Super Retail Group Limited · ASX:SUL
Super Retail — Merger or Acquisition (October 2011)
48 slides from Super Retail's merger presentation, Oct 17, 2011
Slide 1: Acquisition of Rebel Group and Entitlement Offer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only Super Retail Group Acquisition of Rebel Group and Entitlement Offer Peter Birtles, Managing Director Gary Carroll, Chief Financial Officer 17 October 2011
Slide 2: Important notice and disclaimer
Important notice and disclaimer Disclaimer For personal use only This investor presentation (“Presentation”) has been prepared by Super Retail Group Limited (ABN 81 108 676 204) (“Super Retail Group”). This Presentation has been prepared in relation to a pro rata renounceable entitlement offer of ne
Slide 3: Important notice and disclaimer
Important notice and disclaimer Past performance For personal use only Past performance and pro-forma historical information in this Presentation is given for illustrative purposes only and should not be relied upon (and is not) an indication of future performance including future share price inform
Slide 4: Table of contents
For personal use only Table of contents 1 Executive summary 2 Overview of Rebel Group 3 Strategic rationale 4 The new Super Retail Group 5 Acquisition terms and funding 6 Super Retail Group trading update Appendices A1: Additional financial information A2: Key risks A3: International selling restric
Slide 5: Executive summary
For personal use only Executive summary 5
Slide 6: Executive summary
Executive summary Acquisition of Australia’s leading sporting goods retailer For personal use only Super Retail Group to acquire Rebel Group for A$610m(1), a business with pro-forma FY11 sales of A$603m and pro-forma FY11 EBITDA of A$77m Acquisition Rebel Group is the national leader in sporting
Slide 7: Overview of Rebel Group
For personal use only Overview of Rebel Group 7
Slide 8: Rebel Group today
Rebel Group today 128 stores Australia wide with pro-forma FY11 sales of A$603m and pro-forma FY11 EBITDA of For personal use only A$77m Approximately 24% market share in the sporting goods retail sector (2) 100% 100% Stores: 92(1) Stores: 36 Average size: 1,400m2 Average size: 1,200m2 FY11A sales:
Slide 9: History of Rebel Group
History of Rebel Group Since its inception in 1985, Rebel Group has grown both organically and through acquisitions to For personal use only become Australia’s leading sporting goods retailer 2007 1985 1993 2001 2004 2005 2007 2011 – 2011 Rebel Sport Rebel Sport Harvey Amart Rowe & Rebel Sport Rebel
Slide 10: True one-stop-shop for sporting goods
True “one-stop-shop” for sporting goods Product For personal use only category Products Key brands FY11 sales mix(1) Apparel 37% Footwear 27% Sporting 20% equipment Exercise 14% (1) Sales mix for FY11. Other categories make up the remaining 2% of sales. 10
Slide 11: Rebel Group operates in an attractive sector
Rebel Group operates in an attractive sector Australian recreational goods retailing market estimated to be A$6.3b industry For personal use only Growth driven by Australia’s high participation in physical activity Additional benefits from major sporting events, success of Australian athletes an
Slide 12: Strategic rationale
For personal use only Strategic rationale 12
Slide 13: Compelling strategic rationale
For personal use only Compelling strategic rationale Rebel Group is a market leader No.1 market position in the Australian sporting goods retail sector with approximately 24% market share(1) Leading “one-stop-shop” for sporting goods across all product categories, carrying the leading brands S
Slide 14: Compelling strategic rationale
For personal use only Compelling strategic rationale Opportunity to increase revenue and profit Super Retail Group’s expertise and model can optimise Rebel Group business operations Opportunity to accelerate store roll-out – potential to grow Rebel Group to 185 stores Direct sourcing opportuni
Slide 15: Strong fit with strategy
Strong fit with Super Retail Group’s strategy Rebel Group’s attributes are strongly compatible with the existing Super Retail Group business For personal use only 1 Specialty retailer of products that customers use predominantly in their leisure time 2 Products for which customers and team members
