SUPER RETAIL GROUP LIMITED — AGM Information 2016

Oct 23, 2016

2016 Annual General Meeting

24 October 2016

Annual General Meeting – Chairman’s Presentation

Robert Wright

24 October 2016

Performance Trends

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Reported Sales ($m)

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2,422
2,239
2,112
2,020
1,654
1,092
938
829
715
Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16
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Reported Total Segment EBIT ($m)

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182.6
172.3 170.2 175.3
140.7
87.5
65.8
55.1
45.7
Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16
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Performance Trends

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182%
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Cumulative Total Shareholder Return (%)

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76%
69%
53%
37%
16% 15%
3%
Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16
-26%
-42%
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Value of $1000 invested on 30 June 2006

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Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16
Super Retail Group S&P / ASX200 Index
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Group Results

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	2015/16 $m	2014/15 $m	Change on PCP
Normalised Net Profit after Tax (NPAT)	108.6	106.3	2.2%
Other items not included in Normalised NPAT	(45.8)	(25.2)	-
Profit attributable to owners – continued operations	62.8	81.1	(22.6%)

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Group Results

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	2015/16 $m	2014/15 $m	Change on PCP
Operating Cash Flow (excluding week 53 net payments)	197.1	182.0	8.3%
Capital Expenditure	(79.9)	(71.9)	11.1%
Financing Cash flows	(77.0)	(121.1)	NA
Net Cash Flow	2.3	(11.0)	NA

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Performance Trends

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Reported DPS (c)

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41.5
40.0 40.0
38.0
32.0
29.0
21.5
18.0
13.0
10.5
Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16
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Annual General Meeting – Group MD & CEO Presentation

Peter Birtles

24 October 2016

Contents

2015/16 Financial Results 2016/17 Trading Update Group Strategy

Group Results

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	2015/16 $m	Change on PCP
Total Sales	2,422.2	8.2%
Total Segment EBITDA	245.7	6.4%
Total Segment EBIT	175.3	3.0%
Normalised NPAT	108.6	2.2%
Operating Cash Flow	159.2	($22.8m)
Net External Debt	400.2	$21.3m
Dividend	41.5c	1.5c

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Performance Trends

Team

Safety

Team Engagement

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Lost Time Injury Frequency
Rate
68.0 71.0
13.2
6.8
Jun 15 Jun 16 Jun 15 Jun 16
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Team Retention

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75% 75%
Jun 15 Jun 16
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Customer

Average Net Promoter Score (%)

Active Club Customer Members (m) Transactions (m)

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43.1
36.9
Jun 15 Jun 16
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3.9 4.5
Jun 15 Jun 16
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42.8 44.8
Jun 15 Jun 16
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• Average of NPS scores of each Division

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Segment Results

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	2015/16	2014/15
	Sales $m Segment EBIT $m	Sales $m Segment EBIT $m
Auto Segment Leisure Segment Sports Segment Group & Unallocated Total Segment Result	922.8 104.6 581.9 18.6 910.2 77.8 7.3 (25.7)	854.3 96.0 543.2 32.3 835.0 65.6 6.2 (23.7)
	2,422.2 175.3	2,238.7 170.2

Segment Results are net of non-controlling interests (EBIT only) and excludes the business restructuring costs for Ray’s Outdoors and Infinite Retail. Refer the segment notes below.

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Segment Results

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	2015/16	2014/15
	Sales $m Segment EBIT $m	Sales $m Segment EBIT $m
Auto Segment Leisure Segment Sports Segment Group & Unallocated Total Segment Result	922.8 104.6 581.9 18.6 910.2 77.8 7.3 (25.7)	854.3 96.0 543.2 32.3 835.0 65.6 6.2 (23.7)
	2,422.2 175.3	2,238.7 170.2

Segment Results are net of non-controlling interests (EBIT only) and excludes the business restructuring costs for Ray’s Outdoors and Infinite Retail. Refer the segment notes below.

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Leisure Performance Plan Update

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BCF

1[st] half 2[nd] half LFL Sales growth 3.1% 8.2% Gross margin vs -3.6% -1.2% pcp EBITDA vs pcp -$6.2m +$0.6m EBITDA margin vs -3.5% -0.9% pcp

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55
Stores
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17
Stores
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Segment Results

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	2015/16	2014/15
	Sales $m Segment EBIT $m	Sales $m Segment EBIT $m
Auto Segment Leisure Segment Sports Segment Group & Unallocated Total Segment Result	922.8 104.6 581.9 18.6 910.2 77.8 7.3 (25.7)	854.3 96.0 543.2 32.3 835.0 65.6 6.2 (23.7)
	2,422.2 175.3	2,238.7 170.2

Segment Results are net of non-controlling interests (EBIT only) and excludes the business restructuring costs for Ray’s Outdoors and Infinite Retail. Refer the segment notes below.

