CORPORATE REVIEW

ABOUT THIS REVIEW

The Corporate Review is an annual publication which reflects on our performance against the objectives and strategies of our strategic plan. It also sets out our financial position for the 2013-2014 year.

Each chapter outlines the achievements, challenges and key initiatives within our core business units and retail brands during the past twelve months.

The Corporate Review, along with our Annual Report, is one of the methods we use to showcase our business and report on our activities to our stakeholders and the general public.

This review and past reviews are available to view online at www.superretailgroup.com

Only 800 copies of this review were printed, using recycled paper.

© 2014

Super Retail Group Limited 751 Gympie Road Lawnton Queensland 4501 AUSTRALIA

www.superretailgroup.com

www.shareourpassion.com

FEEDBACK

We welcome your feedback and suggestions on our Corporate Review.

Please refer any comments to our Group Communications team:

Telephone: +61 7 3482 7900 Email: [email protected]

OUR STORES 4
OUR SUPPLY CHAIN 5
ABOUT US 6
OUR STRUCTURE 7
YEAR IN REVIEW 9
LOOKING FORWARD 11
GROUP DEVELOPMENT 12
COMMUNITY & ENVIRONMENT 13
SYSTEMS 18
GROUP INTERNATIONAL OPERATIONS 19
LOGISTICS 20
SUPER RETAIL COMMERCIAL 21
AUTO RETAILING22
LEISURE RETAILING 24
SPORTS RETAILING 30
OUR TEAM 33
APPENDIX I: 2013-2014 FINANCIAL SUMMARY 37
APPENDIX II: PERFORMANCE TREND GRAPHS 38

OUR STORES

BRAND	ACT	NSW	NT	QLD	SA	TAS	VIC	WA	NZ	TOTAL
AMART SPORTS	-	7	1	26	6	-	11	-	-	51
BCF	3	32	1	36	6	-	19	17	-	114
FCO	-	-	-	-	-	-	-	-	13	13
RAY'S OUTDOORS	1	9	-	10	5	4	20	8	-	57
REBEL	3	34	-	10	6	1	27	12	-	93
SUPERCHEAP AUTO	4	66	3	78	16	5	48	26	45	291
WORKOUT WORLD	1	11	-	4	2	-	2	2	-	22
TOTAL	12	159	5	164	41	10	127	65	58	641

159

⁵ 164

127

ABOUT US

"With more than 640 stores and annualised turnover in excess of \$2 billion, our operations span Australia, New Zealand and China."

OUR STORY

For more than 40 years, we have been driven to deliver great value, choices, products and service to our customers.

Now, as one of Australasia's Top 10 retail organisations, Super Retail Group is listed in the Australian Stock Exchange's Top 200 companies and is home to many of the country's favourite brands. With more than 640 stores and annualised turnover in excess of \$2 billion, our operations span Australia, New Zealand and China.

Our retail portfolio includes Amart Sports, BCF Boating Camping Fishing, Goldcross

OUR PASSION

We are dedicated to building a group of great specialty retail brands that provide products, information and services that inspire our customers to enjoy their passions; whether that's maintaining their FJ Holden, camping with the family, catching a Barra, riding their bike or kicking the footy.

We strive for innovation in all areas of our business, whether it's our range, sourcing and supply chain, or the investment in the ongoing development of our people.

Cycles, FCO Fishing Camping Outdoors, Ray's Outdoors, Rebel, Supercheap Auto and Workout World.

In addition to our vast retail network, our commercial entities, Avanti Fitness, Auto Trade Direct, Infinite Retail, Oceania Bicycles and Super Retail Commercial offer advantages for businesses throughout Australia, New Zealand and Asia Pacific to leverage off the Group's sourcing and supply chain capabilities and purchase products across multiple specialised categories available within our retail brands.

We have a clear view of the future, a solid strategic roadmap and a passionate team of almost 12,000, all committed to delivering exciting new offers and experiences for our customers.

We are proud retailers and we are passionate about our people, our products and our performance.

OUR STRUCTURE

BOARD OF DIRECTORS

GROUP LEADERSHIP TEAM

Auto & Commercial Division	Leisure Division	Sports Division
GROUP SERVICES
Human Finance Resources	International Operations	Marketing & Logistics Property Communications
2008 Acquisition of Goldcross Cycles Supercheap Auto wins Australian Retailer of the Year (ARA Award)	2011 Supercheap Auto wins 2011 Australian Retailer of the Year (Oracle Retail World Award) Acquisition of Rebel Group FCO launched in NZ	2014 Super Retail Group wins Sustainability Excellence Award (NRA) Super Cheap Auto wins Multichannel Retailer of the Year (NRA) Peter Birtles wins CEO Of the Year Award (NRA Award) Opened Sydney Distribution Centre
2006 Peter Birtles appointed as Managing Director Announced plans for reinvigoration Opened sourcing office in Hangzhou	2010 Acquisition of Ray's Outdoors Renamed as Super Retail Group Limited	2013 Acquisition of Workout World Peter Birtles wins CEO of the Year Award (The Australian newspaper's The Deal magazine)

OUR VISION

Inspiring you to live your passion

OUR MISSION

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

OUR GOALS

OUR STRATEGIC FOCUS

YEAR IN REVIEW Welcome to our Corporate Review for

"We also reached some important milestones, including being recognised by the Australian Packaging Covenant as a high performing signatory for the second year in a row and winning the National Retailers Association Sustainability Excellence Award, which recognises the true commitment a retailer has to maintaining as many environmental aspects of the business as possible."

the 2014 financial year. In July 2014 we marked the tenth anniversary of the listing of our company. The business today is very different to the one that listed back in July 2004. Back then we had one business, Supercheap Auto, with 183 stores across Australia and New Zealand.

Today we have eight retail businesses and three commercial businesses with over 640 stores. Over the 10 years, Group sales have grown from \$383 million to \$2.1 billion and Group EBITDA has grown from \$32 million to \$237 million.

We have seen the share price grow from \$1.97 at listing on 6 July 2004 to \$8.46 at 30 June 2014 and over the 10 years we have paid gross dividends of \$2.54. This represents a total shareholder return of 470% over the 10 years, which compares to a return of 142% from the ASX 200 Accumulation Index.

OPERATING AND FINANCIAL PERFORMANCE

The 2014 financial year has been a mixed one for the company. We have delivered our eighth successive year of earnings growth, with both Group sales and earnings after tax growing by around 5%. However, our overall results have been below the expectations we set at the start of the year.

Our Auto Retailing division has maintained its 10 year track record of delivering annual EBITDA growth of around 10% which is an extremely pleasing performance and reflects the successful passing of the leadership of Auto Retailing from David Ajala to Chris Wilesmith. However, both the Leisure and Sports Retailing divisions delivered an underlying EBITDA result below the prior year.

In the Leisure Retailing division, the BCF business was impacted by a slowdown in sales in stores that had previously benefited from investment in the mining industry, a higher level of sales cannibalisation from new stores and some internal execution issues.

The Sports Retailing division had a solid start to the year but performance was impacted by inventory supply challenges resulting from the implementation of new merchandise and supply management systems in October 2013 and from a slowdown in customer demand following the federal budget and a warmer start to winter.

We made a number of operational changes to address the areas that impacted on performance in the 2014 year and we expect that we will re-establish the earnings momentum of the BCF, Rebel and Amart Sports businesses in the 2015 year.

Following the restructuring initiatives undertaken in the 2013 year, good progress was made in the 2014 year in lifting the performance of the Ray's Outdoors and FCO businesses, but both businesses are still generating returns below the Group's targets. We will continue to concentrate on initiatives to both increase the customer base and the frequency of customer visitation for both businesses.

We have remained focused on developing the capabilities that we will need to operate a successful multi-channel retail organisation. During the year, the Group invested circa \$47.9 million in capital expenditure and \$9.8 million in operating expenses on these programs.

We continue to build our loyalty programs across the Group and now have over 1 million members in each of our Supercheap Auto, BCF, Ray's Outdoors and Rebel clubs. Growth through our online channels has significantly exceeded our physical store growth but we have work to do on improving our online fulfilment capabilities. We have also successfully tested store of the future concepts designed to create a more engaging customer experience in our Supercheap Auto and BCF businesses and plan to commence a rollout program in the coming year.

We opened a new distribution centre in Western Sydney in April 2014 and are on track to open a similar facility in Northern Brisbane in the 2015 financial year.

We have grown our stable of private and exclusive brands across the Group and have rolled out the JDA inventory planning system across the Leisure Retailing Division and into the Auto Retailing Division.

