, we retained our focus
on setting up the business to deliver
long-term value for shareholders.
The Group’s financial results for the
year were solid despite a difficult
retail environment and subdued
economic conditions. The value
of our brands and high customer
engagement remained central to
our success.
The Board spends considerable
time visiting stores, support offices,
distribution centres and other
elements of our supply chain, and
engages regularly with the Group’s
stakeholders to maintain a deep
understanding of your business. This
perspective enables the Board to
provide effective support to the
senior leadership team and help
shape the business strategy.
In an environment where corporate
Australia is facing heightened
public and regulatory scrutiny, your
company’s commitment to good
governance, based on an ethical
approach to decision making,
member remuneration – to prevent
these problems reoccurring.
Our engaged team members set us
apart from other retailers in Australia
and New Zealand. As we look ahead
to the next chapter of our journey to
becoming a leading omni-retailer,
the Group’s customer focus and
healthy organisational culture – built
on teamwork, engagement, and
diversity and inclusion – underpins
our performance.
The robust financial performance
and prudent capital management
supported the Board’s decision to
declare a final dividend of 28.5 cents
per share fully franked, bringing full
year dividends to 50 cents per share
fully franked, an increase of
2 per cent on the prior year. The
full year payout was in line with the
Group’s policy to maintain a dividend
payout ratio of between 55 per cent
and 65 per cent of underlying net
profit after tax.
Both the Board and management are
pleased with the steps we have taken
to build a stronger business during
2019 but we remain determined
to continue Super Retail Group’s
evolution as an omni-retailer to take
advantage of the opportunities
ahead. I know Anthony is committed
to building on the momentum
by enhancing and optimising
our capabilities to drive organic
growth and sustainable returns to
shareholders.
I offer my gratitude to every one of
our team members for their immense
dedication and commitment in
delivering for our customers. Our solid
financial results and the underlying
strength of the business reflect their
hard work and expertise.
I also thank my Board colleagues for
their commitment to the Group and
guidance during a year of significant
internal change for the company.
The decisions we took this year as a
Board will continue to strengthen the
Group and help deliver long-term
value for you, our shareholders.
Thank you for your continuing support
of Super Retail Group.
Sally Pitkin
Independent Non-Executive Chair
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 4
5
CEO’s
Message
DEAR SHAREHOLDER
As only the fourth Managing Director and Chief Executive
Officer in Super Retail Group’s long history, I am honoured to
have been appointed to the position by the Board in 2019.
FOUR POWERFUL BRANDS DELIVERING
SOLID SALES GROWTH
Our four powerful brands have
market-leading positions in attractive
and growing lifestyle categories.
In 2018/19 all four brands delivered
solid total sales growth driven by like
for like sales growth and rapid growth
in online sales.
The strength of our brands and their
capacity to inspire and engage our
customers is also reflected in key
customer metrics for FY19. Our total
customer transactions increased
by 2.3 per cent to 46.7 million and
our total club member NPS score
improved to 59.6 (up from 57.9 in the
previous year).
CUSTOMER LOYALTY IS KEY
Our large, growing and loyal
customer base represents a
sustainable competitive advantage
for the organisation.
Strong brand awareness, our focus on
the in-store experience and service
excellence, and the benefits we
offer in our loyalty programs have all
contributed to a significant increase
in loyalty club membership.
We now have more than 6 million
active club members across our
brands and together these club
members contribute more than
56 per cent of total sales.
Looking forward, there is an
opportunity to deepen our
connection with our customers
FY19 Sales
($m)
Sales growth
Like for like
sales growth
Online sales
growth
Supercheap Auto
1,040.6
Rebel
BCF
Macpac
1,016.4
514.6
138.8
3.4%
3.8%
3.3%
2.3%
3.3%
3.2%
70.3%(1)
7.3% (2)
25%
33%
6%
24%
(1) Macpac was owned for 12 months in 2018/19 compared to 3 months in 2017/18.
(2)
Includes Macpac Adventure Hub stores post April Easter trading period (week 44).
I am pleased to report that 2018/19
has been another successful year for
the Company.
In a tough consumer environment,
Super Retail Group has delivered
solid revenue and earnings growth,
highlighting the strength of our four
brands, resilience of our business
and the attractiveness of the lifestyle
categories in which we operate.
FINANCIAL PERFORMANCE
• Group revenue grew by 5.4%,
supported by 2.9% Group like for
like sales growth, 25% growth in
online sales and strong customer
engagement.
•
Segment EBITDA increased
by 7.0% to $314.7 million and
Segment EBIT increased by 3.9%
to $228.1 million.
• NPAT attributable to owners
increased by 8.6% to
$139.3 million and normalised
NPAT increased by 5.0% to
$152.5 million.
Strong operating cashflows have
enabled us to fund our growth
initiatives while reducing debt and
increasing dividend payments to our
shareholders.
by improving our customer data
analytics to deliver more personalised
offers and refreshing our customer
loyalty programs.
INVESTING IN WINNING OMNI-RETAIL
CAPABILITIES
We are investing in our omni-retail
capabilities to grow our overall
market share by providing multiple
ways for our customers to engage
with our brands and a seamless
shopping experience.
More than 40 per cent of our online
sales are via Click & Collect, where
our customers order online, pick up
their product in store and engage
with a passionate team member
in the process. This means we can
leverage our existing portfolio of
690 stores across Australia and New
Zealand to grow our online sales and
mitigate our cost to serve.
I believe our ‘clicks and bricks’
approach to retailing is a winning
strategy. While channel shift is
clearly taking place, and network
optimisation remains a key area of
focus, the Group’s national store
footprint remains an integral part of
our omni-retail offering.
A key focus in 2019/20 and beyond
will be integrating technology into
our retail businesses to improve
the customer experience through
initiatives like endless aisle, improved
order orchestration and real-time
marketing.
AN ENGAGED AND CAPABLE TEAM
We know that providing inspiring
solutions and experiences for our
customers relies on an engaged,
capable and passionate team.
This starts with providing a safe
working environment. I am pleased
to report that in 2018/19 our Total
Recordable Injury Frequency Rate
(TRIFR) decreased by more than
10 per cent, with a result of 14.34. This
is a pleasing outcome and we will
endeavour to deliver an even better
result next year.
We are also committed to fairness,
equity and gender equality and
are proud of the diverse team we
have grown and invested in. Across
the organisation, 39 per cent of our
leadership positions are filled by
women, while female representation
on our Board has remained consistent
at 43 per cent. Advancing gender
diversity at all levels is a priority, in line
with our target of having 40 per cent
female representation at Board and
senior management level by 2020.
A disappointing note in 2018/19 was
the identification of an underpayment
of our retail managers.
The issue reflects the same problem
we uncovered with our Set Up team
members in 2017/18. We found that
while retail managers’ base salaries
were correct, not all overtime hours
worked were paid according to
the General Retail Industry Award.
Additionally, some allowances
required under the award were
not paid. They are both serious
underpayments that we deeply
regret and we apologise to our team
members who have been affected.
To ensure ongoing compliance,
we have introduced an increased
level of governance, including
quarterly audits of our employment
arrangements. We are confident
that we have the controls in place
to pick up the sort of anomalies that
may occur from time to time in an
organisation of our size.
A SUSTAINABLE FUTURE
In FY19, we continued to make
progress towards adopting a
sustainable approach to our business
operations. One example is the
launch of our refreshed Responsible
Sourcing Program, which promotes
fair working conditions, sustainability
and improved environmental
outcomes in our supply chain (refer
to page 19). Further details on
our sustainability initiatives will be
available in our 2019 Sustainability
Report, released in October 2019.
STRATEGIC FOCUS
Our primary focus is on achieving
organic growth in our existing
brands and optimising returns to our
shareholders through the disciplined
allocation of capital. Looking ahead,
there are five initial areas of strategic
focus:
• Delivery of a seamless omni-retail
experience for our customers
•
•
•
•
Integration of our supply chain
Simplification of our operating
model
Improving our customer analytics
Leveraging our powerful retail
brands.
While the retail landscape is
changing and competition is
increasing, I am confident that Super
Retail Group has a bright future. We
own four iconic brands with leading
market positions in growing high-
involvement lifestyle categories of
auto, sports and outdoor leisure.
In the coming year we will leverage
this strong position with a specific
focus on building brands that are
as powerful as the products we sell,
greater digitisation, supply chain
integration and a seamless omni-
retail experience.
With the right strategy in place, and
an experienced management team
focused on its execution, we are well
positioned to inspire our customers
to live their passion, grow our market
share and create value for our
shareholders.
Anthony Heraghty
Group Managing Director and
Chief Executive Officer
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 6
Our
Business
OUR PURPOSE
At Super Retail Group, our purpose is to inspire our customers
to live their leisure passions – whether that’s proudly looking
after their car, running a marathon, catching a ‘barra’
or reaching a mountain summit.
OUR FOUR POWERFUL BRANDS
Our success begins with our four powerful brands which
provide solutions and engaging experiences to our loyal
and growing customer base.
OUR VALUES
Our culture is built around a set of five
Group values that help define who we are
and guide us in the way we behave.
BACKING OUR BRANDS
Leveraging our scale advantage, we back our brands with
centralised service functions that establish our Group-wide
strategy, as well as building and enabling the capabilities we
need to create value and become a winning omni-retailer.
690
STORES
6
7
8
SUPPORT
OFFICES
3
DISTRIBUTION
CENTRES
COUNTRIES OF
OPERATION
Australia, New Zealand & China
S W I T H O U R C ENTRALISED SERVICE F
U
D
N
A
G O U R B R
KIN
C
A
B
Y •
T
I
L
I
B
A
N
I
A
T
S
U
S
&
K
S
I
R
,
L
A
G
E
L
•
R
E
M
O
T
S
U
C
&
Y
G
Y •
R
C USTOM
E
R E
ELIV E
• D
E
R
O
T
S
-
N
I
•
X
P
E
R
I
E
N
C
E
•
C
LICK & C
>6M
LECT • ONLIN
ACTIVE CLUB
MEMBERS
L
O
E
E
T
A
R
T
S • S
N
SOURCES & STAKEHOLDER RELATIO
UMA
N R
E
N
C
T
I
O
N
S
•
S
U
P
P
L
Y
C
H
A
I
N
•
F
I
N
A
N
C
E
&
P
R
O
P
E
R
T
Y • IN
F
O
R
M
ATION SERVICES • H
Rebel helps our customers dream big.
We are Australia’s leading sporting goods
specialist retailer, bringing the best of global
brands direct to our customers. We inspire all
Australians to live their sporting passion, by
providing the right service, right advice, right
brands and right products to help them start
right and chase their dreams.
Macpac has designed apparel and equip-
ment that has inspired a life outdoors since
1973. Designed, tested and proven in the
ultimate outdoor test lab – New Zealand,
Macpac’s wide range of products are made
for adventurers, by adventurers.
Supercheap Auto is Australia and New
Zealand’s largest specialty automotive parts
and accessories retail business. We leverage
our market leadership to bring a wide range
of tools and accessories for the DIY home
handyman, as well as products for travel,
touring, outdoors, garage and the shed.
BCF is the leading outdoor retailer in the country,
with stores across every state of mainland
Australia. With expert knowledge and service,
we provide everything you could possibly
need for your next boating, camping or fishing
adventure under the one roof.
DELIVERING OUR
CUSTOMER EXPERIENCE
Our objective is to create an enjoyable and
seamless shopping experience for our customers
every time, no matter how they choose to shop with
us – whether that’s at one of our 690 conveniently
located stores, online or via Click & Collect.
DELIVERING LONG–TERM VALUE
FOR OUR SHAREHOLDERS
By inspiring, engaging and satisfying our customers,
we will continue to grow our businesses in high
involvement categories and aim to deliver top
quartile shareholder returns.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019PASSION INTEGRITYCAREOPENNESSDISCIPLINE
8
9
2019
Performance
Highlights
F I N A N C I A L
SALES ($M)
1,654
1,092
938
2,020
2,112
2,239
2,422
2,466
2,710
2,570
EBIT ($M)
172.3
182.6
170.2
175.3
207.3
219.6
228.1
140.7
87.5
65.8
Customer Loyalty
and Omni-retail
Execution
We have a large, growing and highly
engaged customer loyalty base across
our four powerful brands driving strong
customer metrics.
L O YA L C U S T O M E R S A R E O U R C O M P E T I T I V E A D VA N TA G E
10.9%
YOY
3.0%
YOY
2.3%
YOY
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 15
JUN 16
JUN 17
JUN 18
JUN 19
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 15
JUN 16
JUN 17
JUN 18
JUN 19
JUN 17
JUN 18
JUN 19
JUN 17
JUN 18
JUN 19
JUN 17
JUN 18
JUN 19
5.2M
5.5M
6.1M
53.5%
57.9%
59.6%
44.5M 45.6M
46.7M
EPS (C)
46.4
40.9
32.1
55.1
52.3
49.4
51.6
31.8
65.0
70.6
DIVIDEND (C)
38.0
40.0
40.0
41.5
46.5
49.0
50.0
32.0
29.0
21.5
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 15
JUN 16
JUN 17
JUN 18
JUN 19
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 15
JUN 16
JUN 17
JUN 18
JUN 19
POST TAX ROC (PER CENT)
16.8
17.3
15.9
POST TAX ROE (PER CENT)#
12.6
11.3
10.6
10.7
13.0
13.1
13.3
18.8
19.4
19.5
16.1
14.5
13.9
14.5
18.2
18.6
19.2
GROWTH IN
TOTAL ACTIVE
CLUB MEMBERS
AVERAGE
CLUB MEMBER
NPS
GROWTH IN
TOTAL CUSTOMER
TRANSACTIONS
G R O W I N G O N L I N E S A L E S ( Y O Y )
BY BRAND
GROUP TOTAL
SUPERCHEAP AUTO
25%
REBEL
33%
BCF
6%
MACPAC
24%
0
10
20
30
40
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 15
JUN 16
JUN 17
JUN 18*
JUN 19
JUN 10
JUN 11
JUN 12
JUN 13
JUN 14
JUN 15
JUN 16
JUN 17
JUN 18*
JUN 19
* As reported
# Normalised * As reported
F O C U S E D O N O M N I - R E TA I L E X E C U T I O N
5.4%
SALES GROWTH YOY
8.6%
EPS GROWTH YOY
13.3%
POST TAX ROC
ONLINE
SALES
HOME
DELIVERY
CLICK &
COLLECT
% OF TOTAL
ONLINE SALES
57%
43%
4%
3%
SALES
CHANNEL
93%
IN-STORE
25%
GROWTH IN TOTAL
ONLINE SALES
We are investing in our digital capability
to provide a seamless omni-retail
experience for our customers. This has
delivered 25 per cent growth in online
sales across the Group.
43%
CLICK & COLLECT % OF
TOTAL ONLINE SALES
We offer a Click & Collect service,
where our customers order online
and collect their purchase in-store,
at all of our Supercheap Auto, Rebel
and BCF stores.
Click & Collect represents more
than 40 per cent of online sales. This
enables the Group to leverage its
portfolio of 690 stores to grow online
sales while mitigating online cost to
serve.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 10
11
Our Supercheap Auto team at the
‘Check It’ day launch in Auckland, New Zealand.
Our
Brands
Supercheap Auto is Australia and New Zealand’s largest specialty automotive parts and accessories
retail business. We leverage our market leadership to bring a wide range of tools and accessories for
the DIY home handyman, as well as products for travel, touring, outdoors, garage and the shed.
P O W E R F U L C O N S U M E R B R A N D
323
STORES
86%
BRAND AWARENESS
Data: Stellar Market Research;
Australia April-June 2019
61
AVERAGE ACTIVE CLUB
MEMBER NPS
F I N A N C I A L H I G H L I G H T S
3.4%
SALES GROWTH YOY
11.6%
EBIT MARGIN
25%
ONLINE SALES GROWTH
C U S T O M E R L O Y A L T Y
1.65M
ACTIVE CLUB MEMBERS
39%
12%
ACTIVE CLUB MEMBERS
% OF TOTAL SALES
ACTIVE CLUB MEMBER
GROWTH YOY
S A L E S ( B Y C H A N N E L )
94%
IN–STORE
% OF TOTAL SALES
4%
CLICK & COLLECT
% OF TOTAL SALES
2%
HOME DELIVERY
% OF TOTAL SALES
‘Check It’ – the free vehicle safety
initiative that’s upskilling young drivers
Supercheap Auto is empowering
young drivers to improve safety on
our roads.
For many young Australians, owning
a vehicle can mean freedom and
independence. It’s also the most
common way we get home, to work,
or to those leisure activities that make
life worth living. However, for a driver
to reach their destination safely, it is
critical that their vehicle is checked
regularly.
Research by Driver Safety Australia
showed that 30 per cent of Australian
and New Zealand drivers aged 25
and under say they don’t have
enough knowledge to perform a
basic safety check on their vehicle.
Alarmingly, two in five young drivers
have knowingly driven a car with a
safety issue.
Despite already being the group
most likely to be involved in a
road accident(1), young drivers are
increasing this risk by allowing basic
safety essentials to go unchecked.
At Supercheap Auto, we have
always understood that education
and awareness play a critical role in
road safety.
(1) Research: Driver Safety Australia 2019
In an effort to better arm young
people with car safety know-how,
Supercheap Auto leveraged its
long-standing partnership with Driver
Safety Australia to launch ‘Check
It’ in February 2018 – a campaign
that raises awareness among
young drivers on the importance of
undertaking regular vehicle safety
checks.
We knew there was more to do and
built on this partnership by launching
national ‘Check It’ day in March
2019. This day provides free training
for all drivers across our Supercheap
Auto store network in Australia and
New Zealand.
Our inaugural national ‘Check It’
day was a great success with our
skilled and capable team members
providing training to more than 1,650
drivers in-store. This training shows
drivers how to check a vehicle
for basic problems that cause
breakdowns, such as the condition
of wipers, tyres, engine oil, coolant
and engine fluids. More than 5,000
people have chosen to learn how
to check their vehicle online by
viewing the ‘Check It’ video tutorials
and resources available at www.
supercheapauto.com.au/checkit.
4
5
young drivers do
not undertake any
regular checks on
their car, leaving
it to someone
else or believing a
warning light will
alert them to any
safety issue.
15,230
services completed throughout
our network during the week of
national ‘Check It’ day.
43%
of young drivers
believe that being
able to undertake
basic vehicle
safety checks is
an important skill
that every driver
should know.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 12
Queensland Thunderbirds and Diamonds player Gretel Tippett at
Rebel for the Suncorp Super Netball player shopping spree.
13
Our
Brands
Rebel helps our customers dream big. We are Australia’s leading sporting goods specialist retailer,
bringing the best of global brands direct to our customers. We inspire all Australians to live their
sporting passion, by providing the right service, right advice, right brands and right products to help
them start right and chase their dreams.
P O W E R F U L C O N S U M E R B R A N D
161
STORES
94%
BRAND AWARENESS
Data: Stellar Market Research;
Australia April-June 2019
57.1
AVERAGE ACTIVE CLUB
MEMBER NPS
F I N A N C I A L H I G H L I G H T S
3.8%
SALES GROWTH YOY
9.2%
EBIT MARGIN
33%
ONLINE SALES GROWTH
Supporting the next generation of
female sporting stars
From supporting grassroots
participation to elite athletes, Rebel
invests and supports Australia’s major
sporting codes including cricket,
football, netball, rugby league and
AFL. We want to inspire the stars
of tomorrow by lifting the profile of
female stars today.
In FY19, we continued our long-
standing commitment to women in
sport by developing and supporting
young athletes through our Rebel
Women Mentor Program. This
program started in 2016 as part of an
existing partnership with the Women’s
Big Bash League (WBBL) and has
now expanded to include all Rebel-
sponsored sporting codes.
Up-and-coming sportswomen are
selected based on their on-field
performance, off-field attitude,
demonstrations of skill, tenacity, good
sportsmanship and for inspiring other
young female athletes to have a go.
The program provides essential skills
to support women in their careers
both on and off the field. With the
backing of each sporting code,
participating athletes are awarded
a $5,000 cash prize and access to a
dedicated online mentor program
developed in collaboration with
Bianca Chatfield (former Australia
Diamonds netballer, Melbourne
Vixens captain and leadership
coach).
where participants, past and present,
can support each other and share
experiences.
C U S T O M E R L O Y A L T Y
In addition to the online program,
athletes are also provided with a
one-on-one mentoring session with
Laura Geitz, Rebel Ambassador and
former captain of the Australian
national netball team. This unique
experience gives participants the
chance to talk first-hand about
the challenges and opportunities
young female athletes face when
navigating their professional sporting
careers.
In FY19, we awarded the Rebel
Women Mentor Program to the
following inspirational athletes:
AFL Women’s – Libby Birch
WBBL – Sophie Molineux
Suncorp Super Netball –
Jessica Anstiss
W-League – Jada Whyman.
We are proud of our role in helping
girls and young women appreciate
that sport is not just a hobby, but a
viable career path. We continue
to identify new opportunities to
develop the Rebel Women Mentor
Program and build a community
2.57M
ACTIVE CLUB MEMBERS
61%
8%
ACTIVE CLUB MEMBERS
% OF TOTAL SALES
ACTIVE CLUB MEMBER
GROWTH YOY
S A L E S ( B Y C H A N N E L )
Rebel brand ambassador and mentor coach,
Laura Geitz, with W-League player Jada
Whyman (top left), Suncorp Super Netball
player Jessica Anstiss (top right), AFL Women’s
player Libby Birch (bottom left) and WBBL
player Sophie Molineux (bottom right).
91%
IN–STORE
% OF TOTAL SALES
2%
CLICK & COLLECT
% OF TOTAL SALES
7%
HOME DELIVERY
% OF TOTAL SALES
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 14
15
OzFish Unlimited’s Robbie Porter helping to restore
fish habitat in Queensland’s Moreton Bay.
Our
Brands
BCF is the leading outdoor retailer in the country, with stores across every state of mainland Australia. With
expert knowledge and service, we provide everything you could possibly need for your next boating,
camping or fishing adventure under the one roof.
P O W E R F U L C O N S U M E R B R A N D
136
STORES
74%
BRAND AWARENESS
Data: Stellar Market Research;
Australia April-June 2019
61
AVERAGE ACTIVE CLUB
MEMBER NPS
F I N A N C I A L H I G H L I G H T S
3.3%
SALES GROWTH YOY
4.0%
EBIT MARGIN
6%
ONLINE SALES GROWTH
C U S T O M E R L O Y A L T Y
1.45M
ACTIVE CLUB MEMBERS
81%
7%
ACTIVE CLUB MEMBERS
% OF TOTAL SALES
ACTIVE CLUB MEMBER
GROWTH YOY
S A L E S ( B Y C H A N N E L )
93%
IN–STORE
% OF TOTAL SALES
5%
CLICK & COLLECT
% OF TOTAL SALES
2%
HOME DELIVERY
% OF TOTAL SALES
Creating healthy waterways for
future generations
Australia has some of the world’s
greatest outdoor spaces. By
encouraging people to restore and
improve our waterways, we are
helping to keep it that way.
BCF understands that waterways play
a major role in the outdoor activities
enjoyed by many Australians. Fishing
alone attracts almost 3.5 million
Australians each year. However,
there are a number of high-profile
issues impacting the health of our
waterways. As well as threatening
our valued natural spots, concerns
about high fish mortality and the loss
of species diversity place the future
of our fisheries at risk.
Since 2017, BCF has demonstrated
a commitment to making a positive
contribution to environmental
and social change in this area by
partnering with OzFish Unlimited, a
fishing conservation organisation.
Together, in FY19, we opened a
Moreton Bay Shellfish Recycling
Centre as part of the ‘Give Back
to Habitat’ initiative. The initiative
restores marine life habitat by placing
used oyster shells in waterways to
encourage live oysters to return to
the area and boost fish populations.
OzFish raised funds at the popular Wynnum Seafood Festival to help restore fish habitat.
These efforts will be concentrated
across 100 hectares of oyster reef in
Moreton Bay and will also encourage
habitat restoration in surrounding
areas.
The project relies on the ongoing
support of many stakeholders,
including government and our local
community. Each year Australians
eat millions of oysters, with the
majority of discarded shells sent
to landfill sites, contributing to the
country’s growing waste problem.
To address this issue, local businesses
can donate used oyster shells to
OzFish, which offers the dual benefit
of assisting OzFish operations and
preventing waste being sent to
landfill.
Our work restoring the environment
also relies on securing continued
funding. Through our Round
Up campaign, we encourage
BCF customers to round up their
purchases and donate the difference
to OzFish. In FY19, our customers
helped raise almost $250,000, with
BCF proudly contributing a further
$220,000.
Other BCF initiatives include donating
useful sample stock and extending
our team member discount to local
OzFish chapters to source prizes for
fundraising events.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 16
17
Macpac Adventure Hub in Enfield, South Australia.
Our
Brands
Macpac has designed apparel and equipment that has inspired a life outdoors since 1973. Designed,
tested and proven in the ultimate outdoor test lab – New Zealand, Macpac’s wide range of products
are made for adventurers, by adventurers.
P O W E R F U L C O N S U M E R B R A N D
70
STORES
82%
BRAND AWARENESS
Data: Stellar Market Research;
New Zealand April-June 2019
C O M I N G
I N FY20
AVERAGE ACTIVE CLUB
MEMBER NPS
F I N A N C I A L H I G H L I G H T S
70.3%
SALES GROWTH YOY
Macpac was owned for 12 months in 2018/19
compared to three months in 2017/18
C U S T O M E R L O Y A L T Y
9.4%
EBIT MARGIN
24%
ONLINE SALES GROWTH
Macpac only excludes Rays
0.41M
ACTIVE CLUB MEMBERS
65%
36%
ACTIVE CLUB MEMBERS
% OF TOTAL SALES
ACTIVE CLUB MEMBER
GROWTH YOY
S A L E S ( B Y C H A N N E L )
90%
IN–STORE
% OF TOTAL SALES
C O M I N G
I N FY20
CLICK & COLLECT
% OF TOTAL SALES
10%
HOME DELIVERY
% OF TOTAL SALES
Macpac opens nine new Adventure
Hubs across Australia
The outdoor adventure retailing
segment is benefiting from a global
shift as more and more people are
discovering the advantages of
getting outdoors. Recognising this
opportunity, we announced our
decision to acquire New Zealand
outdoor adventure retailer, Macpac,
in February 2018.
Since the acquisition, a key focus has
been transforming nine of the existing
Rays stores to Macpac Adventure
Hubs. These hubs respond to the
growing demand for a premium
destination for outdoor products and
adventure advice and position us
as the leading outdoor adventure
specialist across Australia and New
Zealand.
The outdoor business is a technical,
high-involvement category, where
customers look for expert advice
and want to try the product before
buying.
By combining the expertise and
reputation of Rays and Macpac, we
now offer a much broader range
of quality products, information
and services. The Adventure Hubs
provide outdoor enthusiasts with the
personalised customer experience
they seek as well as a one-stop shop
A look inside the pack-fitting hut. Nunawading Adventure Hub, Victoria.
for all their hiking, camping, travelling
and paddling needs.
Macpac’s Australian store footprint
to 34.
The Adventure Hubs expand on
the classic Macpac stores by
combining our brand heritage and
technical excellence with a selection
of carefully curated apparel,
equipment and accessories from
some of the world’s best brands.
A key part of Macpac’s expansion
into a premium retail solution has
been ensuring our strong physical
presence in Australia. In March 2019
we successfully transformed nine
Rays stores into new large format
retail Adventure Hubs in Victoria,
New South Wales, ACT, South
Australia and Queensland – bringing
The Hubs’ core customer experiences
include:
• pack-fitting huts where our
knowledgeable team members
will professionally fit and show
customers how to get the most
out of their packs
• essential and practical resources
to help customers feel prepared
for their next adventure, including
detailed world maps and
packing lists
• chill-out zones where customers
are offered personalised expert
advice and a space to feel
inspired to get outdoors.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 18
Our Coffs Harbour Rebel team members are currently
completing their Certificate III in Retail Operations.
19
Our passionate Supply Chain team onsite at our
Brendale Distribution Centre in Queensland.
S U S T A I N A B I L I T Y
In FY19, Super Retail
Group proudly:
joined the United Nations
Global Compact
was included in the SAM 2019 Sustainability Yearbook as
a sustainability leader in Australia in the retailing sector.
Paving the way for a career
in retail
Driving improved outcomes in our
supply chain
An unwavering focus on the learning
and development of our team
members is critical to our future
success as a business.
Super Retail Group offers a number
of programs to help support our retail
team members unlock their potential
for a rewarding and valuable career
in retail.
our retail team members to obtain
nationally-recognised, relevant
qualifications.
Over the last three years, the
program has paved the way for
participants to pursue a successful
career in retail, with approximately
20 per cent progressing into higher
duty roles.
By providing development
opportunities within the Group we
are able to attract, grow and retain
talented team members. In addition,
investing in the skills and knowledge
of our team members allows us
to better serve our customers
and strengthens our relationships
with local communities. We view
this commitment to learning and
development as a competitive
advantage in today’s marketplace.
ACCREDITED LEARNING PROGRAMS
We partner with Registered Training
Organisations to facilitate accredited
learning programs, which provide a
variety of training and assessment
opportunities. These initiatives allow
Within our Australian program, we
are proud to have almost 220 retail
team members currently completing
either a Certificate III in Retail
Operations or a Certificate IV in
Retail Management. In FY19, more
than 130 team members successfully
completed their training and gained
their qualification.
NEW ZEALAND RETAIL MANAGEMENT
In New Zealand, we remain focused
on giving our team members
opportunities to develop their
management skills to become retail
leaders of the future. For the first time,
our New Zealand Store and Assistant
Store Managers can enrol in a Level
4 Retail Management qualification.
Partnering with the industry leader
in retail training, Service IQ, this
qualification provides competency-
based learning, mentorship and
coaching to develop valuable and
lasting skills.
We have 44 team members currently
completing their qualification, with
the first group of managers expected
to complete their qualification by the
end of 2019.
DEVELOPING THE RETAIL LEADERS OF
THE FUTURE
In addition to our internal efforts, we
view school-based traineeships as
a valuable way for store managers
to strengthen their connection with
their local communities. Launched
in February 2019, our school-based
traineeships provide students aged
16 years or older with valuable
industry skills while they complete
their secondary school qualifications.
