ANNUAL REPORT 2018 Inspiring you to live your passion CONTENTS 001 About Us 002 Our Business 007 Chair’s Message 009 CEO’s Message 013 Performance Overview 030 Sustainability 034 Board of Directors 036 Group Executive Team 038 Our Team 041 Corporate Governance 045 Directors’ Report 074 Financial Statements 126 Directors’ Declaration 127 Independent Auditor’s Report 135 Shareholder Information 137 Financial Calendar & Corporate Directory 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. A description of the nature of the consolidated entity’s operations and its principal activities is included in the Directors’ Report on pages 45 to 72. The financial report was authorised for issue by the Directors on 20 August 2018. The Directors have the power to amend and reissue the financial report. Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available globally at minimum cost to the Company. All press releases, financial reports and other information are available on our Investors and Media page on our website: www.superretailgroup.com ABOUT US Super Retail Group is one of We have over 670 stores, an annualised turnover of more than $2.5 billion, and Australasia’s largest retailers operations in Australia, New Zealand and China. and is listed on the Australian Securities Exchange (ASX). Our retail portfolio includes BCF Boating Camping Fishing, Macpac, Rebel and Supercheap Auto. Our online and digital presence complements our physical store footprint to enable our customers to shop whenever and however they prefer. In addition to our extensive retail network, our commercial entities – Supercheap Auto Trade Direct, Infinite Retail and Super Retail Commercial – offer opportunities for businesses to use our sourcing and supply chain capabilities to buy the products they need, when they need them. We have a clear view of the future, a solid strategic roadmap and a passionate team of more than12,000 members – all committed to delivering solutions that engage and inspire our customers. Super Retail Group Limited • Annual Report 2018 1 OUR BUSINESS OUR VALUES PASSION OPENNESS INTEGRITY CARE DISCIPLINE OUR PURPOSE OUR VISION To provide solutions and engaging Inspiring you experiences that inspire our customers to live your passion. to make the most of their leisure time. Customer engagement, inspiring We remain focused on our strategy OUR STRATEGY customer solutions, a world class supply to ensure we continue to foster chain and an engaged and capable sustainable value creation in a team are critical to our future. changing retail environment. Engaging capable Growing businesses in high team members who share our Building a world class 1involvement categories 2customers’ passions 3omni-retail organisation Super Retail Group has a strong We recognise the imperative of OUR GOALS portfolio of retail businesses, each with turning this potential into growth in strong potential for organic growth. total Group earnings. HEALTHY, INSPIRED, SUSTAINABLE TOP PASSIONATE AND ENGAGED AND OMNI-RETAIL QUARTILE HIGH PERFORMING SATISFIED CAPABILITIES SHAREHOLDER TEAM MEMBERS CUSTOMERS RETURNS 2 Super Retail Group Limited • Annual Report 2018 At the core of our strategy is our we need to build as a world class OUR CUSTOMER Group-wide Customer Promise, omni-retailer and align to our PROMISE which ensures we have a clear and purpose of providing solutions and common view of the standards engaging experiences that inspire customers can expect us to deliver. our customers to make the most of These standards guide the capabilities their leisure time. INSPIRATION EXPERIENCE SOLUTIONS DELIVERY CONFIDENCE Inspiring our Engaging you Determining the Delivering how, Guaranteeing communities with and providing best solution for when and where the competitive value our passion outstanding service your needs you choose of our solutions 12and expertise 345 Super Retail Group is one of our customers to live their leisure OUR CORE BRANDS Australasia’s largest retailers, and passions as the owner of iconic is proud to provide solutions and Australian brands including: engaging experiences that inspire AUTO OUTDOOR SPORTS Supercheap Auto is a thriving specialty With stores across every state of Rebel offers a wide range of the latest retail business, specialising in automotive mainland Australia, BCF is the largest quality, branded sporting and leisure parts and accessories. Supercheap outdoor retailer in the country. goods for the casual enthusiast and Auto stocks a wide