"The driving force behind our performance continues to be our strong culture underpinned by the passion and commitment our 12,000 team members. I would like to take this opportunity to recognise and thank each one of them for their contribution."

Although we have encountered some challenges post implementation, the establishment of the Group's SAP platform into the Sports Retailing division will facilitate consistent sourcing and supply chain processes across the Group.

SUSTAINABILITY

We continued our support of a number of charitable organisations during the year. At the Group level, the focus is on raising funds for children's healthcare charities while at a brand level, support is provided to organisations in areas related to the activities serviced by the business' products, for example safe driving at Supercheap Auto and Coastguard at BCF. During the year, the Group contributed \$1.03 million including contributions from our team members and customer to various charities.

The Group has also maintained its focus on a number of environmental initiatives including reducing packaging and power consumption and increasing recycling. The Group has now been recognised by the Australian Packaging Covenant in both their 2013 and 2014 annual report ratings for being the highest achiever in the retail industry.

Since the establishment of our international sourcing operations in China in 2006, we have been committed to ethical sourcing. We undertake audits of factories manufacturing products for the Group to ensure compliance with our ethical sourcing policy, which is available on our website, superretailgroup.com. The audits cover a number of factors including workplace health and safety and employment and payroll practices.

TEAM MEMBERS

The driving force behind our performance continues to be our strong culture underpinned by the passion and commitment our 12,000 team members. I would like to take this opportunity to recognise and thank each one of them for their contribution.

Team retention rates are now above the long term target of 75%, having improved by a further 3.4% over the year to 76.1%.

We were particularly encouraged that, in a mixed year of performance, team member engagement has also improved further to 68% when assessed in April 2014 compared to 66% at the last survey in October 2012. This compares to the retail industry average of 55% and good employer status at 65%.

We reported last year that we had introduced a number of initiatives to improve safety performance and we are pleased that the Group's Lost Time Injury Frequency Rate (LTIFR) reduced from 14.3 in the 2013 year to 12.0 in the 2014 year. We are aiming to reduce our LTIFR by 15% each year for the next three years and will continue to drive the initiatives required to achieve this key objective.

In August 2014, Steve Doyle and Graham Chad retired from the Group after 12 and 9 years' service respectively. Steve led the development of the Leisure Retailing Division from inception in 2005 to sales in the 2014 year of \$550 million while Graham oversaw the development and operation of our Group Logistics function. Both made significant contributions to the growth of the Group and we wish them well for the future.

LOOKING FORWARD

The year ahead will be a year in which we will maintain an appropriate balance between firstly delivering growth in sales and profit and reducing working capital in our existing businesses and secondly building our multi-channel capabilities.

We are planning to open between 20 and 30 new stores and expect to refurbish between 70 and 80 stores across the Group.

We expect like for like sales growth in the first part of the year to be relatively low as we continue to see patchy retail conditions and the impact of cannibalisation and reduced promotional discounting in our Leisure Retailing division, but we expect like for like growth across the Group to increase as we move through the year.

We expect to lift EBITDA margins across the Group although margin growth at the EBIT level will be more modest as we incur increased depreciation charges resulting from the supply chain and systems investment over the last two years.

We expect to reduce working capital levels across the Group as we capitalise on the investment in inventory planning systems and logistics infrastructure to improve stock turn to around three times per annum within three years. We will open our new distribution centre in Northern Brisbane and refurbish our Melbourne and Perth distribution centres.

We recognise the increasing challenge of both global retailers opening stores in Australia and New Zealand and the growth of online competitors. We see that it will be critical for us to seek to maintain differentiated products through private brands and exclusive products and to source branded products at global cost prices. We will work with our trade partners with a view to both sourcing more exclusive product and sourcing more products at lower cost at the point of manufacture.

We will continue to develop our own online offer across all of our businesses and will test 'dark store' logistics operations to support our online businesses to more effectively meet customer demand and delivery expectations.

This is an exciting time for our company as we position ourselves to continue to grow and operate as a multi-channel business. We have a full agenda of initiatives underway and we look forward to sharing our progress in the year ahead.

PETER BIRTLES Group Managing Director and Chief Executive Officer

GROUP DEVELOPMENT

"We've continued digital development to ensure our various brand websites provide an engaging experience when customers are researching or purchasing products online. It is pleasing to note our share of online traffic is at least equal to that of our physical store traffic, across all our brands."

Our continued evolution as a leading multi-channel retailer is reliant upon setting ourselves apart from our competitors by delivering a seamless customer experience, regardless of the channel they prefer to use when engaging with us.

To achieve this differentiation, the following imperatives apply:

We understand our customers' needs and wants at a detailed level and we communicate with our customers in a timely and relevant way.
Our supply chain has the capability to deliver products to customers in line with their expectations, while ensuring our inventory levels are as efficient as they can be; and
We work productively as an organisation to maintain our cost competitiveness and maximise the time we spend in valueadding activities, such as product and range selection and customer interaction.

Given the speed of change occurring in the retail industry, we recognised the need to further enhance our capability in the areas of customer insight and engagement, supply chain effectiveness and productive working arrangements. We are focused on achieving these group-wide objectives at the same rapid pace we have historically delivered brand-specific growth projects such as new and refurbished stores.

In 2011/12 we established a dedicated program and project management team, comprising three full-time program managers and a number of internal and contracted project managers. In broad terms, the mandate was as follows:

Implementation of a standardised methodology to implement change projects throughout the Group. The use of the methodology is intended to ensure projects are delivered on time and budget, and realise the expected benefits; and
Delivery of a number of change projects to build the multi-channel capabilities of the Group.

We are pleased to say the program management team successfully implemented a number of significant change projects in 2013/14 to improve the Group's multi-channel capabilities.

From a customer understanding perspective, we have continued to develop our customer relationship management system and leverage its capability to launch a new loyalty club for Ray's Outdoors customers, replacing the previous Ray's VIP club. The new club, branded Ray's Rewards, provides members with a credit that can be used on future purchases as well as member-only special offers.

This ongoing CRM development now allows us to execute a number of marketing campaigns targeted towards our club members across all brands throughout the year. These campaigns are delivered via direct e-mails (eDMs) to club members and allow us to generate additional sales without the costs of catalogue or TV advertising; thereby generating excellent returns on our marketing spend.

In 2013/14, we continued to evolve the customer experience by setting up branded micro-sites within market-leading aggregator websites such as eBay in Australia and Trade Me in New Zealand. This approach allows us to broaden our sales channels while still maintaining control over the range, pricing and brand look and feel.

To ensure we provide customers with timely deliveries for their online purchases, we have re-engineered our distribution centres (DCs) to enable orders to be processed for stock that is held within the DCs. This has resulted in improved delivery times for our Auto Retailing division in particular, since the vast majority of its stock is held in DCs. In the coming year we will continue to develop our online fulfillment capabilities, including trialling a dedicated fulfillment centre.

We've continued digital development to ensure our various brand websites provide an engaging experience when customers are researching or purchasing products online. It is pleasing to note our share of online traffic is at least equal to that of our physical store traffic, across all our brands.

The 2013/14 year represented the third of our five year plan to transform the Group's supply chain operations. The projects are broken into two broad areas: development of our distribution centre network and improvements to our inventory management systems and processes. During 2013/14, we completed construction of a new DC in Sydney and commenced the construction of a site for a larger DC in Brisbane.

This site will ultimately replace the two distribution centres currently in Brisbane. When combined with recent upgrades in New Zealand and future upgrades in Melbourne and Perth in 2014/15, these new DCs will deliver multi-million dollar cost savings to the Group as well as enhancing our ability to meet customers' expectations in terms of delivery times.

Other significant achievements include the upgrading of the merchandise planning system in our Leisure Retailing division and rolling out an enhanced demand forecasting system for a number of categories in our Auto Retailing division. The remaining categories are due to be completed during 2014/15. These activities are designed to grow sales and reduce out-of-stock while investing less in the way of inventory purchases.

Finally, we have trialled the use of an improved stock allocation system in our Sports Retailing division. The system provides a faster and more accurate way to allocate seasonal apparel and footwear to stores, thereby increasing sales and reducing the risk of markdowns to clear products at the end of the season.