Slide 16: Opportunity to drive growth
Opportunity to drive growth Super Retail Group has identified a number of initiatives to drive Rebel Group’s growth For personal use only Immediate priorities (<12 months) Ongoing initiatives (>12 months) Determine and position customer Commence integration: New store development offering:
Slide 17: Potential synergies
Potential synergies Super Retail Group has identified approximately A$10m of synergies on an annualised basis by For personal use only FY13, with expected cash costs to achieve synergies of approximately A$2m(1) in FY12 Short-term Medium-term Expected synergies: A$5m Expected additional synergies: A
Slide 18: The new Group
For personal use only The new Super Retail Group 18
Slide 19: Three complementary retail business units
The new Super Retail Group Three complementary retail business units For personal use only Corporate Auto and Cycle Retailing Leisure Retailing Sporting Goods Retailing Retail Operations Retail Operations Retail Operations Merchandising Merchandising Merchandising Marketing Marketing Marketing 277 s
Slide 20: Combined Group key financials
Combined Group key financials Combined Group generating pro-forma FY11 sales of A$1,698m and pro-forma FY11 EBITDA of For personal use only A$189m Pro-forma FY10(1) Combined Group contribution (A$m) Pro-forma FY11 Combined Group contribution (A$m) Revenue 939 630 1,569 Revenue 1,095 603 1,698 EBITDA
Slide 21: Combined Group key financials: diversified earnings
Combined Group key financials Acquisition will diversify Super Retail Group’s earning streams For personal use only Before After Auto & Sporting Cycle Leisure Goods Retailing Retailing Retailing 42% Pro-forma 35% 35% FY11 Combined Group revenue Auto & composition Cycle Retailing 65% Leisure Retailin
Slide 22: Acquisition terms and funding
For personal use only Acquisition terms and funding 22
Slide 23: Acquisition terms and funding
Acquisition terms and funding The Acquisition is not subject to any regulatory or shareholder approvals For personal use only 1. Purchase price Purchase price of A$610m(1) 2. Timing The Acquisition is expected to complete on 31 October 2011(2) The Acquisition is being funded through a combinatio
Slide 24: Entitlement Offer
Entitlement Offer Offer structure and size For personal use only 9 for 19 accelerated renounceable entitlement offer with retail rights trading on ASX at an offer price of A$5.34 per new share (“New Share”) to raise gross proceeds of approximately A$334m, comprising: Entitlement Offer to existin
Slide 25: Entitlement Offer timetable
Entitlement Offer timetable Key events Date For personal use only Commence trading halt and open Institutional Entitlement Offer Monday, 17 October Institutional Entitlement Offer closes Tuesday, 18 October Institutional shortfall bookbuild Wednesday, 19 October Trading halt lifted Thursday, 20 Octo
Slide 26: Trading update
For personal use only Super Retail Group trading update 26
Slide 27: Trading update and outlook
For personal use only Trading update and outlook Auto and Cycle Retailing Leisure Retailing Like for like sales growth of 5.3% in the 15 Like for like sales growth of 3.0% in the 15 weeks to 15 October weeks to 15 October SCA store development: Plan to open 5 new BCF: 5.4% stores, close 1 st
Slide 28: Appendix 1: Additional financial information
For personal use only Appendix 1: Additional financial information 28
Slide 29: Combined Group pro-forma profit and loss
Combined Group pro-forma profit and loss A$m(1) Pro-forma FY10 Pro-forma FY11 For personal use only Sales 1,569 1,698 EBITDA 163 189 EBIT 128 155 PBT(2) 97 122 NPAT(2) 68 87 In addition to driving Rebel Group’s EBITDA growth, significant opportunity exists for Super Retail Group to implement initi
Slide 30: Combined Group's pro-forma balance sheet
Combined Group’s pro-forma balance sheet A$m Super Retail Pro-forma Pro-forma adjustments Pro-forma adjustments for Pro-forma For personal use only (FY11) Group Rebel Group for acquisition(1) debt and Entitlement Offer(2) FY11 CURRENT ASSETS Cash 26 - (620) 620 26 Receivables 22 8 - - 30 Inventories