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Segment Results

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	2015/16	2014/15
	Sales $m Segment EBIT $m	Sales $m Segment EBIT $m
Auto Segment Leisure Segment Sports Segment Group & Unallocated Total Segment Result	922.8 104.6 581.9 18.6 910.2 77.8 7.3 (25.7)	854.3 96.0 543.2 32.3 835.0 65.6 6.2 (23.7)
	2,422.2 175.3	2,238.7 170.2

Segment Results are net of non-controlling interests (EBIT only) and excludes the business restructuring costs for Ray’s Outdoors and Infinite Retail. Refer the segment notes below.

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Group Cash Flow

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	2015/16 $m 2014/15 $m
Operating cash flow (pre store set up investment) Store set up investment Operating cash flow Stores Other Capex Investing Cash flow Dividends & interest Ext Debt (repay)/proceeds Financing Cash flow Net Cash flow	184.4 196.2 (25.2) (14.2)
	159.2 182.0 (56.1) (38.8) (23.8) (33.1)
	(79.9) (71.9) (100.3) (100.5) 23.3 (20.6)
	(77.0) (121.1) 2.3 (11.0)

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Group Balance Sheet

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	Jun 16 $m Jun 15 $m
Inventory - Auto Retailing - Leisure Retailing - Sports Retailing - Group & Unallocated Total Inventory Trade and other payables Net inventory investment	188.7 145.8 162.7 4.7 183.3 153.8 161.8 6.7
	501.9 505.6 (251.1) (268.6)
	250.8 237.0
Property, Plant and Equipment & Computer Software	315.2 311.2
Net External Debt	400.2 378.9

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Contents

2015/16 Financial Results 2016/17 Trading Update Group Strategy

2016/17 Trading Update

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Auto Retailing

• LFL sales growth in the first 16 weeks of 2016/17 circa 2.5%

• Auto categories performing solidly but Tools categories impacted by competitive clearance activity, which is expected to conclude in December

• SCA store development: plan to open 15 new stores and close two stores, 45 refurbishments, extensions and relocations

Leisure Retailing

• LFL sales growth in the first 16 weeks of 2016/17 circa 6%

• 1st quarter Rays Outdoors clearance has boosted its LFL sales growth but dampened BCF’s LFL sales growth

• Rays Outdoors clearance activity and store closures are complete

• Store development plan to open 14 BCF stores (3 new sites and 11 conversions for Rays Outdoors sites)

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2016/17 Trading Update

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Sports Retailing

• LFL sales growth in the first 16 weeks of 2016/17 circa 4.5%

• Store development: plan to open two new Rebel stores and 12 Amart Sports stores (including 5 conversion of Rays Outdoors sites)

Group

• Group Unallocated costs to be circa $21m, including Corporate $8m, unutilised DC storage $5m, Digital $5m, and Other $3m

• Planned capital expenditure of circa $110m to support the larger store development program, RAYS transformation and investment in information systems

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Contents

2015/16 Financial Results

2016/17 Trading Update

Group Strategy

Changing Retail Market How are external market forces shaping our strategy?

Forces Evolving Customer Workforce impacting on Globalisation Digitalisation Business Power Demographic Retail Models Historical levers of differentiation (range and price) will no longer succeed Building a stronger emotional connection with customers is a must Implications for Super Organisational capabilities have to be ‘World class’ not ‘Australasian class’ Retail Group Aligning team member behaviour and culture with the customer offer will be a sustainable advantage

Providing Multi channel Team Customer Supply Chain Key elements Differentiated retail, engagement Understanding and IT of the strategy Solutions (not inspiration, and & Engagement capability just products) community development

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Our Strategic Roadmap

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OUR VISION

Inspiring you to live your passion

OUR PURPOSE

To provide solutions and engaging experiences that enable our customers to make the most of their leisure time

OUR GOALS

To be one of the 5 largest Australasian retail companies

To achieve the highest Team Member engagement across the retail industry

To achieve higher To provide customer returns to our engagement shareholders that ratings than our exceed the competitors ASX 200 by 5%

OUR FINANCIAL TARGETS

To deliver compound annual growth in EPS of greater than 15%

To grow return on capital to greater than 15%

OUR VALUES

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Passion Openness Integrity Care Discipline
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Our Strategic Roadmap

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OUR VISION

Inspiring you to live your passion

OUR PURPOSE

To provide solutions and engaging experiences that enable our customers to make the most of their leisure time