COMMUNITY & ENVIRONMENT

"We also reached some important milestones,

Covenant as a high

Retailers Association Sustainability Excellence Award, which recognises the true commitment a retailer has to maintaining as many environmental aspects of the business as

possible."

including being recognised by the Australian Packaging

performing signatory for the second year in a row and winning the National We are committed to achieving and demonstrating profitable and sustainable growth in a manner consistent with our group values and with our commitment to social and environmental initiatives for the benefit of our team, customers and trade partners and the communities in which we operate.

We strive to lead by example and invest our time, financial support and resources in a variety of initiatives. Examples of this philosophy in practise include:

- Environmental initiatives - we have a commitment to paper usage reduction, power usage reduction, catalogue paper reduction/recycling, and customer oil and battery recycling. We are also a proud signatory to the Australian Packaging Covenant, working towards reducing the volume of packaging used across the Group.

- Social education and philanthropic initiatives - we have a commitment to supporting several children's charities, responsiveness in times of community crisis, e.g. natural disasters (fires, floods, earthquakes) and active participation in improving community wellbeing, e.g. safe driving and safe recreation initiatives.

- Ethical working and employment practices - we have a commitment to equal employment opportunities and to a bullying, harassment and discriminationfree work environment, open door communication and the gathering of team member feedback, fair trading practices, team member development and involvement in negotiations over pay and conditions, product quality standards, workplace health and safety and ethical sourcing.

ETHICAL PRODUCT SOURCING

We have continued to develop our compliance frameworks governing our sourcing of product from overseas, including our Ethical Sourcing Policy for all our trade partners. This policy addresses environmental and socioeconomic criteria including labour relations, packaging and environmental requirements. In addition, we have invested in developing our own quality assessment team in China

to support the specialist independent auditors periodically engaged to ensure that requirements are understood and that compliance is maintained by trade partners.

PACKAGING OPTIMISATION PROJECT

In addition to the above, our packaging team overseas liaises with suppliers on a regular basis to ensure they are complying with our packaging specifications. To this end, we reduced a significant amount of waste through our overseas packaging optimisation project, which involved reducing air space and changing packing methods to reduce the amount of packaging material.

Our existing compliance and quality assurance programs include use of accredited auditors to inspect and test to certify that products meet Australian legal requirements, to ensure that good quality, safe and innovative products are provided to customers and are good value-formoney.

ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

As part of the Group's EMS, our Committee meets on a quarterly basis to review environmental initiatives, including the reduction of waste, packaging and energy consumption.

AUSTRALIAN PACKAGING COVENANT (APC)

We are committed to establishing a 'framework for the effective life cycle management of consumer packaging' through an educational approach with our team, our trade partners and our customers. Since becoming a signatory to the Australian Packaging Covenant in July 2008, the Group has embraced the principles of product stewardship to ensure the environmental impact on new or existing packaging is continuously monitored and minimised.

During the year, we continued to develop processes that embody the principles of product stewardship with an aim to continually improve our environmental impact with respect to packaging and waste management via:

review of internal procedures to govern product packaging and operations in accordance with the Sustainable Packaging Guidelines
extension of recycling processes within current waste management activities to reduce waste disposal
promotion of existing recycling activities to customers and team members to improve knowledge and awareness of recycling options
use of recycle logo in our packaging and catalogues to encourage waste recycling
regular articles on waste and environmental topics in our internal media to increase our team members' awareness
engaging with our waste provider on a regular basis to improve our waste management practices
inclusion of environmental and APC compliance checks in our internal audits
monthly waste reports to the Board and retail managers to monitor and improve our recycling rates; and
development of online sustainability training for team members in stores, which covers topics related to waste, water and energy reduction.

We also reached some important milestones, including being recognised by the Australian Packaging Covenant as a high performing signatory for the second year in a row and winning the National Retailers Association Sustainability Excellence Award, which recognises the true commitment a retailer has to maintaining as many environmental aspects of the business as possible.

CUSTOMER AUTOMOTIVE BATTERY RECYCLING

In accordance with our Environmental Policy, we continue to explore options to offer our customers the ability to return directly to our retail stores selected products which will be collected and distributed to recycling facilities. Supercheap Auto now accepts used car batteries in all retail stores. These are collected and returned to a recycling facility where the lead and plastic is reused in manufacturing new products. In addition to this, we continue to explore other recycling opportunities as an added service and convenience for customers in support of the environment.

CATALOGUE PAPER REDUCTION/ RECYCLING

We are committed to using recycled paper for catalogue printing and reducing advertising waste through targeted delivery. Through our major printing and distribution partners, Super Retail Group uses paper which includes up to 70% recycled fibre with the balance coming from fully sustainable plantation forests. Similarly, our use of customer targeting software and greater emphasis on email marketing has enabled us to reduce catalogue distribution quantities with little or no loss in effectiveness.

POWER USAGE REDUCTION

Super Retail Group continues to explore opportunities to reduce power usage and monitor company performance, including:

organisational culture initiatives educating team members on how to reduce power usage
structural initiatives building specifications, e.g. heat reflective roof paint and efficient lighting fixture trials to assess the benefits
energy saving devices and control equipment, e.g. 'smart' thermostats, light sensors and
procedural initiatives optimising the hours of operation of equipment, e.g. air conditioning, lighting and illuminated signage through timers and PE cells.

AWARDS FOR SUPER RETAIL GROUP

NATIONAL RETAIL ASSOCIATION

SUSTAINABILITY EXCELLENCE AWARD

AUSTRALIAN PACKAGING COVENANT

HIGH PERFORMER SIGNATORY 2014

OF TOTAL WASTE 53.8%

PRODUCED (9280.51t.) WAS RECYCLED IN AUSTRALIA DURING FY2014

2.8% RECYCLING RATE INCREASE FROM FY2013

54.6%

OF TOTAL WASTE PRODUCED (777.45t.) WAS RECYCLED IN NEW ZEALAND DURING FY2014

THE ENVIRONMENTAL BENEFITS FROM OUR RECYCLING EFFORTS IN FY2014 ARE EQUIVALENT TO:

OVER

\$1m CONTRIBUTED TO GRASS ROOTS SPORTS BY AMART SPORTS

CHARITY

Super Retail Group is committed to supporting the communities in which we operate by supporting several children's charities, responsiveness in times of community crisis such as fires, floods, earthquakes and active participation in improving community wellbeing. Our decisions about how we can best support communities are based on our capacity to strengthen a community and the alignment to our core purpose and values.

COMMUNITY SERVICES LEAVE AND WORKPLACE GIVING DONATION

We support and encourage team members who wish to make an impact on the community by taking part in civic activities and therefore provide various forms of leave under Community Services Leave, including Blood Donor Leave, Emergency Services Leave and Natural Disaster Leave. The opportunity to participate in workplace giving is also available to all team members in Australia and New Zealand using pre-tax dollars debited from their pay.

Super Retail Group is also part of Club Red, a nationwide initiative to drive blood donations for the one in three Australians that will need blood or blood products in their lifetime.

AMART SPORTS

Amart Sports continues its support of the local community through its Community Kickbacks initiative. Free to join and open to all registered clubs and schools, the program offers a 5 per cent rebate on all club member purchases. Clubs and schools accrue credits that they can then redeem to buy or upgrade equipment. Last year, through the Community Kickbacks initiative, Amart Sports contributed over \$1m to grass roots sports and supports over 900 local clubs and 400 schools throughout Australia.

BCF

BCF's support of the Australian Volunteer Coast Guard (AVCG) and Marine Rescue NSW (MRNSW) has continued this year, with the team has raising over \$360,000

through its in-store "round-up" initiative. This is a significant achievement for the BCF team who is proud to help raise awareness for the role the Coast Guard and Marine Rescue plays in marine safety. The funds raised are distributed between the flotillas and assist AVCG and MRNSW in search and rescue, purchasing vital rescue equipment and public boating education. In addition to supporting the AVCG and MRNSW, BCF maintains a strong affinity with the environment by promoting sustainable fishing practices and a generally environmentally responsible ethos. This was underlined by our move to eliminate plastic bags from the business in 2010 - a decision that was well received by customers and is now being emulated by other retailers.