Through these traineeships, we hope
to inspire the next generation of
team members with a rewarding
hands-on experience and a
nationally recognised qualification.
At Super Retail Group, we
are committed to social and
environmental initiatives that benefit
our team, customers, trade partners
and the communities in which we
operate.
Responsible sourcing is now a
fundamental expectation of
businesses who operate in a
global economy. We know that
it’s important to have responsible
and ethical business practices
across all our operations. This means
addressing global social and
environmental factors in our supply
chain, including sourcing products in
a sustainable and responsible way,
respecting human rights and fair
working conditions, and managing
our environmental impact in the
sourcing process.
Principles on Business and Human
Rights and the UN Global Compact
(UNGC).
To address the challenges associated
with responsible product sourcing, we
need to operate under the guidance
of our Group values, uphold high
standards of behaviour and maintain
a strong focus on our product supply
chain – particularly with respect to
human rights and the elimination of
modern day slavery.
One of the key ways in which we will
achieve positive long-term outcomes
is by working closely with our trade
partners. This view is based on the
understanding that we cannot
build responsible supply chains in
isolation – close collaboration is
needed to support our supply chains
to remain ethical, transparent and
environmentally sustainable.
In FY19, we launched our refreshed
Responsible Sourcing Program. The
program promotes fair working
conditions, sustainability and
improved environmental outcomes in
our supply chain.
It is aligned with the UN Guiding
It is equally important that our
team members uphold these
same standards every day. We
will continue to support them with
ongoing training to increase their
knowledge of the important role
they play in delivering improved
outcomes throughout our supply
chain. Our refreshed Responsible
Sourcing Program will also
standardise policies and processes
across the Group.
Our Responsible Sourcing Program is
supported by two key documents:
• Responsible Sourcing Policy:
which reinforces our commitment
to responsible sourcing in line with
industry best practice and the
new Australian Modern Slavery
legislation.
• Responsible Sourcing Code:
which provides clarity to our
trade partners and indirect
suppliers about our requirements
and expectations in relation to
business integrity, environmental
sustainability and respect for
human rights in our supply chain.
These documents, including links to
the UN Guiding Principles on Business
and Human Rights and the UNGC,
are available on our Super Retail
Group website under Working with
Us/Trade.
Further details on our sustainability initiatives will be available in our 2019 Sustainability Report in October 2019.
For more details about our governance practices refer to our Corporate Governance Section on page 26.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 20
21
Board of
Directors
Appointed
Committees
Experience
Other Roles
SALLY PITKIN
Independent
Non-Executive Chair
ANTHONY HERAGHTY
Group Managing Director
and Chief Executive Officer
REG ROWE
Non-Executive Director
DIANA EILERT
Independent
Non-Executive Director
LAUNA INMAN
Independent
Non-Executive Director
HOWARD MOWLEM
Independent
Non-Executive Director
PETER EVERINGHAM
Independent
Non-Executive Director
Chair – 23 October 2017
Board – 1 July 2010
20 February 2019
8 April 2004
21 October 2015
21 October 2015
13 June 2017
19 December 2017
Chair of the Nomination
Committee.
Member of the Nomination
Committee.
Member of the Nomination
Committee.
Audit and Risk Committee,
Human Resources and
Remuneration Committee
and Nomination Committee.
Chair of the Human
Resources and Remuneration
Committee and member of
the Nomination Committee.
Chair of the Audit and Risk
Committee and member of
the Nomination Committee.
Anthony has more than 20
years’ leadership experience
across the retail, apparel,
FMCG and marketing
services industries. Prior to
his appointment as Group
Managing Director and
Chief Executive Officer,
Anthony was Managing
Director – Outdoor Retailing
(2015 – 2019) where he was
responsible for the BCF, Rays
and Macpac businesses.
Anthony has served in
a variety of senior roles
including Group General
Manager of Underwear
for Pacific Brands Limited,
where he led the overhaul
of the Bonds business from
a wholesale operation to
an omni-retailer, Global
Marketing Director for
Foster’s Group Limited
and Managing Director
for George Patterson and
McCann Erickson.
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 that evolved into
the thriving specialty retail
business – 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.
Director of a number of
private family companies.
Dr Sally Pitkin has more than
20 years’ experience as a
Non-Executive Director in the
listed, private, public and
non-profit sectors, including
experience in international
markets, and more than
15 years’ experience as a
non-executive director of
ASX200 companies. Sally
served as an Independent
Non-Executive Director for
Super Retail Group (1 July
2010 – 23 Oct 2017) prior
to her appointment as
Chair and is an ex-officio
member of the Audit and Risk
Committee, and the Human
Resources and Remuneration
Committee. She is a lawyer
and former partner of
a national law firm with
banking law, corporate law
and corporate governance
expertise. Sally holds a Doctor
of Philosophy (Governance),
a Master of Laws and
Bachelor of Laws.
Non-Executive Director and
Fellow of the Australian
Institute of Company
Directors and Chair of
the Institute’s Corporate
Governance Committee,
Director of ASX listed
companies The Star
Entertainment Group Limited
and Link Administration
Holdings Limited.
Launa brings to the Board
extensive experience in
retailing, marketing (including
digital technology and
social media), finance
and logistics. Her diverse
experience includes terms as
Managing Director and CEO
of Billabong International
(May 2012 – August 2013),
Managing Director of
Target Australia Pty Ltd
(2005 – 2011), Managing
Director of Office Works
(2004 – 2005). She is formerly
a Non-Executive Director of
the Commonwealth Bank
of Australia. Launa holds
a Bachelor of Commerce
(Hons) and a Master of
Commerce. She is a member
of the Australian Institute
of Company Directors and
has completed the Wharton
Business School executive
program.
Howard is experienced
in many segments of the
Australian and international
retail industry and brings
extensive experience in
corporate finance, mergers
and acquisitions, financial
reporting, treasury, tax,
audit and governance.
From 2001 – 2010, he was
Chief Financial Officer and
Board member of Dairy
Farm International Holdings,
a Hong Kong based pan-
Asian retailer. Prior to that,
he held the position of
Finance Director for Coles
Supermarkets for 12 years.
Howard was formerly a
Non-Executive Director
of Billabong International
Ltd. He holds a Bachelor of
Economics (Hons), a Master
of Business Administration
and Securities Industry
Diploma, and is a Fellow of
CPA Australia.
Independent non-executive
Director of Domain Holdings
Australia Limited and Elders
Limited.
Non-Executive Director of
Precinct Properties New
Zealand Limited, and is
a Board member of the
Alannah and Madeline
Foundation and Virgin
Australia Melbourne Fashion
Festival.
Member of the Audit and
Risk Committee, Human
Resources and Remuneration
Committee and Nomination
Committee.
Peter is an experienced
executive with more than 25
years’ corporate experience,
including 18 years in senior
executive roles in the digital
sector. He was formerly
Managing Director of SEEK
Limited’s International
Division, and served as a
Non-Executive Director of the
education businesses, IDP
Education, Online Education
Services and THINK Education,
as well as Chairman of Seek’s
China subsidiary, Zhaopin
Limited. His previous executive
roles include Director of
Strategy for Yahoo! in Australia
and Southeast Asia. Peter
holds a Master of Business
Administration from IESE, a
Bachelor of Economics from
The University of Sydney,
and is a Graduate Member
of the Australian Institute of
Company Directors.
Non-Executive Director of
ME Bank, iCar Asia Limited
and WWF-Australia,
Australia’s largest
conservation organisation.
Leisure Passion
Bush walking and skiing
Fishing, camping, hiking,
cycling, running and cars
Enjoying time with family,
walking and gardening
Skiing, cycling, hiking,
swimming and jazz
Hiking, sailing and
adventure travel
Golf
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019Diana is an experienced Non-Executive Director with strong strategic and operational experience. As a former Suncorp Group Executive and as a CEO, she has broad experience running large businesses. Combined with her Strategy Partner and executive experience, Diana brings to the Board particular skills in strategy, with an emphasis on customer and data, technology, digital disruption and business models. Diana’s Non-Executive focus is mid-cap companies, with previous board roles including realestate.com, Veda and Navitas. Diana holds a Bachelor of Science (Pure Mathematics) (University of Sydney) and a Master of Commerce (UNSW).Ocean swimming 22
23
Executive Leadership Team
We inspire our
customers to
live their passion
by building
businesses that
are market
leaders in high
involvement
categories
BENJAMIN WARD
Managing Director –
Supercheap Auto
GARY WILLIAMS
Managing Director –
Rebel
Benjamin joined Super Retail Group
in July 2019 as Managing Director –
Supercheap Auto. Benjamin holds a
Bachelor of Business (Marketing) from
the University of Newcastle, and is
an experienced retail executive with
almost 25 years in senior management
roles across Australia, UK, US and
Europe, including two decades with
international supermarket giant ALDI.
Previously, he was Managing Director,
Global Business Coordination for ALDI
Supermarkets based in Germany.
Benjamin also held various senior
leadership roles at ALDI in strategy
development and organisation
management.
Gary joined Super Retail Group in
April 2019 as Managing Director –
Rebel. Previously Gary served as
Chief Operating Officer for Alceon
Retail Group and was a member
of the executive committee for the
EziBuy and SurfStitch businesses. His
global experience includes roles
in USA, UK, Asia Pacific and South
Africa. Gary has held executive,
board and senior retail leadership
roles with brands including David
Jones/Country Road Group, Myer,
Puma, Topshop, Reebok, Coca-Cola
and Westfield.
DAVID BURNS
Chief Financial Officer
PAUL HAYES
Chief Information Officer
David joined Super Retail Group in
December 2012 in the role of Chief
Financial Officer (CFO). David has
overall responsibility for the finance,
investor relations, and property and
store improvement portfolios. David
holds a degree in Economics from the
University of Sydney, and is a FCPA.
He has more than 25 years of finance
experience in a number of industry
sectors, and previously held senior
management positions at Qantas,
Spotless and Lend Lease.
Paul joined Super Retail Group in
December 2015 as Chief Information
Officer (CIO) from UK retailer, John
Lewis, where he served for a number
of years as Head of Information
Systems Delivery. Paul was previously
a senior IT consultant with IBM,
leading multi-million dollar projects
for premier retailers including Tesco,
Argos and Woolworths, and prior to
that held a variety of roles with British
Home Stores.
JANE KELLY
Chief Human
Resources Officer
Jane joined Super Retail Group in
July 2016 as Chief Human Resources
Officer (CHRO), and is responsible
for advancing Super Retail Group’s
strong focus on team engagement,
culture and capability development.
Jane holds a Masters of Commerce
and Employee Relations with Honours
from the University of Melbourne, and
a Bachelor of Commerce from the
University of New South Wales. She
was previously the Human Resources
and Corporate Affairs Director at BT
Financial Group, and also held senior
roles as Head of Reward for St. George
Bank and Head of HR Australian
Financial Services at Westpac.
ETHAN ORSINI
Acting Managing Director –
BCF
ALEX BRANDON
Chief Executive Officer –
Macpac
Ethan was appointed Acting Managing
Director for BCF in February 2019. Ethan
first joined Super Retail Group in 2006
as a Senior Business Analyst, and after
various management roles moved
on to become the Group Financial
Controller, and then General Manager
Commercial. Ethan graduated with
an Honours in Business Administration
from Richard Ivey School of Business,
University of Western Ontario and is also
a Chartered Professional Accountant
(Canada). Previously, Ethan held senior
management roles across Canada and
Australia working with brands including
David Jones, Colgate, Subaru and Estee
Lauder.
Alex was appointed as Macpac’s
Chief Executive Officer in July 2012
and continues to serve in this role
after Super Retail Group acquired the
outdoor adventure specialist retailer in
April 2018. Originally from England, Alex
holds a Bachelor of Economics and
Marketing degree from the London
Guildhall University and is currently
based in Christchurch, New Zealand.
Alex has more than 20 years of retailing
experience across the US, Australia
and New Zealand with companies
including Bath and Body Works,
Express, Surf Dive N Ski, Rip Curl and
Just Kids.
PETER LIM
Group General Counsel
and Company Secretary
KATIE McNAMARA
Chief Strategy and
Customer Officer
DARREN WEDDING
Chief Supply Chain Officer
Peter joined Super Retail Group in
January 2019 as Group General
Counsel and Company Secretary
and leads the legal, secretariat,
risk management and compliance
functions of the organisation. He has
a Bachelor of Laws and a Bachelor
of Commerce from the University
of NSW, and is a graduate of the
Advanced Management Program
at INSEAD, Fontainebleau. Peter was
previously the Executive General
Manager, Legal and Corporate
Affairs at Caltex Australia Limited.
Katie joined Super Retail Group in April
2019 as Chief Strategy and Customer
Officer, where she has responsibility
for corporate strategy integration
and execution, analytics, marketing
and customer strategy. Katie holds a
Bachelor of Pharmacy Degree, and
a Master of Business Administration
from Melbourne Business School and
Cornell University. She has completed
executive programs in Digital
Marketing at INSEAD and both Digital
Transformation and Marketing at
Harvard Business School. Katie brings
more than 20 years’ experience in
top tier consulting, retail and FMCG
businesses. She was previously Vice
President Asia-Pacific for IBM, leading
Digital Strategy and iX.
Darren joined Super Retail Group in
January 2019 as Chief Supply Chain
Officer. Darren has more than 30
years’ experience in supply chain
and logistics having served in a
broad array of industries including
military, steel manufacturing, FMCG,
retail and third party logistics, with
nine of his past 10 years based in
Asia. Darren holds a Bachelor of
Business Degree, Graduate Diploma
of Business and a Master of Business
Administration from the University of
Southern Queensland. Prior to joining
Super Retail Group, Darren worked in
a regional operations role for Zuellig
Pharma serving their Asian based
operations.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 24
Our
Team
At Super Retail Group, everything starts with
our team. Having healthy, happy, capable
and passionate team members is essential to
providing inspiring solutions and experiences for
our customers.
STRATEGIC INVESTMENTS THAT DRIVE
CUSTOMER VALUE
Continuously improving our skills and knowledge
is one way we enable our team to develop the
expertise they need to support our customers and,
in FY19, we continued our targeted investment in
our senior leaders so they could be our ongoing
narrators of change. At the same time, we
launched:
SOULlibrary – a broad selection of voluntary
learning tools for all our team members,
including a digital library of more than 10,000
learning items. These tools reinforce that
learning is not just training, but a continuous
opportunity to build our team members’
expertise.
A suite of new capabilities on SOULmoments –
our digital team member recognition platform
and a key driver of internal engagement.
Our team members access the platform, on
average, 13,500 times every month to give
thanks to one another for living our values and
delivering excellent customer service.
Next year, we will continue to focus on
embedding our strategic learning and
development initiatives in service of our team and
customers.
MEASUREMENT WHERE IT MATTERS
A commitment to a healthy and safe work
environment for team members, contractors,
customers and visitors remains our highest priority.
We continue to track safety performance via our
Total Recordable Injury Frequency Rate (TRIFR).
This measures the number of fatalities, lost time
injuries, restricted duties and other injuries requiring
treatment by a medical professional, per million
hours worked.
We are pleased to report a 10.1 per cent
reduction on last year, with a result of 14.34
in FY19. There were no work-related fatalities
recorded during the reporting period. The TRIFR
result compared to the previous year reflects
ongoing maturity of our reporting data, which
recalculated FY18 TRIFR to 15.95.
Backing
our Brands
Brands
3 6 8 S U P P L Y C H A I N
I N A N C E
8 F
F O R M A T I O N S E R V I C ES
S O U R C E S
N R
Y & C U S T O M E R
I A N C E
O M P
E
L
8
2
0 I N
U M A
G
E
T
A
A L & C
2
R
1
1 H
7
3 2 S T
15 L E G
830 M
1873 B
C
F
A
C
P
A
C
37
0
8 S
5
4
8
7 R
E
B
E
L
U
P
E
R
C
H
E
A
P
A
U
T
O
S
R
A
E
Y
+
1
5
%
0
.
7
S
R
A
E
Y
8
1
R
E
D
N
U
%
4
.
6
>12,000 TEAM
MEMBERS
Gender
4
7
.
9
%
F
E
M
A
L
E
5
2
.
1
%
M
A
L
E
RS
A
E
5 Y
2
8 –
% 1
7.1
S
R
A
E
5 Y
– 3
4
6
2
%
1
.
3
2
S
R
A
E
Y
0
5
–
6
3
%
5
.
6
1
Age Group
4
1
.
2
%
0
2
7.6
2
0.0
– 2 Y
E
A
R
S
% 2 – 5 YEARS
% 5 – 10 YEARS
11.2% 10+ YEARS
Length of
Service
% P A RT TIM E
U L L TI M E
C L U
(I N
D I N
3 .5
2
% F
9 . 8
2
L
A
U
S
A
4 6 . 7 % C
G P E AK TRADE)
Employment
Type
25
Our focus this year has been on safety leadership,
risk management, personal accountability
and team member awareness and education.
Next year, we will improve our health and
safety maturity by continuing our efforts and
activities in these core areas as well as our safety
management system.
We believe that a diverse team and an inclusive
work culture are essential to our organisation’s
growth. We know that team members who feel
valued and supported are more likely to be
engaged in their work. A diverse team also offers
a wider variety of perspectives, which improves
the quality of organisational decision-making.
An inclusive environment for all team members
– regardless of gender, ethnicity, religion, age,
sexual orientation and mobility – allows us to
attract and retain the best talent and reflect the
diversity of the communities in which we operate
and the customers we serve.
These beliefs are underpinned by progressive
ways of working, policies and practices.
In FY19, the Group achieved its highest rate of
female participation with a total team mix of 47.9
per cent female and 52.1 per cent male. Women
in senior management roles increased to 38.6 per
cent in FY19 and by 2 per cent (to 35 per cent) for
management roles.
Female representation on our Board remained
consistent year-on-year at 43 per cent, while
leadership renewal at the executive leadership
level meant the number of women decreased to
20 per cent. We remain committed to our target
of having 40 per cent female representation at
Board and senior management levels by 2020.
TEAM ENGAGEMENT
In October 2019, we will conduct our annual
team member engagement survey. Following this,
we will start running shorter, more regular pulse
surveys so we can listen and respond faster to the
‘heartbeat’ of our team members.
GENDER EQUALITY PUBLIC REPORT
To comply with the Workplace Gender Equality
Act 2012, we have lodged our 2018-19 Gender
Equality Report with the Workplace Gender
Equality Agency. The report is available to
view here: https://www.wgea.gov.au/.
47.9%
% OF FEMALE
PARTICIPATION
38.6%
WOMEN IN SENIOR
MANAGEMENT
35%
WOMEN IN
MANAGEMENT
10.1%
TOTAL RECORDABLE INJURY
FREQUENCY RATE
75.9%
TEAM
RETENTION
13,500
AVG TEAM MEMBER
RECOGNITIONS PER MONTH
across Super Retail Group
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019
26
27
Corporate
Governance
Super Retail Group is committed to sound corporate governance standards that protect and enhance the
long-term performance of the Group, taking into account the interests of our stakeholders.
The Group has fully followed the
recommendations of the ASX
Corporate Governance Council’s
Principles and Recommendations
(3rd Edition) throughout the
reporting period. Further details are
set out in the Group’s Appendix
4G and Corporate Governance
Statement, authorised for issue
by the Directors on 14 August
2019, which are available on the
Australian Securities Exchange
(ASX) website at www.asx.com.au
and the Group’s website at: www.
superretailgroup.com/investors-and-
media/corporate-governance.
OUR PURPOSE
The purpose of our business is to
provide solutions and engaging
experiences that inspire our
customers to make the most of their
leisure time. We aim to operate
our business to create long-term
shareholder value while taking
account of the interests of team
members, customers, and others
with whom we do business, and the
communities in which we operate.
We aspire to an organisational
culture that promotes ethical and
responsible behaviour and supports
team members to achieve our
purpose.
We have a set of five values to
guide the behaviours of Directors
and all team members. These are
passion, openness, integrity, care
and discipline. Further detail on our
values can be found at:
www.superretailgroup.com/about-
us/our-values.
Our Code of Conduct sets out
our personal responsibilities and
standards of behaviour, and
provides guidance as to how to
conduct our activities in a safe and
fair manner. Our Code of Conduct
is supported by other policies,
including the Whistleblowing Policy.
This policy encourages our team
members, suppliers and associates
to raise concerns about suspected
unethical, unsafe or illegal activity,
or any inappropriate conduct.
Under this policy we also seek to
safeguard people who make a
report.
We create an
environment in which
we share our passion
for what we do, and
our contributions
and successes are
recognised.
P
A
S
S
I
O
N
O
P
E
N
N
ESS
OUR
VALUES
E
N
I
L
CIP
DIS
R E
A
C
INTEGRIT Y
We commit to the
plan, resource
effectively and
follow the agreed
processes and
standards.
We are committed
to open and
constructive
communication.
We value our team,
our customers, our
trade partners and the
communities in which
we operate.
We act with honesty
and we deliver on
our commitments.
OUR GOVERNANCE FRAMEWORK
The Board’s role, as set out in the
Board Charter, includes responsibility
to approve and oversee the
strategic direction of the Group,
to appoint the Group Managing
Director and CEO and to oversee
the governance, management
and performance of the Group.
The Board is supported through
three standing Board Committees.
Each Committee has its own
Charter setting out its role and
responsibilities, composition, and
how it will operate.
The Board has a policy that it
shall be composed of a majority
of independent, Non-Executive
Directors who, with Executive
Directors, have an appropriate mix
of capabilities, experience and
diversity to effectively meet the
Board’s responsibilities.
The Board delegates responsibility
for the day to day management of
the Group to the Group Managing
Director and CEO. The Group
Managing Director and CEO
manages the Group in accordance
with the strategy, business plans
and delegations approved by
the Board, and is accountable to
the Board for the exercise of the
delegated authority.
The Group recognises that risk is
characterised by both threat and
opportunity, and manages risk in
order to enhance opportunities
and mitigate threats. There is an
Internal Audit function reporting to
the Audit and Risk Committee and
the Chief Financial Officer. The role
of Internal Audit is to evaluate the
adequacy and effectiveness of
the risk management system and
internal controls.
The External Auditor provides
assurance on the Group’s financial
reporting.
The governance framework is
depicted in the diagram below:
THE
BOARD
Nomination
Committee
Board size and composition,
Director recruitment and re-election,
Director induction and continuing
development, Board and Committee
performance evaluation,
Audit & Risk
Committee
Financial reporting
Internal and External Audit
Risk management and internal control
Compliance
Corporate Governance
Human Resources &
Remuneration Committee
Human resources strategy
Remuneration governance and strategy
Development and succession
Diversity strategy
Workplace Health & Safety
Group Managing Director and CEO
Executive Leadership Team
Internal Audit
External Audit
(Independent)
OUR APPROACH TO STAKEHOLDER
ENGAGEMENT
We are committed to providing
shareholders and the investment
community with access to full,
accurate and timely information
about our governance, financial
performance and activities. We
are also committed to meeting our
continuous disclosure obligations.
We have programs of engagement
with a broad range of stakeholders,
including our team members,
customers, business partners,
industry participants and
local communities. We value
our engagement with all our
stakeholders.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 28
2018 – 2019
Directors’ Report
Remuneration Report
Financial Report
F O R T H E Y E A R E N D E D 2 9 J U N E 2 0 1 9
Super Retail Group Limited
ABN: 81 108 676 204
ASX Code: SUL
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 29
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 29 June 2019.
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:
Directors
Directors:
S A Pitkin
(Independent Non-Executive Chair)
A M Heraghty
(Group Managing Director and Chief Executive Officer) (appointed 20 February 2019)
R A Rowe
(Non-Executive Director)
D J Eilert
(Independent Non-Executive)
L K Inman
(Independent Non-Executive)
H L Mowlem
(Independent Non-Executive)
P D Everingham
(Independent Non-Executive)
Former:
P A Birtles
(Group Managing Director and Chief Executive Officer) (retired 19 February 2019)
Details of the qualifications, experience and responsibilities of the Directors can be found in the Group’s annual report.
Special Responsibilities of Directors:
Director
S A Pitkin
A M Heraghty(2)(3)
R A Rowe
D J Eilert(3)
L K Inman(3)
H L Mowlem
P D Everingham
Audit & Risk Committee
Nomination Committee
Human Resources &
Remuneration Committee
n/a
n/a
n/a
(cid:1)
n/a
(cid:1)(1)
(cid:1)
(cid:1)(1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
n/a
n/a
n/a
(cid:1)
(cid:1)(1)
n/a
(cid:1)
(1) Denotes Chair of Committee.
(2) Appointed 20 February 2019.
(3) Resigned from Nomination Committee effective 22 July 2019.
1.1
Directorships of listed companies held by members of the Board
Current directors:
Director
S A Pitkin
Listed Company
Directorship
Key Dates
Super Retail Group
Limited
The Star Entertainment
Group Limited
Link Administration
Holdings Limited
Former directorships:
Independent Non-Executive Chair
Independent Non-Executive Director
Current, appointed 01 July 2010
Appointed as Chair 23 October 2017
Current, appointed 31 July 2014
Independent Non-Executive Director
Current, appointed 23 September
2015
IPH Limited
Independent Non-Executive Director
A M Heraghty
R A Rowe
Billabong International
Limited
Super Retail Group
Limited
Super Retail Group
Limited
Independent Non-Executive Director
Group Managing Director and Chief
Executive Officer
Non-Executive Director
Current, appointed 08 April 2004
Former, appointed 23 September
2014 and ceased 20 November 2017
Former, appointed 28 February 2012
and ceased 15 August 2016
Current, appointed 20 February 2019
30 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
DIRECTORS’ REPORT (continued)
1.
1.1
Directors (continued)
Directorships of listed companies held by members of the Board (continued)
Current directors:
Director
D J Eilert
L K Inman
H L Mowlem
P D Everingham
Former director:
Director
P A Birtles
Listed Company
Directorship
Key Dates
Super Retail Group
Limited
Elders Limited
Domain Holdings
Australia Limited
Former directorships:
Independent Non-Executive Director
Current, appointed 21 October 2015
Independent Non-Executive Director
Independent Non-Executive Director
Current appointed 14 November 2017
Current appointed 16 November 2017
Veda Group Limited
Independent Non-Executive Director
Navitas Limited
Independent Non-Executive Director
Former, appointed 4 October 2013
and delisted 26 February 2016
Former, appointed 28 July 2014 and
delisted 5 July 2019
Super Retail Group
Limited
Precinct Properties
New Zealand Limited
Former directorships:
Commonwealth Bank
of Australia
Bellamy’s Australia
Limited
Jaxsta Limited
Super Retail Group
Limited
Former directorships:
Billabong International
Limited
Super Retail Group
Limited
iCar Asia Limited
Independent Non-Executive Director
Current, appointed 21 October 2015
Independent Non-Executive Director
Current, appointed 28 October 2015
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Former, appointed 16 March 2011 and
ceased 16 November 2017
Former, appointed 15 February 2015
and ceased 28 February 2017
Former, appointed 28 December 2018
and ceased 28 February 2019
Independent Non-Executive Director Current, appointed 13 June 2017
Independent Non-Executive Director
Former, appointed 24 October 2012
and delisted 26 April 2018
Independent Non-Executive Director
Current, appointed 19 December 2017
Independent Non-Executive Director
Current, appointed 1 July 2017
Listed Company
Directorship
Key Dates
Super Retail Group
Limited
GWA Group Limited
Group Managing Director and Chief
Executive Officer
Independent Non-Executive Director
Former, appointed 05 January 2006
and ceased 19 February 2019
Current, appointed 24 November 2010
1.2
Directors’ Meetings
The number of meetings of the Company’s Board of Directors and each Board Committee held during the period ended 29 June
2019 is set out below:
Board Meetings
Audit and Risk
Nomination
Human Resources and
Remuneration
Attended
Held(1)
Attended
Held(1)
Attended
Held(1)
Attended
Held(1)
Meetings of Committees
S A Pitkin
A M Heraghty
P A Birtles
R A Rowe
D J Eilert
L K Inman
H L Mowlem
P D Everingham
12
5
7
12
12
12
12
12
12
5
7
12
12
12
12
12
5
1
4
5
5
5
5
5
5
1
4
5
5
5
5
5
2
1
1
2
2
2
2
2
(1)Number of meetings held during the time the Director held office during the year.
2
1
1
2
2
2
2
2
6
2
4
6
6
6
6
6
6
2
4
6
6
6
6
6
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 31
DIRECTORS’ REPORT (continued)
1.
1.3
Directors (continued)
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
S A Pitkin
A M Heraghty
R A Rowe
D J Eilert
L K Inman
H L Mowlem
P D Everingham
2.
Company Secretary
Number of Ordinary Shares
Options over Ordinary Shares
42,153
40,691
59,936,866
15,500
22,175
30,000
17,000
-
-
-
-
-
-
-
The Company Secretary (and Group General Counsel) is Mr Peter Lim, B Com LLB (UNSW). Mr Lim was appointed and commenced
with Super Retail Group Limited on 21 January 2019.
Prior to 21 January 2019, the Company Secretary (and Chief Legal and Property Officer) position was held by 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.
3.1
Operating and Financial Review
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:
• Super Cheap Auto (SCA): retailing of auto parts and accessories, tools and equipment;
• Rebel: retailing of sporting equipment and apparel;
• BCF: retailing of boating, camping, outdoor equipment, fishing equipment and apparel; and
• Macpac: retailing of apparel, camping and outdoor equipment.
3.2
(a)
Review of Financial Condition
Group Results
Revenue from continuing operations
Segment earnings before interest, taxes, depreciation and amortisation (EBITDA)
Segment earnings before interest and taxes (EBIT)
Normalised NPAT
Profit for the period attributable to owners
Profit for the period
Operating cash flow
EPS – basic (cents)
Dividends per share (cents)
2019
$m
2,710.4
314.7
228.1
152.5
139.3
139.2
240.9
70.6
50.0
2018
$m
2,570.4
294.1
219.6
145.3
128.3
127.3
308.4
65.0
49.0
The Group has delivered a solid result for the financial year. The Goup achieved total sales growth of 5.4% which reflected sales and
like for like sales growth across all four divisions. This top line growth translated into a 7.0% increase in Segment EBITDA, a 3.9%
increase in Segment EBIT and a 5.0% increase in normalised net profit after tax. Super Retail Group delivered another period of
strong operating cashflows. Normalised EBITDA cash conversion of 94% reflected an ongoing focus on working capital
management together with a strategic decision to invest in inventory levels to increase in-store availability of products. This
enabled the Group to fund its growth initiatives while reducing net debt by $36.2 million and paying fully franked dividends totalling
50.0 cents per share.
