ANNUAL REPORT Annual Review 2014.indd 1 9/8/14 10:32 AM Annual Review 2014.indd 2 9/8/14 10:32 AM NAME OF ENTITY Super Retail Group Limited CONTENTS ABN 81 108 676 204 CHAIRMAN AND MANAGING DIRECTOR’S REPORT ... 3 PRINCIPAL REGISTERED OFFICE 751 Gympie Road CORPORATE GOVERNANCE STATEMENT ..................... 6 LAWNTON QLD 4501 Telephone (07) 3482 7900 ANNUAL REPORT ........................................................... 16 Facsimile (07) 3205 8522 SHARE REGISTRY DIRECTORS’ REPORT ......................................................17 Link Market Services Level 12, 680 George Street COMPREHENSIVE INCOME STATEMENT ......................44 SYDNEY NSW 2000 Telephone: 1300 554 474 STATEMENT OF FINANCIAL POSITION ......................... 45 www.linkmarketservices.com.au STATEMENT OF CHANGES IN EQUITY .......................... 46 AUDITORS PricewaterhouseCoopers STATEMENT OF CASH FLOWS ....................................... 47 SOLICITORS King & Wood Mallesons NOTES TO THE FINANCIAL STATEMENTS ..................... 48 STOCK EXCHANGE LISTING DIRECTORS’ DECLARATION ........................................... 96 Super Retail Group Limited (SUL) shares are quoted on the Australian Securities Exchange INDEPENDENT AUDIT REPORT ..................................... 97 COMPANY SECRETARY Mr Robert Dawkins SHAREHOLDER INFORMATION .....................................99 WEBSITE www.superretailgroup.com THE ANNUAL GENERAL MEETING The Annual General Meeting of the Shareholders of Super Retail Group Limited will be held at Kedron Wavell Services Club, Long Tan Room, 375 Hamilton Road, Chermside South, Queensland on Wednesday, 22 October 2014 at 11.30 am. Annual Review 2014.indd 1 9/8/14 10:32 AM PERFORMANCE TREND GRAPHS SALES ($m) EBIT ($m)* 182.6 2112.1 172.3 2020.0 140.7 1654.1 1092.3 87.5 938.0 828.8 65.8 715.4 55.1 624.8 45.7 38.1 JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 *excludes goodwill impairment charge in 2010 EPS (c)* 55.1 Post Tax ROC (%)* 52.3 16.8 17.3 46.4 15.4 15.9 40.9 13.9 14.1 12.6 11.3 32.1 28.1 22.6 19.5 JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 * historical EPS adjusted to take into account the bonus element in the 2011 * return calculation adjusted for goodwill impairment, acquisition costs and entitlement offer restructuring provisions 382.6 Dividend (c) Net Debt ($m) 182.655.1 182.640.055.1 38.0 341.0 329.3 32.0 29.0 21.5 18.0 117.8 114.7 13.0 93.5 10.5 78.8 73.5 JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 Gearing Ratio (%) Post Tax ROE (%)* 46.7 22.0 43.3 42.3 19.8 19.5 18.8 18.8 19.4 33.1 33.5 16.1 31.0 14.5 22.6 19.5 JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 * return calculation adjusted for goodwill impairment, acquisition costs and restructuring provisions Value of $1,000 invested on 30 June 2006 Annual Total Shareholder Return (%) 16000 182 14000 12000 10000 76 69 8000 53 6000 37 16 4000 -42 -26 2000 JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 0 JUN 06 JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 SUPER RETAIL GROUP LIMITED S&P/ASX 200 INDEX Annual Review 2014.indd 2 9/8/14 10:32 AM Fellow Shareholders, from investment in the mining industry, a CHAIRMAN higher level of sales cannibalisation from AND GROUP Welcome to the 2014 Annual Report of new stores and some internal execution MANAGING Super Retail Group. issues. DIRECTOR’S July 2014 marked the tenth anniversary of The Sports Retailing Division had a solid the listing of our Company in July 2004. The start to the year but performance was REPORT Company today is very different to the one impacted by inventory supply challenges that listed back in 2004. Back then we had resulting from the implementation of new one business, Supercheap Auto, with 183 merchandise and supply management stores across Australia and New Zealand. systems in October 2013 and from a slowdown in customer demand following Today we have eight retail businesses and the federal budget and a warmer start to three commercial businesses with over winter. 