FCO

In 2012 FCO announced a partnership with New Zealand's primary maritime search and rescue service, Coastguard NZ. The organisation comprises more than 2,140 dedicated and highly trained volunteers, 92 dedicated search and rescue vessels and

\$360 THOUSAND

RAISED THROUGH BCF'S ROUND UP INITIATIVE FOR MARINE RESCUE NSW AND AUSTRALIAN VOLUNTEER COAST GUARD

two small fixed wing single engine aircraft. FCO supports the Coastguard's fundraising efforts via an in-store 'round up' function. This allows customers to simply round up the value of their transactions to the dollar value they nominate, which throughout the year generated over \$43,000 in donations. A number of additional activities are undertaken throughout the year such as the 'Mayday' appeal, which assists Coastguard NZ in raising additional funds to make New Zealand's waterways a safer place for

Since July 2011 Ray's Outdoors' customers have assisted us in our support of Cancer Council Australia's vision to minimise the threat of cancer to all Australians. The generosity of customers has contributed much-needed funds for cancer research, prevention and support services by simply 'rounding up' the value of their purchase, or by making a standalone donation at the register. Ray's Outdoors achieved approximately \$135,000 in the first year of the round up program and in our second

boaties.

RAY'S OUTDOORS

\$242 DELIVERED IN ROUND THOUSAND

UP DONATIONS BY RAY'S OUTDOORS CUSTOMERS FOR CANCER COUNCIL

year we raised an additional \$174,000. Now in our third year we have delivered a record \$242,000 in customer round up donations.

REBEL

Rebel is a major partner with Fairfax on nine fun run events held in Australia each year including the world-renowned Sydney City to Surf. This year alone, Fairfax fun runs raised over \$20m in funds for various charities and Rebel is proud to support these events. Rebel is also the major sponsor of the News Local Junior Sports Stars awards. The program recognises and celebrates junior sporting talent aged between 10 –16 and brings the endeavours and successes of these future champions to the attention of their local area, giving the community the opportunity to embrace and support their sports stars of the future.

SUPERCHEAP AUTO

Supercheap Auto continues to partner with Driver Safety Australia in support of CARMA, a landmark national road safety campaign aimed at improving road users' \$43 THOUSAND

DONATED TO COASTGUARD NZ THROUGH FCO'S ROUND UP FUNDRAISING FUNCTION

awareness, behaviour and attitudes to driving on Australian roads. A series of community service announcements and a dedicated CARMA website www.yourcarma.com.au feature useful tips and practical tools for all Australian drivers. Supercheap Auto has also embarked on a behavioural and skill-based road safety education campaign delivered to Queensland and New South Wales high schools. This initiative is delivered by Driver Safety Australia on behalf of Supercheap Auto and is designed to better equip young drivers and their parents with proven skills and techniques to create better, safer drivers.

SYSTEMS

"The suite of applications we use, from leading vendors such as JDA, Manhattan Associates and SAP, integrated with our own developments, helps customers to choose and get the product in the most convenient way."

Our group IT systems are undergoing strategic development to ensure they support the growing demands of a large-scale specialty retailer undergoing significant growth and dynamic change. Our technology platform is a fundamental enabler of our strategy to offer a worldclass multi-channel retail experience that supports our customers to make the most of their leisure time.

Our IT strategy addresses the following critical needs:

support our team members in providing the best possible service to customers
deliver a platform that leverages group scale to support consistent business processes across all brands
develop business processes to maintain the unique characteristics of each brand
provide appropriate security and resilience to keep the business operating effectively and efficiently
scalability to support future organic growth
simplify the integration of new businesses as opportunities occur; and
contribute business value by using IT to solve existing problems or provide new opportunities.

We took the first step in delivering this strategy in 2002, with the installation of SAP as our core Enterprise Resource Planning (ERP) system. SAP is a leading ERP system and provides the Group with key merchandising, finance, human resources and customer relationship capabilities.

Our focus is on enhancing the Group's multi-channel capability, improving the effectiveness of our supply chain and supporting our retail divisions in the development of our customer offers. We help our customers "shop their way" by providing shopping choices across multiple channels as well as options in how they prefer their order to be fulfilled. Our customers can buy products through our online or physical stores as well as through online aggregators such as eBay.

The suite of applications we use, from leading vendors such as JDA, Manhattan Associates and SAP, integrated with our own developments, helps customers to choose and get the product in the most

convenient way. We have the ability for our customer to "click-and-collect" the product from a store or to deliver direct to them from our hub stores, distribution centres or to "drop ship" products from third parties for a limited range of products.

During the coming year we will develop our capabilities in the following areas:

develop a better understanding of our customers to be able to engage them appropriately across all channels
complete the expansion of our supply chain capabilities by expanding the use of the Sydney distribution centre and opening a new DC in Brisbane to support the re-engineering of the flow of product from our suppliers to our customers
continue the roll out of our Store of the Future formats to support customer access to rich media. This is supported through touchscreens in store as well as wifi access for customers; and
Increase the use of cloud services for our computing infrastructure to take advantage of the scalability, reduced costs and improved agility in delivering capabilities to the Group.

Our core SAP environment is augmented by industry-leading applications and partnerships in other areas, including:

Manhattan Associates' system continues to support our significant growth in warehouse and distributed order management needs
JDA systems are used to improve our supply chain planning and execution
Optus is delivering our Australian telecommunications services with our New Zealand needs delivered by Vodafone New Zealand
IBM delivers our robust, scalable and reliable server infrastructure
Cisco Systems provide IP networking technologies and services; and
LANDesk's suite of support tools allows a small support team to administer a network of over 4,000 devices.

Information Technology has been, and will continue to be, a critical success factor for Super Retail Group by providing a major competitive advantage.

GROUP INTERNATIONAL OPERATIONS

With a team almost 100-strong, our Group International Operations division operates as a mini group with many varied functional and operational responsibilities.

Our primary areas of focus include:

sourcing goods for all the retail business units
logistic and value-added services such as scan pack and direct-to-store delivery readiness
factory audits and compliance management
pre-shipment inspections; and
packaging development supporting the Group's Packaging Covenant environmental objectives.

This year we will continue to concentrate on private brand development and expansion as we deliver innovative, differentiated products offering features and benefits under the Group's own brand portfolio.

We completed the expansion and relocation of our new office facilities to the new CBD of Hangzhou and this will enable our next growth phase.

Team development included a program of problem resolution and creative thinking during our annual team member conference, culminating with a good old Aussie poolside barbeque which gave our Chinese team members the opportunity to experience a genuine sausage sizzle with all the trimmings (minus the flies).

The Group's focus on team member development extends to our China-based International Operations team, who were included in the Ignite and Turbo Boost programs held in Australia, as we invest in our executives of the future.

This year we introduced a CSR program whereby we meet with various factory suppliers to discuss the Group's Ethical Sourcing Policy and Occupational Health & Safety concepts. Rather than just talk about our requirements and commitment, we also presented a gift of various safety equipment such as welding masks, protective goggles, hearing protection and gloves to the management and workers at our supply partners.

Productivity improved at so many levels throughout the supply chain and at the same time, the team continued to seek the best sources of supply. Auditing factories, designing packaging and artwork, coordinating production schedules, quality assurance and order management right through to pre-shipment inspections underpins the effective dispatch of goods to Australia and New Zealand.

Our Packaging Optimisation program achieved another consecutive year of 18 per cent pallet utilisation improvement and 7.3 per cent container utilisation improvement, reflecting the Group's commitment to sustainability and our responsible approach to reducing packaging waste whilst delivering commercial benefits.

The year ahead will offer exciting opportunities as we put extra effort into our private brand development and support the Group's strategic category development plans.

"This year we will continue to concentrate on private brand development and expansion as we deliver innovative, differentiated products offering features and benefits under the Group's own brand portfolio."

LOGISTICS

"Optimum inventory levels and a supporting forecasting and replenishment system are an adjacent enabler for the new DC and freight network, helping us achieve our speed to market and stock turn objectives."

As outlined in the Group Development section, Super Retail Group is well advanced in construction of an integrated distribution centre (DC) network to support our multi-channel retail capabilities. In March 2014, the new Sydney DC was fully operational, providing faster delivery times to stores and customers in New South Wales. Construction of a new DC at Brendale in Brisbane is due to be completed by November 2014.

The reengineering of the existing distribution centre at Altona in Melbourne has also commenced, with Perth and New Zealand DCs to be refurbished during the 2014/15 year. All new and refurbished DCs will be "multi-user" facilities, servicing all the brands in the Group. This enables significant transport and labour savings to be realised when compared to existing, single user facilities.

The introduction of a new voice picking system at all distribution centres commenced in August 2013. As at June 2014, the DCs in Altona, Sydney and New Zealand were utilising the system, with Brendale due to be completed as part of its construction and commissioning. Both the refreshed physical infrastructure and systems add to the ongoing investment in safety, capacity and capability to support planned growth over the next ten years, with resulting lower overall supply chain costs.