During the financial period the Group completed a comprehensive review of employment arrangements across the business
following the identification of underpayments to retail managers and other team members. As previously announced to the market
on 12 February 2019, the Group will make back payments to all impacted team members. An estimate has been completed for the
period between financial years 2013 to 2018. The annual amounts were not material to profit for any of the individual years to
which they related. A total of $24.0 million after tax is included in the restatement of retained earnings. In addition, the Group has
recognised net $8.9 million before tax ($6.2 million after tax) as an expense in 2019 relating to revision of wages underpayment
estimates and associated remediation costs.
32 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
DIRECTORS’ REPORT (continued)
3.
3.2
(a)
Operating and Financial Review (continued)
Review of Financial Condition (continued)
Group Results (continued)
Net profit after tax (NPAT) attributable to owners was $139.3 million compared to $128.3 million in the prior period representing an
increase of 8.6%. Normalised NPAT was $152.5 million compared to $145.3 million in the prior period, an increase of 5.0%. 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 owners of Super Retail Group Limited from
continuing operations
Wages underpayment and remediation costs(1)
Business restructuring costs(1)
Losses from associates accounted for using the equity method
Loss on divestment of investments
Macpac acquisition costs(1)
Autoguru net gain on divestment(2)
Normalised net profit after tax
(1) Net of tax
(2) Net of tax and share of trading losses
2019
$m
139.2
0.1
139.3
6.2
3.1
2.2
1.7
-
-
152.5
2018
$m
127.3
1.0
128.3
6.0
11.8
-
-
3.9
(4.7)
145.3
Basic earnings per share (EPS) was 70.6 cents compared to 65.0 cents in the prior comparable period.
Total sales have increased 5.4% on the prior comparative period to $2,710.4 million. This included a full 12 month contribution from
the Macpac business which was acquired effective 31 March 2018, compared to a 3 month contribution in the prior comparative
period. The increase in total Group sales compared to the prior comparative period was driven by solid like for like growth in all
divisions together with new store growth.
Online sales grew by 25% as more customers shifted to the omni-channel experience allowing them to shop online and receive their
purchases either in store or at the location of their choice. Online sales now represent over 7% of total Group sales, however almost
half of all online sales are Click & Collect transactions where the customer visits a store to collect their purchase. This means the
Group can leverage its national store footprint to grow online sales and mitigate its cost to serve.
The Group remains focused on growing market share by investing in its digital capability and omni-retail platform to provide
customers with a seamless multi-channel shopping experience that gives them the flexibility to shop when, where and how they
want. The Group’s scale provides the opportunity to fractionalise the cost of investment in technology and systems across its entire
brand portfolio, store network and customer transaction base.
The Group has over 6 million active members in its loyalty club programs. These customers represent over 56% of Group sales and
they have a higher average transaction value than non-members across each of the four brands. The Group has a significant
opportunity to leverage this customer base and develop closer customer relationships by refreshing its loyalty programs and utilising
customer data analytics to develop more tailored and personalised offers.
(b)
Division Results
Supercheap Auto
Rebel
BCF
Macpac (including Rays)
Unallocated
Supercheap Auto
Sales
EBITDA
EBIT
2019
$m
1,040.6
1,016.4
514.6
138.8
-
2,710.4
2018
$m
1,006.4
979.2
498.3
81.5
5.0
2,570.4
2019
$m
156.1
122.6
40.2
15.6
(19.8)
314.7
2018
$m
148.2
115.7
44.2
3.7
(17.7)
294.1
2019
$m
120.6
93.8
20.8
13.0
(20.1)
228.1
2018
$m
116.4
91.5
27.3
2.3
(17.9)
219.6
Divisional sales of $1,040.6 million were 3.4% higher than the prior comparative period, supported by like for like growth of 2.3% and
new store growth.
Like for like sales growth of 2.3% was driven by higher ATV and reflected an increase in average item value and higher average
units per transaction.
Gross margin was in line with the prior comparative period and operating expenses as a percentage of sales improved by 0.3%.
Segment EBITDA increased by 5.3% to $156.1 million and EBITDA margin of 15.0% was 0.3% higher than the prior comparative period.
Segment EBIT increased by 3.6% to $120.6 million and EBIT margin of 11.6% was in line with the prior comparative period.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 33
DIRECTORS’ REPORT (continued)
3.
3.2
(b)
Operating and Financial Review (continued)
Review of Financial Condition (continued)
Division Results (continued)
Supercheap Auto (continued)
Auto maintenance and auto accessories, which represent approximately three quarters of divisional revenue, were the strongest
performing categories and delivered solid sales and LFL sales growth.
Supercheap Auto is focused on expanding the value added services it provides to customers to encourage them to visit our stores
when purchasing products. Growth in services like diagnostics, blade, bulb and battery fitting supported product sales and helped
deliver $8.0 million in total services revenue in the financial period.
Sales growth was achieved across all Australian states and New Zealand delivered very strong growth. Gross margin was in line with
the prior comparative period.
The business successfully relaunched the Supercheap Auto website during the financial period with pleasing results. Growth in online
traffic and a significant improvement in online conversion resulted in online sales growth of 25%. Online sales now represent 6% of
Supercheap Auto’s total sales and Click & Collect now accounts for approximately two thirds of these online sales.
Supercheap Auto Club Plus membership increased by 12% during the year to 1.65 million members. Sales attributable to club
members increased to 39% of total sales. Average club member NPS increased to 61% from 59% in the prior comparative period.
The business opened five new Supercheap Auto Stores and closed one store in the financial period. The store refurbishment
program completed 8 refurbishments and relocations plus an additional 14 layout changes. As at 29 June 2019, Supercheap Auto
had a total of 278 stores in Australia and 45 stores in New Zealand.
Rebel
Divisional sales of $1,016.4 million were 3.8% higher than the prior comparable period, supported by like for like sales growth of 3.3%
and new store growth. Segment EBIT of $93.8 million was 2.5% higher than the prior comparative period.
Like for like sales growth of 3.3% was driven by both transaction growth and higher average transaction value.
Gross margin was in line with the prior comparative period and operating expenses as a percentage of sales improved by 0.3%.
Segment EBITDA increased by 6.0% to $122.6 million and EBITDA margin of 12.1% was 0.3% higher than the prior comparative period.
Segment EBIT increased by 2.5% to $93.8 million and EBIT margin of 9.2% was 0.1% lower than the prior comparative period.
Key categories of apparel and footwear delivered solid sales growth in the financial period. Fitness accessories also performed well,
while sales of hard goods decreased.
Queensland, Victoria and South Australia delivered the strongest like for like sales growth.
Following the launch of a new website platform in July 2018 as part of the Group’s ongoing investment in its omni-channel retail
capability, Rebel has delivered online sales growth of 33%. In the financial period, website traffic has increased and conversion
rates have improved by almost 20%. Online sales now represent 9% of total Rebel sales and Click & Collect accounts for
approximately one quarter of these online sales.
Rebel active club membership increased by 8% during the period to 2.57 million members. Sales to club members represent 61% of
Rebel sales. Average club member NPS increased to 57% from 55% in the prior comparative period.
In the financial period, the business has opened 4 stores and closed 2 stores. The store refurbishment program completed 4
relocations and extensions together with 15 refurbishments. As at 29 June 2019 Rebel had a network of 161 stores.
BCF
BCF sales of $514.6 million increased by 3.3% on the prior comparative period.
Sales growth was primarily attributable to LFL sales growth of 3.2% which was driven by higher average transaction value resulting
from higher units per sale.
BCF delivered positive like for like sales growth across all states. The camping and apparel categories delivered strong LFL sales
growth while LFL sales in the fishing category declined.
Over the financial period, gross margin materially declined across all categories due to the highly competitive environment driving
a higher mix of promotional sales and deeper discounting on key value items. Gross margin began to stabilise in the second half as
BCF pricing and promotional countermeasures took hold. The competitive pricing environment remains unchanged.
Operating expenses as a percentage of total sales improved by 0.5%.
34 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
DIRECTORS’ REPORT (continued)
3.
3.2
(b)
Operating and Financial Review (continued)
Review of Financial Condition (continued)
Division Results (continued)
BCF (continued)
Segment EBITDA decreased to $40.2 million and EBITDA margin of 7.8% was 1.1% lower than the prior comparative period.
Segment EBIT decreased to $20.8 million and overall EBIT margin declined to 4.0% from 5.5% in the prior comparative period.
The BCF club loyalty program exhibited strong growth in the financial year with active memberships increasing by 7% to 1.45 million.
BCF club members represent 81% of total BCF sales. Average club member NPS increased to 61% from 57% in the prior comparative
period.
Online sales grew by 6% reflecting growth in online traffic and improvements in online conversion. BCF was the first of four brands to
replatform which negatively impacted online sales. Online sales now represent 7% of total BCF sales and Click & Collect accounts
for approximately 70% of these online sales.
BCF opened 3 stores and closed 1 store during the financial period. As at 29 June 2019, BCF had 136 stores.
Macpac
The Macpac business, which was acquired effective 31 March 2018, made a full year contribution in FY2019 compared to a three
month contribution in FY2018.
During the financial period, the Group successfully completed the integration of Macpac and ceased operating Rays. Sales from
Macpac stores (including Adventure Hubs) increased to $119.3 million supported by store openings and like for like growth. Like for
like sales growth for Macpac (including Adventure Hub stores post April Easter trading period, week 44) was 7.3%.
Macpac stores (including Adventure Hubs) delivered EBITDA of AUD 17.4 million compared to acquisition case of NZD 16 million
(equivalent to AUD 14.7 million), in line with management’s business plan.
Macpac stores (including Adventure Hubs) delivered $15.4 million of EBIT in the financial period. Operating expenses increased, in
line with management’s business plan, as a result of investment in capabilities and systems to support expansion. Additional
overhead costs relating to Adventure Hubs were also incurred in the period. The opportunity exists to fractionalise these costs over
time as the formats mature and the store network expands.
The Group converted nine Rays stores to large format Macpac Adventure Hubs in March 2019. The Rays brand has ceased to
operate and incurred $2.4 million of EBIT losses in the financial period.
Macpac online sales grew by 24% during the financial period and now represent over 10% of total sales.
Macpac now has over 400,000 club members representing 65% of total sales.
Macpac opened 16 stores during the financial period including seven small format stores and nine large format Adventure Hub
stores. As at 29 June 2019, Macpac had 70 stores comprising 61 small format stores and nine Adventure Hub stores.
The Group believes Macpac is now well positioned to grow profitably and to expand its store network in Australia and New
Zealand.
Group Costs
Group costs for the period were $20.1 million, up 12.3% compared to the prior period. The Group costs include Corporate costs of
$12.2 million, $3.3 million of un-allocated distribution centre costs and $4.6 million relating to omni-retail development and digital
investment.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 35
DIRECTORS’ REPORT (continued)
3.
3.2
(c)
Operating and Financial Review (continued)
Review of Financial Condition (continued)
Financial Position and Cash Flow
BALANCE SHEET
Trade and other receivables
Inventories
Trade and other payables
Current tax assets / (liabilities)
Total working capital
Cash and cash equivalents
Borrowings
Net debt
Property, plant and equipment
Intangible assets
Other financial assets
Derivatives
Provisions
Deferred taxes
NET ASSETS
CASH FLOW
Net cash inflow from operations
Net cash (outflow) from investing
Net cash (outflow) from financing
Net increase / (decrease) in cash
Cash at the beginning of the period
Effects of exchange rates on cash
Cash at the end of the period
2019
$m
37.6
560.2
(412.2)
1.9
187.5
7.5
(394.2)
(386.7)
267.9
894.2
6.9
(3.4)
(127.0)
(23.4)
816.0
240.9
(90.5)
(158.4)
(8.0)
15.2
0.3
7.5
2018
$m
23.8
545.5
(391.4)
(9.6)
168.3
15.2
(438.1)
(422.9)
270.4
891.6
9.3
5.3
(126.7)
(20.1)
775.2
308.4
(241.2)
(71.8)
(4.6)
19.9
(0.1)
15.2
Net assets for the Group increased by $40.8 million primarily due to lower borrowings, ongoing focus on working capital and the
strategic decision to invest in inventory levels to increase in-store availability of products.
Net debt decreased by $36.2 million to $386.7 million as the Group utilised strong free cashflow to pay down debt. The Group
remains comfortably within its banking covenants.
Group capital expenditure cash flow was $90.5 million which included $28.6 million in new and refurbished store fit out, $0.7 million in
acquisitions and $61.2 million in building omni-retail capabilities, data and analytics, inventory management projects and other
information technology projects.
(d)
Dividends
Super Retail Group has declared a 28.5 cents per share fully franked final dividend for 2019. This will result in full year dividends of
50.0 cents per share fully franked, up 2.0% on the prior year. This represents a dividend payout ratio of 64.7% of underlying NPAT.
(e)
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 risk management functions.
The business risks faced by the Group that are likely to have a material effect on its financial prospects are listed below, including
an overview of the Group’s mitigating actions:
•
•
Competition intensity – The growth and intensity of competition in the increasingly globalised retail market continues to impact
the Group. The Group may face increased competition from existing competitors and new entrants into the Australian and
New Zealand retail markets. The Group expects this risk to increase in the future as competitors continue to enter the market.
We will mitigate this risk by focusing on our Customer Promise, notably Inspiration, Experience and Solutions, and continue to
build an emotional connection with our customers that will differentiate each Brand in market.
New retail business model – Traditional retail business models are being disrupted and the cost of doing business is increasing.
The Group’s Operating Model and strategic investment must support the required capability uplift to transition to an omni-
retailer. The Group expects this risk to continue to develop in the short and medium term. The Group has and will continue to
invest in its Omni Channel Strategy to provide customers with seamless engagement options to meet their expectations.
36 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
DIRECTORS’ REPORT (continued)
3.
3.2
(e)
•
•
•
•
•
•
Operating and Financial Review (continued)
Review of Financial Condition (continued)
Material Business Risks (continued)
Breach of industrial practices – The Group, like all retailers, is exposed to industrial relations risk that can impact the reputation
and financial performance of the business. There are dedicated programs of work in place to mitigate this risk including
remuneration oversight, an audit program, training, procedures and policies.
Health and safety – The Group, like all retailers, is exposed to safety and wellbeing risks which include hazardous environments
associated with retail operations and distribution centres. Safety and wellbeing is a priority area for the Group. The Group has
an established Health and Safety Management System including resources, training and procedures, and this is supported
through active reporting of incidents, regular monitoring and assurance activities.
Supply chain and inventory agility for omni-retail – Supply Chain and inventory agility are critical requirements of a world class
omni-retailer, in order to meet evolving customer expectations. Risks associated with the supply chain and inventory
management remain constant in the current retail environment, and increased flexibility is key to future success. The Group
continues to pursue opportunities to reduce the cost of the supply chain and working cost of capital through improved
delivery models with major trade partners. The Group has made substantial investments in an updated supply chain network
and supporting information systems to improve agility and meet changing customer expectations.
Cyber and information security - The digital economy and associated transformation in retail delivery creates new challenges
for all companies to maintain a strong cyber resilience program. The Group is implementing strategies to provide protection
against deliberate exploitation of computer systems, technology-dependent enterprises and networks by internal and
external parties. Cyber security is an evolving and significant risk to all retailers and the Group will need to maintain ongoing
vigilance and adopt appropriate responses to protect its information assets. The Group has made and will continue to make a
significant investment in cyber security to meet the challenges of the digital economy and evolving technology landscape.
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 potential adverse impacts on the financial performance of the Group. Financial risks and
specific risk management approaches are reported in more detail in the Notes to the Consolidated Financial Statements.
Compliance – The Group is required to maintain compliance with all applicable regulations, including consumer law, product
quality, ethical sourcing and transport regulations. Failure to comply with these regulations would expose the Group to
financial and non-financial penalties. The Group has dedicated compliance programs in place to mitigate compliance risks.
3.3
Dividends
Dividends paid or declared by the Group to members since the end of the previous financial year were:
Declared and paid during the year:
2018 final fully franked dividend
2019 interim fully franked dividend
Declared after end of year:
2019 final fully franked dividend
3.4
Significant Changes in the State of Affairs
Cents per share
Total amount
$m
Payment date
27.5
21.5
54.3
42.4
2 October 2018
28 March 2019
28.5
56.3
26 September 2019
There were no significant changes in the Group’s state of affairs during the period other than that described in section 3.5 below.
3.5
Matters Subsequent to the End of the Financial Year
Since 29 June 2019 Super Retail Group limited does not have any matters subsequent to the end of the financial year to be
disclosed.
3.6
Likely Developments and Future Prospects
Information on likely developments in the operations of the Group is set out in this report under the section Review of Financial
Condition. Further information on the expected results of operations has not been included in this report because the Directors
believe it would be likely to result in unreasonable prejudice to the Group.
3.7
Environmental Regulation
The Group’s environmental obligations are regulated under State, Territory, Federal and International 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 29 June 2019.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 37
DIRECTORS’ REPORT (continued)
4.
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
Other assurance(1)
Total remuneration for audit and review services
Taxation and Other Services
PricewaterhouseCoopers Australian firm:
Taxation Services
Customs prudential review
Digital advertising advisory
Workshop facilitation
Network firms of PricewaterhouseCoopers Australia:
Taxation Services
Total remuneration for non-audit services
(1) Cyber security review.
5.
Corporate Governance Statement
2019
$
2018
$
807,976
13,407
821,383
295,484
-
-
-
56,283
351,767
585,570
44,721
630,291
394,329
18,500
49,572
51,601
66,924
580,926
The Group’s Corporate Governance Statement sets out the corporate governance framework adopted by the Board of Super
Retail Group Limited. This statement is publically available on the Super Retail Group external website:
http://www.superretailgroup.com
6.
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.
7.
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
39.
8.
Remuneration Report (Audited)
The audited remuneration report is set out on pages 40 to 63.
38 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
DIRECTORS’ REPORT (continued)
9.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, 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 instrument 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.
S A Pitkin
Chair
Brisbane
14 August 2019
A M Heraghty
Group Managing Director and
Chief Executive Officer
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 39
Auditor’s Independence Declaration
As lead auditor for the audit of Super Retail Group Limited for the period 1 July 2018 to 29 June 2019, I
declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation
to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Super Retail Group Limited and the entities it controlled during the
period.
Kim Challenor
Partner
PricewaterhouseCoopers
Brisbane
14 August 2019
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
40
2018 – 2019
Remuneration Report
Audited
F O R T H E Y E A R E N D E D 2 9 J U N E 2 0 1 9
Super Retail Group Limited
ABN: 81 108 676 204
ASX Code: SUL
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 41
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
Remuneration
Report (Audited)
CONTENTS
Summary
Key Management Personnel
FY19 Executive Remuneration Overview
FY19 Performance and Remuneration Outcomes
Section 1
Section 2
Section 3
Section 4
Section 5 Detail of the FY19 Executive Total Reward Framework
Section 6 Executive Remuneration Framework Changes for FY20
Section 7 Non-Executive Directors’ Remuneration Arrangements
Section 8 Executive KMP Remuneration Outcomes for FY19
Section 9 Remuneration Governance
Introduction
The Directors of Super Retail Group present this Remuneration Report for the 52-week period ended 29 June
2019. The Remuneration Report outlines the Group’s remuneration philosophy and practices, explains how the
Group’s 2019 performance has driven executive remuneration outcomes, and provides the details of specific
remuneration arrangements that apply to Key Management Personnel (KMP) in accordance with section 300A
of the Corporations Act 2001 (Cth) (Corporations Act) and applicable accounting standards.
The Remuneration Report for the year ended 29 June 2019 (FY19) has been restructured to enhance clarity. We
welcome your feedback on the Report.
REMUNERATION REPORT APPROVAL AT 2018 ANNUAL GENERAL MEETING (AGM)
Our Remuneration Report for the 2018 financial year received positive shareholder support at the 2018 AGM,
with 99.4% of votes in favour of adoption.
SECTION 1
Summary
GROUP FINANCIAL PERFORMANCE
UNDERPAYMENT OF TEAM MEMBERS
Overall, the Group had a solid year
of performance:
• Core business delivering solid
sales growth;
•
Year one of Macpac multi-
year business case achieved;
• Continuing investment in omni-
retail capabilities underpinning
growth;
•
Successfully re-platformed
core websites;
• Continued safety
improvement; and
•
Strong performance in team
and customer metrics.
Sales growth of 5.4% has been
achieved with a Segment EBIT
growth of 3.9% and a 5.0% increase
in normalised net profit after tax.
There were improvements in
customer metrics (including Net
Promoter Score) and a reduction
of 10.1% in the Total Recordable
Injury Frequency Rate (TRIFR).
Super Retail Group initiated
a comprehensive review of
employment arrangements across
the Group in FY19. The review
followed the discovery in FY18 of
a breach of the General Retail
Industry Award (GRIA) with the
underpayment of overtime and
allowances for team members
involved in store Set Up projects.
Super Retail Group found that
while retail managers’ base salaries
were correct, not all overtime
hours worked were paid according
to the GRIA. Additionally, some
allowances required under the
award were not paid.
In its FY19 full year financial
results, Super Retail Group has
recognised net $8.9 million before
tax ($6.2 million after tax) as an
expense relating to a revision of
wages underpayment estimates
and associated remediation costs.
In addition, $24.0 million after tax
costs associated with prior year
retail management underpayment
was recognised as a restatement
of retained earnings as required by
the accounting standards.
SHORT-TERM INCENTIVE (STI)
The Group’s solid financial
performance resulted in the gate
to the STI scheme opening. The
Executive KMP STI achievement, as
detailed in Section 4 of this report,
was commensurate with the solid
performance of the Company
during the FY19 year.
Recognising the accountability
of Executive KMP, the Board
determined the following
adjustments to remuneration
outcomes to recognise the impact
of the underpayment of retail
managers:
• No STI was awarded to the
former Group Managing
Director and CEO (Group MD
and CEO), with his agreement.
• A 25% reduction was applied
to other Executive KMPs’
payments.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 42
Remuneration
Report (Audited)
LONG-TERM INCENTIVE (LTI)
The FY17 LTI grant reached the end of
its three-year performance period on
29 June 2019 and 77.3% will vest as a
result of performance against the LTI
hurdles. The threshold hurdles for both
Earnings Per Share (EPS) and Return
on Capital (ROC) were achieved
reflecting a period of growth for both
key shareholder return metrics.
•
•
•
An analysis was completed to
understand the financial impact the
underpayments would have had on
the LTI vesting across the relevant
performance periods, and appropriate
adjustments made to vesting
outcomes for all grants on foot. For
details see Section 4.
GROUP MANAGING DIRECTOR AND CEO
TRANSITION
Mr Heraghty succeeded Mr Birtles as
Group MD and CEO from 20 February
2019. Mr Heraghty’s remuneration has
been set by the Board in accordance
with the Group’s Remuneration
Framework. The components of Mr
Heraghty’s remuneration, as disclosed
to the market on 22 January 2019, are
as follows:
Base salary (inclusive of
superannuation and salary
sacrificed items) of $1,050,000,
which will be reviewed annually,
plus an allowance for car and
home office usage.
STI target of $500,000 (maximum
$750,000), assessed by the Board
having regard to his STI objectives.
Subject to shareholder approval
at the 2019 AGM, Mr Heraghty
will be entitled to a one-off co-
investment grant of Performance
Rights to the value of $400,000
(vesting over a three to five-year
period), on the condition that Mr
Heraghty acquires an additional
$200,000 worth of Super Retail
Group ordinary shares to build his
shareholding (which has been
satisfied) and subject to service
conditions. Mr Heraghty’s initial
purchase of shares in March 2019
is progress towards meeting his
obligations under the Minimum
Securities Holding Policy.
• At the discretion of the Board, and
subject to shareholder approval
at the 2019 AGM, Mr Heraghty
is eligible to participate in the
Group’s LTI plan for FY20. Mr
Heraghty’s FY20 LTI grant will be
equivalent to $850,000 at face
value and measured over a three-
year period, and will vest over a
four-year period. Refer to Section 6
for FY20 LTI scheme changes.
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
Upon his retirement Mr Birtles received
his statutory leave entitlements. As
agreed with Mr Birtles, no STI for FY19
was awarded. The FY19 LTI grant
lapsed. Adjustments to the FY16, FY17
and FY18 LTI grants were made in light
of the team member underpayment
issue as set out in Section 4 and
Table 14.
NON-EXECUTIVE DIRECTOR (NED) FEES
There was no change made to NED
fees (including Committee fees)
in FY19.
EXECUTIVE REMUNERATION FRAMEWORK
CHANGES FOR FY20
The Group has been progressively
reviewing the executive total reward
framework. The approach to setting
base salary and the STI scheme (the
Scheme) has been reviewed and
revised. A review of the Long Term
Incentive plan (the Plan) has identified
several areas where the Plan could be
enhanced with related implications for
the STI Scheme.
The changes to the Executive
Remuneration Framework for FY20
include:
• Changing the vesting period of
the LTI plan
•
Introducing deferral for a portion
of the STI scheme.
No changes are proposed to fixed
remuneration for Executive KMP.
Further details of the changes to the
Executive Remuneration Framework for
FY20 are set out in Section 6.
No changes are proposed to NED fees
for FY20.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 Remuneration
Report (Audited)
SECTION 2
Key Management Personnel
43
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
The names and titles of the Group’s KMP, being those persons having authority and
responsibility for planning, directing and controlling the activities of the entity, are set
out below.
Name
Chair
Position
Term as KMP
S A Pitkin
Chair and Independent Non-Executive Director
1 July 2010
Non-Executive Directors
R A Rowe
Non-Executive Director
D J Eilert
Independent Non-Executive Director
L K Inman
Independent Non-Executive Director
H L Mowlem
Independent Non-Executive Director
8 April 2004
21 October 2015
21 October 2015
13 June 2017
P D Everingham Independent Non-Executive Director
19 December 2017
Managing Director and CEO
A M Heraghty Group Managing Director and
27 April 2015
Chief Executive Officer (Group MD and CEO)
Executives
A Brandon
Chief Executive Officer - Macpac
D J Burns
Chief Financial Officer
C D Wilesmith Managing Director – Auto
G Williams
Managing Director – Sports
Former Managing Director and CEO
1 May 2019
3 December 2012
29 June 2014
2 April 2019
P A Birtles
Group Managing Director and
5 January 2006
Chief Executive Officer
Former Executives
E A Berchtold Managing Director – Sports
5 November 2011
Mr Brandon joined the business through the acquisition of Macpac in March 2018 and has
since continued to lead the Macpac division. Mr Brandon joined the Executive Leadership
Team in May 2019 when Mr Heraghty restructured his Leadership Team.
Mr Williams, Managing Director – Sports, joined the business in April 2019. Mr Williams was
previously Chief Operating Officer at Alceon Retail Group and brings more than 30 years of
global retailing and marketing experience to the Group.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019
44
Remuneration
Report (Audited)
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
SECTION 3
FY19 Executive Remuneration Overview
Our philosophy is to provide flexible and market competitive remuneration arrangements that are linked to the
performance of the Group and its businesses.
The key elements are:
Market
competitive
Aligned to
shareholders’
sustainable
value
Pay-for-
performance
environment
– specific and
measurable
Equitable and
consistent
across the
group
Flexible –
recognise
performance
and
experience
Aligned to
values and
prudent risk
management
FY19 EXECUTIVE REMUNERATION FRAMEWORK
The Group MD and CEO, together with the other Executive KMP, are remunerated under a Total Reward
Framework. The diagram below summarises the FY19 remuneration framework over the period for which FY19
remuneration is delivered and when the awards may vest.
Year 1
Year 2
Year 3
Year 4
Year 5
FIXED REMUNERATION
Base pay, superannuation,
non-monetary benefits
STI
Received as cash; Group
PBT; Divisional EBIT; working
capital efficiency; Individual
performance targets
LTI 50%
Performance Rights, subject to service and performance conditions for three to
five years from grant date. Earnings per share (EPS); Return on Capital (ROC).
1 YEAR (25%)
holding back
2 YEAR (25%)
holding back
FY19 EXECUTIVE REMUNERATION OBJECTIVES
The Total Reward Framework is designed to appropriately reward executives for their contribution to the success
of the Group by aligning all remuneration elements to the delivery of both short-term milestones and long-
term sustainable value to the Group’s shareholders. Further detail of the Executive Total Reward Framework is
provided in Section 5 of this report.
Our
Remuneration
Objectives
Attract, motivate, and
retain executive talent
Differentiate reward
to drive performance
including values and
behaviours
Alignment to share-
holder interests and
value creation through
equity components
An appropriate balance
of fixed and ‘at-risk’
components focused on
long-term strategy and
short-term milestones
ALIGNMENT OF OBJECTIVES TO OUR REMUNERATION FRAMEWORK
Base Salary Package
Short Term Incentive (STI)
Long Term Incentive (LTI)
Remuneration Mix
Strategic
Intent and
Market
Positioning
Positioned at the median
compared to relevant
market-based data
(similarly sized S&P/
ASX200 companies),
considering expertise and
performance in the role.
To achieve Board
approved targets,
in support of the
execution of the
Group’s strategy.
Combined, base
salary package and
STI is intended to be
positioned within
the third quartile of
relevant benchmark
comparisons.
To reward Executive
KMP for sustainable
long-term growth
aligned to
shareholders interests.
Combined, base
salary package, STI
and LTI is intended to
be positioned within
the third quartile of
relevant benchmark
comparisons.
Higher weighting of
‘at-risk’ remuneration
and higher weighting
towards shorter-term
remuneration than the
broader market norm
due to the nature of
the organisation and
shorter business cycles.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 45
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
The performance of the Group
over the last six years is summarised
in Table 1 below:
Remuneration
Report (Audited)
SECTION 4
FY19 Performance and Remuneration Outcomes
Overall, the Group had a solid year
of performance:
• Core business delivering solid
sales growth;
•
•
•
Year one of Macpac multi-
year business case achieved;
Investment in omni-retail
capabilities underpinning
growth;
Successfully re-platformed
core websites;
• Continued safety
improvement; and
•
Strong performance in team
safety and customer metrics.
Table 1:
The strategic direction of the
Group has been reviewed with
the focus continuing on omni-
retailing execution by the Divisions
supported by strong, common,
cost-effective infrastructure.