640 stores. Over the 10 years, Group sales have grown from $383 million to We have made a number of operational $2.1 billion and Group EBITDA has grown changes to address the areas that impacted “Today we have eight from $32 million to $237 million. on performance in the 2014 year and we retail businesses and three expect that we will re-establish the earnings We have seen the share price grow from momentum of the BCF, Rebel and Amart commercial businesses $1.97 at listing on 6 July 2004 to $8.46 at Sports businesses in the 2015 year. with over 640 stores. Over 30 June 2014 and over the 10 years we the 10 years, Group sales have paid gross dividends of $2.54. This Following the restructuring initiatives have grown from $383 represents a total shareholder return of undertaken in the 2013 year, good progress million to $2.1 billion and 470% over the 10 years, which compares has been made in the 2014 year in lifting to a return of 142% from the ASX 200 the performance of the Ray’s Outdoors and Group EBITDA has grown Accumulation Index. FCO businesses but both businesses are from $32 million to still generating returns below the Group’s $237 million.” OPERATING AND FINANCIAL targets. We will continue to concentrate on PERFORMANCE initiatives to both increase the customer base and the frequency of customer The 2014 financial year has been a mixed visitation for both businesses. one for the Company. We have delivered our eighth successive year of earnings We have remained focused on developing growth, with both Group sales and earnings the capabilities that we will need to after tax growing by around 5%. However, operate a successful multi-channel retail our overall results have been below the organisation. During the year, the Group expectations we set at the start of the year. invested circa $47.9 million in capital expenditure and $9.8 million in operating The Auto Retailing Division has maintained expenses on these programs. its 10 year track record of delivering annual EBITDA growth of around 10% which is We continue to build our loyalty programs an extremely pleasing performance and across the Group and now have over reflects the successful passing of the 1 million members in each of our leadership of Auto Retailing from David Supercheap Auto, BCF, Ray’s Outdoors and Ajala to Chris Wilesmith. However, both Rebel clubs. Growth through our online the Leisure and Sports Retailing Divisions channels has significantly exceeded our delivered an underlying EBITDA result physical store growth but we have work below the prior year. to do on improving our online fulfilment capabilities. We have also successfully In the Leisure Retailing Division, the BCF tested store of the future concepts business was impacted by a slowdown in designed to create a more engaging sales in stores that had previously benefited customer experience in our Supercheap Super Retail Group Limited 3 ANNUAL REPORT 2014 Annual Review 2014.indd 3 9/8/14 10:32 AM Auto and BCF businesses and plan to the year. At the Group level, the focus is commence a rollout program in the coming on raising funds for children’s healthcare year. charities while at a business level, support is provided to organisations in areas related We opened a new distribution centre in to the activities serviced by the business’ Western Sydney in April 2014 and are on products, for example safe driving at track to open a similar facility in Northern Supercheap Auto and Coastguard at BCF. Brisbane in the 2015 financial year. During the year, the Group contributed $1.03 million including contributions from We have grown our stable of private and our team members and customers to “The Group has now exclusive brands across the Group and various charities. been recognised by the have rolled out the JDA inventory planning Australian Packaging system across the Leisure Retailing Division The Group has also maintained its focus and into the Auto Retailing Division. on a number of environmental initiatives Covenant in both their Although we have encountered some including reducing packaging and power 2013 and 2014 annual challenges post implementation, the consumption and increasing recycling. report ratings for being establishment of the Group’s SAP platform The Group has now been recognised by the highest achiever in into the Sports Retailing Division will the Australian Packaging Covenant in both facilitate consistent sourcing and supply their 2013 and 2014 annual report ratings the retail industry.” chain processes across the Group. for being the highest achiever in the retail industry. A full review of the Group’s performance and plans is included in the Operating and Some of the Group’s achievements are Financial Review set out on pages 17 to 22 summarised in the table below. of this Annual Report. Group Waste Recycling - The Group is The Directors have declared a fully franked a signatory to the Australian Packaging final dividend of 21.5 cents per share which Covenant and has set increased annual results in full year dividends of 40.0 cents waste recycling targets as per the agreed per share, an increase of 5% over the prior APC Action Plan.