Following the re-engineering of our secondary freight services (DC to stores) in 2012/13, the Group tendered its primary freight (supplier to DC) service in 2013/14. Our ability to take on the primary freight service (and resulting cost savings) is dependent on the completion of our multi-user DC network. As a result, primary freight benefits are scheduled to commence from March 2015, following the commissioning of the Brendale DC. Our focus also continues on the development and implementation of enhanced online / B2B transport and fulfilment capability, especially service experience.

Work continued in 2013/14 on implementing our enhanced inventory forecasting and replenishment system. Rollout of the new system commenced in the Auto Retailing division during the year, with completion scheduled for November 2014. This builds on the system that was implemented in the Leisure Retailing division in 2012/13. Optimum inventory levels and a supporting forecasting and replenishment system are an adjacent enabler for the new DC and freight network, helping us achieve our speed to market and stock turn objectives.

SUPER RETAIL COMMERCIAL

"Super Retail Commercial continues to export products to retailers in a variety of locations with the Pacific Rim and in 2015 we plan to expand our export reach by developing partnerships with both exporters and importers across the region."

Super Retail Commercial (SRC) is the trading arm of Super Retail Group and is focused on developing new business opportunities across a variety of non-retail channels that deliver incremental sales for the Group and our brands.

Leveraging off the Group's high profile brands, sourcing and supply chain capabilities SRC is dedicated to building long term commercial relationships with a range of businesses throughout Australia, New Zealand and Asia Pacific.

At SRC we pride ourselves on delivering value via innovative and creative business solutions through strong partnerships that are supported by our passionate team who deliver excellent customer service.

Over this past year SRC has concentrated on developing business and capability within three important sales channels, as listed below.

REWARDS AND INCENTIVES

Our web-based rewards and incentives offering, Supergifts, allows commercial customers to purchase gift cards from any of the Group's retail brands. This area of the business continued to enjoy further growth by incorporating several promotional campaigns alongside our already established rewards programs. The addition of digital gift cards into the SRC offer in 2015 will add another dimension to the business and enable us to provide low cost and immediate fulfilment in the business-to-business channels plus the ability to target new customer sectors. This additional capability, coupled with our high level of customer service and the ease of use via the Supergifts website, will see us continue to grow this channel.

INSURANCE

We further extended our successful product replacement program this year, by including a number of new insurance companies into the scheme. SRC supplies gift cards and products via Super Retail Group's store network to replace insurance claimants' possessions. Our operations have expanded into the New Zealand market via Supercheap Auto and FCO stores and in the coming year we plan to further

develop our insurance program through new partnerships with Australia and New Zealand insurers, whilst incorporating the Workout World brand into our operations.

WHOLESALE AND EXPORT

In 2014 SRC secured an agreement with BP to supply its metropolitan based Petrol & Convenience stores with a range of automotive and fishing products. In addition, we successfully piloted a new "store within a store" concept using Supercheap Auto and BCF brands in selected BP locations. In 2015 we intend to extend our distribution within the BP store network whilst also developing supply arrangements with other Petrol & Convenience store retailers.

SRC continues to export products to retailers in a variety of locations with the Pacific Rim and in 2015 we plan to expand our export reach by developing partnerships with both exporters and importers across the region.

AUTO RETAILING

"Following the success of our Club Plus loyalty program, we have seen significant positive customer connections being formed. Our club members are loyal; visiting our stores more often, spending more and serving as true advocates for our business."

Supercheap Auto is a thriving specialty retail business, with 291 stores across Australia and New Zealand, specialising in automotive parts and accessories. We also stock a wide range of tools and accessories for the DIY home handyman as well as products for travel, touring, outdoors, garage and the shed.

Many and varied activities drive and grow the Supercheap Auto business; below are some of our key strategies along with a preview of some exciting new initiatives.

STORE OF THE FUTURE PROGRAM AND NEW STORES

Our vision for the Store of the Future program was to build an engaging and integrated customer experience that provides solutions and real reasons to shop in store, which would support our customers to get the most out of their shopping experience and leisure time. As a result of this initiative, we launched two prototype stores in Queensland during April and May 2013, the first at Caboolture and the second at Lawnton. These trial stores allowed us to closely monitor early progress to ensure both customer and commercial outcomes were achieved. Initial forecasts for the concept have been exceeded and now with 17 of these stores in the Supercheap Auto fleet, we are very confident to move forward at pace. Sales delivery out our 'stores of the future' is four times higher than the average business performance. During Financial Year 2015, we plan to open or refurbish another 46 stores into the Store of the Future format, further supporting sales growth in FY15.

Store of the Future features:

Presentation

updated external signage and finishes
revised store layout which sorts and groups products by usage occasion or project
improved store navigation signage, aisle markers and internal signage with an updated colour palette.

Customer engagement

customer solutions kiosks which provide in-store access to vast product and "how to" information
product feature displays including

informational touch-screens and TVs

free wireless internet access for customers combined with QR codes to provide in-store access to extended product and usage information
engaging displays incorporating fun and theatre.

Extended services

vehicle diagnostics service which provides fault code reading, reset and analysis, allowing customers to be more involved in their vehicle's care and maintenance
paint mixing service offering more than 74,000 auto paint colours to be created in-store
home delivery of bulky and heavy products
designated Click & Collect pick up point for online purchases.

Improved customer service

team member development program
solutions-focused service model
increased frequency of stock deliveries supporting improved in-stock position
customer call-buttons linked to team member walkie-talkies for improved service.

During FY14 we opened six new stores, finishing the year with a total of 291 sites. Three stores were closed during the year as we continue to ensure a highly profitable fleet in the best locations we can secure. The coming year will see us deliver one of our largest store opening programs with 10- 15 new stores currently scheduled.

MULTI-CHANNEL CAPABILITY

We now have both core and extended ranges available for sale online in Australia and New Zealand, offering our customers well over 1,000,000 items. This year we have seen extensive growth of our Click & Collect offer, which enables customers to order online and pick up from their local store. We are also seeing a trend in customers who buy additional items when in store to collect their orders. This supports our decision to continue building a strong physical store network in parallel to growing our online business. We strongly believe we must continue to improve and develop our multi-channel capability, allowing our customers to shop their way. The coming year will see significant growth

in our offer and supporting material to aid product selection, and delivery of valuable interactive video content to empower customers to complete multiple tasks involving their car, garage and shed.

BRANDS AND NEW PRODUCTS

Driving quality known and private brands is a very important element in growing our business and building integrity and trust with our customers. We continue to launch thousands of new and innovative products each year faster than our competitors and we firmly believe that new products are the lifeblood of any good retail business.

FITMENT PROGRAM

Our fitment program was launched in 2007, driven by customer demand for basic items to be fitted for them at the time of purchase. The program continues to be strongly supported by our customers, with hundreds of thousands of fitments completed last year alone. Our friendly team loves to go above and beyond and this service is another great way for our team

members to engage, surprise and delight our valued customers. The popularity of our fitment program is evident through the number of customers taking advantage of the service, along with their positive feedback. This year we will increase the number of fitment solutions available, ensuring we are meeting our customers' growing expectations.

PERSONALISED CONNECTIONS AND CUSTOMER LOYALTY PROGRAM

Following the success of our Club Plus loyalty program, we have seen significant positive customer connections being formed. Our club members are loyal; visiting our stores more often, spending more and serving as true advocates for our business. We set what we believed would be a challenging target of 750,000 Club Plus members by year's end. The response to our loyalty program has exceeded all expectations and with our club now boasting membership of more than one million, it is pleasing to say we underestimated the initial target.

Club Plus is designed to reward our customers for their loyalty and benefits for our members include a 'Price Promise,' which provides a credit to the member's card when items they purchase go on sale at a better price, along with special events, exclusive offers, receipt-free warranty and much, much more!

The program also provides a window into individual purchasing habits, which allows us to send targeted offers to members without large marketing costs attached, increasing the frequency of these customers' visits to our stores.

We are now leveraging the investment in our customer relationship management systems, enabling us to connect more personally, predict trends and reduce our reliance on mass media as we move towards more focused, personalised digital connections. This presents an opportunity for significant savings, while increasing relevance and extending customer reach.

LEISURE RETAILING

"This year has proved to be another stellar year for our loyalty club. More than 250,000 new members joined Club BCF, which now boasts membership numbers in excess of 1.4 million."

With 114 stores, BCF Boating Camping Fishing is the largest outdoor retailer in Australia and is recognised for having the widest quality product range and most helpful team members in the market. This year saw the opening of nine new BCF stores, extending our physical store footprint in New South Wales, Victoria, Western Australia and Queensland.

