SUPER RETAIL GROUP LIMITED — AGM Information 2017

Oct 22, 2017

2017 Annual General Meeting

23 October 2017

Chairman’s Presentation

Robert Wright

23 October 2017

Sales and EBIT Trends

Reported Sales ($m)

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2,422 2,466
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 Jun 17
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Reported Total Segment EBIT ($m)

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207.3
182.6
172.3 170.2 175.3
140.7
87.5
45.7 55.1 65.8
Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17
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Group Net Profit after Tax

	2016/17 $m	2015/16 $m	Change on PCP
Normalised Net Profit after Tax (NPAT)	135.8	108.6	25.0%
Other items not included in Normalised NPAT	(34.0)	(45.8)	-
Profit attributable to owners – continued operations	101.8	62.8	62.1%

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Long Term Shareholder Returns

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Group Cash Flow

	2016/17 $m	2015/16 $m	Change on PCP
Operating Cash Flow	234.5	159.2	47.3%
Capital Expenditure	(101.2)	(79.9)	26.7%
Financing Cash flows	(129.0)	(77.0)	67.5%
Net Cash Flow	4.3	2.3	87.0%

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Dividend Per Share Trends

Reported DPS (c)

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46.5
41.5
40.0 40.0
38.0
32.0
29.0
21.5
18.0
13.0
Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17
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Chairman’s Presentation

Robert Wright

23 October 2017

Group Managing Director & Chief Executive Presentation

Peter Birtles

23 October 2017

Contents

2016/17 Financial Results 2017/18 Trading Update Group Strategy

Group Highlights

• Total Group sales of $2.5 billion up by 4.1% on a LFL basis

• Total Segment EBIT of $207.3 million up by 18.3% on pcp

• Normalised NPAT of $135.8 million up by 25.0% on pcp

• Operating cash flow of $234.5 million up by $75.3 million on pcp

• Full year dividend of 46.5 cents per share up by 12% on pcp

2016/17 results are for 52 weeks, pcp results are for 53 weeks

Core businesses generating strong underlying performance

Transformation initiatives delivering expected benefits

Investment in omni-retail capabilities on track

Strong performance in customer and team member metrics

√ √ √ √

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Performance Trends

Team

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Team Engagement Safety Team Retention
Lost Time Injury Frequency Rate
68% 71% 71% 75% 75% 74%
13.2
8.8
6.3
Jun 15 Jun 16 Jun 17 Jun 15 Jun 16 Jun 17 Jun 15 Jun 16 Jun 17
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Customer

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Average Net Active Club Customer
Promoter Score Members (m) Transactions (m)
36.9 43.1 53.5 3.9 4.5 5.2 42.8 44.0 44.5
Jun 15 Jun 16 Jun 17 Jun 15 Jun 16 Jun 17 Jun 15 Jun 16 Jun 17
Average of club member NPS
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Segment Results

	2016/17	2015/16
	Sales $m Segment EBIT $m	Sales $m Segment EBIT $m
Auto Segment Leisure Segment Sports Segment Group & Unallocated Total Segment Result	955.9 111.0 553.5 25.4 949.2 91.3 7.2 (20.4)	922.8 104.6 581.9 18.6 910.2 77.8 7.3 (25.7)
	2,465.8 207.3	2,422.2 175.3

Segment Results are net of non-controlling interests (EBIT only) and in 2016/17 excludes the business

restructuring costs for Sports Retail (in 2015/16 excludes the business restructuring costs for Ray’s Outdoors and Infinite Retail). Refer the segment notes below.

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Segment Results

	2016/17	2015/16
	Sales $m Segment EBIT $m	Sales $m Segment EBIT $m
Auto Segment Leisure Segment Sports Segment Group & Unallocated Total Segment Result	955.9 111.0 553.5 25.4 949.2 91.3 7.2 (20.4)	922.8 104.6 581.9 18.6 910.2 77.8 7.3 (25.7)
	2,465.8 207.3	2,422.2 175.3

Segment Results are net of non-controlling interests (EBIT only) and in 2016/17 excludes the business

restructuring costs for Sports Retail (in 2015/16 excludes the business restructuring costs for Ray’s Outdoors and Infinite Retail). Refer the segment notes below.