RELATIONSHIP OF REMUNERATION TO
GROUP PERFORMANCE
The STI scheme and LTI plan operate
to create a clear link between
executive remuneration and the
Group’s performance, motivating
and rewarding the Group MD and
CEO and Executive KMP.
Financial performance
2014
2015(1)
2016(2)
2017
2018
2019
CAGR(3)
Sales ($m)
2,112.1
2,238.7
2,422.2
2,465.8
2,570.4
2,710.4
Normalised Profit before tax ($m)
158.6
148.6
155.9
190.5
201.9
206.8
Normalised Post Tax ROC (%)
11.3
10.6
10.7
13.0
13.1
13.3
Shareholder value created
Normalised Earnings Per Share(¢)
Dividends Per Share (¢)
Closing June Share Price ($)
55.1
40.0
8.46
54.0
40.0
9.40
55.1
41.5
8.77
68.9
46.5
8.20
73.7
49.0
8.10
77.3
50.0
8.23
5%
5%
3%
7%
5%
(1%)
(1) Results from continuing operations.
(2) 2016 is a 53-week reporting period compared to 52 weeks for the other five years.
(3) Represents the five-year normalised Compound Annual Growth Rate.
Table 2:
s
e
m
o
c
t
u
O
%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
66%
78%
LTI vesting
outcomes
32%
34%
29%
40%
Average STI
outcome as a
percentage
of maximum
opportunity
0%
9%
2015
0%
2016
0%
2017
2018
2019
The Group’s incentive awards
are designed to align Executive
KMP remuneration with business
performance. This alignment is
demonstrated in Table 2 and
shows the variability in the history
of incentive plan outcomes for
participants. This table shows LTI
vesting percentages and average
STI outcome as a percentage of
maximum opportunity. The figures
in Table 2 include the adjustments
made for the underpayment of
retail managers and store Set Up
team members. This impact is
detailed in Table 5.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019
46
Remuneration
Report (Audited)
FY19 REMUNERATION OUTCOMES
Short-Term Incentive Scorecard
Outcomes for FY19
For the year to 29 June 2019, the
profit before tax (PBT) target was
set at $212.9 million, 5.4% higher
than the normalised profit before
tax achieved in the period to
30 June 2018 of $201.9 million.
Table 3:
Executive KMP
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
The financial gateway for the
STI scheme of $191.6 million was
exceeded and therefore, per
scheme rules, Executive KMP
scorecards were activated.
The Divisional profit is measured
by segment EBIT performance
against budget. In the year to
29 June 2019, only the Auto Division
achieved its segment EBIT budget.
The individual KPIs and 2019
achievement as determined by
the Board for the Group MD and
CEO and other Executive KMP are
detailed in Table 3.
Individual Performance Against STI Measures
Name
Role
Financial
(50%)
Business
Improvement
(20–30%)
Customer
(10–15%)
People
(10–20%)
STI
scorecard
outcome
A Heraghty
A Heraghty
D J Burns
MD and
CEO
Threshold
to Target
Former MD
– Outdoor
Threshold
to Target
Target
to Stretch
Target
to Stretch
Threshold
to Target
Target
to Stretch
Target
to Stretch
Below
Threshold
Chief
Financial
Officer
Threshold
to Target
Target
to Stretch
Threshold
to Target
Target
to Stretch
C D Wilesmith
MD – Auto
Threshold
to Target
Target
Threshold
to Target
Below
Threshold
91%
80%
95%
80%
GROUP MANAGING DIRECTOR
AND CHIEF EXECUTIVE OFFICER +
MANAGING DIRECTOR OUTDOOR
– A HERAGHTY
Mr Heraghty’s performance was
assessed for seven-and-a-half
months (64%) of the year as the
Managing Director, Outdoor
(MD Outdoor) and then for the
remaining period as Group MD
and CEO.
For the period he was MD Outdoor
his performance was assessed
by the Board at 80% of target.
However, to recognise the impact
of the underpayment of retail
managers, a 25% reduction was
applied to this STI achievement.
The overall outcome of Mr
Heraghty as the Group MD
and CEO was assessed by the
Board to be a performance
level of 91% of target, driven by
outperformance in the Working
Capital, Business Improvement and
Safety measures and impacted by
underperformance in PBT measure.
Therefore a STI outcome of $317,400
was awarded to Mr Heraghty with
$153,600 (reduced from $204,800)
relating to his period as MD
Outdoor and $163,800 relating to
his period as the Group MD and
CEO. The Board determined not
to reduce the Group MD and CEO
portion of Mr Heraghty’s incentive
as an adjustment to the STI for the
former Group MD and CEO had
been made.
FORMER MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER – P.BIRTLES
Due to the underpayment of retail
managers, the Board and Mr Birtles
agreed that no FY19 STI would be
awarded.
OTHER EXECUTIVE KMP
Mr Burns’ performance was
assessed at 95% of target driven
by outperformance in Working
Capital and Business Improvement
but moderated by Group PBT
underperformance. Mr Wilesmith
was assessed at 80% of target as
a result of at target performance
in Business Improvement but
offset by under performance
across the other measures. The
Board determined that the STI
outcomes for both Mr Burns and
Mr Wilesmith would be reduced by
25% to recognise the impact of the
underpayment of retail managers.
Mr Williams and Mr Brandon were
KMP for a partial period of the year
(two months respectively) and the
scheme did not apply given the
short nature of time in role.
Ms Berchtold was not eligible for
short term incentives due to time
in role.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 Remuneration
Report (Audited)
47
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
The STI payments for the other
Executive KMP have been reduced
by 25% to account for the impact
of the underpayment of retail
managers. These outcomes are
reflected in Table 13.
will vest as a result of performance
against the LTI hurdles. The threshold
hurdles for both Earnings Per Share
(EPS) and Return on Capital (ROC)
metrics were achieved.
The 2019 STI payment was
determined on 22 July 2019.
In the 2019 financial year the STI
award will be paid in cash. In
order to support an increase in
executive shareholding, enhance
risk management and executive
retention, and reflect broader
market practice, the Board has
determined to defer a portion of
STI into equity from and including
FY20 for all Executive KMP. See
Section 6 for details.
LONG TERM INCENTIVE OUTCOMES
FOR FY19
The FY17 LTI grant reached the
end of its three-year performance
period on 29 June 2019 and 77.3%
Table 4 outlines the performance
outcomes for LTI Performance
Rights granted between the 2015
to 2017 financial periods. Table 5
outlines the subsequent vesting
and forfeiture adjusting for the
Set Up and retail management
underpayment as follows:
• The percentage of FY17
performance rights granted in
September 2016, that will vest
in accordance with the LTI Plan
Rules is 77.3%
• The FY16 grant, tested in
FY18 which previously had a
determined vesting percentage
of 56.2% would reduce to 33.5%
as the FY18 ROC performance
hurdle dropped below the
threshold of 12%. Aligned with
the vesting schedule, 28.1%
(50% of the original vesting
outcome) of the FY16 grant
vested in September 2018. To
account for the adjustment to
the overall vesting outcome,
the remaining amount to vest
will reduce from 28.1% to 5.4%.
These will proceed to vest in
line with original timelines that is
50% September 2019 and 50%
September 2020. This treatment
will be applied to Executive
KMP and Executives who hold
unvested portions of the FY16
grant.
• The FY14 and FY15 grants,
tested in FY15 and FY16
respectively: Previously
determined nil vesting, so no
adjustments are required.
Each grant is subject to equally
weighted performance measures
(EPS and ROC).
Table 4: Before adjustment for impact of underpayment of Set Up and retail managers
Grant Date
Financial Results
determining
vesting
EPS three-year CAGR
ROC Averaged
Performance
outcome
Vested
Forfeited
Performance
outcome
Vested
Forfeited
September 2014
June 2017
September 2015
June 2018
September 2016
June 2019
7.7%
10.9%
11.9%
nil
29.5%
34.5%
100%
20.5%
15.5%
11.4%
12.2%
13.1%
nil
26.7%
34.2%
100%
23.3%
15.8%
Table 5: Adjustment for impact of underpayment of Set Up and retail managers
Grant Date
Financial Results
determining
vesting
EPS three-year CAGR
ROC Averaged
Performance
outcome
Vested
Forfeited
Performance
outcome
Vested
Forfeited
September 2014
June 2017
September 2015
June 2018
September 2016
June 2019
8.1%
11.7%
13.8%
nil
33.5%
44.0%
100%
16.5%
6.0%
11.0%
11.9%
13.0%
nil
nil
33.3%
100%
50.0%
16.7%
• ROC vesting reduces for all years due to lower returns. FY18 ROC drops below the vesting hurdle threshold of 12%.
• EPS increases in FY18 and FY19. This is due to the lower base EPS years in FY14 to FY16 which results in higher growth
in later years.
UNDERLYING PERFORMANCE
Each year, the Board reviews
any significant items, positive
and negative, and considers
their relevance for the PBT results.
The Board may exclude any
significant events/items to give
a clearer reflection of financial
performance from one period
to the next. Significant events/
items are considered unusual by
their nature and size and/or not in
the ordinary course of the business.
In relation to the FY19 year, the
principle exclusions were in
relation to prior period store wages
underpayment and remediation
costs, business restructuring costs,
equity accounted losses and losses
on divestments (refer to note 4b in
the financial statements).
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 48
Remuneration
Report (Audited)
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
SECTION 5
Detail of the FY19 Executive Total Reward Framework
Figure 1 shows the remuneration
mix based on the base salary
package (as at June 2019), and
the incentives payable assuming
maximum STI is received and full
vesting of the LTI plan for:
•
the Group MD and CEO and;
• other Executive KMPs.
Figure 1:
GROUP MANAGING DIRECTOR & CHIEF
EXECUTIVE OFFICER - A HERAGHTY
40%
28%
32%
CHIEF FINANCIAL OFFICER
43%
30%
27%
DIVISIONAL MANAGING DIRECTORS
(AUTO & SPORTS)
39%
37%
24%
DIVISIONAL MANAGING DIRECTORS
(OUTDOOR)
42%
32%
26%
FORMER GROUP MANAGING DIRECTOR &
CHIEF EXECUTIVE OFFICER - P BIRTLES
33%
33%
33%
Base
salary
package
STI
LTI
The Chief Executive Officer
– Macpac participates in a
cash-based retention scheme,
agreed at the time of acquisition,
with vesting dependent on the
performance of the Macpac
business. The current intention is
that the Chief Executive Officer –
Macpac will not receive an annual
LTI grant of performance right
under the SRG scheme until the
expiry of the retention scheme.
The Group is committed to
creating a high-performance
culture. The 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.
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. These
are also aligned with the interests
of shareholders.
For the 2019 financial year,
remuneration benchmarking for all
Executive KMP was sourced from
Ernst & Young (EY) Remuneration
Consultants. The Board referenced
two sets of comparator groups to
benchmark remuneration, being:
• Market Capitalisation
comparator group: S&P/ASX
200 companies within 50% to
200% of Super Retail Group’s
12-month average market
capitalisation; and
• Market Capitalisation and
GICS comparator group: S&P/
ASX 200 companies within
the ‘Consumer Discretionary
Sector’ Global Industry
Classification Standard (GICS).
TARGET REMUNERATION MIX
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,
developing and implementing
business strategy, and external
remuneration practices.
BASE SALARY
Base salary 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.
No guaranteed base salary
increases are included in any
Executive KMP’s service contract.
Approved amendments to base
salary packages are effective from
the commencement of the new
financial year.
VARIABLE OR ‘AT-RISK’
REMUNERATION
Variable or ‘at-risk’ remuneration
forms a significant portion of the
Executive KMP remuneration
opportunity. The purpose of
variable remuneration is to focus
executives on the execution of the
Group’s strategy, and delivery of
long-term sustainable value.
The information below provides
detail of the Group’s short-term
and long-term incentives.
SHORT TERM INCENTIVE REWARD
Consistent with the prior year, the
2019 STI scheme (the Scheme)
for all Executive KMP (and other
key executives) is based on a
balanced scorecard. Taking a
balanced scorecard approach
allows Executive KMP performance
to be assessed in a holistic way for
four key drivers of performance
(outlined in Table 6). The Human
Resources and Remuneration
Committee (the Committee)
governs the design of the STI
scheme, KPI and target setting,
and the Board holds discretion
over the outcomes.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019
Remuneration
Report (Audited)
Table 6:
49
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
The key aspects of the FY19 STI are summarised in table 6. See Section 6 for changes to the STI for FY20:
Scheme
Participation
Purpose
STI awards are made under the Super Retail Group Short Term
Incentive Scheme (the Scheme).
The Group MD and CEO and other Executive KMP are invited to participate in
the scheme.
The scheme rewards a combination of Board-approved financial and non-
financial performance measures that articulate performance expectations at
both target and over-achievement that are aligned to the execution of the
Group’s strategy.
Performance Period
The performance period is for 12 months ending 29 June 2019.
Financial Gateway
Performance Targets
A minimum Group PBT of at least 90% of target must be met before any
short-term incentives are payable. If this level is not reached, the Scheme is
deemed to be discretionary and any payment made to Executive KMP will be
at the Board’s discretion.
The achievement of individual KPI targets (once the financial gateway
has been achieved) shall determine the proportion of the potential bonus
entitlement that will be granted.
For FY19, the following performance goals and weightings were selected.
These goals are aligned to the Group’s strategic plan.
Measures
Category
Weighting
(% of STI)
Performance Goals
Financial
Financial
50
• Net Profit Before Tax (PBT)
• Working Capital Efficiency
Business
Improvement
20 - 30
• F20 Budget and Execution
Non-Financial
Customer
10 - 15
People
10 - 20
Framework
• Division business plan
delivery
• Net Promotor Score (NPS)
• Omni Retail Customer
Offer
• Total Recordable Injury
Frequency Rate (TRIFR)
• One Super Team
2019 Target and Maximum
Stretch Opportunity
Use of Discretion
The significant weighting of financial outcomes with a minimum of 50%
maintains a strong link between actual financial performance and
incentive paid
For the Group MD and CEO and other Executive KMP, the target STI
opportunity is 100%, and the maximum stretch STI opportunity is 150% of target.
For each measure, a threshold level of performance is set. This level must be
met to achieve a score. In setting this threshold, consideration is given to prior
year performance and target.
The Committee, in its advisory role, reviews proposed adjustments to STI
outcomes and makes recommendations for any changes to performance
measures, which may only be approved by the Board. The Committee also
reviews the nature of the adjustments to earnings to assess the impacts (if any)
on remuneration.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019
50
Remuneration
Report (Audited)
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
Governance and Approval
Process
The Group MD and CEO’s STI is recommended by the Committee based on
his balanced scorecard performance and is approved by the Board.
The amount of STI paid to other Executive KMP is recommended by the
Group MD and CEO to the Committee based on each executive’s balanced
scorecard performance and is recommended by the Committee for approval
by the Board.
The Board may apply discretion in determining the STI outcomes to ensure
they are appropriate. By way of illustration, the Board may take into
consideration the Executive KMP’s alignment to Company values, prudent risk
management and the Company’s long-term financial soundness.
Payment Vehicle
FY19 STI awards are delivered in cash with no deferral.
Payment Frequency
STI awards are paid annually. Payments are made in September following the
end of the performance period.
LONG-TERM INCENTIVE REWARD
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
Executive KMPs and other executives are focused on delivering sustainable returns to shareholders, whilst
allowing the Group to attract and retain executives of a high calibre. The Board has determined that the
combination of EPS and ROC are appropriate measures of sustainable shareholder returns.
The key aspects of the LTI plan are summarised in Table 7. See Section 6 for changes to the LTI plan for FY20.
Table 7:
Plan
Participation
LTI Instrument
Allocation Methodology
LTI awards are granted under the Super Retail Group Employee Performance Rights Plan
(the Plan).
The Plan allows for the annual grant of Performance Rights to Executive KMP and other
executives.
Performance Rights are granted by the Group for nil consideration. Each performance
right is a right to receive a fully-paid ordinary share at no cost if service-based and
performance-based vesting conditions are met.
The number of Performance Rights granted to each Executive KMP is determined
in accordance with the Executive Remuneration Framework, and have a value
of between 50% and 100% of their base salary package. The notional value of
Performance Rights granted to Executive KMP and other executives is determined on
a face value basis using the volume weighted average price for Super Retail Group
shares traded on the ASX on the five trading days from the day following the release of
the Group’s results for the preceding reporting period. The value of Performance Rights
for grant purposes may differ from the accounting valuation shown in the financial
statements which considers probability of vesting and other factors.
Performance Period
The performance period is three years commencing on 1 July in the year the award is
made. For the 2019 awards, this is the three-year period from 1 July 2018 to 26 June 2021.
Performance Hurdles and
Vesting Schedules
Equity grants to Executive KMP and other executives are in two equal tranches of 50% for
the three year compound annual growth rate in normalised EPS and 50% for normalised
three year averaged ROC.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 Remuneration
Report (Audited)
51
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
The performance conditions for Performance Rights granted in September 2018 are:
Measure
Weight
Nature
Normalised earnings per
share CAGR
Averaged ROC
50%
50%
Growth of Group
Group Absolute
Performance Zone
(Threshold to Maximum)
8% to 13% compound
annual growth
10% to 15% annual
average
Payout
Performance Period
Below threshold (<8%):
0% of elements vested
Threshold (8%):
30% of elements vested
Target (10%):
50% of elements vested
Below threshold (<10%):
0% of elements vested
Threshold (10%):
30% of elements vested
Target (12%):
50% of elements vested
Maximum (13%):
100% of elements vested
Maximum (15%):
100% of elements vested
Straight-line vesting:
Between threshold (8%)
and target (10%) and then
target and maximum (13%)
Straight-line vesting:
Between threshold
(10%) and target (12%)
and then target and
maximum (15%)
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:
3 years
4 years
5 years
Percentage of
Performance Rights
that vest:
50%
25%
25%
Under these performance hurdles, for the plan to achieve 100% vesting, the compound
EPS growth must be at least 13%, and ROC must average at least 15%. The normalised
EPS measure excludes the value of franking credits being generated, which are
transfered to shareholders through the Group’s fully franked dividend.
For Performance Rights granted in September 2017 and prior, the normalised earnings
performance hurdle was as follows:
Normalised EPS CAGR
% vesting of Performance Rights
10% (threshold)
15% (maximum)
50%
100%
Performance Rights will vest on a pro rata basis between these compound
annual growth ranges.
Each year, the Board reviews any significant items, positive and negative, and considers
their relevance for the PBT, ROC and EPS results. The Board may include or exclude any
significant events/items to give a clearer reflection of normalised financial performance
from one period to the next. Significant events/items are considered unusual by their
nature and size and/or not in the ordinary course of the business. In relation to the
FY19 year, exclusions made in relation to the performance measures include: prior
period store underpayment and remediation costs, business restructuring costs, equity
accounted losses and losses on divestments (refer to note 4b in the financial statements).
At the end of three financial years, equity grants are tested against the performance
hurdles set. Awards will only vest once the Board, in its discretion, determines that
relevant conditions have been satisfied. If the performance hurdles are not met at the
vesting date, the Performance Rights will lapse. There is no retesting of performance
hurdles under the Plan. The Board has discretion to determine that an Award vests prior
to the end of the relevant period and retains a discretion to adjust performance related
outcomes.
Testing and Time Restrictions
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 52
Remuneration
Report (Audited)
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
Dividends and Voting Rights
Performance Rights do not carry voting or dividend rights.
Hedging Arrangements
Participating executives are prohibited from entering into any hedging
arrangements in relation to Performance Rights.
Clawback Policy
Termination Provisions
There is a Clawback Policy within the Plan. The Board may determine any
treatment in relation to an Award, without limitation, in certain circumstances
such as fraud, dishonesty, or breach of obligations (including, without
limitation, a material misstatement of financial information). The Plan
document is available on the Group’s website. The vesting outcome of the
FY16 LTI grant has been reduced due to prior period underpayment of retail
managers and store Set Up team members.
Executive KMP must be employed at the time of vesting to receive the
allotment of shares. The Board has discretion to amend the employment
requirement based on the circumstances associated with the Executive KMP
and other executives leaving. The Board has previously exercised its discretion
where an employee left due to retirement, retrenchment or redundancy, or
termination by mutual consent. The employee may, in these circumstances,
retain entitlement to a portion of the Performance Rights pro-rated to reflect
the period of service from the start of the Performance Period to the date of
departure. After the employee’s departure the Performance Rights would
only be available to vest to the extent that the performance conditions are
met. In the event the Board has not exercised discretion, when an employee
leaves due to resignation or termination with cause, all unvested Performance
Rights will lapse.
Change of Control Provisions
Any unvested Performance Rights may vest at the Board’s discretion, having
regard to pro-rated performance.
The Super Retail Employee Performance Rights Plan Rules are available on the Group’s website,
www.superretailgroup.com.au/investors-and-media/corporate-governance/
PERFORMANCE-BASED RETENTION ARRANGEMENTS FOR CHIEF EXECUTIVE OFFICER – MACPAC
As part of the acquisition of Macpac, an executive retention scheme was established for the Chief Executive
Officer – Macpac, Mr Brandon. The performance hurdles of the retention scheme align to the five-year business
strategy disclosed to the market in May 2018.
The retention scheme arrangements for Chief Executive Officer – Macpac are outlined in Table 8.
Table 8:
Vehicle
Cash
Incentive Opportunity
NZ$1,500,000
Performance Period
Five years (2018 – 2023)
Performance Conditions
Vesting is tied to the EBIT (CAGR over five years) measured at three intervals;
30 June 2021, 30 June 2022 and 30 June 2023, against the consolidated
MacPac business plan as approved by the Board.
Payment schedule
On the basis that the performance conditions are met at each interval the
retention payment will be made in the following manner:
1 July 2021 NZ$500,000
1 July 2022 NZ$500,000
1 July 2023 NZ$500,000
Eligibility
The executive is eligible to receive payment if EBIT achieves plan and he
remains employed on 1 July immediately following each testing date.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 Remuneration
Report (Audited)
53
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
SECTION 6:
Executive Remuneration Framework Changes for FY20
BASE SALARY CHANGES
REMUNERATION STRUCTURE CHANGES
The comparator benchmarks show
that overall Executive KMP base
salary package and short-term
incentive packages for the 2020
year will be in the range of 90%
to 132% of the respective market
median. Executive KMP base
salaries will not increase in FY20.
DEFERRED SHORT-TERM INCENTIVE
Super Retail Group has been
progressively reviewing the
executive total reward framework.
The approach to setting base
salary and the STI scheme
have previously been reviewed
and revised. During FY19, the
Company reviewed the LTI plan
taking into consideration market
competitiveness as well as the
effectiveness of the Plan in
supporting the strategic direction
(namely to become a sustainable,
world class omni-retailer). The
review identified several areas
where the LTI plan could be
enhanced, with associated
implications and further changes
for the STI plan. We consulted
on the approach to changes to
understand shareholders’ and
governance advisers’ perspectives.
The following summarises the key
changes between FY19 and FY20.
Together with the changes to the LTI plan, deferred STI in the form of Performance Rights (allocated based on
the face value of award) will be introduced from and including FY20. The introduction of deferred STI is aimed
to support equity ownership, enhance risk management, retain key executives and reflect market remuneration
practices.
The key components of the deferred STI are outlined as follows:
Table 9:
Key change
Key terms of change
Portion of deferred STI
Vesting period
Clawback
LONG-TERM INCENTIVE
Up to 30% of the total STI awarded to KMP will be deferred across two years
(20% deferral in FY 20, transitioning to 30% deferral in FY21). Transitioning
towards a 30% deferral over two years allows the Group to appropriately
manage costs.
Each KMP’s target STI will be increased by 25%, to facilitate the immediate
introduction of the deferral scheme and to maintain executive engagement,
consistent with the remuneration strategy and principles. On completion of
transition the targets will be reviewed against market.
Vesting of the deferred STI will occur in two, equal tranches (i.e., 50% of
Rights vest one year after grant and remaining 50% vests 2 years after grant).
Accumulated dividend equivalent payments will be received when awards
are fully vested.
The deferred STI awards will be subject to the same clawback provisions as
the LTI (refer to Section 5 for further detail on the LTI clawback policy).
Key change
Key terms of change
Maintain a three-year performance measure but
transition to a simplified tranche vesting structure. This
means that 50% of Rights vest three years after grant and
the remaining 50% vest four years after grant.
This approach simplifies the vesting period while
maintaining the existing performance period. The vesting
period remains longer than the majority of companies in
the S&P/ASX200 index.
In conjunction with the introduction of the deferred STI,
the changes will result in a larger portion of remuneration
held in equity and a longer weighted-average period to
receive remuneration, despite the 25% reduction in the
vesting period of the LTI.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 54
Remuneration
Report (Audited)
IMPACT OF CHANGES OVER TIME
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
Table 10:
Current state
Changes for FY20
FR
STI
LTI
FR
Year 1
Year 2
Year 3
Year 4
Year 5
100% CASH
PERFORMANCE PERIOD
100% CASH
PERFORMANCE PERIOD
Right (50% EPS and 50% ROC)
100% CASH
50% of Rights vest
VESTING PERIOD
25% of Rights vest
25% of Rights vest
CASH STI
PERFORMANCE PERIOD
80% CASH
50% of Rights vest
50% of Rights vest
DEFERRED LTI
LTI
VESTING PERIOD
PERFORMANCE PERIOD
VESTING PERIOD
Key
Grant date
Vesting date
50% of Rights vest
50% of Rights vest
Cash payment
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 Remuneration
Report (Audited)
55
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
SECTION 7:
Non-Executive Directors’ Remuneration Arrangements
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 responsibilities of the position.
Non-Executive Directors receive
fees to recognise their contribution
to the work of the Board and the
associated Committees on which
they serve.
The Nominations Committee
reviews the level of fees annually.
Under the current fee framework,
Non-Executive Directors are
remunerated by way of a base
fee, with additional fees paid
to the Chairs and members
of Committees; namely, 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.
The Board Chair receives an
all-inclusive fee and no other
fees (e.g. Committee fees)
are paid. Fees are inclusive of
superannuation contributions
required by the Superannuation
Guarantee legislation. Non-
Executive Directors do not
receive any performance-related
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.
Non-Executive Directors are not
eligible for termination payments
or to receive retirement benefits
other than superannuation on
resignation or retirement from
the Board.
Non-Executive Directors’ Fees are
determined within an aggregate
Directors’ fee pool approved
by shareholders. The fee pool
of $1,200,000 per annum was
approved at the Annual General
Meeting on 23 October 2013. No
increase in the pool is proposed for
FY20.
NON-EXECUTIVE DIRECTORS’ FEES
The fees paid to Non-Executive
Directors are set out in Table 11
and are annual fees, inclusive
of superannuation, unless
otherwise stated.
Table 11:
Annual Fees
Board
Audit and Risk
Committee
Human Resources and
Remuneration Committee
Nomination
Committee
Chair(1)
Members
$313,650
$141,143
$25,000
$10,000
$25,000
$10,000
Nil
Nil
(1) Committee fees are not paid to the Chair.
There was no change to Non–Executive Directors’ fees (including Committee fees) in FY19 and there will be no
change in FY20.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 56
Remuneration
Report (Audited)
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
Details of the remuneration of the Non-Executive Directors of the Group are set out in Table 12.
Table 12:
2019
Short-term Benefits
Post-
employment
Share based
Cash
salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Performance
Rights
$
Other
Total
$
$
Name
Non-Executive
S A Pitkin
R A Rowe
D J Eilert
L K Inman
H L Mowlem
P D Everingham
313,650
121,371
147,163
166,143
151,729
147,163
Total
1,047,219
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19,771
13,980
–
14,414
13,980
62,145
–
–
–
–
–
–
–
–
–
–
–
–
–
–
313,650
141,142
161,143
166,143
166,143
161,143
1,109,364
2018
Short-term Benefits
Post-
employment
Share based
Cash
salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Performance
Rights
$
Other
Total
$
$
Name
Non-Executive
S A Pitkin(1)
R A Rowe
D J Eilert
L K Inman(2)
H L Mowlem(3)
P D Everingham(4)
R J Wright(5)
252,928
118,761
147,162
176,143
156,944
68,911
97,867
Total
1,018,716
–
–
–
–
–
–
–
–
–
–
–
–
–
–
18,857
22,382
13,980
–
14,910
6,547
7,337
84,013
–
–
–
–
–
–
–
–
–
–
–
–
–
–
271,785
141,143
161,142
176,143
171,854
75,458
105,204
1,102,729
(1) S A Pitkin commenced as Board Chair on 23 October 2017.
(2) L K Inman commenced as Chair of the Audit & Risk Committee from 24 October 2016, ceased as chair on 23 October 2017 and
subsequently commenced as chair of the Human Resources & Remmuneration Committee from 23 October 2017.
(3) H L Mowlem commenced as Director on 13 June 2017, and commenced as Chair of the Audit & Risk Committee from 23 October 2017.
(4) P D Everingham commenced as Director on 19 December 2017.
(5) R J Wright retired at the conclusion of the 2017 Annual General Meeting on 23 October 2017.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 Remuneration
Report (Audited)
57
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
SECTION 8:
Executive KMP Remuneration Outcomes for FY19
Details of the remuneration of the Executive KMP of the Group are set out in Table 13:
Table 13:
2019
Short-term Benefits
Post-employment
Share based
Name
Executive Director
A M Heraghty(2) (8)
P A Birtles(3)
Other Executive
KMP
A Brandon(4)
D J Burns(8)
C D Wilesmith(5) (8)
G S Williams(6)
E A Berchtold(7)
Cash
salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Annual
leave
$
Super-
annuation
$
Termination
benefits
$
Performance
Rights
$
Other
long term
benefits(1)
$
Total
$
838,014
790,582
317,400
-
25,916
2,380
32,303
41,079
20,531
15,399
-
132,952
336,949
(339,972)
6,971
17,366
1,578,084
659,786
54,825
654,468
651,469
167,254
203,841
15,454
249,375
276,000
136,986
-
2,952
-
48,000
-
-
7
(2,779)
40,905
14,215
30,956
3,550
20,531
20,531
5,133
15,231
-
-
445,469
-
188,160
-
37,228
45,525
-
(248,965)
61,764
8,245
13,228
270
6,999
138,552
967,068
1,541,127
323,858
196,222
Total
3,360,453
995,215
79,248 156,686
100,906
766,581
(169,235)
114,843
5,404,697
2018
Short-term Benefits
Post-employment
Share based
Cash
salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Annual
leave
$
Super-
annuation
$
Termination
benefits
$
Performance
Rights
$
Other
long term
benefits(1)
$
Total
$
Name
Executive Director
P A Birtles
Other Executive
KMP
D J Burns(9)
E A Berchtold(9)
A M Heraghty(9)
C D Wilesmith(9)
1,230,911
-
3,640
(15,277)
20,049
637,851
629,072
738,343
631,951
168,750
195,750
254,100
222,750
-
4,154
11,608
48,000
(2,712)
(30,293)
40,629
(19,888)
20,049
20,049
20,049
20,049
-
-
-
-
-
-
241,391
23,066
1,503,780
65,598
76,400
83,716
76,043
6,789
8,553
3,058
12,870
896,325
903,685
1,151,503
991,775
543,148
54,336
5,447,068
Total
3,868,128
841,350
67,402 (27,541)
100,245
(1) Includes accruals for long service leave entitlements and accrued long term retention bonus for A Brandon of $61,764 in 2019.