New store openings:

Smithfield
Macgregor
Waurn Ponds
Springfield
Grafton
Deeragun
Yeppoon
Forster
Belmont

BCF STORE OF THE FUTURE

Last year we unveiled our first ever Store of the Future conversion at BCF Morayfield in Queensland. This revitalised store has proven to be successful with an 8.18 per cent LFL growth. On the back of this success we have completed additional store conversions at Townsville and Darwin, and six more will be completed early 2015 at our Lawnton, Mackay, Maroochydore, Cairns and Midland stores. These new format stores with specialised extended ranges are now known as BCF Superstores.

SOCIAL MEDIA

In the second half of the year we increased our social media engagement efforts, with Facebook our immediate focus. Within a short timeframe, our BCF Facebook community reached 100,000 fans, demonstrating that many Facebook users hold a strong affinity with the brand. Facebook has delivered multifaceted benefits including fan engagement, increased promotional reach, complaint identification and customer interaction. Many customers feel comfortable conversing with BCF through private Facebook messages and this offers us the opportunity to interact with our customers on an individual level and gain insight into their expectations of the brand. Facebook has also proven a powerful and growing advertising platform, providing unprecedented targeting capabilities

and impressive value for money versus traditional advertising channels. We have engaged in paid post boosting to extend brand reach to relevant target groups and will continue to consider other social media advertising opportunities.

CLUB BCF

This year has proved to be another stellar year for our loyalty club. More than 250,000 new members joined Club BCF, which now boasts membership numbers in excess of 1.4 million. Our club members contributed a massive 62% of all sales this year, proving that engaged club members shop more often and spend more. BCF stores collectively hosted 104 exclusive club night events with more than 25,000 club members attending to take advantage of special offers, featured guests and info sessions.

BCF EBAY STORE

The first of our Leisure Retailing brands to launch an eBay store, BCF can now be found on one of the world's largest online marketplaces. The initial roll out was tested in incremental stages and has grown to offer more than 12,000 leisure products through the customised eBay storefront. eBay and BCF have worked in close collaboration to launch our online store, with eBay providing support with display advertising banners and focused leisure promotions. Future opportunities exist to leverage eBay's considerable customer database and website traffic to further generate significant online revenue. eBay is working towards becoming a central shopping experience for household name retail brands, expanding from their used goods position, and is highly motivated to bring large brands such as BCF on board.

EFFICIENCIES

The implementation of our Planogram Project in conjunction with rolling out JDA - our forecasting and replenishment tool - across all hard good categories has significantly improved our inventory efficiency. BCF's year-end closing inventory was -5.4 per cent lower than the previous year on a per-store basis, which is an excellent result.

BCF PRIVATE LABEL

This year saw significant development in the evolution of our private label brands. The exclusive introduction of Savage Gear into the fishing range was one of our major successes. Savage Gear is a popular and successful international brand in the European and US markets and the response from Australian anglers has been overwhelming. Another key move was the development of the Blueline Boat, Motor and Trailer packages which extends our boating offer to now include a car topper aluminium tinny and a 3.75 metre tinny/trailer option. Wanderer continues to grow into one of the most successful brands in the BCF business and boasts a significant range of camping equipment across categories such as tents, bedding, chairs and shelter. Our suite of private label and exclusive brands continues to gain momentum with more in store for the coming year.

COAST GUARD AND MARINE RESCUE

BCF continues to support the local community through a range of charity and sponsorship activities. A significant component of our community support activity is the ongoing relationship between BCF and not-for-profit marine organisations, Coast Guard and Marine Rescue NSW.

Each BCF store across Australia collected funds for these highly active and valuable volunteer organisations and, over the financial year, raised over \$350,000. BCF is proud of this achievement and the work that these indispensable marine charities do.

LEISURE RETAILING

"The continued development of our private label program has been a key strategic initiative for the Ray's Outdoors business and in the past year we have significantly developed our Apparel and Hiking ranges. A feature of this development work is the reinvigoration of our Outdoor Expedition brand which has provided a template for new product development and enhanced quality."

As 'the gateway to your next getaway', Ray's Outdoors is geared towards inspiring and enabling Australian families to get outdoors. Recognised as a market leader for quality camping and outdoor apparel products and with 57 stores across Australia, Ray's Outdoors provides a vast range of camping gear, tents, fishing, kayaks and apparel including footwear and work wear.

NEW STORE OPENINGS

The doors opened on three new Ray's Outdoors stores this year; our second Hobart store in Cambridge extended our Tasmanian presence, while Kalgoorlie in Western Australia and Rutherford New South Wales rounded out the store launch celebrations.

RAY'S REWARDS

This year the Ray's Rewards program marked a major milestone, achieving one million members. Over the past twelve months we have significantly revamped our loyalty program, and now offer our members a 10% credit on all full priced purchases, along with exclusive deals, competitions and events. The new benefits on offer for Ray's Rewards members make for an industry leading value proposition which has resulted in increased customer engagement and store visitation.

SOCIAL MEDIA

The highly anticipated launch of the Ray's Outdoors social media presence was another key marker of last year. We were careful to ensure that we had established our new brand direction and personality before venturing into the social media space and this deliberate strategy has paid dividends. Engagement programs such as the "Ray's Your Flag" photo competition, along with relevant information and engaging content has driven our Facebook community numbers to 50,000 in only the first few months.

PRIVATE LABEL

The continued development of our private label program has been a key strategic initiative for the Ray's Outdoors business and in the past year we have significantly

developed our Apparel and Hiking ranges. A feature of this development work is the reinvigoration of our Outdoor Expedition brand which has provided a template for new product development and enhanced quality.

EFFICIENCIES

We made excellent strides in improving our inventory efficiencies this year by implementing the same planogram and JDA forecasting and replenishing systems as BCF. Ray's Outdoors had an impressive -16.4% improvement in comparison to last year on a per store basis.

CANCER COUNCIL

Ray's Outdoors commenced our partnership with Cancer Council Australia in July 2011. This year, our customers donated more than \$240,000 in our Roundup campaign, with overall funds raised to date exceeding \$500, 000. The monies raised have contributed to Cancer Council's work in cancer research, prevention and education (such as sun protection, quit-smoking, healthy eating and physical activity campaigns) and support services. As an example, the Cancer Connect support service is designed to link newlydiagnosed breast cancer patients with a specially trained volunteer who has had a similar cancer experience. Cancer Connect volunteers are trained and supported by Cancer Council to offer emotional and practical support.

LEISURE RETAILING

"We have been very pleased with the growth of the Club FCO CRM platform, with nearly 50 per cent of all sales now attributed to our club members. Our CRM platform has enabled us to achieve growth in customer visitation and is a key part of our customer engagement strategy, helping us to understand the market and adapt our promotional campaigns accordingly."

Throughout the year, FCO Fishing Camping Outdoors has continued to evolve within the New Zealand market as a destination for Kiwis who want to "get outdoors". This new tag line has been a part of an aggressive media schedule which has helped boost our brand profile in New Zealand. We have seen significant growth in the business's recognition as a leading camping destination as we continue to target and inspire Kiwi families.

STORE RELOCATIONS

The FCO network now totals 13 stores on the North Island of New Zealand. Late in the year we took the opportunity to relocate our Whangarei store into a better position in a slightly smaller tenancy. We are very happy with the initial results of this relocation, and we will continue to invest in our brand positioning and refine the FCO offer.

CUSTOMER RELATIONSHIP MANAGEMENT

We have been very pleased with the growth of the Club FCO CRM platform, with nearly 50 per cent of all sales now attributed to our club members. Our CRM platform has enabled us to achieve growth in customer visitation and is a key part of our customer engagement strategy, helping us to understand the market and adapt our promotional campaigns accordingly. Our Club membership now exceeds 75,000 members with 50 per cent growth last year alone.

PRIVATE LABEL GROWTH

We explored an opportunity to develop a private brand designed specifically to handle the tougher New Zealand conditions. This move became the cornerstone of the substantial growth seen in our camping category over the financial year. The new brand, Wanderer Black, was positioned to appeal directly to Kiwis requesting a shelter product that can withstand substantial rain and storm force winds. Wanderer Black was exceedingly well received, delivering exceptional quality at previously unseen pricing. To achieve this outstanding value, we leveraged the Group's Australian sourcing plan. Wanderer Black continues to deliver on its 'best'

brand mantra and now offers extended ranges in furniture and bedding which cater specifically to the Kiwi family camper whose number one priority is product longevity.