range of tools We sell quality brands from trusted serious competitor, including fitness and accessories for the DIY home manufacturers and are committed to equipment, sports equipment, apparel handyman, as well as products for offering the widest product range to our and associated accessories. travel, touring, outdoors, garage and customers, who are as passionate about the shed. boating, camping and fishing as we are. Macpac has designed apparel and equipment that has inspired a life out- doors 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. Super Retail Group Limited • Annual Report 2018 3 2018 PERFORMANCE HIGHLIGHTS TEAM ~12,000 TEAM MEMBERS SUPPORT DISTRIBUTION COUNTRIES OF OPERATION: 670 STORES 5 OFFICES 7 CENTRES 3 AUSTRALIA, NZ & CHINA 70% SAFETY 74% TEAM 6.4 TEAM ENGAGEMENT LTIFR – Lost Time Injury Frequency Rate RETENTION 2016 2017 2016 2017 2016 2017 71% 71% 8.8 6.5 75% 74% FINANCIAL SALES ($M) TOTAL SEGMENT EBIT ($M) 2,570 2,422 2,466 2,239 2,020 2,112 219.6 207.3 1,654 172.3 182.6 170.2 175.3 140.7 1,092 938 829 87.5 55.1 65.8 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 JUN 15 JUN 16 JUN 17 JUN 18 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 JUN 15 JUN 16 JUN 17 JUN 18 EPS (C) DIVIDEND (C) 65.0 55.1 52.3 51.6 49.4 49.0 46.4 41.5 46.5 38.0 40.0 40.0 40.9 32.0 32.1 31.8 29.0 28.1 18.0 21.5 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 JUN 15 JUN 16 JUN 17 JUN 18 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 JUN 15 JUN 16 JUN 17 JUN 18 POST TAX ROC ( PER CENT) POST TAX ROE ( PER CENT)* 16.8 17.3 15.4 15.9 22.0 12.6 13.0 13.1 18.6 11.3 18.8 19.4 19.5 18.2 10.6 10.7 16.1 14.5 13.9 14.5 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 JUN 15 JUN 16 JUN 17 JUN 18 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 JUN 15 JUN 16 JUN 17 JUN 18 * Normalised 4 Super Retail Group Limited • Annual Report 2018 2018 PERFORMANCE HIGHLIGHTS DELIVERING OUR FINANCIAL TARGETS CUSTOMER 5 YEAR TARGETS SALES GROWTH PER CENT AUTO 5.3% OUTDOOR (BCF ONLY) 3.7% 57.9% SPORTS 3.2% 8.2% 0 1 2 3 4 5 6 (percentage) AVERAGE NPS PRE TAX ROC PER CENT* AUTO 44% OUTDOOR (BCF ONLY) 21% 5.5M SPORTS 12% 5.8% 0 10 20 30 40 50 (percentage) *excludes acquired goodwill and brand names ACTIVE CLUB MEMBERS EBIT MARGIN AUTO 11.6% OUTDOOR (BCF ONLY) 5.5% 45.6M SPORTS 9.3% 2.5% 0 3 6 9 12 15 (percentage) CUSTOMER TRANSACTIONS OMNI-RETAIL TRANSFORMATION TOTAL ONLINE STORE CLICK & SALES GROWTH NUMBERS COLLECT % AUTO 85% 319 >50% OUTDOOR (BCF) 76% 134 >50% SPORTS 152% 159 >30% Super Retail Group Limited • Annual Report 2018 5 6 Super Retail Group Limited • Annual Report 2018 CHAIR’S MESSAGE DEAR SHAREHOLDER, It is a honour to be able to write my first message to you as the Chair of Super Retail Group. Good governance provides the a dividend payout ratio of between their significant and long-standing foundation for all our activities, and 55 per cent and 65 per cent of service to the Board and the Group, is essential to the realisation of our underlying net profit after tax. and wish them the best for the future. goals. Your Board is committed to In line with our planned and rigorous sound governance practices, based Super Retail Group has a clear approach to Board succession on an ethical approach to decision purpose, and a capable team led planning, Peter Everingham was making, and a healthy organisational by Peter Birtles. We will continue to appointed to the Board as a Non- culture that values engagement, execute on our omni-retail strategy, Executive Director in December transparency, diversity and inclusion. responding to the dynamic retail 2017, bringing his extensive executive We recognise that what we do as a environment and striving to provide experience in the digital sector to Group affects our team members, solutions and experiences for the Board. our customers, our suppliers, our customers so they can make the investors, and the communities we most of their leisure time. I thank my Board colleagues for are connected with. By engaging their commitment and guidance. with our stakeholders, and being Your Board has a deep I welcome the Macpac team to transparent about our approach understanding of the Group’s the Group, and thank the entire and our actions, we aim to make businesses, and spends time outside Super Retail Group team for their good decisions which will support the Board and Committee meetings tireless efforts to inspire and support our customers, and engage with continued success of the Group.