(2) A M Heraghty was Managing Director of Outdoor from 1 July 2018 to 19 February 2019 and commenced as Managing Director and
Chief Executive Officer from 20 February 2019.
(3) P A Birtles retired as Managing Director and Chief Executive Officer on 19 February 2019.
(4) A Brandon commenced as a KMP effective 1 May 2019.
(5) C D Wilesmith resignation effective 9 August 2019. Termination benefits are accrued obligations as at 29 June 2019.
(6) G S Williams commenced on 2 April 2019. Included in Cash bonus is an accrued sign on bonus for G S Williams of $136,986 in 2019.
(7) E A Berchtold resigned 11 January 2019.
(8) Cash bonus for FY19 is reflective of a 25% reduction to recognise the impact of the underpayment of retail managers.
(9) Cash bonus for FY18 is reflective of a 25% reduction to recognise the impact of the underpayment of store Set Up team members.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 58
Remuneration
Report (Audited)
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
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 Executive KMP, including their related parties is as
per Table 14. Adjustments relating to the impact of the underpayment of store Set Up team members and retail
managers occurred subsequent to 29 June 2019 and are therefore not reflected in Table 14 below.
Table 14:
Held at
1 July 2018 Granted(1)
Vested
Lapsed
or Forfeited
Other
Changes(2)
Value of
Performance
Rights
granted in
year(3)
Held at
29 June
2019
Financial year in
which grant vests
2019
Number
Number
Number
Number
Number
Number
$
Year
A M Heraghty
2016
2017(4)
2018
2019
A Brandon
2019
D J Burns
2016
2017(4)
2018
2019
C D Wilesmith
2016
2017(4)
2018
2019
G S Williams
2019
P A Birtles
2016
2017(4)
2018
2019
E A Berchtold
2016
2017
2018
52,258
45,586
59,526
–
–
–
–
50,200
(14,684)
–
–
–
(22,889)
–
–
–
–
–
–
–
34,994
30,685
50,860
–
43,897
39,666
54,114
–
–
–
–
44,006
(9,833)
–
–
–
–
–
–
46,940
(12,335)
–
–
–
(15,327)
–
–
–
(19,227)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
104,516
117,031
156,433
-
45,291
40,554
54,114
-
-
-
131,924
(29,369)
-
-
-
-
-
-
(12,727)
-
-
(45,778)
-
-
-
(19,837)
-
-
(29,369)
(117,031)
(156,433)
(131,924)
(12,727)
(40,554)
(54,114)
14,685
45,586
59,526
50,200
n/a
n/a
n/a
384,030
2019, 2020, 2021
2020, 2021, 2022
2021, 2022, 2023
2022, 2023, 2024
–
–
n/a
9,834
30,685
50,860
44,006
12,335
39,666
54,114
46,940
–
-
-
-
-
-
-
-
n/a
n/a
n/a
336,646
n/a
n/a
n/a
359,091
2019, 2020, 2021
2020, 2021, 2022
2021, 2022, 2023
2022, 2023, 2024
2019, 2020, 2021
2020, 2021, 2022
2021, 2022, 2023
2022, 2023, 2024
–
n/a
n/a
n/a
n/a
1,009,219
2019, 2020, 2021
2020, 2021, 2022
2021, 2022, 2023
2022, 2023, 2024
n/a
n/a
n/a
2019, 2020, 2021
2020, 2021, 2022
2021, 2022, 2023
(1) Performance Rights provided as remuneration to each of the Executive KMP of the Group during the financial year.
(2) Ceased as Executive KMP therefore Performance Rights disclosed as being Executive KMP become nil.
(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) These performance rights will partially vest with the announcement of the June 2019 financial results.
(5) All vested Performance Rights are exercisable.
Treatment of departing Executive KMP
In July 2019, the Board made determinations under the Super Retail Employee Performance Rights Plan rules in
relation to LTI awards held by Executive KMP who departed from the Group during the financial year. The impacts
of these determinations are as follows:
To recognise the impact of the Set Up team members and retail managers underpayment (refer to Section 4) the following
treatment was determined for Mr Birtles:
•
•
2016 - remaining unvested Performance Rights will lapse;
2017 - 50% of the grant will lapse, remaining Performance Rights will follow the adjusted vesting calculation
(refer Table 5);
2018 - 50% of the grant will lapse, remaining Performance Rights will remain on foot (prorated for time served); and
2019 - lapse.
•
•
In relation to Mr Wilesmith’s resignation:
•
•
•
•
2016 - remaining unvested Performance Rights will follow the adjusted vested calculation (refer Table 5);
2017 - the Performance Rights will follow the adjusted vesting calculation (refer Table 5);
2018 - the Performance Rights will remain on foot (prorated for time served); and
2019 - lapse.
In relation to Ms Berchtold’s resignation;
•
•
2016 - remaining unvested Performance Rights will follow the adjusted vested calculation (refer Table 5);
2017 & 2018 - lapse.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 Remuneration
Report (Audited)
59
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
The Performance Rights granted
in the current reporting period
were valued for the purpose of
the financial statements using a
fair value of $7.65 which is the
share price at the date of issue.
The Performance Rights are
expensed over a five-year period
in line with the vesting conditions
of the Performance Rights; refer
to Section 5 for details of these
vesting conditions. Performance
Rights are granted using a
face value methodology. 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 2019 financial year.
OPTION OVER EQUITY INSTRUMENTS
OF SUPER RETAIL GROUP LIMITED
No Options were granted or vested
during the financial year.
REMUNERATION EXPENSE OF DIRECTORS AND EXECUTIVE KEY MANAGEMENT PERSONNEL
Table 15:
Base Salary Package
Short Term Incentive
Long Term Incentive
Total
2014
$m
4.8
0.4
0.4
5.6
2015
$m
4.9
0.4
0.1
5.4
2016(1)
$m
2017(2)
$m
2018(3)
$m
5.4
0.8
0.5
6.7
5.1
2.1
1.1
8.3
5.2
0.8
0.5
6.5
2019(4)
$m
5.6
1.1
(0.2)
6.5
(1) 2016 is a 53-week reporting period compared to 52 weeks for the other five years and excludes “Other” remuneration.
(2) During 2017 the number of Executive KMP decreased from six to five which impacts year-on-year comparisons.
(3) The 2018 remuneration expense attributable to Executive KMP accounts for the impact of the underpayment of Set Up team members.
(4) The 2019 remuneration expense attributable to Executive KMP accounts for the impact of the underpayment of retail managers.
Since 2014 normalised earnings
per share have increased by 40.3%
and dividends per share have
increased by 25.0%.
During the same period, total
remuneration paid to Executive
KMP has increased 16.1%. 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 normalised profit
before tax was 3.5% in 2014 and
has decreased to 3.1% in 2019
(refer to Table 1 and Table 15).
(A) EQUITY INSTRUMENTS HELD BY KMP
(i) Shares provided on exercise of Performance Rights and Options
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 29 June 2019 on the exercise of Options.
Table 16:
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)
A M Heraghty
A Brandon
D J Burns
C D Wilesmith
G S Williams
P A Birtles
E A Berchtold
Total
Performance Rights
n/a
Performance Rights
Performance Rights
n/a
Performance Rights
Performance Rights
14,684
n/a
9,833
12,335
n/a
29,369
12,727
78,948
139,645
n/a
93,512
117,306
n/a
279,299
121,034
750,796
(1) G Williams and A Brandon 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 4(c) - Long-Term Incentives.
(3) The 2016 grants vesting due to hurdles being met.
(4) The value at exercise date for Performance Rights is determined using the Company share price.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 60
Remuneration
Report (Audited)
(ii) Movement in shares
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
The movement during the year in the number of ordinary shares in the Company held directly or indirectly or
beneficially, by each Executive KMP, including their related parties is as per Table 17 below:
Table 17:
2019
Held at
30 June
2018
Exercise of
performance
rights
Purchases
In lieu of
dividends(1)
Sales
Other
changes
Non Executive Directors:
S A Pitkin
R A Rowe
D J Eilert
L K Inman
H L Mowlem
P D Everingham
Executive Director:
A M Heraghty
P A Birtles(2)
Other Executive KMP:
A Brandon
D J Burns
C D Wilesmith
G S Williams
E A Berchtold(3)
39,153
59,925,001
8,500
22,175
10,000
10,000
–
1,392,596
–
11,000
3,776
–
–
–
–
–
–
–
–
14,684
29,369
–
9,833
12,335
–
12,727
3,000
–
7,000
–
20,000
7,000
25,590
–
–
–
–
–
–
–
11,865
–
–
–
–
417
–
–
–
236
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,421,965)(4)
–
–
(12,000)
–
–
–
–
–
–
(12,727)(4)
(1) Shareholders are eligible to receive dividends in cash or choose to participate in the dividend reinvestment plan.
(2) P A Birtles retired and ceased to be a KMP on 19 February 2019.
(3) E A Berchtold ceased to be a KMP on 11 January 2019.
(4) Ceased as KMP therefore KMP Shareholding becomes nil.
Held at
29 June
2019
42,153
59,936,866
15,500
22,175
30,000
17,000
40,691
–
–
20,833
4,347
–
–
(iii) Unissued shares under Performance Rights and Options plans
Unissued ordinary shares of Super Retail Group Limited under the Performance Rights Plan at the date of this
report are set out in the table below:
Table 18:
Grant date
Value per Performance Right
at Grant Date
Number of
Performance Rights
1 September 2012
1 September 2013
1 September 2014
1 September 2015
1 September 2016
1 September 2017
1 September 2018
Total
$7.95
$10.83
$6.03
$8.17
$7.99
$6.38
$7.65
–
–
–
136,707
453,535
633,916
592,684
1,816,842
(1) Performance Rights vest progressively three to five years after grant date and have no expiry date. Refer to Section 5 for details of these vesting conditions.
(2) Due to resignations and retirements of Executive KMP, the Board has exercised its discretion per the LTI plan with the Performance Rights and as such certain
Performance Rights are due to lapse – refer to Table 14 for impacts on Executive KMP.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 Remuneration
Report (Audited)
61
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
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.
(B) LOANS TO KMP AND THEIR
RELATED PARTIES
There are no loans to Executive
KMP and their related parties as at
29 June 2019 and no loans were
made during the financial year.
(C) OTHER TRANSACTIONS WITH KMP
No Executive KMP held positions in
other companies that transacted
with the Group in the reporting
period. Dividends paid to KMP
as shareholders in the reporting
period amounted to $30,133,125
(2018: $28,538,241). Other
payments made to Director R A
Rowe in the form of store lease
payments during the reporting
period amounted to $12,087,041
(2018: $10,789,552). Rent payable
at year-end was nil (2018: nil). Rent
on properties are deemed to be
on an arms length basis. There
were no other transactions with
KMP during the reporting period.
(D) INSURANCE OF OFFICERS
During the financial year, the
Group paid a premium of $545,000
(2018: $202,880) 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.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 62
Remuneration
Report (Audited)
SECTION 9:
Remuneration Governance
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
The Board’s role, as set out in
the Board Charter, includes
responsibility to approve and
oversee the strategic direction
of the Group, to appoint the
MD and CEO and to oversee
the governance, management
and performance of the Group.
The Board is supported through
three standing Board Committees
including the Human Resources
and Remuneration Committee.
Each Committee has its own
Charter setting out its role and
responsibilities, composition, and
how it will operate.
The Board established the
following Committees: Audit and
Risk Committee; Nomination
Figure 2:
Committee; and Human Resources
and Remuneration Committee.
The Audit and Risk Committee will
liaise with the Human resources
and Remuneration Committee, as
necessary, relating to risk, policies
and framework relating to KMP
remuneration.
Board
Human Resources and
Remuneration Committee
Remuneration Advisors
The Board approves company
wide remuneration strategy,
policy and framework to ensure
alignment with company’s
business strategy and objectives.
The Board reviews and approves
(as appropriate) the Human
Resources and Remuneration
Committee recommendations.
The Board is responsible for
evaluating the performance and
determining the remuneration
of the Group MD and CEO and
senior management.
The Board has delegated
responsibility to the Human
Resources and Remuneration
Committee to review and make
recommendations to the Board
in relation to the overall human
resources and remuneration
practices of the Company. This
includes, but is not limited to,
supporting and advising the Board
in relation to the Company’s
human resources strategy
including human resource policies;
remuneration policies; health and
safety; talent management; and
otherwise assisting the Board to
comply with legal and statutory
requirements in respect of human
resources and remuneration
matters.
The Committee operates
independently of senior
executives and engages directly
with remuneration advisors. The
requirements for external advisors’
services are assessed annually
in the context of remuneration
matters that the Committee
requires to address. During 2019,
external advice was received from
Ernst & Young related to market
remuneration benchmarking,
market remuneration practices for
remuneration structures, gender
pay equity review, Group MD
and CEO dividend arrangement
advice, equity advice, and
a review of the executive
remuneration framework
(including the STI Scheme and LTI
Plan) and support for executive
remuneration changes. No
remuneration recommendations
were provided.
The Corporate Governance
Statement (available on
the Group’s website at
www.superretailgroup.com.au)
provides further information on
the role of the Committee. The
membership of the Committee is
noted in Section 1 of the Directors’
report, as is the number of meetings
and individual attendance during
the period ended 29 June 2019.
GENDER PAY EQUITY
The Group is committed to
remunerating all employees
fairly and equitably. The Group
will conduct annual gender pay
equity reviews that are presented
to the Committee. The last review
conducted identified a small
gender pay gap, at organisation-
wide level. This gap is being
addressed at the Divisional level
and organization level. In addition,
the organisation is monitoring
recruitment, performance
and reward processes, and
promotional data to ensure
we deliver on our commitment
to provide equitable, fair and
consistent pay arrangements to
team members.
The analysis shows that gender
representation contributes
to gender pay equity at the
organisation level. While this
is not necessarily a pay related
issue it highlights that uneven
participation at all levels does
mean the continuing emphasis
and focus on women in leadership
across the Group is necessary.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019
Remuneration
Report (Audited)
SERVICE AGREEMENTS
63
F O R T H E Y E A R
E N D E D 2 9 J U N E 2 0 1 9
Remuneration and other terms of employment for ongoing Executive 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 below.
All contracts with Executive KMP may be terminated early by either party as shown in Table 19:
Table 19:
Name
Term of
Agreement
Agreement
Commencement
Date(1)
Review Term(2)
Termination
payment
Commencement
date with Super Retail
Group
A M Heraghty
Ongoing
20 February 2019
Annual
12 months(3)
27 April 2015
A Brandon
D J Burns
Ongoing
31 March 2018
Annual
6 months(3)
31 March 2018
Ongoing
3 October 2018
Annual
6 months(3)
3 December 2012
C D Wilesmith
Ongoing
1 October 2018
Annual
6 months(3)
18 September 2007
G Williams
P Birtles
E Berchtold
Ongoing
1 April 2019
Annual
6 months(3)
Ongoing
1 December 2016
Annual
12 months(3)
1 April 2019
30 April 2001
Ongoing
15 May 2017
Annual
6 months(3)
5 November 2011
(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.
PERIOD OF RESTRAINT
Executive KMP have post-employment restraints within their service contracts.
After cessation of employment for any reason, 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. These restraints range from periods of 12 months for Group MD
and CEO to 3 – 12 months for other Executive KMP.
MINIMUM SECURITIES HOLDING POLICY
Commencing in 2015 financial year, the Board introduced a minimum shareholding requirement for Non-
Executive Directors valued at a minimum of 100% of one year’s pre-tax base fees. The Group MD and CEO to
be 150% of one year’s pre-tax base salary; and for other Executive KMP to be 100% of one year’s pre-tax base
salary. This is to be achieved by October 2020 or within five years from the commencement of employment.
This requirement may be extended due to reduced vesting. This is to further align the interest of Non-Executive
Directors and Executive KMP with those of shareholders (referenced in Tables 16 and 17).
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 64
2018 – 2019
Financial
Report
F O R T H E Y E A R E N D E D 2 9 J U N E 2 0 1 9
Super Retail Group Limited
ABN: 81 108 676 204
ASX Code: SUL
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019 S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 65
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 29 June 2019
CONTINUING OPERATIONS
Revenue from continuing operations
Other income from continuing operations
Total revenues and other income
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 and joint ventures
Total expenses
Profit before income tax
Income tax expense
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:
Owners of Super Retail Group Limited
Non-controlling interests
Earnings per share for profit attributable to the ordinary equity holders
of the Company:
Basic earnings per share
Diluted earnings per share
Notes
5
2019
$m
2,710.4
2.8
2,713.2
2018
$m
2,570.4
8.5
2,578.9
(1,488.2)
(1,415.5)
(347.8)
(81.9)
(215.5)
(366.4)
(21.3)
(2.6)
(332.3)
(83.9)
(213.0)
(339.4)
(17.7)
(1.0)
(2,523.7)
(2,402.8)
189.5
(50.3)
139.2
139.3
(0.1)
139.2
(6.3)
2.7
(3.6)
135.6
135.7
(0.1)
135.6
70.6
69.9
176.1
(48.8)
127.3
128.3
(1.0)
127.3
6.2
(0.9)
5.3
132.6
133.6
(1.0)
132.6
65.0
64.5
6
6
13
18
18
16
16
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
66 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
CONSOLIDATED BALANCE SHEET
As at 29 June 2019
2019
Notes
$m
2018
Restated*
$m
2017
Restated*
$m
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax asset
Derivative financial instruments
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Other financial assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Interest-bearing liabilities
Current tax liabilities
Provisions
Derivative financial instruments
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
7
8
13
15
9
10
23(b)
11
12
13
14
15
11
12
13
14
17
18
18
Capital and reserves attributable to owners of Super Retail Group Limited
Non-controlling interests
TOTAL EQUITY
*Refer note 3(b) for details regarding the restatement as a result of a prior period error.
7.5
37.6
560.2
1.9
2.8
15.2
23.8
545.5
-
6.8
19.9
42.6
481.5
-
-
610.0
591.3
544.0
267.9
894.2
6.9
1,169.0
1,779.0
270.4
891.6
9.3
1,171.3
1,762.6
264.5
750.1
-
1,014.6
1,558.6
362.7
342.3
253.7
3.4
-
107.3
6.2
479.6
49.5
390.8
23.4
19.7
483.4
963.0
3.0
9.6
105.0
1.5
461.4
49.1
435.1
20.1
21.7
526.0
987.4
2.6
1.5
96.3
3.1
357.2
44.2
398.0
7.1
21.5
470.8
828.0
816.0
775.2
730.6
542.3
8.2
265.9
816.4
(0.4)
816.0
542.3
10.3
223.3
775.9
(0.7)
775.2
542.3
3.5
186.7
732.5
(1.9)
730.6
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 29 June 2019
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 67
Contributed
Equity
Reserves Retained
Earnings
Restated*
Notes
$m
$m
$m
Total
Restated*
$m
542.3
-
3.5
-
210.7
(24.0)
756.5
(24.0)
Non-
Controlling
Interests
$m
(1.9)
-
Total
Equity
Restated*
$m
754.6
(24.0)
542.3
3.5
186.7
732.5
(1.9)
730.6
Balance at 1 July 2017
Correction of prior period error (net of tax)
Restated total equity at the beginning of the
financial period
Profit for the period
Other comprehensive loss 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
Transactions with non-controlling interests
21
18
23(b)
Change in ownership interest in controlled entities
23(a)
Balance at 30 June 2018
542.3
Profit for the period
Other comprehensive loss 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
21
18
Change in ownership interest in controlled entities
23(a)
-
-
-
-
-
-
-
Balance at 29 June 2019
542.3
-
-
-
-
-
-
-
-
-
5.3
5.3
128.3
-
128.3
128.3
5.3
133.6
(91.7)
(91.7)
-
1.1
0.6
(0.2)
1.5
10.3
-
-
-
(91.7)
223.3
-
139.3
(3.6)
(3.6)
-
139.3
1.1
0.6
(0.2)
(90.2)
775.9
139.3
(3.6)
135.7
-
1.3
0.2
1.5
8.2
(96.7)
(96.7)
-
-
(96.7)
265.9
1.3
0.2
(95.2)
816.4
(1.0)
-
(1.0)
-
-
2.0
0.2
2.2
(0.7)
(0.1)
-
(0.1)
-
-
0.4
0.4
(0.4)
127.3
5.3
132.6
(91.7)
1.1
2.6
-
(88.0)
775.2
139.2
(3.6)
135.6
(96.7)
1.3
0.6
(94.8)
816.0
*Refer note 3(b) for details regarding the restatement as a result of a prior period error.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
68 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 29 June 2019
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
2,995.8
(2,438.0)
2,850.1
(2,268.6)
Notes
2019
$m
2018
$m
Rental payments
- external
- related parties
Income taxes paid
Net cash inflow from operating activities
19
Cash flows from investing activities
Payments for property, plant and equipment and computer software
Proceeds from sale of property, plant and equipment
Payments for acquisitions of investments in associates/joint ventures
Acquisition of subsidiary, net of cash acquired
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Finance lease payments
Borrowing costs paid
Interest paid
Interest received
Dividends paid to Company’s shareholders
Net cash (outflow) from financing activities
Net increase / (decrease) 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
23(b)
23(a)
21
(250.6)
(12.1)
(54.2)
240.9
(89.8)
-
(0.7)
-
(90.5)
946.0
(986.0)
(3.3)
(2.4)
(16.0)
-
(96.7)
(158.4)
(8.0)
15.2
0.3
7.5
(218.5)
(10.8)
(43.8)
308.4
(107.1)
-
(0.3)
(133.8)
(241.2)
994.5
(955.5)
(2.7)
(0.3)
(16.2)
0.1
(91.7)
(71.8)
(4.6)
19.9
(0.1)
15.2
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the period ended 29 June 2019
TABLE OF CONTENTS
Reporting entity
Summary of significant accounting policies
Critical accounting estimates, judgements and errors
Segment information
Revenue and other income from continuing operations
Expenses from continuing operations
Basis of Preparation
1.
2.
3.
Group Performance
4.
5.
6.
Assets and Liabilities
Trade and other receivables
7.
Inventories
8.
Property, plant and equipment
9.
Intangible assets
10.
Trade and other payables
11.
Interest-bearing liabilities
12.
Income taxes
13.
Provisions
14.
15.
Financial assets and financial liabilities
Capital Structure, Financing and Risk Management
Earnings per share
16.
17. Contributed equity
18.
19.
20.
21. Capital management
Group Structure
22.
23.
24. Deed of cross guarantee
25.
26.
Other
27.
28.
29.
30. Contingencies
31. Commitments
32. Net tangible asset backing
33.
Key management personnel disclosures
Share-based payments
Remuneration of auditors
Parent entity financial information
Investments in controlled entities
Related party transactions
Business combinations
Events occurring after balance date
Reserves and retained earnings
Reconciliation of profit from ordinary activities after income tax to net cash inflow from operating activities
Financial risk management
70
70
70
74
75
75
77
78
79
79
80
80
82
85
85
86
91
93
96
96
97
98
99
100
106
107
107
108
110
112
113
114
114
114
115
116
116
117
117
70 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
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 29 June 2019 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 and apparel.
2.
Summary of significant accounting policies
This section sets out the principal accounting policies upon which the Group’s consolidated financial statements are prepared as a
whole. Specific accounting policies are described in their respective Notes to the consolidated financial statements. 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 29 June 2019 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.
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 (refer note 23 - Business combinations),
regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The
consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-
existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values as at
the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either
at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair
value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is
recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the
measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
2.
Summary of significant accounting policies (continued)
(b)
Principles of consolidation (continued)
Business combinations (continued)
(iii)
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.
Investments in associates and joint ventures
(iv)
Associates and joint ventures are entities over which the Group has significant influence or joint control but not control. They 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 changed 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)
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.
72 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
2.
(d)
Summary of significant accounting policies (continued)
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.
(e)
Rounding of amounts
The economic entity is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191,
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 instrument to the nearest hundred thousand dollars.
(f)
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 29 June 2019, the Group is reporting on the 52 week period that
began 1 July 2018 and ended 29 June 2019. For the period to 30 June 2018, the Group is reporting on the 52 week period that
began 2 July 2017 and ended 30 June 2018.
(g)
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 9 Financial Instruments
AASB 15 Revenue from Contracts with Customers
AASB 9 Financial Instruments Treatments
AASB 9 replaces the multiple classification and measurement models in AASB 139 Financial instruments: Recognition and
measurement with a single model that has initially only two classification categories: amortised cost and fair value.
Classification of debt assets will be driven by the entity’s business model for managing the financial assets and the contractual cash
flow characteristics of the financial assets. A debt instrument is measured at amortised cost if: a) the objective of the business model
is to hold the financial asset for the collection of the contractual cash flows, and b) the contractual cash flows under the instrument
solely represent payments of principal and interest.
All other debt and equity instruments, including investments in complex debt instruments and equity investments, must be
recognised at fair value.
All fair value movements on financial assets are taken through the statement of profit or loss, except for equity investments that are
not held for trading, which may be recorded in the statement of profit or loss or in reserves (without subsequent recycling to profit or
loss).
For financial liabilities that are measured under the fair value option entities will need to recognise the part of the fair value change
that is due to changes in the their own credit risk in other comprehensive income rather than profit or loss.
The hedge accounting rules align hedge accounting more closely with common risk management practices. As a general rule, it
will be easier to apply hedge accounting going forward. However as permitted by AASB 9, the Group continues to apply hedge
accounting under AASB 139 instead of the requirements of the new standard.
Also introduced was a new impairment model with the introduction of:
• a third measurement category (FVOCI) for certain financial assets that are debt instruments
• a new expected credit loss (ECL) model which involves a three-stage approach whereby financial assets move through the
three stages as their credit quality changes. The stage dictates how an entity measures impairment losses and applies the
effective interest rate method. A simplified approach is permitted for financial assets that do not have a significant financing
component (eg trade receivables). On initial recognition, entities will record a day-1 loss equal to the 12 month ECL (or lifetime
ECL for trade receivables), unless the assets are considered credit impaired.
There are no significant impacts on the Group’s consolidated financial statements resulting from the application of AASB 9.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
2.
(g)
Summary of significant accounting policies (continued)
New and amended standards adopted by the Group (continued)
AASB 15 Revenue from Contracts with Customers
The standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer – so the
notion of control replaces the existing notion of risks and rewards.
A new five-step process must be applied before revenue can be recognised:
•
identify contracts with customers
•
identify the separate performance obligation
• determine the transaction price of the contract
• allocate the transaction price to each of the separate performance obligations, and
•
recognise the revenue as each performance obligation is satisfied.
There are no significant impacts on the Group’s consolidated financial statements resulting from the application of AASB 15.
(h)
Impact of standards issued but not yet applied by the Group
AASB 16 Leases – effective 30 June 2019
AASB 16 Leases (AASB 16) is applicable to the Group for the period commencing 30 June 2019 and replaces the current standard
AASB 117 Leases. AASB 16 requires lessees to recognise most leases on balance sheet as lease liabilities, with corresponding right-of-
use (ROU) assets.
As a result of adoption of AASB 16, the nature of expenses relating to leases will change. Operating lease expenses are currently
recognised on a straight-line basis. However, under AASB 16 the Group will recognise depreciation expense for ROU assets and
interest expense for lease liabilities. There will also be an impact to both the operating and financing activities for cash flows where
cash paid for operating leases will be split between principal and interest repayments as a financing activity instead of as rental
payments in operating cash flows.
The Group expects to adopt AASB 16 using the modified retrospective approach with election of the option to retrospectively
measure the ROU assets using the transition discount rate. Furthermore, the Group plans to elect the following transition practical
expedients:
•
To retain the classification of existing contracts as leases instead of reassessing whether existing contracts are or contain a lease
at the date of initial application;
Lessee arrangements with a short remaining term from date of initial application or leases assessed as low value will be
disregarded;
•
• Discount rates applied to a portfolio of leases with similar characteristics; and
• Use of hindsight with regards to determination of the lease term.
Under this approach the cumulative effect of adoption will be recognised as an adjustment to opening retaining earnings at 30
June 2019, with no restatement of comparative information.
The Group has materially completed the impact assessment of adopting AASB 16. The impact on the Consolidated Balance sheet
as at 30 June 2019 is expected to be as follows:
• An increase of between $900 million to $950 million to lease liabilities;
• An increase of between $800 million to $850 million to ROU assets; and
• A resulting adjustment to retained earnings of between $50 million to $150 million.
The financial impact on the Consolidated Statement of Comprehensive Income for the year of adoption is estimated as follows:
• A decrease in operating lease rentals of between $210 million to $220 million
• An increase in depreciation expense of between $150 million and $175 million; and
• An increase in interest expense of between $25m to $35 million.
There will be a nil net effect to the Consolidated Statement of Cashflows as a result of adopting AASB 16, as operating lease
payments will continue to be paid as previously, however the cash outflow will be reclassified to financing activities rather than
operating activities.
The estimated financial impacts above could be different to actuals due to changes in lease portfolio, incremental borrowing rate
used and foreign currency fluctuations.
As at the reporting date, the Group has non-cancellable operating lease commitments of $957.2 million (refer note 31 -
Commitments).