OUR STRATEGIC PILLARS

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Customer Solutions that engage
Understanding and and inspire our
Insight customers
Agile and Efficient Engaged and Capable
Supply Chain Team
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Leading Private and Exclusive Brands

Strong, Sustainable and Efficient Foundations

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Strategic Pillars

TODAY

Market leading retail brands in all our categories (apart from outdoor adventure)

Solutions that engage and inspire our customers

Strong portfolio of existing stores in the right location for our target customers

In store experience that benchmarks strongly against best in class for our categories

First to market access to the best products through our strong partnerships with our trade partners and our sourcing and supply chain capabilities

Market leading digital engagement with our retail brands – conversion currently below par Extension of our offer into physical services to provide customer solutions

Early exploration of digital business models extending service offering

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5 YEAR PLAN

Group wide focus on driving customer endorsement through team and customer engagement

Opening circa 150 new stores over the next 5 years

Continual focus on improving customer experience through the store refurbishment program – circa 80 stores per annum

Continual focus on developing our trade partner partnerships

Developing ecommerce customer experience and fulfilment capabilities Increasing range of services provided in store and out of store through partnering with 3[rd] party providers

Continued development of digital businesses and in developing interactive digital communities based around leisure passions

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Strategic Pillars

TODAY

Deep understanding of our target customers across all categories

Large active membership of loyalty programs: Auto – 1.2 million active Leisure – 1.5 million active Sports – 1.8 million active

Customer Understanding and Insight

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5 YEAR PLAN

Growing active membership and lifetime value

Strengthening in-house capabilities to generate insights to improve the customer experience and maximise customer lifetime value

Basic in-house customer analytics capability

Leading Private and Exclusive Brands

TODAY

Strong portfolio of private brands: Auto circa 42% of sales Leisure circa 36% of sales Sports circa 14% of sales

Exclusive access to selected international brands

5 YEAR PLAN

Strong portfolio of differentiated private brands: Auto circa 50% of sales Leisure circa 40% of sales Sports circa 25% of sales

Secure additional exclusive international brands

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Strategic Pillars

TODAY

Distribution centre and freight network to support business plans are built and operational Best of breed warehouse management and forecasting and replenishment systems

Agile and Efficient Supply Chain

Some Sports logistics managed by 3PL

TODAY

Strong corporate culture built around core values and vision

High levels of team member engagement and retention

Engaged and Capable Team

Improving performance across safety and diversity

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5 YEAR PLAN

$20m cost savings driven through productivity, freight efficiencies and sports integration

Further $55m to $80m net inventory reduction delivered from existing capabilities and new allocations management systems

Multi channel fulfilment capability that meets customer expectations

5 YEAR PLAN

Evolving culture to support changing business model and team member expectations - customer centricity, collaboration and agility

Enhanced leadership and capability development Sustained engagement and retention with improved safety and diversity

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Strategic Pillars

TODAY

Strong cost control disciplines across the Group

Strong performance framework and IT infrastructure that supports traditional product and physical channel business model

Strong, Sustainable and Efficient Foundations

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5 YEAR PLAN

• $10m group wide procurement and productivity savings program

• Developing performance

• management framework to support evolving business model

IT Transformation:

Compliant sustainability and ethical souring practices

• Establish 3[rd] party managed data centre

• Implementation of a new digital platform, middleware, business analytics and allocations systems

• Enhanced cyber security management

Enhanced sustainability and ethical sourcing governance

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Delivering our Financial Targets

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5 Year Target	Store Numbers	LFL Growth	EBIT Margin	**Pre Tax ROC % ***
Auto	350	>3% PA	12%	> 50%
Leisure	220	>3% PA	11%	> 30%
Sports	230	>4% PA	11%	> 30%

• excludes acquired goodwill and brand names

Opportunities

Challenges

• Growing store numbers to over 800

• Delivering LFL growth of 3% to 4%

• Eliminate Group transformation costs

• Deliver $20m saving in supply chain costs

• Grow private brand to hit divisional targets

• Developing digital businesses to over 15% of sales

• Increased investment in digital and technology

• Investment in in-store customer experience

• • Lower domestic growth

• Consumer confidence

• Weakening Australian dollar

• Competitive intensity

• Reposition Rays

• Amart Sports scale and profitability in new markets

• Complete Workout World integration into Rebel

• Group costs efficiencies targeting $10m

• Achieve $75m to $100m working capital savings

• Range management and sourcing initiatives

• Effective change management

Compared to 2014/15 base

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2016 Annual General Meeting

24 October 2016