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Segment Results

	2016/17	2015/16
	Sales $m Segment EBIT $m	Sales $m Segment EBIT $m
Auto Segment Leisure Segment Sports Segment Group & Unallocated Total Segment Result	955.9 111.0 553.5 25.4 949.2 91.3 7.2 (20.4)	922.8 104.6 581.9 18.6 910.2 77.8 7.3 (25.7)
	2,465.8 207.3	2,422.2 175.3

Segment Results are net of non-controlling interests (EBIT only) and in 2016/17 excludes the business

restructuring costs for Sports Retail (in 2015/16 excludes the business restructuring costs for Ray’s Outdoors and Infinite Retail). Refer the segment notes below.

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Group Cash Flow

	2016/17 $m 2015/16 $m
Operating cash flow (pre store set up investment) Store set up investment Operating cash flow Stores Other capital expenditure Investing cash flow Dividends & interest Ext debt (repay)/proceeds Financing cash flow Net cash flow	264.8 184.4 (30.3) (25.2)
	234.5 159.2 (64.7) (56.1) (36.5) (23.8)
	(101.2) (79.9) (104.0) (100.3) (25.0) 23.3
	(129.0) (77.0) 4.3 2.3

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Group Balance Sheet

	June 17 $m June 16 $m
Inventory - Auto Retailing - Leisure Retailing - Sports Retailing - Group & Unallocated Total inventory Trade and other payables Net inventory investment	187.7 126.9 164.9 2.0 188.7 145.8 162.7 4.7
	481.5 501.9 (253.7) (251.1)
	227.8 250.8
Property, Plant and Equipment & Computer Software	358.0 315.2
Net external debt	380.7 400.2

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Contents

2016/17 Financial Results 2017/18 Trading Update Group Strategy

2017/18 Trading Update

Auto Retailing

• Sales growth in the first 16 weeks of 2017/18 circa 6% (LFL sales growth circa 4%)

• Auto categories performing solidly with Tools categories delivering strong growth cycling competitive clearance activity in the prior comparative period

• SCA store development: plan to open ten new stores and close one store, 44 refurbishments, extensions and relocations

Leisure Retailing

• Sales growth for BCF in the first 16 weeks of 2017/18 circa 7% (LFL sales growth circa 2%)

• Solid LFL growth cycling Ray’s Outdoor’s clearance activity in the prior comparative period

• Rays performance is strong with new customers, focusing on traffic growth. Expected loss of $4m this financial year – decision on future plans in Q3

• Store development plan to open three BCF stores and close one and open one Rays store

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2017/18 Trading Update

Sports Retailing

• Sales growth in the first 16 weeks of 2017/18 circa 5% (LFL sales growth circa 2%)

• 63 Amart Sports stores converted to Rebel – remaining five stores will be converted by 28 October

• Store development: plan to open three Rebel stores

Group

• Planned capital expenditure of circa $120m to support the store development program, Amart Sports conversion and investment in information systems to support omni-retailing strategy

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Contents

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

Retail is a people business ‐ It all starts with our team

RETURN ON CAPITAL DRIVING BUSINESS IMPROVING IMPROVING ASSET GROWTH PROFITABILITY UTILISATION

DELIVERING A DIFFERENTIATED ENGAGING CUSTOMER OFFER

DEVELOPING THE REQUIRED BUSINESS CAPABILITIES DEVELOPING THE RIGHT LEADERSHIP AND CULTURE TO ENGAGE AND INSPIRE OUR TEAM

ATTRACTING, DEVELOPING AND RETAINING CAPABLE AND PASSIONATE TEAM MEMBERS

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Strategic context

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Forces Increasing Evolving
Global Changing
impacting Digitalisation Customer Business
Competitors Workforce
retail Power Models
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Strategic context

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Forces Increasing Evolving
Global Changing
impacting Digitalisation Customer Business
Competitors Workforce
retail Power Models
•
Lower utility of consumption
•
Less time for shopping
•
More informed and connected – changing media consumption
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• Expect increasing relevance and personalisation

• • Expect increasing convenience

• • Demand the best prices

• Retail footfall decreasing………

• • ……….. But transaction values increasing

• • More time for services

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Strategic context

Strategic Options for Traditional Retailers The ‘middle ground’ is increasingly challenging.