Interpretation 23 Uncertainty over Income Tax Treatments – effective 1 July 2020
The interpretation explains how to recognise and measure deferred and current income tax assets and liabilities where there is
uncertainty over a tax treatment. In particular, it discusses:
• how to determine the appropriate unit of account, and that each uncertain tax treatment should be considered separately or
together as a Group, depending on which approach better predicts the resolution of the uncertainty
74 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
2.
(h)
•
•
•
•
Summary of significant accounting policies (continued)
Impact of standards issued but not yet applied by the Group (continued)
that the Group should assume a tax authority will examine the uncertain tax treatments and have full knowledge of all related
information, ie that detection risk should be ignored
that the Group should reflect the effect of the uncertainty in its income tax accounting when it is not probable that the tax
authorities will accept the treatment
that the impact of the uncertainty should be measured using either the most likely amount or the expected value method,
depending on which method best predicts the resolution of the uncertainty, and
that the judgements and estimates made must be reassessed whenever circumstances have changed or there is new
information that affects the judgements.
While there are no new disclosure requirements, there is a reminder of the general requirement to provide information about
judgements and estimates made in preparing the financial statements.
3.
Critical accounting estimates, judgements and errors
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 included in the following Notes to the consolidated
financial statements:
•
•
•
•
•
Note 8 – Inventories;
Note 9 – Property, plant and equipment;
Note 10 – Intangible assets;
Note 14 – Provisions;
Note 23 – Business combinations.
(b)
Correction of prior period error
During the reporting period, the Group completed a comprehensive review of employment arrangements across the business. This
review identified an underpayment of overtime and some allowances to retail managers. This underpayment is in addition to the
discovery of a related underpayment of overtime and allowances for team members involved in store set-up activities identified
and recognised in the previous financial year.
An estimate has been completed for the period between financial years 2013 to 2018. The annual amounts were not material to
profit for any of the individual years to which they related. A total of $24.0 million after tax is included in the restatement of retained
earnings as required by AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. In addition, the Group has
recognised net $8.9 million before tax ($6.2 million after tax) as an expense in 2019 relating to revision of wages underpayment
estimates and associated remediation costs - refer note 4 (b). The estimate has been revised based on the ongoing remediation
considerations and additional data.
Critical accounting estimates and judgements have been made in the calculations as to the number of overtime hours, allowance
payments and the valuation based on assumed work patterns. Any revisions of the estimates will be recognised in the period the
revisions are identified.
The error has been corrected by restating each of the affected financial statement line items for the prior periods as follows:
Balance sheet
(extract)
As previously
stated
30 June 2018
$m
Increase/
(decrease)
30 June 2018
$m
Provisions – current
Deferred tax liabilities
Net assets
Retained earnings
Total equity
71.0
30.1
799.2
247.3
799.2
34.0
(10.0)
(24.0)
(24.0)
(24.0)
Restated
30 June 2018
$m
105.0
20.1
775.2
223.3
775.2
As previously
stated
2 July 2017
$m
Increase/
(decrease)
2 July 2017
$m
62.3
17.1
754.6
210.7
754.6
34.0
(10.0)
(24.0)
(24.0)
(24.0)
Restated
2 July 2017
$m
96.3
7.1
730.6
186.7
730.6
There was no profit and loss impact for the year ended 30 June 2018, and no impact on basic or diluted earnings per share.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
4.
(a)
Segment information
Description of segments
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.
During the period the operating segments changed due to how the operations are currently reviewed. The previous Outdoor
segment has been split into two segments being BCF and Macpac. The Macpac segment incorporates the previous Rays business
which was fully transitioned to Macpac during the period.
No operating segments have been aggregated to form the below reportable operating segments. This results in the following
business segments:
Super Cheap Auto (SCA): retailing of auto parts and accessories, tools and equipment;
Rebel: retailing of sporting equipment and apparel;
BCF: retailing of boating, camping, outdoor equipment, fishing equipment and apparel; and
Macpac: retailing of apparel, camping and outdoor equipment.
(b)
Segment information provided to the Group Managing Director and Chief Executive Officer
Detailed below is the information provided to the Group Managing Director and Chief Executive Officer for reportable segments.
Items not included in Normalised Net Profit After Tax (Normalised NPAT) are one-off charges relating to business restructuring, equity
accounted non-core businesses, divestments and prior year wages underpayment and remediation costs.
Other items not included in total segment NPAT are determined by management based on their nature and size. They are items of
income or expense which are, either individually or in aggregate, material to the Group or to the relevant business segment but are
not in the ordinary course of business (for example reorganisations), or are part of the ordinary activities of the business but are
unusual due to their size and nature (for example professional fees in relation to remediation activities).
For the period ended 29 June 2019
SCA
$m
Rebel
$m
BCF
$m
Macpac
$m
Total
continuing
operations
$m
Inter-segment
eliminations/
unallocated
$m
Consolidated
$m
1,016.4
-
1.5
1,017.9
122.6
(28.8)
93.8
514.6
-
0.2
514.8
40.2
(19.4)
20.8
138.8
-
0.1
138.9
15.6
(2.6)
13.0
2,710.4
-
1.9
2,712.3
334.5
(86.3)
248.2
-
-
0.9
0.9
(19.8)
(0.3)
(20.1)
Segment Revenue and Other Income
External segment revenue(1)
Inter segment sales
Other income
Total segment revenue and other
income
Segment EBITDA(2)
1,040.6
-
0.1
1,040.7
156.1
(35.5)
120.6
Segment depreciation and amortisation
Segment EBIT result
Net finance costs
Total segment NPBT
Segment income tax expense(3)
Normalised NPAT
Other items not included in the total segment NPAT(4)
Profit for the period attributable to:
Owners of Super Retail Group Limited
Non-controlling interests
Profit for the period
2,710.4
-
2.8
2,713.2
314.7
(86.6)
228.1
(21.3)
206.8
(54.3)
152.5
(13.2)
139.3
(0.1)
139.2
(1) Includes non-controlling interest (NCI) revenue of $1.3 million.
(2) Adjusted for $8.9 million of prior year store wages underpayment and remediation costs, $4.4 million of net business restructuring costs including gains
of $1.7 million due to the release of previous restructuring provisions, $2.2 million of equity accounted losses, losses on divestment/investments of $1.7
million and NCI operating result of $0.1 million.
(3) Segment income tax expense of $54.3 million excludes $4.0 million relating to the tax effect of prior year store wages underpayment and remediation
costs and business restructuring costs.
(4) Includes $8.9 million related to the revision of wages underpayment estimates and associated remediation costs, $4.4 million of net business
restructuring costs including gains of $1.7 million due to the release of previous restructuring provisions, $2.2 million of equity accounted losses and
losses on divestment/investments of $1.7 million. Total related income tax impact of $4.0 million.
Other items not included in total segment NPAT – 2019
Prior Year Store Wages Underpayment and Remediation Costs
The Group has recognised net $8.9 million before tax ($6.2 million after tax) as an expense in 2019 relating to revision of wages
underpayment estimates and associated remediation costs – refer note 3 (b).
Business Restructuring Costs
During the reporting period there was both organisational restructure and a review of current and prior restructuring provision
requirements. Net costs of $4.4 million before tax ($3.1 million after tax) were recognised which will result in an on-going lower cost
base for these expenses. Included in the $4.4 million is $1.7 million before tax ($1.2 million after tax) of restructure costs recognised in
previous years that were released.
76 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
4.
(b)
Segment information (continued)
Segment information provided to the Group Managing Director and Chief Executive Officer (continued)
Equity Accounted Losses
During the 2018 financial year, the Group ceased to control Autoguru and now accounts for its share in this associate using the
equity method. Equity accounted losses relating to Autoguru amount to $2.2 million during the period and have been excluded
from normalised NPAT.
Losses on Divestment/Investments
During the period the Group sold its shares in Youcamp – refer note 23 (a). The net loss on divestment was $0.6 million (nil tax). In
addition a review of the investment value in Autocrew has resulted in a net loss of $1.1 million being excluded from normalised NPAT.
For the period ended 30 June 2018
SCA
$m
Rebel
$m
BCF
$m
Macpac
$m
Total
continuing
operations
$m
Inter-segment
eliminations/
unallocated
$m
Consolidated
$m
1,007.0
148.2
1,006.4
-
0.6
Segment Revenue and Other Income
External segment revenue(1)
Inter segment sales
Other income(2)
Total segment revenue and other
income
Segment EBITDA(3)
Segment depreciation and
amortisation(4)
Segment EBIT result
Net finance costs
Total segment NPBT
Segment income tax expense(5)
Normalised NPAT
Other items not included in the total segment NPAT(6)
Profit for the period attributable to:
Owners of Super Retail Group Limited
Non-controlling interests
(31.8)
116.4
979.2
-
0.7
979.9
115.7
(24.2)
91.5
498.3
-
0.2
498.5
44.2
(16.9)
27.3
81.5
-
-
81.5
3.7
(1.4)
2.3
2,565.4
-
1.5
2,566.9
311.8
(74.3)
237.5
5.7
(0.7)
0.1
5.1
(17.7)
(0.2)
(17.9)
2,571.1
(0.7)
1.6
2,572.0
294.1
(74.5)
219.6
(17.7)
201.9
(56.6)
145.3
(17.0)
128.3
(1.0)
Profit for the period
(1) Includes non-controlling interest (NCI) revenue of $1.6 million.
(2) Excludes gain on divestment of controlled entities $6.9 million.
(3) Adjusted for NCI operating result of $1.0 million, $16.9 million of business restructuring costs, $4.0 million of acquisition costs, $8.6 million of prior year
127.3
store set-up costs and net gain on divestment of $4.7 million.
(4) Adjusted for $5.2 million provision for asset depreciation and impairment relating to business restructuring costs.
(5) Segment income tax expense of $56.6 million excludes $7.8 million relating to the tax effect of prior year store set-up costs and business restructuring
costs.
(6) Includes $24.8 million of costs consisting of business restructuring costs $16.9 million, acquisition costs $4.0 million, prior year store set-up costs $8.6
million and net gain on divestment of $4.7 million and the related income tax effect of $7.8 million.
Other items not included in total segment NPAT - 2018
Rebel
During the 2018 reporting period the Group completed the program of converting all Amart Sports stores to Rebel in line with the
strategy to sustain the Group’s position as the market leader in sports retailing. In June 2017 the Group recognised $34.0 million of
after tax restructuring costs associated with the rebranding. A further $2.7 million of after tax costs have been incurred during the
current reporting period consistent with the announcement made to the market on 25 July 2017.
Macpac
During the 2018 reporting period the Group acquired the Macpac group of companies as announced to the market on 20 February
2018. Following the acquisition of Macpac, the Group has completed the trial of the Rays business and will integrate its profitable
stores into the Macpac business in the fourth quarter of the 2019 financial year. Costs associated with the business restructuring and
integration incurred during the current reporting period total $13.0 million before tax ($9.1 million after tax), consistent with that
announced to the market. Transaction costs to complete the acquisition of Macpac total $4.0 million before tax ($3.9 million after
tax).
Gain on divestment – Autoguru
During the 2018 reporting period the Group’s investment in Autoguru decreased to 49.5% - refer note 23 (b). The net gain on
divestment partially offset by associated trading losses was $4.7 million before tax (nil tax) and has been excluded from normalised
NPAT.
Prior year store set-up costs
The Group has identified that team members involved in store set-up activities should have received additional amounts to the
amounts paid. A remediation program is underway and will be completed in 2019. The amount relating to prior periods of $8.6
million, ($6.0 million after tax) is not included in normalised NPAT.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
4.
Segment information (continued)
(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)
Super Cheap Auto (SCA): retailing of auto parts and accessories, tools and equipment;
Rebel: retailing of sporting equipment and apparel;
BCF: retailing of boating, camping, outdoor equipment, fishing equipment and apparel; and
Macpac: retailing of apparel, camping and outdoor equipment.
New Zealand
Super Cheap Auto (SCA): retailing of auto parts and accessories, tools and equipment; and
Macpac: retailing of apparel, camping and outdoor equipment.
Total revenue and other income from continuing operations
(i)
Australia
New Zealand
Total non-current assets
(ii)
Australia
New Zealand
Significant Accounting Policies
2019
$m
2,528.9
184.3
2,713.2
1,023.3
145.7
1,169.0
2018
$m
2,442.7
136.2
2,578.9
1,093.1
78.2
1,171.3
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).
5.
Revenue and other income from continuing operations
Revenue from the sale of goods
Other income
Insurance claims
Reversal of contingent consideration
Gain on divestment
Sundry
Total revenues and other income
Significant Accounting Policies
2019
$m
2,710.4
0.7
1.1
-
1.0
2018
$m
2,570.4
0.5
-
6.9
1.1
2,713.2
2,578.9
Revenue from the sale of goods is recognised when a group entity sells a product to the customer.
Sale of goods – retail
Payment of the transaction price is due immediately when the customer purchases products and takes delivery in store. It is the
Group’s policy to sell its products to the end customer with a right of return. Therefore, a refund liability (included in trade and
other payables) and a right to the returned goods (included in other current assets) are recognised for the products expected
to be returned. Accumulated experience is used to estimate such returns at the time of sale at a portfolio level (expected value
method). Because the number of products returned has been steady for years, it is highly probable that a significant reversal in
the cumulative revenue recognised will not occur. The validity of this assumption and the estimated amount of returns are
reassessed at each reporting date.
The group’s obligation to repair or replace faulty products under the standard warranty terms is recognised as a provision.
Interest income
Interest income is recognised using the effective interest method. When a receivable is impaired, the Group reduces the
carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest
rate of the instrument. Interest income on impaired loans is recognised using the original effective interest rate.
78 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
6.
Expenses from continuing operations
Profit before income tax includes the following specific gains and expenses:
Expenses
Net loss on disposal of property, plant and equipment
Share of net loss from associates and joint ventures accounted for using the equity
method
Depreciation
Plant and equipment
Motor vehicles
Computer equipment
Total depreciation
Amortisation and impairment
Computer software amortisation
Plant and equipment impairment
Total amortisation and impairment
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
Foreign exchange gains and losses
Net foreign exchange (gain)/ loss
Significant Accounting Policies
Depreciation, amortisation and impairment
Refer to notes 9 and 10 for details on depreciation, amortisation and impairment.
2019
$m
0.2
2.6
41.1
0.1
15.1
56.3
30.3
-
30.3
21.3
-
21.3
38.0
502.2
540.2
232.8
3.3
236.1
2018
$m
-
1.0
40.9
0.1
14.1
55.1
22.2
2.4
24.6
17.8
(0.1)
17.7
36.1
474.7
510.8
229.2
3.4
232.6
(3.4)
2.4
Finance costs
Finance costs are recognised in the period in which these are incurred and are expensed in the period to which the costs relate.
Generally costs such as discounts and premiums incurred in raising borrowings are amortised on an effective yield basis over the
period of the borrowing. Finance costs include:
•
• amortisation of discounts or premiums relating to borrowings;
• amortisation of ancillary costs incurred in connection with the arrangement of borrowings;
•
•
interest on bank overdrafts and short-term and long-term borrowings;
finance lease charges; and
interest revenue.
Employee benefits
Refer to note 14 for details on employee provisions and superannuation.
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.
Foreign exchange gains and losses
Refer to note 2 (c) for details on foreign exchange gains and losses.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 79
7.
Trade and other receivables
Current
Trade receivables
Loss allowance
Net trade receivables
Other receivables
Prepayments
Net current trade and other receivables
(a)
Impaired trade receivables
2019
$m
16.0
(0.3)
15.7
14.2
7.7
37.6
2018
$m
10.0
(0.6)
9.4
7.7
6.7
23.8
As at 29 June 2019 current trade receivables of the Group with a nominal value of $0.3 million (2018: $0.6 million) were impaired and
provided for. The individually impaired receivables mainly relate to wholesalers with whom the Group no longer trade.
(b)
Past due but not impaired
As at 29 June 2019, trade receivables of $3.5 million (2018: $2.4 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
Significant Accounting Policies
2019
2018
$m
0.8
0.3
2.4
3.5
$m
0.2
0.7
1.5
2.4
Trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They
are generally due for settlement within 30 days and therefore are all classified as current. Trade receivables are recognised
initially at the amount of consideration that is unconditional unless they contain significant financing components, when they
are recognised at fair value. The group holds the trade receivables with the objective to collect the contractual cash flows and
therefore measures them subsequently at amortised cost using the effective interest method. Details about the group’s
impairment policies and the calculation of the loss allowance are provided in note 15.
The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk
characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same
risk characteristics as the trade receivables for the same types of contracts. The group has therefore concluded that the
expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of sales over a period of 24 months and the corresponding historical
credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking
information on macroeconomic factors affecting the ability of the customers to settle the receivables. The group has identified
the GDP and the unemployment rate of the countries in which it sells its goods and services to be the most relevant factors, and
accordingly adjusts the historical loss rates based on expected changes in these factors.
On that basis, the loss allowance as at period end was determined for both trade receivables to be minor.
80 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
8.
Inventories
Finished goods, at lower of cost or net realisable value
(a)
Inventory expense
2019
$m
560.2
2018
$m
545.5
Inventories recognised as expense during the period ended 29 June 2019 amounted to $1,408.3 million (2018: $1,338.7 million).
Write-downs of inventories to net realisable value recognised as an expense during the period ended 29 June 2019 amounted to
$1.0 million (2018: $9.4 million). The expense in the 2018 financial year was impacted by provisioning for the exit of the Ray’s stock
lines. This expense has been included in cost of sales of goods within the consolidated statement of comprehensive income.
Significant Accounting Policies
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.
Critical accounting estimates and assumptions
Net realisable value
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.
9.
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
2019
$m
435.2
(208.0)
227.2
0.6
(0.5)
0.1
106.8
(66.2)
40.6
2018
$m
407.3
(180.4)
226.9
0.6
(0.4)
0.2
104.7
(61.4)
43.3
Total net property, plant and equipment
267.9
270.4
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
9.
(a)
Property, plant and equipment (continued)
Reconciliations
Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below:
2019
Carrying amounts at 30 June 2018
Additions
Depreciation
Disposals
Foreign currency exchange differences
Carrying amounts at 29 June 2019
2018
Carrying amounts at 1 July 2017
Additions
Acquisition of subsidiary (note 23(a))
Depreciation
Impairment(1)
Divestment of subsidiary (note 23(b))
Foreign currency exchange differences
Carrying amounts at 30 June 2018
Plant and
equipment
$m
Motor vehicles
$m
Computer
equipment
$m
226.9
41.0
(41.1)
-
0.4
227.2
217.2
47.9
5.6
(40.9)
(2.4)
(0.1)
(0.4)
226.9
0.2
-
(0.1)
-
-
0.1
0.2
-
0.1
(0.1)
-
-
-
0.2
43.3
12.4
(15.1)
(0.2)
0.2
40.6
47.1
10.2
0.2
(14.1)
-
-
(0.1)
43.3
Total
$m
270.4
53.4
(56.3)
(0.2)
0.6
267.9
264.5
58.1
5.9
(55.1)
(2.4)
(0.1)
(0.5)
270.4
(1) During 2018 certain items of Plant and equipment relating to assets in leased locations associated with the Rebel business transformation activities
were considered to be impaired – refer note 4 – Segment information.
Finance Leases
The carrying value of computer equipment held under finance leases as at 29 June 2019 was $8.1 million (2018: $9.9 million).
Additions during the year were $1.0 million (2018: $1.0 million). Leased assets are pledged as security for the related finance lease
liability.
Significant Accounting Policies
Carrying value
Property, plant and equipment are stated at historical cost, less any accumulated depreciation or amortisation. Historical costs
include expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All repairs and maintenance are charged to the income statement during the financial period in which they
are incurred.
Depreciation and amortisation of property, plant and equipment
Depreciation and amortisation are calculated on a straight line basis for accounting and on a diminishing value basis for tax.
Depreciation and amortisation allocates the cost of an item of property, plant and equipment net of residual values over the
expected useful life of each asset to the consolidated entity. Estimates of remaining useful lives and residual values are
reviewed and adjusted, if appropriate, at each statement of financial position date.
The depreciation rates used for each class of assets are:
Plant and equipment
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.
82 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
9.
Property, plant and equipment (continued)
Significant Accounting Policies (continued)
Gains and losses
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.
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.
Leases
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.
Critical accounting estimates and assumptions
Impairment
Assets that are subject to depreciation 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).
10.
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 and impairment charge
Net brand names
Total net intangible assets
2019
$m
528.6
(2.1)
526.5
240.7
(126.3)
114.4
311.8
(58.5)
253.3
2018
$m
528.0
(2.1)
525.9
213.9
(101.5)
112.4
311.8
(58.5)
253.3
894.2
891.6
(a)
Reconciliations of the carrying amounts for each class of intangible asset are set out below:
Reconciliations
2019
Carrying amounts at 30 June 2018
Additions
Adjustment to provisional accounting (note 23(a))
Amortisation charge
Carrying amounts at 29 June 2019
Goodwill
$m
Computer
Software
$m
Brand Name
$m
525.9
-
0.6
-
526.5
112.4
32.3
-
(30.3)
114.4
253.3
-
-
-
253.3
Totals
$m
891.6
32.3
0.6
(30.3)
894.2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 83
10.
Intangible assets (continued)
(a)
Reconciliations (continued)
2018
Carrying amounts at 1 July 2017
Additions
Acquisition of subsidiary (note 23(a))
Divestment of subsidiary (note 23(b))
Amortisation charge
Carrying amounts at 30 June 2018
(b)
Impairment tests for goodwill
Goodwill
$m
Computer
Software
$m
Brand Name
$m
447.6
-
79.0
(0.7)
-
525.9
93.5
41.1
0.2
(0.2)
(22.2)
112.4
209.0
-
44.3
-
-
253.3
Totals
$m
750.1
41.1
123.5
(0.9)
(22.2)
891.6
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
Super Cheap Auto
Rebel
BCF
Macpac
Total
2019
$m
45.3
376.5
25.1
79.6
526.5
2018
$m
45.3
376.5
25.1
79.0
525.9
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 12.4% (2018: 14.0%) and terminal growth rate of 3.0% (2018: 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. Management does not consider that a
reasonably possible change in any of the key assumptions would cause the carrying value of any of the CGU’s to exceed their
recoverable amounts.
(c)
Impairment tests for the useful life for brands
No amortisation is provided against the carrying value of the purchased brand names on the basis that they are considered to have
indefinite useful lives.
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 carrying values of the purchased brand names are:
Brand
Rebel
Macpac
Total
2019
$m
209.0
44.3
253.3
2018
$m
209.0
44.3
253.3
84 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
10.
Intangible assets (continued)
(c)
Impairment tests for the useful life for brands (continued)
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 12.4% (2018: 14.0%) and terminal growth rate of 3.0% (2018: 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 brand names currently exceeds their carrying values. Management does not consider that a
reasonably possible change in any of the key assumptions would cause the carrying value of any of the brand names to exceed
their recoverable amounts.
Significant Accounting Policies
Goodwill
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 is not amortised. Instead, it is 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
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 are amortised over their useful lives.
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
10% – 33.3%
Nil
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. Brand names are determined to have indefinite useful lives and therefore do not attract amortisation.
Research and development
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 85
10.
Intangible assets (continued)
Significant Accounting Policies (continued)
Other items of expenditure
Significant items of expenditure, such as costs incurred in store set-ups, are expensed in the financial period in which these costs
are incurred.
Critical accounting estimates and assumptions
Capitalised software costs and useful lives
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 impairment of indefinite useful life non-financial assets
The Group tests annually whether indefinite useful life non-financial assets have suffered any impairment, in accordance with
the accounting policy stated above. The recoverable amounts of cash-generating units have been determined based on
value-in-use calculations. These calculations require the use of assumptions. Refer above for details of these assumptions.
11.
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
Significant Accounting Policies
2019
$m
274.8
82.5
5.4
362.7
49.5
49.5
2018
$m
255.6
81.2
5.5
342.3
49.1
49.1
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.
Leases
Refer to note 6 for details on the straight lining of lease expenses.
12.
Interest-bearing liabilities
Current
Finance leases - secured by leased asset
Total current interest-bearing liabilities
Non-current
Finance leases - secured by leased asset
Bank debt funding facility - unsecured(1)
Total non-current interest-bearing liabilities
(1)Net of borrowing costs capitalised of $3.0 million (2018: $1.4 million).
2019
$m
3.4
3.4
3.8
387.0
390.8
2018
$m
3.0
3.0
6.5
428.6
435.1
86 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
12.
(a)
Interest-bearing liabilities (continued)
Reconciliation of liabilities arising from financing activities
30 June 2018
$m
Cash flows
$m
9.5
428.6
438.1
(3.3)
(42.4)
(45.7)
1 July 2017
$m
Cash flows
$m
11.2
389.4
400.6
(2.7)
38.7
36.0
Non-cash –
Amortisation and
additions
$m
1.0
0.8
1.8
Non-cash –
Amortisation and
additions
$m
1.0
0.5
1.5
29 June 2019
$m
7.2
387.0
394.2
30 June 2018
$m
9.5
428.6
438.1
Finance leases
Bank debt funding facility(1)
Total
Finance leases
Bank debt funding facility(1)
Total
(1)Net of borrowing costs paid
Significant Accounting Policies
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.
13.
Income taxes
(a)
Income tax expense
Current tax expense
Deferred tax (benefit)
Adjustments to tax expense of prior periods
Deferred income tax expense/ (revenue) included in income tax expense comprises:
Decrease / (increase) in deferred tax assets (note 13(e))
Increase in deferred tax liabilities (note 13(e))
(b)
Numerical reconciliation between tax expense and pre-tax profit
Profit before income tax from continuing operations
Tax at the Australian tax rate of 30% (2018: 30%)
Tax effect of amounts not deductible / (taxable)in calculating taxable income:
Tax consolidation adjustments regarding NZ branches
Gain on divestment of subsidiary
Non-deductible acquisition costs
Sundry items
Difference in overseas tax rates
Derecognition of tax losses and deferred tax assets
Previously unrecognised tax losses and deferred tax assets
Adjustments to tax expense of prior periods
Income tax expense
Effective tax rate:
Australia
Consolidated group
2019
$m
45.1
6.0
(0.8)
50.3
5.9
0.1
6.0
189.5
56.9
-
-
-
2.9
59.8
(2.6)
1.0
(7.1)
(0.8)
50.3
2018
$m
51.9
(2.4)
(0.7)
48.8
(3.6)
1.2
(2.4)
176.1
52.8
(3.2)
(2.0)
1.1
0.4
49.1
(0.3)
0.7
-
(0.7)
48.8
30.8%
26.5%
29.1%
27.7%
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
13.
Income taxes (continued)
(c)
Numerical reconciliation of income tax expense to income tax payable
Income tax (expense)
Tax effect of timing differences:
Depreciation
Provisions
Accruals and prepayments
Tax losses
Sundry temporary differences
Current tax payable
Income tax instalments paid during the year
Income tax receivable / (payable)
(d)
Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not recognised
in net profit or loss but directly debited or credited to equity:
Net deferred tax (credited) / debited directly to equity (note 13(e))
Tax expense relating to items of other comprehensive income
Cash flow hedges
(e)
Deferred tax assets and liabilities
Assets
Amounts recognised in profit or loss
Provisions
Accruals and prepayments
Depreciation
Tax losses
Sundry temporary differences
Amounts recognised directly in equity
Cash flow hedges
Set off with deferred tax liabilities
Net deferred tax assets
Liabilities
Amounts recognised in profit or loss
Brand values
Depreciation
Amounts recognised directly in equity
Cash flow hedges
Set-off of deferred tax assets
Net deferred tax liabilities
2019
$m
2018
Restated
$m
(50.3)
(48.8)
(2.1)
11.9
(0.7)
(4.4)
0.8
(44.8)
46.7
1.9
(2.7)
(2.7)
(2.7)
(2.7)
40.1
5.4
15.0
4.4
1.1
66.0
1.1
67.1
(67.1)
-
75.3
15.2
90.5
-
90.5
(67.1)
23.4
(1.6)
(4.4)
2.6
-
(1.1)
(53.3)
43.7
(9.6)
2.6
2.6
2.6
2.6
51.3
4.3
13.7
-
2.6
71.9
-
71.9
(71.9)
-
76.0
14.4
90.4
1.6
92.0
(71.9)
20.1
Net deferred tax assets / (liabilities)
(23.4)
(20.1)
88 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
13.
(e)
Income taxes (continued)
Deferred tax assets and liabilities (continued)
Movements in deferred tax assets:
Opening balance
Acquisition of subsidiary (note 23(a))
(Charged) / credited to the income statement
Credited / (charged) to equity
Closing balance
Deferred tax assets to be recovered after more than 12 months
Deferred tax assets to be recovered within 12 months
Movements in deferred tax liabilities:
Opening balance
Acquisition of subsidiary (note 23(a))
Charged to the income statement
(Credited) / charged to equity
Closing balance
Deferred tax liabilities to be settled after more than 12 months
Deferred tax liabilities to be settled within 12 months
(f)
Unrecognised deferred tax assets
2019
$m
71.9
-
(5.9)
1.1
67.1
40.7
26.4
67.1
92.0
-
0.1
(1.6)
90.5
90.5
-
90.5
2018
Restated
$m
67.8
0.5
3.6
-
71.9
45.0
26.9
71.9
74.9
13.3
1.2
2.6
92.0
92.0
-
92.0
Tax losses
7.3
13.6
Deferred tax assets have not been recognised in respect of these tax losses because it is not considered probable that
future taxable profit will be available against which they can be realised.
(g)
Tax transparency report
In May 2016, the government announced the release of the Board of Taxation’s final report on the voluntary Tax Transparency
Code. The aim of the Code is to provide a mechanism by which medium and large companies can be held accountable for their
Australian tax affairs, and to give stakeholders confidence that companies are compliant with their statutory obligations.
Currently the Code is voluntary. Super Retail Group supports the concept of voluntary tax transparency as an important measure for
all large companies to provide assurance to the Australian community that their tax obligations are being appropriately met. We
know that Super Retail Group’s success is dependent on the wellbeing of the economies and communities where our businesses
operate and our conservative approach to tax strategy is one of the many ways we act to ensure sustainability of our operations.
We are pleased to disclose our taxes paid in Australia and to detail our approach to tax planning for the first time.