COASTGUARD

FCO has been proud to support Coastguard New Zealand with our "round-up" in-store initiative.

Coastguard NZ relies on its volunteers to ensure that New Zealand's waterways are a safer place for boaties which aligns with the FCO business philosophy.

On average, Coastguard and its 2,430 volunteers rescue more than 18 seagoers per day. That's over 7,080 people home safely each year. It's great to think that FCO can be a part of that thanks to the generosity of our fantastic club members and customers.

As you can imagine, running and maintaining a not-for-profit of this magnitude is a costly exercise. It is with great excitement that the FCO business can announce that over the past year we have donated just over \$55,000. We are proud that in conjunction with our customers we have the opportunity to support a great cause that supports our goal of getting more Kiwis outdoors.

SPORTS RETAILING

"Prior to acquisition, the Rebel and Amart Sports businesses achieved a combined engagement score of 43 per cent. In 2013 our engagement survey result had improved to 60 per cent and we are happy to report that this year we saw further improvement with an overall score of 64 per cent engagement across the Sports Retailing team."

Our Sports Retailing division, comprising Rebel, Amart Sports, Goldcross Cycles and Workout World is pleased to report 2.6% LFL growth during FY14, a year that was extremely challenging across the retail sector, particularly in the latter half.

The year saw a lot of work done on improving systems that will underpin future growth opportunities, refurbishing existing Rebel stores and opening new Amart Sports stores, working on exclusive and private label brand expansion and restructuring our merchandise teams to be more customer focused rather than internally focussed.

In September 2013 we rolled out a new enterprise system. As it stood at the time of acquisition in November 2011, the legacy system that Rebel and Amart Sports were running on was barely able to support the business and having added 27 stores since acquisition (12 of those in FY14), we successfully migrated onto the SAP platform. This move will underpin the future growth of the business and allow the Sports Retailing division to tap into the sophisticated supply chain, logistics and product sourcing capabilities of the broader group.

Amart Sports has extended further into Victoria with 5 new stores as well as launching into New South Wales with four new stores in Penrith, Randwick, Bankstown and Mittagong. Our new smallformat footwear and apparel concept, RebelFit was also launched in the inner Sydney suburb of Balmain and we plan to expand on this format in FY15. Whilst we opened a new Rebel store in Indooroopilly this year, our focus for FY14 was around refurbishment, of which 5 were delivered. Stores that have been modified to this new world-class format are trading very well, particularly in the footwear, apparel and fitness categories.

Goldcross Cycles was also expanded within our Amart Sports store network with 31 new store-in-store concepts rolled out. Now, with more than 30 Goldcross Cycles store-in-store concepts across the country, Amart Sports is the largest full-service bike reseller in Australia.

During FY14 we secured several exclusive brands including Reebok footwear and

apparel & fitness accessories, New Balance apparel, Umbro football product and one of the largest new sporting brands in the world, Under Armour. Whilst Under Armour had a small selection of product available in the marketplace previously, we launched extensive ranges of footwear and apparel exclusively through our 92 Rebel stores in January 2014 and this exclusive arrangement will continue to grow over the next five years.

We have recently realigned our merchandise function into dedicated Rebel and Amart Sports-specific teams with independent General Managers of Merchandise for both businesses. Whilst Rebel is certainly the largest sporting retailer in Australia, Amart Sports is a close second and as we expand the brand across Australia to cater for a different customer to Rebel's, it is increasingly evident that a dedicated focus on range selection, pricing architecture and marketing is required to sustain and further grow both brands.

In 2014 we undertook our regular Team Member Engagement Survey. The survey is instrumental in helping us to understand how our team members regard the organisation and it provides direction on the areas our team believe we should focus on improving as well as areas they would like us to continue to do well. In addition to shaping a great place to work for our team, there are financial benefits for the business in achieving higher engagement scores: stores with higher engagement scores have higher sales and margin performance and lower shrinkage rates (with the reverse the case for stores with lower engagement scores). Prior to acquisition, the Rebel and Amart Sports businesses achieved a combined engagement score of 43 per cent. In 2013 our engagement survey result had improved to 60 per cent and we are happy to report that this year we saw further improvement with an overall score of 64 per cent engagement across the Sports Retailing team. In FY15 we will roll out initiatives designed to improve career development opportunities and communication, as a direct response to the feedback received from the team.

This year saw the launch of Sports Uni, an online training platform geared towards team members within our 140+ stores.

More than 30 online training modules are available across a variety of product categories and the thirst for knowledge we see within our team has motivated us to expand this platform further in FY15. Our team's product knowledge and in-store service are areas of pride for us and, as we seek to become the best in the country in both these areas, this online training tool will be fundamental.

Our online business for Rebel and Amart Sports is an ever-growing component of the Sports Retailing division and with over 15 million visits to our websites in FY14, we have great plans to revamp the fulfilment of customer orders, along with product information and digital content on our eCommerce sites. Whilst we have historically fulfilled orders out of the retail store network, the business has grown to a size where we will be moving the fulfilment of online orders into a warehouse to offer our customers faster delivery times,

extended ranges and a better overall shopping experience with us.

In FY14 we saw over half a million new customers join our loyalty programs, seeing us surpass the two million members milestone. In FY15 we will be launching new loyalty programs to our customers, who can take advantage of exclusive member pricing, competitions, electronic receipts/warranty and access to exclusive content online.

We are also looking to expand our private label and exclusive brand portfolio to ensure we continue to offer customers the best brands in the world and the best value for money.

Finally, as well as further integrating Rebel, Amart Sports and Goldcross Cycles into the broader business, Super Retail Group acquired the Workout World brand in December 2013, adding more than 20 retail stores and a commercial fitness offer to our Sports Retailing portfolio. We are finalising a business restructure and improvement plan for Workout World which will see us refurbish stores and rebrand the business in the first half of FY15.

OUR TEAM

At Super Retail Group, we genuinely believe that our greatest asset is our passionate team. Our Group Vision, inspiring you to live your passion drives our team's performance each and every day, setting us apart and underpinning our ongoing success. Whether working in one of our stores, support offices or distribution centres, our team members are passionate about what they do and take pride in helping our customers to make the most of their leisure time.

Over the years, we've worked to foster our culture and create an environment where the team enjoys coming to work, is encouraged to put forward new ideas, and is offered an array of opportunities to promote both personal and professional growth.

OUR CORE VALUES

We create an environment in which we share our passion for the solutions we provide and our contribution and successes are recognised. This means we:

are committed
show enthusiasm
recognise others' contribution
celebrate success.

Openness

We are committed to open and constructive communication and trust and respect others. This means we:

share information honestly and based on the facts
confirm understanding
have our say and listen openly
collaborate to deliver the agreed plan.

We only say things that we know are true and we only commit to things that we can do.

This means we:
are truthful
maintain confidentiality
deliver on our commitments
accept responsibility.

We value each member of our team and have a commitment to ensuring our business is safe for everyone. This means we:

work safely
are considerate
are supportive of each other
consider the impacts of our actions.

We commit and own the plan, resource effectively and follow the agreed processes and standards.

• explain expectations

This means we:

make decisions based on facts
take pride in all that we do
monitor progress, learn from our mistakes and take action.

"Whether working in one of our stores, support offices or distribution centres, our team members are passionate about what they do and take pride in inspiring customers to live their passions."

Discipline

Integrity

Care

TEAM MEMBERS YEAR ON YEAR

TEAM MEMBERS BY BRAND

LEARNING AND ORGANISATIONAL DEVELOPMENT

We are committed to providing ongoing skill development and learning to ensure our team has the capability to reach their full potential in their role. We encourage our team to view learning as a lifelong objective, where exposure to different learning opportunities will assist them to be effective both inside and outside of the workplace. We provide these opportunities through experience, exposure and education.

• Experience – team members learn onthe-job or through secondments or work rotations

Exposure team members learn through feedback or exposure to others, i.e. mentoring or coaching, shadowing, or networking opportunities
Education team members learn through structured training e.g. SRG programs or resources

Super Retail Group operates as an Enterprise Registered Training Organisation (RTO) which allows us to offer a range of qualifications to our team. These qualifications are aligned to team members' internal development whilst being externally recognised in the market.

A number of organisational focus areas such as Performance and Development, Talent and Succession, our Team Member Value Proposition and Employer Branding, ensure the business is best placed to meet both internal and external needs, and ensure Super Retail Group is seen as a 'great place to work'.