Best Price

Middle Ground

Niche or Luxury

Real Specialism

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Strategic context

Implications for Super Retail Group

• Historical levers of differentiation (range and price) no longer enough

• Building a stronger emotional connection with customers is critical – built around their passions for their leisure activities

• We have a significant advantage through connecting our customers with our team members who share their passions

• Organisational capabilities have to be World‐Class not Australasian class

We need to become real specialists in our categories

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Vision

OUR VISION

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Inspiring you to live your passion

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PASSIONATE CUSTOMERS

HIGH INVOLVEMENT CATEGORIES

PASSIONATE TEAM MEMBERS

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Group Strategy

Growing businesses in high involvement categories

OUR STRATEGY

Engaging capable team members who share our customers’ passions

Solutions that engage and inspire Building a world class omni-retail organisation

Participating in high involvement categories mean that we can win by connecting with and inspiring our customers around their passions by providing solutions and engaging experiences not just product and price transactions

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How we can win…..

INSPIRE

INSPIRE EXPERIENCE Inspiring our communities Providing outstanding with our passion service and expertise OUR CUSTOMERS SOLUTIONS Determining the best solution for your needs

Our focus is on helping our customer catch the fish they’ve always wanted to… …not just to sell them the fishing rod.

Allowing our customers to shop their way by integrating our web business with our extensive network of conveniently located stores is a major competitive advantage

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How we can win…..

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INSPIRE EXPERIENCE
Penrith Customer
‘Women in sport’ FISHO app Team Experts
Experience Centre
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SOLUTIONS

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Fitment services Product innovation
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Key initiatives – investing in customer experience

• Click and Collect OMNI • Customer delivery and collection options • New web platform for all websites DIGITAL • Customer engagement apps – BCF trialling FISHO • New stores – potential for up to 800 stores STORES • New formats • In store services – fitment, installation, podiatry….. SERVICES • Partnerships

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Key initiatives – building business capability

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|||
|---|---|
|•|
|Analytics|
|CUSTOMER|
|•|
|Net Promoter Score|
|INSIGHT|
|•|
|Direct Marketing|
|•|
|Private Brand profitability|
|PRIVATE|
|BRANDS|
|•|
|Increasing share of sales|
|•|
|Build on top quintile engagement|
|TEAM|
|•|
|Product to customer centricity|
|CAPABILITY AND|
|ENGAGEMENT|•|
|Focus on leadership alignment, capability development,|
|talent pipeline and achievement culture|

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Key initiatives – delivering business efficiency

OPERATING MODEL	• Review of the Group wide operating model to: o build a successful omni-retail organisation o drive efficiency in Group wide operations
LEISURE	• Division – cycling impact of Ray’s Outdoors closure • BCF – space productivity opportunities • Rays – trial of new format to conclude in third quarter of FY18
SPORTS	• Rebel / Amart Sports Integration – circa $15m benefits • Maturing store space productivity
SUPPLY CHAIN	• Operations efficiencies – further $10 million cost efficiencies • Working Capital – further $40 to $50 million over the next three years

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Factors underpinning confidence in our strategy

Customer Needs and Wants	Customers in the Auto, Leisure, Sports categories want more than range, price and convenience	Customers want community, expertise, inspiration, innovation and solution
Customer Buying Activity	Customers want to shop in the manner that’s most convenient to them at the time	Click and collect presents a significant opportunity and is already over 50 per cent of on-line sales
Product Characteristics	Many of the top selling products in our categories have supply chain challenges	Chemicals, Lead Batteries, Bulky, Ugly and Fragile items require special handling
International Peers	The market leading retailers in our categories in the US, Canada and UK have continued to grow	Their performance provides confidence that Super Retail’s margin targets are achievable
Brand Strength	Our businesses have sizeable club membership and their web traffic is significantly higher than competitors	We are best placed to transition to the new competitive environment
Improvement Opportunities	Super Retail has a significant program of business improvement initiatives	The benefits of the program can be reinvested into competitive pricing and to growing our businesses

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2017 Annual General Meeting

23 October 2017