The requirements of the Code are broken into Part A which forms part of the tax note as referenced below and Part B as disclosed
below. The make-up of the respective parts is as follows:
(i)
•
•
•
(ii)
•
•
•
Part A:
Effective company tax rates for our Australian and global operations (Note 13 (b))
A reconciliation of accounting profit to tax expense and to income tax payable (Note 13 (c))
Identification of material temporary (Note 13 (b)) and non-temporary differences (Note 13 (c))
Part B:
Tax policy, tax strategy and governance
Information about international related party dealings
A tax contribution summary of Income tax paid
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
13.
Income taxes (continued)
(g)
Tax transparency report (continued)
Part B discloses the Australian income tax paid by the Group in the 2019 and 2018 financial years and provides qualitative
information about our approach to tax risk and international related party dealings.
Tax policy, tax strategy and governance
Super Retail Group is committed to full compliance with its statutory obligations and takes a conservative approach to tax risk.
Super Retail Group’s Tax Policy includes an internal escalation process for referring tax matters to the corporate Group Tax function.
The CFO must report any material tax issues to the Board. Tax strategy is implemented through Super Retail Group’s Tax
Governance Policy. Super Retail Group’s approach to tax planning is to operate and pay tax in accordance with the tax law in
each relevant jurisdiction. The Group aims for certainty on all tax positions it adopts. Where the tax law is unclear or subject to
interpretation, advice is obtained, and when necessary the Australian Taxation Office (ATO) (or other relevant tax authority) is
consulted for clarity.
International related party dealings
Super Retail Group is an Australian based group, with some trading operations in other countries, including New Zealand (Super
Cheap Auto (SCA) and Macpac) and China (Sourcing assistance). Given its current profile, the Group has very limited international
related party dealings. Super Retail Group always seeks to price international related party dealings on an arm’s length basis to
meet the regulatory requirements of the relevant jurisdictions.
Super Retail Group’s international related party dealings are summarised below:
•
•
•
•
Super Retail Group’s Australian retail businesses source material amounts of trading stock from overseas, particularly through
Asian based third-party suppliers. To facilitate this, the Group has a Chinese based subsidiary that co-ordinates these supplies.
Super Retail Group’s Australian businesses pay the overseas subsidiaries for these services.
Super Retail Group SCA and Macpac retail businesses operate across Australia and New Zealand. To meet customer demand
and manage stock levels, trading stock is occasionally transferred between jurisdictions, for which arm’s length consideration is
paid by the recipient of the trading stock.
Certain Super Retail Group businesses operating outside of Australia are utilising intellectual property developed by Super
Retail Group businesses in Australia. Where appropriate, and as required by international cross border tax rules, a royalty
payment is made by the off-shore subsidiary to the relevant Super Retail Group business in Australia.
Various administrative and support services are provided by Super Retail Group head office and divisional parent entities to
offshore subsidiary businesses. As required by international cross border tax rules, arm’s length consideration is paid for these
services.
Other jurisdictions
The Super Retail Group includes a few subsidiary companies that are incorporated in jurisdictions outside of Australia as summarised
in the table below:
Country
China(1)
New Zealand
Nature of activities
Co-ordinating the sourcing of trading stock for SCA, Rebel and BCF
Active trading operations (SCA and Macpac) and dormant entities
(1) These companies are subject to the Australian Controlled Foreign Company rules. Under these rules profits generated by these subsidiaries from
trading with Super Retail Group are taxable in Australia at the 30 per cent Australian corporate tax rate. For the 2019 year, the gross value of
international related party transactions in and out of Australia represented less than 1.0 per cent of revenue.
Australian income taxes paid
Super Retail Group is a large taxpayer and paid Corporate Income Tax of $46.7 million in 2019 and $43.7 million in 2018.
90 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
13.
Income taxes (continued)
Significant Accounting Policies
Current and deferred 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
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets
are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each
jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to
measure the deferred tax asset or liability.
An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred
tax asset or liability is recognised in relation to these temporary differences if they arise in a transaction, other than a business
combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences
and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and
when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the
liability simultaneously.
A deferred tax liability is recognised in relation to some of the Group’s indefinite life intangibles. The tax base assumed in
determining the amount of the deferred tax liability is the capital cost base of the assets.
Tax consolidation
Super Retail Group Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation as of 1 July 2003 and account for current and deferred tax amounts under the Separate taxpayer within Group
approach in accordance with AASB Interpretation 1052, Tax Consolidation Accounting.
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.
13.
Income taxes (continued)
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 91
14.
Provisions
Current
Employee benefits(a)
Onerous contracts(b)
Make good provision(c)
Other provisions(d)
Total current provisions
Non-current
Employee benefits(a)
Onerous contracts(b)
Make good provision(c)
Total non-current provisions
(a)
Employee benefits
2019
$m
97.8
2.5
5.8
1.2
107.3
9.5
1.1
9.1
19.7
2018
Restated
$m
94.6
4.3
5.0
1.1
105.0
8.7
4.5
8.5
21.7
Provisions for employee benefits includes accrued annual leave, long service leave and accrued bonuses. In addition the Group
has identified that certain salaried team members should have received additional amounts to the amounts paid. A remediation
program is underway and will be completed in the next financial period. At 29 June 2019 there is a provision to recognise payments
for additional overtime and allowances to current and former team members of an estimated $44.3 million (2018: $44.6 million).
(b)
Onerous contracts
Onerous contracts include the provision for surplus lease space which 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. During the 2016 year, the Group committed to a plan to restructure the Ray’s Outdoors business by
converting various stores into either the new concept Rays stores or to other Group brands and close other stores. As at 29 June
2019 $1.9 million associated with the transformation relates to surplus lease space (2018: $6.8 million). During the 2018 year, the
Group completed the program of converting all Amart Sports stores to Rebel in line with the strategy to sustain the Group’s position
as the market leader in sports retailing. As at 29 June 2019 $0.5 million associated with this conversion relates to surplus lease space
(2018: $1.2 million).
Onerous contracts also includes the provision for loss making contracts which represents the present value of the forecasted loss.
During the 2016 year the Group performed a review of key contracts relating to Infinite Retail that were loss making. As at 29 June
2019 $0.8 million is provided for loss making contracts related to Infinite Retail (2018: $0.7 million).
(c)
Make good provision
Provision is made for costs arising from contractual obligations in lease agreements at the inception of the agreement. A provision
has been recognised for the present value of the estimated expenditure required to remove any leasehold improvements. These
costs have been capitalised as part of the cost of the leasehold improvements and are amortised over the shorter of the term of the
lease or the useful life of the assets.
(d)
Other provisions
The current provision for other items includes the provision for store refunds.
(e)
Movement in provisions
Movements in each class of provision during the period, except for other, are set out below:
2019
Opening balance as at 30 June 2018
Provisions made
Indexing of provisions
Provisions used
Closing balance as at 29 June 2019
Employee benefits
$m
103.3
38.2
-
(34.2)
107.3
Onerous contracts
$m
Make good
$m
8.8
0.4
-
(5.6)
3.6
13.5
1.2
2.4
(2.2)
14.9
Total
$m
125.6
39.8
2.4
(42.0)
125.8
92 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
14.
Provisions (continued)
Significant Accounting Policies
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.
Employee benefits - short-term obligations
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.
Employee benefits – long term obligations
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.
Retirement benefit obligations
Contributions are made by the economic entity to an employee superannuation fund and are charged as expenses when
incurred.
Profit-sharing and bonus plans
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.
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.
Critical accounting estimates and assumptions
Estimated value of make good provision
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.
Long service leave
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.
Onerous contracts
For surplus leases, the Group estimates the period it will take to exit surplus lease space. It then records a liability for the present
value of the future lease payments for the estimated exit period less estimated future sub-lease revenue. For loss making
revenue contracts, the Group estimates a range of potential financial outcomes for each contract based on forecasted
scenarios. It then records a liability for the present value of the resulting forecasted loss of each contract.
Employee benefits
Judgements have been made in the calculations as to the number of overtime hours, allowance payments and the valuation
based on assumed work patterns.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 93
15.
Financial assets and financial liabilities
(a)
Financial instruments
The Group holds the following financial instruments:
2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Total
Financial liabilities
Trade and other payables
Interest-bearing liabilities
Derivative financial instruments
Total
2018
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Total
Financial liabilities
Trade and other payables
Interest-bearing liabilities
Derivative financial instruments
Total
Derivatives used for
hedging
$m
Notes
Financial assets and
liabilities at
amortised cost
$m
7
20
11
12
20
-
-
2.8
2.8
-
-
6.2
6.2
7.5
37.6
-
45.1
412.2
394.2
-
806.4
Derivatives used for
hedging
$m
Notes
Financial assets and
liabilities at
amortised cost
$m
7
20
11
12
20
-
-
6.8
6.8
-
-
1.5
1.5
15.2
23.8
-
39.0
391.4
438.1
-
829.5
Total
$m
7.5
37.6
2.8
47.9
412.2
394.2
6.2
812.6
Total
$m
15.2
23.8
6.8
45.8
391.4
438.1
1.5
831.0
The Group’s exposure to various risks associated with the financial instruments is discussed in note 20 – Financial risk management.
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets
mentioned above.
(b)
Recognised fair value measurements
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.
94 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
15.
Financial assets and financial liabilities (continued)
(b)
(i)
Recognised fair value measurements (continued)
Fair value hierarchy (continued)
The following tables present the Group’s entity’s assets and liabilities measured and recognised at fair value.
2019
Financial assets
Derivatives used for hedging
Total
Financial liabilities
Derivatives used for hedging
Total
2018
Financial assets
Derivatives used for hedging
Total
Financial liabilities
Derivatives used for hedging
Total
Level 1
$m
Level 2
$m
Level 3
$m
-
-
-
-
2.8
2.8
6.2
6.2
-
-
-
-
Level 1
$m
Level 2
$m
Level 3
$m
-
-
-
-
6.8
6.8
1.5
1.5
-
-
-
-
Total
$m
2.8
2.8
6.2
6.2
Total
$m
6.8
6.8
1.5
1.5
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.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
15.
Financial assets and financial liabilities (continued)
Significant Accounting Policies
Financial assets classification
From 1 July 2018, the Group classifies its financial assets in the following measurement categories:
•
those to be measured subsequently at fair value (either through Other Comprehensive Income (OCI) or through profit or
loss), and
those to be measured at amortised cost.
•
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the
cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity
instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of
initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those assets changes.
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to
purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have
expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely
payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash
flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of
principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income
using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and
presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate
line item in the statement of profit or loss.
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash
flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken
through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses
which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised
in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets
is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other
gains/(losses) and impairment expenses are presented as separate line item in the statement of profit or loss.
FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment
that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in
which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present
fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to
profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit
or loss as other income when the Group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as
applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported
separately from other changes in fair value.
96 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
15.
Financial assets and financial liabilities (continued)
Significant Accounting Policies (continued)
Impairment
From 1 July 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments
carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant
increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses
to be recognised from initial recognition of the receivables.
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
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the
income statement.
Amounts accumulated in equity are recycled in the income statement in the income periods when the hedged item will affect
profit or loss (for instance when the forecast payment that is hedged takes place). However, when the forecast transaction that
is hedged results in the recognition of a non-financial asset (for example, inventory) or a non-financial liability, the gains and
losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying
amount of the asset or liability.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at the time remains in equity and is recognised when the forecast
transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the
cumulative gain or loss that was reported in equity is immediately transferred to the income statement.
Net investment hedges
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges.
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss
relating to the ineffective portion is recognised immediately in the income statement within other income or other expenses.
Gains and losses accumulated in equity are included in the income statement when the foreign operation is partially disposed
of or sold.
Derivatives that do not qualify for hedge accounting
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.
16.
Earnings per share
Basic earnings per share
(a)
Total basic earnings per share attributable to the ordinary equity holders of the
company
Diluted earnings per share
(b)
Total diluted earnings per share attributable to the ordinary equity holders of the
company
Normalised earnings per share(1)
(c)
From continuing operations attributable to the ordinary equity holders of the company
(1) Normalised profit attributable to ordinary equity holders is $152.5 million (2018: $145.3 million) – note 4(b).
2019
Cents
70.6
2018
Cents
65.0
69.9
64.5
77.3
73.7
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
16.
Earnings per share (continued)
Weighted average number of shares used as the denominator
(d)
Weighted average number of shares used as the denominator in calculating basic
EPS
Adjustments for calculation of diluted earnings per share – performance rights
Weighted average potential ordinary shares used as the denominator in
calculating diluted earnings per share
(e)
Basic earnings and diluted earnings per share
Reconciliations of earnings used in calculating earnings per share
Profit attributable to the ordinary equity holders of the company used in EPS
calculating basic earnings per share:
2019
Number
2018
Number
197,342,404
197,240,020
1,816,842
1,773,137
199,159,246
199,013,157
2019
$m
139.3
2018
$m
128.3
Information concerning the classification of securities
(f)
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.
Significant Accounting Policies
Basic earnings per share
Basic earnings per share is calculated by dividing:
•
the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares;
• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year and excluding treasury shares.
Diluted earnings per share
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.
17.
Contributed equity
(a)
Share capital
Ordinary shares fully paid (197,383,751 ordinary shares as at 29 June 2019)
2019
$m
542.3
(i)
Movement in ordinary share capital
Balance 1 July 2017
Shares issued under performance rights
Closing balance 30 June 2018
Shares issued under performance rights
Closing balance 29 June 2019
Number of Shares
Issue Price
197,240,020
-
197,240,020
143,731
197,383,751
-
-
2018
$m
542.3
$m
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.
98 S UP E R R ET A I L G R O UP L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
17.
Contributed equity (continued)
(a)
Share capital (continued)
Performance rights over 622,684 (2018: 734,862) ordinary shares were issued during the period with 143,731 (2018: nil) performance
rights vesting during the period. Under the share option plan, no (2018: 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 28 – 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.
Significant Accounting Policies
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.
18.
Reserves and retained earnings
Reserves
(a)
Foreign currency translation reserve
Share based payments reserve
Hedging reserve
NCI equity 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
NCI equity reserve
Balance at the beginning of the financial period
Change in ownership interest in controlled entities
Balance at the end of the financial period
2019
$m
5.2
12.9
(2.3)
(7.6)
8.2
2.5
2.7
5.2
11.6
1.3
12.9
4.0
(9.0)
2.7
(2.3)
(7.8)
0.2
(7.6)
2018
$m
2.5
11.6
4.0
(7.8)
10.3
3.4
(0.9)
2.5
10.5
1.1
11.6
(2.2)
8.8
(2.6)
4.0
(8.2)
0.4
(7.8)
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
18.
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 15 – Financial assets and financial liabilities. 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(c). The reserve is recognised in profit and loss when the net investment is disposed of.
NCI equity reserve
The NCI equity reserve is used to recognise the change in ownership interest in controlled entities.
(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
2019
$m
223.3
139.3
(96.7)
265.9
2018
Restated
$m
186.7
128.3
(91.7)
223.3
19.
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
Impairment charge
Net loss on sale of non-current assets
Non-cash employee benefits expense/share based payments
Loss / (gain) on divestment
Equity accounting loss
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
- (increase) / decrease in receivables
- (increase) / decrease in net current tax liability
- (increase) in inventories
- increase in payables
- (decrease) / increase in provisions
- increase / (decrease) in deferred tax liability
Net cash inflow from operating activities
Significant Accounting Policies
2019
$m
139.3
86.6
-
0.2
1.3
1.1
2.6
(0.1)
21.3
(13.8)
(11.5)
(14.7)
25.3
(4.1)
7.4
240.9
2018
$m
128.3
77.3
2.4
-
1.1
(6.9)
1.0
(1.0)
17.7
19.6
7.3
(37.0)
94.0
7.0
(2.4)
308.4
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.
100 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
20.
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
Foreign exchange
Interest rate
Credit risk
Liquidity risk
Exposure
arising from
Future commercial
transactions
Recognised financial
assets and liabilities not
denominated in AUD
Long-term borrowings at
variable rates
Cash and cash
equivalents, trade and
other receivables and
derivative financial
instruments
Measurement
Cash flow forecasting
Sensitivity analysis
Sensitivity analysis
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
Interest rate swap contracts – cash flow hedges
Total current derivative financial instrument liabilities
2019
$m
2.8
2.8
6.2
6.2
2018
$m
6.8
6.8
1.5
1.5
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 15 – Financial assets and financial liabilities. 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.
Fair value measurement
(ii)
For information about the methods and assumptions used in determining the fair value of derivatives please refer to note 15 –
Financial assets and financial liabilities.
(b) Market risk
Foreign exchange risk
(i)
Group companies are required to hedge their foreign exchange risk exposure using forward contracts transacted with the finance
department.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
20.
Financial risk management (continued)
(b) Market risk (continued)
Foreign exchange risk (continued)
(i)
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/New Zealand dollars with maturity
- 0 to 4 months
- 5 to 12 months
Trade receivables
Trade payables
2019
USD
$m
1.8
27.8
46.0
48.0
94.0
2019
CNY
$m
0.2
29.7
2018
USD
$m
1.9
28.7
41.8
46.5
88.3
2018
CNY
$m
0.2
7.9
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity.
When the cash flows occur, the Group adjusts the initial measurement of the component recognised in the consolidated balance
sheet by the related amount deferred in equity. In the year ended 29 June 2019, no hedges were designated as ineffective (2018:
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 on USD foreign exchange contracts
- unrealised (losses) on interest rate swaps
Total unrealised (losses) / gains
2019
$m
2.8
(6.2)
(3.4)
2018
$m
6.8.
(1.5)
5.3.
102 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
20.
Financial risk management (continued)
(b) Market risk (continued)
(i) Foreign exchange risk (continued)
Group sensitivity
Based on the financial instruments held at 29 June 2019, had the Australian dollar weakened/strengthened by 10% against other
currencies with all other variables held constant, the impact on the Group’s post-tax profit would have been nil, on the basis that
the financial instruments would have been designated as cash flow hedges and the impact upon the foreign exchange
movements of other financial assets and liabilities is negligible.
Equity would have been $8.3 million lower/$10.2 million higher (2018: $7.2 million lower/$8.8 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 3.18% (2018: 3.36%). 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 $215.0 million (2018: $240.0 million).
The Group also has $260.0 million (2018: $260.0 million) interest rate swaps in place for future periods up until June 2022 at an
average rate of 2.35%.
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 55.1% (2018: 56.0%)
of the loan principal outstanding. The average fixed interest rate is 2.36% (2018: 2.43%).
Interest rate risk exposures
The economic entity’s exposure to interest rate risk and the effective weighted average interest rate by maturity periods is set out in
the following table:
Fixed interest maturing in
Floating
interest rate
$m
1 year or
less
$m
Over 1 to 5
years
$m
More than
5 years
$m
Notes
2019
Financial assets
Cash and cash equivalents
Trade and other receivables
7
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
11
12
14
5.8
-
5.8
1.00%
-
387.0
-
387.0
3.18%
-
-
-
-
3.4
-
3.4
-
-
-
-
3.8
-
3.8
Net financial (liabilities) / assets
(381.2)
(3.4)
(3.8)
-
-
-
-
-
-
-
-
Non-
interest
bearing
$m
1.7
37.6
39.3
412.2
-
107.3
519.5
Total
$m
7.5
37.6
45.1
412.2
394.2
107.3
913.7
(480.2)
(868.6)
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
20.
Financial risk management (continued)
(b) Market risk (continued)
(ii) Cashflow and fair value interest rate risk (continued)
Fixed interest maturing in
Notes
Floating
interest rate
$m
1 year or
less
$m
Over 1 to
5 years
$m
More than
5 years
$m
Non-
interest
bearing
Restated
$m
Total
Restated
$m
2018
Financial assets
Cash and cash equivalents
Trade and other receivables
7
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
11
12
14
13.4
-
13.4
1.50%
-
428.6
-
428.6
3.36%
-
-
-
-
3.0
-
3.0
-
-
-
-
6.5
-
6.5
Net financial (liabilities) / assets
(415.2)
(3.0)
(6.5)
-
-
-
-
-
-
-
-
1.8
23.8
25.6
391.4
-
103.3
494.7
15.2
23.8
39.0
391.4
438.1
103.3
932.8
(469.1)
(893.8)
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 2019 and 2018
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 (d) below.
2019
$m
390.0
215.0
2018
$m
430.0
240.0
The Group risk management policy is to maintain fixed interest rate hedges of approximately 40% of anticipated debt levels over a 3
year period. The Group utilises interest rate swaps to hedge its interest rate exposure on borrowings.
As at 29 June 2019, 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 $1.2 million lower/higher (2018: $1.3 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.
104 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
20.
Financial risk management (continued)
(c)
Credit risk (continued)
(i) Risk management (continued)
Sales to retail customers are required to be settled in cash or using major credit cards, mitigating credit risk. There are no significant
concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions.
(ii) Security
For wholesale customers without credit rating, the Group generally retains title over the goods sold until full payment is received, thus
limiting the loss from a possible default to the profit margin made on the sale. For some trade receivables the Group may also obtain
security in the form of guarantees, deeds of undertaking or letters of credit which can be called upon if the counterparty is in
default under the terms of the agreement.
(d) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount
of committed credit facilities to meet obligations when due. Due to the dynamic nature of the underlying businesses, finance
department maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Group’s liquidity reserve (comprising the undrawn borrowing facilities below) and cash
and cash equivalents 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(1)
- 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
2019
$m
635.0
20.0
655.0
390.0
3.2
393.2
245.0
16.8
261.8
2018
$m
640.0
20.0
660.0
430.0
3.3
433.3
210.0
16.7
226.7
(1) As at 29 June 2019, $22.3 million (2018: $20.7 million) of the overdraft facility has been drawn and in accordance with financing
arrangements this is offset by cash funds in transit.
Current interest rates on bank loans of the economic entity are 2.79% - 3.55% (2018: 3.25% - 3.51%).
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 105
20.
Financial risk management (continued)
(d) Liquidity risk (continued)
(ii)
Maturities of financial liabilities (continued)
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
357.3
6.2
1.8
365.3
-
6.2
1.8
8.0
-
12.4
3.6
16.0
-
395.9
0.3
396.2
Net settled (Interest Rate Swaps)
0.8
0.8
1.5
0.5
2019
Non-derivatives
Trade and other payables
Interest-bearing liabilities(1)
Finance lease liabilities
Total non-derivatives
Derivatives
Forward exchange contracts used
for hedging:
Gross settled
- (inflow)
- outflow
Total derivatives
(1)Excludes finance leases.
2018
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.
-
-
-
-
-
-
-
-
357.3
420.7
7.5
785.5
357.3
390.0
7.2
754.5
3.6
6.2
(133.7)
130.7
0.6
(2.8)
-
3.4
(88.2)
(45.5)
86.1
(1.3)
44.6
(0.1)
-
-
1.5
-
-
0.5
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
336.8
7.2
1.6
345.6
-
7.2
1.6
8.8
-
259.7
3.3
263.0
-
183.4
3.5
186.9
0.4
0.3
0.2
0.2
(82.0)
77.1
(4.5)
(38.1)
35.5
(2.3)
-
-
0.2
-
-
0.2
-
-
-
-
-
-
-
-
336.8
457.5
10.0
804.3
336.8
430.0
9.5
776.3
1.1
1.5
(120.1)
112.6
(6.4)
(6.8)
-
(5.3)
106 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
21.
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 2019 the Group’s strategy, which was unchanged from 2018, 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 29 June 2019 and 30 June 2018 were as
follows:
Total borrowings
Less: Cash & cash equivalents
Net Debt
Total Equity
Total Capital
Gearing Ratio
2019
$m
394.2
(7.5)
386.7
816.0
1,202.7
32.2%
2018
Restated
$m
438.1
(15.2)
422.9
775.2
1,198.1
35.3%
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 2019 the Group’s strategy, which was unchanged from 2018, was to maintain a fixed charge cover ratio of around 2.0 times
and a net debt to EBITDA of below 2.5 times. The fixed charge cover and net debt to EBITDA ratios at 29 June 2019 and 30 June
2018 were as follows:
Profit attributable to Owners of Super Retail Group Limited
Add: Taxation expense
Net finance costs
Depreciation and amortisation (excludes impairment)
EBITDA
Rental expense
EBITDAR
Net finance costs
Rental expense
Fixed charges
Fixed charge cover ratio
Net debt to EBITDA ratio
Fixed charge cover ratio from normalised net profit after tax(1)
Net debt to EBITDA ratio from normalised net profit after tax(1)
(1) Normalised EBITDAR is $551.2m (2018: $521.2m) and normalised EBITDA is $314.7m (2018: $294.2m)
2019
$m
139.3
50.3
21.3
86.6
297.5
236.1
533.6
21.3
236.1
257.4
2.07
1.30
2.14
1.23
2018
$m
128.3
48.8
17.7
77.3
272.1
232.6
504.7
17.7
232.6
250.3
2.02
1.55
2.13
1.44
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 2019 and 2018 financial
years. There are no assets pledged as security in relation to the unsecured debt in the 2019 financial year (2018: nil).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 107
21.
Capital management (continued)
(b)
Dividends
Ordinary shares
Dividends paid by Super Retail Group Limited during the financial year were as
follows:
Final dividend for the period ended 30 June 2018 of 27.5 cents per share (2017: 25.0
cents per share) paid on 2 October 2018. Fully franked based on tax paid @ 30%
Interim dividend for the period ended 29 December 2018 of 21.5 cents (2018: 21.5
cents per share) paid on 28 March 2019. 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 28.5 cents per ordinary share (2018: 27.5 cents per ordinary share), fully franked
based on tax paid at 30%.
The aggregate amount of the dividend expected to be paid on 26 September 2019,
out of retained profits as at 29 June 2019, but not recognised as a liability at year end,
is
Franking credits
The franked portions of dividends paid after 29 June 2019 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 29 June 2019.
Franking credits remaining at balance date available for dividends declared after the
current balance date based on a tax rate of 30%
2019
$m
2018
$m
54.3
42.4
96.7
95.0
1.7
96.7
49.3
42.4
91.7
87.0
4.7
91.7
56.3
54.3
138.7
142.7
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 $24.1 million (2018: $23.2 million). The recommended dividend has not been recognised as a
liability at year end.
Significant Accounting Policies
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.
22.
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
Subsidiaries, associates and joint ventures
(b)
Interests in subsidiaries are set out in note 26 – Investments in controlled entities. Details on associates and joint ventures can be
found at note 23(b) – Business combinations.
(c)
Disclosures relating to key management personnel are set out in note 27 – Key management personnel disclosures.
Key Management Personnel
108 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
22.
Related party transactions (continued)
Directors
(d)
The names of the persons who were Directors of Super Retail Group Limited during the financial period are S A Pitkin, R A Rowe, D J
Eilert, L K Inman, H L Mowlem, P D Everingham, A M Heraghty and P A Birtles.
(e)
Amounts due from Directors of the consolidated entity and their director-related entities are shown below in note 22(f).
Amounts due from related parties
(f)
Loans to / (from) Related Parties
Loans to / (from) Related Parties
Loan to related parties(1)
Loan to former related party James Woodford Pty Ltd(2)
2019
$
302,888
850,000
2018
$
282,523
-
(1) Loans to Australian Creatives Online Pty Ltd, an entity with a non-controlling interest in Autoguru Australia Pty Ltd, an associate of the Group. These
loans were extended as part of the Group’s acquisition arrangements with Autoguru Australia Pty Ltd. These loans are deemed to be on an arms-
length basis, attracting interest at a rate of 7.0% (2018: 7.0%).
(2) Loan to James Woodford Pty Ltd, an entity with a controlling interest in Youcamp Pty Ltd, a former subsidiary of the Group. This loan was extended in
an agreement with James Woodford to sell all of the Group’s shares in Youcamp for a total consideration of $850,000. As a result the Group no
longer has an ownership interest in Youcamp. This loan is deemed to be on an arms-length basis, and attracts interest in accordance with the loan
agreement at a rate of 7.0%.
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)
2019
$
2018
$
12,087,041
3,034,241
10,789,552
3,115,489
(1) Rent on properties, with rates which are deemed to be on an arms-length basis. Rent payable at year-end was nil (2018: nil).
(2) Purchases of inventories from Robert Bosch (Australia) Pty Ltd on an arms-length basis. Amounts payable at year-end are $78,844 (2018: $214,924).
23.
Business combinations
(a)
Subsidiaries
2019
The Group’s subsidiaries at 29 June 2019 are as detailed in note 26 - Investments in controlled entities. With the exception of
changes to the Group’s ownership interest in Youcamp Pty Ltd, detailed below, there were no other changes to the Group’s
ownership interest in these entities.
Youcamp Pty Ltd – December 2018
On 7 December 2018, the Group entered into an agreement with James Woodford Pty Ltd to sell all of its shares in Youcamp Pty Ltd
for a total consideration of $850,000. As a result the Group no longer has an ownership interest in Youcamp and the entity has been
deconsolidated from December 2018. On divestment the Group has deconsolidated Youcamp by derecognising the assets and
liabilities resulting in a loss on divestment of $0.6 million which has been recognised in the Group’s consolidated statement of
comprehensive income.
2018
During the 2018 financial year the Group purchased the Macpac group of companies and changed its ownership interest in
Youcamp Pty Ltd as detailed below.
Macpac Holding Pty Ltd – March 2018
On 20 February 2018, the Group entered into an agreement to acquire 100% of the Macpac group of companies. Settlement was
completed on 5 April 2018 with an effective date of 31 March 2018. The Macpac group of companies is consolidated as part of the
Group from this date.
Macpac is a vertically integrated outdoor apparel and equipment retailer with 54 stores throughout New Zealand and Australia. In
addition to its retail stores, Macpac sells to commercial customers and export distributors in Europe, Japan and in the USA.
The acquired business contributed revenue and net profit after tax (NPAT) to the Group for the year ended 30 June 2018 of
$31,391,000 and $5,718,000 respectively. If the acquisition had occurred on 2 July 2017 the Group’s revenue and NPAT for the year
would have been $2,633,701,000 and $132,477,000 respectively.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 109
23.
Business combinations (continued)
(a)
Subsidiaries (continued)
Purchase consideration:
Cash
Total
Assets acquired and liabilities assumed at the date of acquisition:
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment
Intangible assets
Payables and provisions
Deferred taxes
Derivative financial instruments
Total
2018
$m
138.3
138.3
2018
Restated
$m
4.5
1.0
27.0
5.9
44.5
(12.6)
(11.3)
(0.3)
58.7
The fair value of receivables acquired includes trade receivables with a fair value of $461,000. The gross amount due is $473,000 of
which $12,000 is considered doubtful.