SAFETY, HEALTH AND WELLBEING

We are committed to providing a healthy and safe workplace for our team members and customers. To that end, our Health, Safety and Wellbeing Strategic Plan, Healthy, Safe & Productive Lives reflects a proactive behaviour-based approach. We integrate health, safety, wellbeing and injury management into our team culture and core values, and the way that we do

TEAM MEMBER RETENTION

business. We provide a range of health and wellbeing activities and initiatives designed to educate and assist our team to live a safe and healthy life. Our Get Active framework focuses on bringing information, promotions and offers, tools and tips to support team members in achieving a healthy and active lifestyle.

COMMUNICATION AND ENGAGEMENT

Across the business we communicate and seek feedback from the team in a variety of ways. In order for Super Retail Group to evolve and ensure this is a great place to work, it's important for us to understand what's working well and where we could improve. We are dedicated to ensuring that our team members know they have a voice and that we genuinely care about what they have to say.

Our Group-wide Team Member Engagement Survey is a chance for our team to help shape our workplace. The survey helps us understand what team members say about working at Super Retail Group, what makes team members stay working here, and what motivates team members to go the extra mile. Our 2014 engagement score sees us exceeding the Australia/New Zealand retail average by 12%, and falling into the "High Performance/Best Employer" range for the second time.

The feedback received from our team is extremely important in ensuring we undertake targeted initiatives that make a real difference.

ATTRACTION AND RETENTION

To ensure we remain competitive in the market, we are committed to attracting and retaining top talent. Through innovative and best-practice methodology, our recruitment team ensures we have the right candidates in the right roles, which best match our team and culture. Once onboard, our team members participate in an induction program that ensures they have a clear understanding of their role and are supported throughout their initial months.

GENDER BY BRAND

We care about our people, and want them to know that we appreciate the effort and dedication they demonstrate every day in their work. We pride ourselves on our range of initiatives that are focused on reward, benefits and recognition, all designed to ensure our people understand and feel they're valued members of our team.

Our annualised retention rate for the Group in 2014 increased to 76.10%, with this figure including both permanent and casual team member retention. We benchmark ourselves against the industry to ensure we continue to deliver a rewarding experience to our team. The retention of our passionate team is supported through our engaging culture and career opportunities that ensure continual growth and development.

WORKPLACE GENDER EQUALITY

Super Retail Group lodged a report with the Workplace Gender Equality Agency (WGEA) for the 2013/2014 reporting period that includes a workplace profile and a commitment to complying with the new notification and access requirements of the Workplace Gender Equality Act 2012 (Act).

We are committed to meeting our WGEA reporting requirements on an annual basis and to promoting and improving gender equality in the workplace.

Achieving gender equality is important for our workplace. In the competitive market we operate in, gender equality assists us to attract top talent and is vitally important to our bottom line performance. Super Retail Group has formal strategies and policies across the range of HR practices to support gender equality in our workplace. Our workplace structures and conditions enable all team members to contribute to their full potential at work while taking into account personal commitments.

We strive to enable women and men to be equally represented, valued and rewarded in the workplace. Our current focus to increase our female representation in senior positions has led to the development and implementation of the WILD (Women in Leadership Development) program. Through this six month program we expect participants' knowledge, self-confidence and job satisfaction to increase and for their interpersonal skills to be enhanced. To support and embed this program, each

participant is supported by a mentor within the business.

To further augment our agenda, our CEO joined the Queensland Male Champions of Change group to recognise the importance of and commitment to gender diversity and to building an inclusive culture in our organisation. We are proud of our focus on cultivating a positive workplace image through accessible attraction and recruitment strategies and a supportive workplace environment that encourages and engages diversity.

APPENDIX I: 2013-2014 FINANCIAL SUMMARY

INCOME STATEMENT	2014 \$m	2013 \$m
Revenue from continuing operations	2,112.1	2,020.0
Cost of sales of goods	(1,171.4)	(1,121.9)
Operating expenses	(782.1)	(751.3)
Profit before income tax	158.6	146.8
Profit attributable to Members of Super Retail Group Limited	108.4	102.7

BALANCE SHEET	2014 \$m	2013 \$m
Current assets	555.4	502.8
Non-current assets	1,019.4	962.3
Total assets	1,574.8	1,465.1
Current liabilities	317.7	302.3
Non-current liabilities	496.7	431.3
Total liabilities	814.4	733.6
Net assets	760.4	731.5
Total assets
Contributed equity	542.3	542.3
Reserves	7.7	9.5
Retained profits	210.4	179.7
Total equity attributable to equity holders of Super Retail Group Limited	760.4	731.5

CASH FLOW STATEMENT	2014 \$m	2013 \$m
Net cash (outflow) inflow from operating activities	167.2	225.1
Net cash (outflow) from investing activities	(118.7)	(109.4)
Net cash inflow (outflow) from financing activities	(46.9)	(140.5)
Net increase (decrease) in cash and cash equivalents	1.6	(24.8)
Cash and cash equivalents at end of year	24.2	22.3

APPENDIX II: PERFORMANCE TREND GRAPHS

JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14

EPS (c)* 19.5 22.6 28.1 32.1 40.9 46.4 55.1 52.3

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 entitlement offer

Net Debt (\$m) 182.6 55.1 93.5 117.8 114.7 78.8 73.5 341.0 329.3

JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14

Gearing Ratio (%)

Annual Total Shareholder Return (%)

JUN 07 JUN 08 JUN 09 JUN 10 JUN 11 JUN 12 JUN 13 JUN 14 *excludes goodwill impairment charge in 2010

Post Tax ROC (%)*

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

Post Tax ROE (%)*

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

^38.1 45.7 55.1 65.8 87.5 140.7 172.3 182.6

AI assistant

SUPER RETAIL GROUP LIMITED — Annual Report 2014

65878_rns_2014-10-23_14f8ac14-dcb4-4eeb-b780-dc547b22d5f2.pdf

CORPORATE REVIEW

ABOUT THIS REVIEW

© 2014

FEEDBACK

CONTENTS

OUR STORES

ABOUT US

OUR STORY

OUR PASSION

OUR STRUCTURE

BOARD OF DIRECTORS

GROUP LEADERSHIP TEAM

OUR VISION

OUR MISSION

OUR GOALS

OUR STRATEGIC FOCUS

YEAR IN REVIEW Welcome to our Corporate Review for

OPERATING AND FINANCIAL PERFORMANCE

SUSTAINABILITY

TEAM MEMBERS

LOOKING FORWARD

GROUP DEVELOPMENT

COMMUNITY & ENVIRONMENT

ETHICAL PRODUCT SOURCING

PACKAGING OPTIMISATION PROJECT

ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

AUSTRALIAN PACKAGING COVENANT (APC)

CUSTOMER AUTOMOTIVE BATTERY RECYCLING

CATALOGUE PAPER REDUCTION/ RECYCLING

POWER USAGE REDUCTION

NATIONAL RETAIL ASSOCIATION

AUSTRALIAN PACKAGING COVENANT

54.6%

THE ENVIRONMENTAL BENEFITS FROM OUR RECYCLING EFFORTS IN FY2014 ARE EQUIVALENT TO:

OVER

CHARITY

COMMUNITY SERVICES LEAVE AND WORKPLACE GIVING DONATION

AMART SPORTS

BCF

FCO

\$360 THOUSAND

REBEL

SUPERCHEAP AUTO

SYSTEMS

GROUP INTERNATIONAL OPERATIONS

LOGISTICS

SUPER RETAIL COMMERCIAL

REWARDS AND INCENTIVES

INSURANCE

WHOLESALE AND EXPORT

AUTO RETAILING

STORE OF THE FUTURE PROGRAM AND NEW STORES

Store of the Future features:

Customer engagement

Extended services

Improved customer service

MULTI-CHANNEL CAPABILITY

BRANDS AND NEW PRODUCTS

FITMENT PROGRAM

PERSONALISED CONNECTIONS AND CUSTOMER LOYALTY PROGRAM

LEISURE RETAILING

BCF STORE OF THE FUTURE

SOCIAL MEDIA

CLUB BCF

BCF EBAY STORE

EFFICIENCIES

BCF PRIVATE LABEL

COAST GUARD AND MARINE RESCUE

LEISURE RETAILING

NEW STORE OPENINGS

RAY'S REWARDS

SOCIAL MEDIA

PRIVATE LABEL

EFFICIENCIES

CANCER COUNCIL

LEISURE RETAILING

STORE RELOCATIONS

SUPER RETAIL GROUP LIMITED Annual Report 2014