At 30 June 2018, the Group had completed the accounting for the acquisition of Macpac on a provisional basis. The finalisation of
the assessment of the fair values of the identifiable assets and liabilities acquired has resulted in adjustments to previously reported
items and a corresponding adjustment to goodwill (refer note 10).
Goodwill arising on acquisition:
Consideration transferred
Less: fair value of net identifiable assets acquired
Goodwill arising on acquisition
2018
Restated
$m
138.3
(58.7)
79.6
The goodwill recognised in relation to the acquisition of Macpac is attributable to the skills and technical talent of the employees of
the acquisition and the synergies expected to be achieved from integrating the business into the Group’s existing operations.
Goodwill is not expected to be deductible for tax.
Net cash outflow on acquisition of subsidiaries:
Transaction costs (included in operating cash flows)
Cash consideration paid
Cash balance acquired
Outflow of cash
2018
$m
4.0
138.3
(4.5)
137.8
Youcamp Pty Ltd – October 2017
On 13 October 2017, the shareholders of Youcamp Pty Ltd, entered into an agreement to issue shares resulting in an increase in the
Group’s ownership interest from 51.0% to 58.68%. In recognising the change in ownership, the Group reassessed the value of the
Group’s non-controlling interest (NCI) held in Equity Reserves at the grant date, 13 October 2017, to reflect the change in NCI from
49.0% to 41.32%. The differential was transferred to a separate NCI Equity Reserve.
(b)
Associates and joint ventures
2019
Autocrew Australia Pty Ltd – June 2019
During the period the Group injected additional capital of $675,000 into Autocrew Australia Pty Ltd, a joint venture with Robert
Bosch (Australia) Pty Ltd where the Group has a 50% ownership interest. Autocrew opened its second workshop in February 2019.
Equity accounted losses of $0.5 million are included in the Group’s consolidated statement of comprehensive income. Based on
initial trading results the value of the Groups investment in Autocrew has been impaired to nil resulting in a further loss of $0.6 million
also being recognised in the Group’s consolidated statement of comprehensive income.
2018
Autoguru Australia Pty Ltd – February 2018
On 19 February 2018, the shareholders of Autoguru Australia Pty Ltd, entered into an agreement with OUTsurance Holdings Limited to
subscribe for and acquire shares in Autoguru Australia Pty Ltd. The transaction has resulted in a decrease in the Group’s ownership
interest from 63.1% to 49.5% and loss of control.
110 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
23.
(b)
Business combinations (continued)
Associates and joint ventures (continued)
As a result of the loss of control of Autoguru the entity has been deconsolidated from March 2018 and equity accounted as an
associate. On loss of control the Group deconsolidated Autoguru by derecognising the assets and liabilities and revaluing its
investment in Autoguru to fair value resulting in a gain of $6.9 million which was recognised in other income in the Group’s
consolidated statement of comprehensive income. Trading and equity accounted losses of $2.2 million were also included in the
Group’s consolidated statement of comprehensive income.
Autocrew Australia Pty Ltd – August 2017
On 15 August 2017 the Group acquired a 50% ownership interest in Autocrew Australia Pty Ltd in joint venture with Robert Bosch
(Australia) Pty Ltd for $325,000. The joint venture was established to open full service auto workshops initially in the Greater Sydney
area. The first ‘AutoCrew – Powered by Supercheap Auto’ pilot workshop opened in June 2018 and offers drivers a full automotive
service powered by Bosch’s superior diagnostic and workshops technology.
24.
Deed of cross guarantee
Super Retail Group Limited, A-Mart All Sports Pty Ltd, Auto Trade Direct Pty Ltd, Workout World Pty Ltd, Coyote Retail Pty Limited,
Foghorn Holdings Pty Ltd, Goldcross Cycles Pty Ltd, Ray’s Outdoors Pty Ltd, Rebel 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
ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 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 29 June 2019 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
Net finance costs
Share of net loss of associates and joint ventures
Total expenses
Profit before income tax
Income tax expense
Profit for the period
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
2019
$m
2,441.4
1.6
2,443.0
2018
Restated
$m
2,395.4
5.8
2,401.2
(1,346.9)
(1,323.8)
(314.8)
(73.3)
(193.6)
(306.7)
(20.8)
(2.6)
(312.6)
(78.4)
(202.5)
(304.3)
(16.9)
(1.0)
(2,258.7)
(2,239.5)
184.3
(51.6)
132.7
$m
132.7
(4.9)
(4.9)
127.8
161.7
(45.1)
116.6
$m
116.6
4.8
4.8
121.4
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
24.
Deed of cross guarantee (continued)
(a)
Consolidated Comprehensive Income Statement and Summary of Movements in Consolidated Retained Earnings
(continued)
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
(b)
Consolidated Balance Sheet
Set out below is a consolidated balance sheet as at 29 June 2019 of the Closed Group.
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax receivables
Derivative financial instruments
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
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 profits
TOTAL EQUITY
2019
$m
209.5
132.7
(96.7)
245.5
2019
$m
-
28.1
489.7
1.9
2.8
522.5
277.7
243.3
761.9
1,282.9
1,805.4
415.3
11.4
-
6.2
98.8
531.7
48.1
390.8
17.2
19.2
475.3
1,007.0
798.4
542.3
10.6
245.5
798.4
2018
Restated
$m
184.6
116.6
(91.7)
209.5
2018
Restated
$m
-
17.9
491.5
-
5.2
514.6
182.9
250.3
761.1
1,194.3
1,708.9
316.3
5.7
6.8
1.5
100.1
430.4
48.3
435.1
7.9
21.2
512.5
942.9
766.0
542.3
14.2
209.5
766.0
112 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
25.
Parent entity 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
NET ASSETS
Contributed equity
Reserves
- share-based payments
- cash flow hedges
Retained earnings
Total Equity
Profit after tax for the period
Total comprehensive income
Significant Accounting Policies
2019
$m
265.8
1,072.1
35.9
423.5
648.6
542.3
12.9
(4.3)
97.7
648.6
111.8
108.5
2018
$m
274.2
1,078.9
14.7
443.4
635.5
542.3
11.6
(1.0)
82.6
635.5
136.6
136.8
Parent entity financial information
The financial information for the parent entity, Super Retail Group Limited has been prepared on the same basis as the
consolidated financial statements, except as set out below.
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the financial statements of Super Retail Group Limited.
Tax consolidation legislation
Super Retail Group Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation.
The head entity, Super Retail Group Limited, and the controlled entities in the tax consolidated group account for current and
deferred tax amounts under the Separate taxpayer within Group approach in accordance with AASB Interpretation 1052, Tax
Consolidation Accounting.
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
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.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
26.
Investments in controlled entities
The Group’s subsidiaries at 29 June 2019 are set out below. Unless otherwise stated, they have share capital consisting of ordinary
shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group.
The country of incorporation is also their principal place of business.
Name of Entity
A-Mart All Sports Pty Ltd(1)
Auto Trade Direct (NZ) Limited
Auto Trade Direct Pty Ltd(1)
BCF New Zealand Limited
Workout World Pty Limited(1)(2)
Coyote Retail Pty Limited(1)
Country of
Incorporation
Australia
New Zealand
Australia
New Zealand
Australia
Australia
Principal Activities
Sports retail
Auto retail
Auto retail
Outdoor retail
Sports retail
Sports retail
Macpac New Zealand Limited(5)
New Zealand
Outdoor retail
Foghorn Holdings Pty Ltd(1)
Goldcross Cycles Pty Ltd(1)
Infinite Retail Pty Ltd
VBM Retail (HK) Limited(3)
Infinite Retail UK Limited(3)
VBM Retail NZ Limited(3)
Macpac Holdings Pty Ltd
Macpac Group Holdings Limited
Macpac Retail Pty Ltd
Macpac Limited
Macpac Enterprise
MP Finco Limited
Mouton Noir Management Pty Ltd
Mouton NOIR IP Limited
Oceania Bicycles Pty Ltd
Oceania Bicycles Limited(4)
Ray’s Outdoors New Zealand Limited
Ray’s Outdoors Pty Ltd(1)
Rebel 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)
Australia
Australia
Australia
Hong Kong
United Kingdom
New Zealand
Australia
New Zealand
Australia
New Zealand
New Zealand
New Zealand
Australia
New Zealand
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Sports retail
Sports retail
Sports retail
Sports retail
Sports retail
Sports retail
Outdoor retail
Outdoor retail
Outdoor retail
Outdoor retail
Outdoor retail
Outdoor retail
Outdoor retail
Outdoor retail
Sports retail
Sports retail
Outdoor retail
Outdoor retail
Sports retail
Sports retail
Sports retail
Sports retail
Sports retail
Sports retail
Investments
Outdoor retail
New Zealand
Product acquisition and distribution
Australia
Product acquisition and distribution
Super Cheap Auto (New Zealand) Pty Ltd
New Zealand
Super Cheap Auto Pty Ltd(1)
Super Retail Commercial Pty Ltd(1)
Australia
Australia
Super Retail Group Services (New Zealand) Limited
New Zealand
Super Retail Group Services Pty Ltd(1)
Super Retail Group Trading (Shanghai) Ltd
Australia
China
Auto retail
Auto retail
Auto retail
Support services
Support services
Product sourcing
Equity Holding
2019
%
2018
%
100
100
100
100
100
100
100
100
100
95
95
95
95
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
95
95
95
95
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Youcamp Pty Ltd(6)
(1) These controlled entities have been granted relief from the necessity to prepare financial reports in accordance with ASIC Corporations (Wholly-
Leisure services
Australia
58.68
-
owned Companies) Instrument 2016/785 issued by the Australian Securities and Investments Commission.
(2) Previously known as Coyote Retail Investments Pty Limited.
(3) Investment is held directly by Infinite Retail Pty Ltd.
(4) Investment is held directly by Oceania Bicycles Pty Ltd.
(5) Previously known as FCO New Zealand Limited.
(6) Ceased to be a subsidiary in December 2018 – refer note 23(a) - Business combinations.
114 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
27.
Key management personnel disclosures
(a)
Key management personnel compensation
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Share-based payments
2019
$
2018
$
5,638,821
5,768,055
114,843
929,632
(169,235)
6,514,061
54,336
184,258
543,148
6,549,797
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
2019
$
2018
$
30,133,125
28,538,241
28.
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
2019
1 September 2015
1 September 2016
1 September 2017
1 September 2018
2018
1 September 2014
1 September 2015
1 September 2016
1 September 2017
Balance at
start of the
year
(Number)
511,500
536,775
724,862
-
1,773,137
479,724
546,500
571,775
-
1,597,999
Granted
during the
year
(Number)
-
-
-
622,684
622,684
-
-
-
734,862
734,862
Exercised
during the
year
(Number)
(143,731)
-
-
-
(143,731)
-
-
-
-
-
Forfeited
during the
year
(Number)
(231,062)
(83,240)
(90,946)
(30,000)
(435,248)
(479,724)
(35,000)
(35,000)
(10,000)
(559,724)
Balance at
the end of
the year
(Number)
136,707
453,535
633,916
592,684
1,816,842
-
511,500
536,775
724,862
1,773,137
Unvested at
the end of
the year
(Number)
136,707
453,535
633,916
592,684
1,816,842
-
511,500
536,775
724,862
1,773,137
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
28.
Share-based payments (continued)
Expenses arising from share based payments transactions:
Executive Performance Rights
Significant Accounting Policies
2019
$m
1.3
2018
$m
1.1
Share-based payments
Share-based compensation benefits are provided to certain employees via the Super Retail Group Performance Rights Plan.
The fair value of performance rights granted under the plan 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 performance rights.
For 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 performance rights, the vesting and performance criteria, the impact of dilution, the non-
tradeable nature of the performance rights, 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 performance rights.
The fair value of the performance rights 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
performance rights that are expected to become exercisable. At each balance sheet date, the entity revises its estimate of the
number of 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 performance rights, the balance of the share-based payments reserve relating to those performance rights
remains in the share-based payments reserve.
29.
Remuneration of auditors
During the period the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms.
2019
$
2018
$
(a)
(i)
PricewaterhouseCoopers Australia
Assurance services
Audit and review of financial statements
Other assurance(1)
Total remuneration for audit and other assurance services
(ii)
Taxation services
Tax compliance services, including review of Company income tax returns
Total remuneration for taxation services
(iii)
Other services
Customs prudential review
Digital advertising advisory
Workshop facilitation
Total remuneration for advisory services
807,976
13,407
821,383
295,484
295,484
-
-
-
-
Total remuneration of PricewaterhouseCoopers Australia
1,116,867
585,570
44,721
630,291
394,329
394,329
18,500
49,572
51,601
119,673
1,144,293
(b) Network firms of PricewaterhouseCoopers Australia
(i)
Taxation services
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
(1) Cyber security review.
56,283
56,283
56,283
66,924
66,924
66,924
1,173,150
1,211,217
116 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
29.
Remuneration of auditors (continued)
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. The Board has considered the non-audit services
provided during the year by the auditor, and in accordance with written advice provided by resolution of the Audit and Risk
Committee, is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not
compromise, the auditor independence requirements of the Corporations Act 2001.
30.
Contingencies
2019
$m
2018
$m
Guarantees
Guarantees issued by the bankers of the Group in support of various rental
arrangements.
The maximum future rental payments guaranteed amount to:
5.2
5.5
The Group continues to work with the Fair Work Ombudsman as the underpayment of retail managers and set-up team members is
remediated. This may result in further amounts being payable.
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.
31.
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 11)
Total lease commitments
Future minimum lease payments expected to be received in relation to non-
cancellable sub-leases of operating leases
2019
$m
2018
$m
0.9
0.9
2.9
2.9
224.1
655.5
132.6
(54.9)
957.2
3.2
222.1
654.2
132.8
(54.6)
954.5
3.1
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.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 117
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the period ended 29 June 2019
31.
Commitments (continued)
Finance leases
The Group leases various plant and equipment with a carrying amount of $8.1 million (2018: $9.9 million) under finance leases
expiring within five years.
Commitments in relation to finance leases are payable as follows:
Within one year
Later than one year but not later than five years
Minimum lease payments
Future finance charges
Total lease liabilities
Representing lease liabilities:
Current (note 12)
Non-current (note 12)
32.
Net tangible asset backing
Net tangible asset per ordinary share
2019
$m
3.6
3.9
7.5
(0.3)
7.2
3.4
3.8
7.2
2018
$m
3.2
6.8
10.0
(0.5)
9.5
3.0
6.5
9.5
2019
Cents
($0.01)
2018
Restated
Cents
($0.20)
Net tangible asset per ordinary share is calculated based on Net Assets of $816.0 million (2018: $775.2 million) less intangible assets of
$894.2 million (2018: $891.6 million) adjusted for the associated deferred tax liability of $75.3 million (2018: $76.2 million). The number
of shares used in the calculation was 197,383,751 (2018: 197,240,020).
33.
Events occurring after balance date
No matter or circumstance has arisen since 29 June 2019 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.
118 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
DIRECTORS’ DECLARATION
In the Directors’ opinion:
(a)
(b)
(c)
the financial statements and notes set out on pages 65 to 117 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 29 June 2019 and of its
performance for the financial period ended on that date; and
(ii)
there are reasonable grounds to believe that the Compacny 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 24 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 24.
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.
S A Pitkin
Director
Brisbane
14 August 2019
A M Heraghty
Director
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 119
Independent auditor’s report
To the members of Super Retail Group Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Super Retail Group Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 29 June 2019 and of its financial
performance for the period from 1 July 2018 to 29 June 2019 (the period)
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
●
●
●
●
●
the consolidated statement of comprehensive income for the period ended 29 June 2019
the consolidated balance sheet as at 29 June 2019
the consolidated statement of changes in equity for the period ended 29 June 2019
the consolidated statement of cash flows for the period ended 29 June 2019
the notes to the consolidated financial statements, which include a summary of significant
accounting policies
the directors’ declaration.
●
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial report
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
120 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion
on the financial report as a whole, taking into account the geographic and management structure of the
Group, its accounting processes and controls and the industry in which it operates.
Materiality
● For the purpose of our audit we used an overall Group materiality of $9.5 million, which represents
approximately 5% of the Group’s profit before tax.
● We applied this threshold, together with qualitative considerations, to determine the scope of our audit and
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
financial report as a whole.
● We chose Group profit before tax because, in our view, it is the benchmark against which the performance of
the Group is most commonly measured.
● We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
● Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
● The Group is now segmented into four brands - SCA, BCF, Rebel and Macpac, and operates in three
countries - Australia, New Zealand and China. The financial report is a consolidation of wholly owned and
controlled subsidiaries. The Group accounting processes happen mainly in the Group head office finance
function in Brisbane, supported by finance teams in Sydney and Christchurch, New Zealand.
● Our audit procedures were mostly performed at this head office and the Macpac office in New Zealand and
also included site visits to stores and distribution centres in Australia and New Zealand to perform audit
procedures over inventory. Our team included specialists in information technology and taxation and
experts in data, payroll and valuations.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 121
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. The key audit matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. Further, any commentary on the outcomes of a particular audit
procedure is made in that context. We communicated the key audit matters to the Audit and Risk
Committee.
Key audit matter
How our audit addressed the key audit matter
Inventory valuation and provisions
Refer to Note 8 (Inventories), $560.2 million
Stock loss provision
The valuation of inventory and provisions for stock
loss, stock valuation and attributable overheads was a
key audit matter because of the judgements involved in
the areas described below.
Stock loss provision
As inventory was counted by the Group on a cyclical
basis during the period, rather than in full at the end of
the period, the stock loss provision at 29 June 2019
contained a degree of estimation as to the quantity and
value of projected stock items for items not counted at
the period end date.
Stock valuation provision
Inventory was recognised at the lower of cost and net
realisable value based on a rolling average selling price.
The determination of the net realisable value of
inventory of a seasonal and discontinued nature
required a degree of estimation as to the clearance
margin for these stock items at balance date.
Attributable overheads
There was judgement involved in how much of the
directly attributable overheads associated with
bringing inventory to its final destination for sale are
recognised as part of the cost of inventory.
● We attended a sample of stock counts
throughout the period at selected retail stores,
performing independent test counts. In
considering the results of stock counts not
observed, we obtained a sample of count
sheets and evaluated any differences
identified.
● For the cyclical counts we attended, we
obtained rollforward schedules showing
activity in the period between the stock count
date and period end date. We used the results
of our cyclical counts to reconcile opening
balances, and period ended closing balances
were reconciled to the general ledger.
● We re-performed the calculation for the
projected stock variance.
Stock valuation provision
● For a sample of individual products, we
compared the recognised costs to the relevant
invoice and recalculated the allocation of
directly attributable costs.
● We compared the carrying value at period end
date to the most recent sales price for a
sample of inventory items.
● For a sample of seasonal and discontinued
inventory items, we compared the last stock
movement date to the relevant invoice and
assessed the mark down margin assigned to
that stock item by checking the current retail
prices of the items in stores.
Attributable overheads
● On a sample basis, we considered the nature
of overhead costs capitalised by reading their
description on supporting documentation,
having regards to the types of costs allowable
by Australian Accounting Standards.
122 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
Carrying value of tangible and intangible
assets
Note 10 (Intangible assets), $526.5 million goodwill,
$253.3 million brand names and $114.4 million
computer software
Note 9 (Property, plant and equipment), $267.9
million
Goodwill and brand names
Goodwill is allocated to the Group’s cash generating
units (CGUs) identified according to the group of assets
based on acquisition. During the period, the reporting
structure changed for the previous Outdoor segment,
splitting CGUs and operating segments into BCF and
Macpac. As required by the Australian Accounting
Standards, the value of goodwill for BCF and Macpac
was allocated to the new CGUs using the relative fair
value approach. The brand values attributed for Rebel
and Macpac remained unchanged.
During the annual review for impairment, the
recoverable amount for each CGU was determined
based on a discounted cash flow valuation model which
relied on the directors’ assumptions and estimates of
future trading performance. The key assumptions
applied by the directors in the valuation models were:
● CGU-specific discount rates
future revenue growth
●
gross margin.
●
The carrying value of goodwill and brand names was a
key audit matter because of the judgements involved in
determining the discount rate, the estimated future
revenue growth and the potential future return from
use of the brand name.
● We checked the mathematical accuracy of the
calculation of the overhead costs attributed to
inventory and compared the amount to the
accounting records.
Goodwill and brand names
Amongst other procedures, we assessed the valuation
models by:
● Obtaining and evaluating the Group’s
assessment of segments and CGUs in light of
the requirements of Australian Accounting
Standards.
● Checking the mathematical accuracy of all
calculations in the models.
● Assessing the discount rates used in the
valuation models, with support from PwC
valuation experts, by comparing the rates to
our internal benchmark data and performing
an independent calculation.
● Comparing the forecasted growth rates to
relevant historical Group actual results and
industry data including forecasts.
● Comparing the gross margins to historical
Group data.
● Evaluating the information included in the
●
valuation models against our knowledge of the
Group gained through reviewing the strategic
initiatives and meeting with managing
directors and commercial managers from each
segment.
Stress-testing the key assumptions in the
models, including: future revenue growth,
trading margins and discount rates; and
noting that the valuation under these
sensitivities was within an acceptable range,
which was determined taking into account
market data and historical data.
● Evaluated the Group’s assessment that the
useful lives of indefinite life brand name
remained appropriate at period end. This
included discussions with management to
develop an understanding of the Group’s
future strategy.
Computer software
Computer software
The Group has undertaken significant development of
software in relation to the omni-channel customer
programme and omni-channel supply chain and
inventory programme. The valuation of computer
software was a key audit matter because of the
judgments involved in assessing whether the
recognition criteria of Australian Accounting Standards
For a sample of software capitalised during the period,
we performed the following procedures, amongst
others:
● Assessed the nature of the costs capitalised in
light of the requirements of Australian
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 123
had been met and in estimating the useful life of
software.
Property Plant & Equipment
Accounting Standards.
● Evaluated the reasonableness of the estimated
useful life estimated for software by
comparing it to industry benchmark data.
The directors determined that each retail store
represented a separate CGU when undertaking the
impairment tests. Corporate assets were included
within the valuation assessment of the key segments
(SCA, Rebel, BCF, and Macpac).
The valuation of property plant & equipment was a key
audit matter because of the key assumptions and
judgements applied by the directors in the impairment
tests were:
●
●
the individual retail store contribution margin
the strategic initiatives in place for individual
stores with negative Group contribution
margins.
Property Plant & Equipment
We performed the following procedures, amongst
others:
● Obtained management’s assessment of the
profitability of all individual stores and their
contribution margin to the Group
● Considered and discussed the strategic
initiatives for stores with negative
contributions to the Group during meetings
with commercial managers for each brand.
Provision for Underpayment of employees
Note 14 (Provisions) $44.3 million
In assessing the provision for additional overtime and
allowance payments, our procedures included the
following:
The Group undertook a review of employee
arrangements during the period following on from the
identification of underpayment of Store Set-up
employees in the previous financial period.
The Group’s review identified underpayment of
overtime and some allowances to retail managers and
determined an estimate for the period 2013 to 2018
with respect to this underpayment.
As required by Australian Accounting Standards, this
was accounted for as a prior period error and the
Group restated each of the affected financial statement
line items in the opening balance sheet.
This was considered a key audit matter due to the key
assumptions included in the critical estimate.
● Developed an understanding of the basis for
management’s best estimate of the provision
and the nature of the estimation uncertainty
at balance date.
● Assessed the objectivity and competence of
management’s experts who assisted them in
the interpretation of the General Retail
Industry Award (GRIA) and the preparation
of a model to calculate the underpayment in
accordance with that interpretation.
● Obtained the assumptions utilised by
management’s experts’ in developing the
estimate.
● Together with PwC data and payroll experts,
we evaluated management’s experts
methodologies in preparing a model.
● Taking into account the above procedures, we
tested a sample of calculations and evaluated
the results.
● Tested the mathematical accuracy of the
provision and its appropriateness in light of
the requirements of Australian Accounting
Standards.
We also considered the adequacy of the disclosures
made in the financial statements, including their
appropriateness under Australian Accounting
Standards.
124 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report for the period ended 29 June 2019, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our auditor's report.
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 125
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 40 to 63 for the period ended 29 June 2019.
In our opinion, the remuneration report of Super Retail Group Limited for the period ended 29 June 2019
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the remuneration report, based on our audit conducted in accordance with Australian
Auditing Standards.
Matters relating to the electronic presentation of the audited financial report
This auditor’s report relates to the financial report of Super Retail Group Limited for the period ended 29
June 2019 included on Super Retail Group Limited's web site. The directors of the Company are
responsible for the integrity of Super Retail Group Limited's web site. We have not been engaged to report
on the integrity of this web site. The auditor’s report refers only to the financial report named above. It
does not provide an opinion on any other information which may have been hyperlinked to/from the
financial report. If users of this report are concerned with the inherent risks arising from electronic data
communications they are advised to refer to the hard copy of the audited financial report to confirm the
information included in the audited financial report presented on this web site.
PricewaterhouseCoopers
Kim Challenor
Partner
Brisbane
14 August 2019
126 S U P E R R E T A I L G RO U P L I M IT E D A N N UA L R E P OR T 2 0 19
SHAREHOLDER INFORMATION
For the period ended 29 June 2019
The shareholder information set out below was applicable as at 9 August 2019.
Number of Shareholders
There were 10,084 shareholders, holding 197,383,751 fully paid ordinary shares.
A.
Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Range
1-1000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total
Ordinary Shareholders
Performance Rights &
Option holders
5,100
4,045
598
298
43
10,084
-
3
11
41
4
59
There were 560 holders of less than a marketable parcel of ordinary shares.
B.
Equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
SCA FT PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
SCCASP HOLDINGS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR PETER ALAN BIRTLES
MR PETER ALAN BIRTLES
AMP LIFE LIMITED
EQUITAS NOMINEES PTY LIMITED
EQUITAS NOMINEES PTY LIMITED
EQUITAS NOMINEES PTY LIMITED
EQUITAS NOMINEES PTY LIMITED
CS THIRD NOMINEES PTY LIMITED
PACIFIC CUSTODIANS PTY LIMITED
SANTOS L HELPER PTY LTD
Ordinary shares
Number held
Percentage of
issued shares
56,575,423
47,560,649
20,970,497
20,129,437
9,133,064
4,444,375
2,316,866
1,363,697
1,078,703
722,334
675,000
665,000
662,776
613,116
567,302
547,135
535,391
532,424
511,597
506,215
28.66%
24.10%
10.62%
10.20%
4.63%
2.25%
1.17%
0.69%
0.55%
0.37%
0.34%
0.34%
0.34%
0.31%
0.29%
0.28%
0.27%
0.27%
0.26%
0.26%
170,111,001
86.20%
S U P E R R ET A I L G R O U P L I MI T ED A N N UA L R E P OR T 2 0 1 9 127
SHAREHOLDER INFORMATION (continued)
For the period ended 29 June 2019
C.
Substantial shareholdings
As at 9 August 2019, there are five substantial shareholders that the Company is aware of:
Name
SCA FT PTY LTD
MITSUBISHI UFJ FINANCIAL GROUP, INC
VINVA INVESTMENT MANAGEMENT
UBS GROUP AG
BLACKROCK GROUP
D.
Unquoted equity securities
Ordinary shares
Number held
Percentage of issued
shares
Date of most
Recent notice
56,954,670
13,614,792
12,007,196
10,022,757
10,678,954
28.99%
6.90%
6.09%
5.02%
5.41%
02/08/2013
02/08/2019
02/08/2018
26/07/2019
15/03/2019
As at 14 August 2019, there were 1,816,842 unlisted performance rights, granted to 59 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.
128
Corporate
Directory
Name of Entity
SUPER RETAIL GROUP LIMITED
ABN
81 108 676 204
Company Secretary
Mr Peter Lim
Principal Registered Office
751 Gympie Road
LAWNTON QLD 4501 Australia
Telephone: +61 7 3482 7900
Facsimile: +61 7 3205 8522
Website Address
www.superretailgroup.com.au
Securities Exchange
Super Retail Group Limited
(SUL) shares are quoted on the
Australian Securities Exchange
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
Solicitors
King & Wood Mallesons
Auditors
PricewaterhouseCoopers
KEY DATES FOR SHAREHOLDERS
Event
Date(1)
Annual General Meeting (2)
22 October 2019
Final Dividend Ex-Date
23 August 2019
Final Dividend Record Date
26 August 2019
Full Year DRP Election Date
27 August 2019
Full Year Dividend Payment Date 26 September 2019
Interim Results Announcement
20 February 2020
Interim Dividend Ex-Date
28 February 2020
Interim Dividend Record Date
2 March 2020
Interim DRP Election Date
3 March 2020
Interim Dividend Payment Date
2 April 2020
(1) If there are any changes to these dates, the Australian Securities
Exchange will be notified accordingly.
(2) The 2019 Annual General Meeting of the Shareholders of
Super Retail Group Limited will be held at the PwC Offices,
Apollo Room Level 23, 480 Queen Street, Brisbane Queensland.
Quantium NAB Data Disclaimer
This report comprises, and is the subject of intellectual property
(including copyright) and confidentiality rights of one or multiple
owners, including The Quantium Group Pty Limited (Quantium)
and where applicable, its third-party data owners (Data Providers),
together (IP Owners). The information contained in this report may
have been prepared using raw data owned by the Data Providers.
The Data Providers have not been involved in the analysis of the raw
data, the preparation of, or the information contained in the report.
The IP Owners do not make any representation (express or implied),
nor give any guarantee or warranty in relation to the accuracy,
completeness or appropriateness of the raw data, nor the analysis
contained in this report. None of the IP Owners will have any liability for
any use or disclosure by the recipient of any information contained in,
or derived from this report. To the maximum extent permitted by law,
the IP Owners expressly disclaim, take no responsibility for and have
no liability for the preparation, contents, accuracy or completeness of
this report, nor the analysis on which it is based. This report is provided
in confidence, may only be used for the purpose provided, and may
not be copied, reproduced, distributed, disclosed or made available
to a third party in any way except strictly in accordance with the
applicable written terms and conditions between you and Quantium,
or otherwise with Quantium’s prior written permission.
SUPER RETAIL GROUP LIMITED ANNUAL REPORT 2019
I N S P I R I N G Y O U T O
L I V E Y O U R PA S S I O N
ABN: 81 108 676 204
www.superretailgroup.com.au