Slide 31: Combined Group's pro-forma gearing metrics
Combined Group’s pro-forma gearing metrics The Combined Group has pro-forma FY11 net debt of A$368m For personal use only Pro-forma FY10(1) Pro-forma FY11(1) Net debt N/A A$368m Net debt / EBITDA N/A 1.95x Gearing (net debt / net debt + equity) N/A 37% Fixed charge cover (EBITDA + rent) / (net inter
Slide 32: Appendix 2: Key risks
For personal use only Appendix 2: Key risks 32
Slide 33: Key risks
Key risks This section discusses the key risks attaching to an investment in shares in Super Retail Group, which may affect the future operating and financial For personal use only performance of Super Retail Group and the value of Super Retail Group shares (before and after the proposed acquisition
Slide 34: Key risks
Key risks Threat of online retailers For personal use only Various uncertainties and difficulties facing traditional retailers in the Australian retail industry have given rise to increasing competition in the online retail space. Lower overhead costs, low barriers to entry and a greater level of fl
Slide 35: Key risks
Key risks Relationship with suppliers For personal use only Super Retail Group relies on numerous key suppliers in Australia, New Zealand and China. Any loss of these key suppliers may have an adverse affect on Super Retail Group’s sales and/or terms of trade. In addition, any change in Super Retail
Slide 36: Key risks
Key risks Supply chain management For personal use only The efficiency of Super Retail Group’s overall supply chain is vital to Super Retail Group’s ongoing success. Any adverse changes or inefficiencies in Super Retail Group’s supply chain (such as increased freight costs due to increasing geograph
Slide 37: Key risks
Key risks Acquisition risks For personal use only Completion risk Completion of the acquisition is conditional on Super Retail receiving the proceeds of the underwritten institutional component of the Entitlement Offer on or before completion. In the event that this condition is not met, a break-fee
Slide 38: Key risks
Key risks Integration risk For personal use only The acquisition involves the integration of the Rebel Group business, which has previously operated independently to Super Retail Group. As a result, there is a risk that the integration of Rebel Group may be more complex than currently anticipated, e
Slide 39: Key risks
Key risks Interest rates For personal use only While Super Retail Group takes reasonable steps to protect itself through the use of hedges, rising interest rates may nonetheless adversely impact Super Retail Group’s interest payments on its floating rate borrowings and inflation in underlying input
Slide 40: Key risks
Key risks Risks associated with renouncing entitlements under the Entitlement Offer For personal use only Prices obtainable for entitlements under the Retail Entitlement Offer may rise and fall over the entitlement trading period. If you sell your entitlements at one stage in the Retail Entitlement
Slide 41: Appendix 3: International selling restrictions
For personal use only Appendix 3: International selling restrictions 41
Slide 42: International selling restrictions
International selling restrictions This document does not constitute an offer of New Shares of the Company in any jurisdiction in which it would be unlawful. New Shares may not be For personal use only offered or sold in any country outside Australia except to the extent permitted below. Canada (Bri
Slide 43: International selling restrictions
International selling restrictions The following is a summary of the statutory rights of rescission or to damages, or both, available to purchasers in Ontario. In Ontario, every purchaser of the New For personal use only Shares purchased pursuant to this document (other than (a) a "Canadian financia
Slide 44: International selling restrictions
International selling restrictions European Economic Area – Austria, Belgium, Denmark, Germany, Luxembourg, Netherlands and Spain For personal use only The information in this document has been prepared on the basis that all offers of New Shares will be made pursuant to an exemption under the Direct
Slide 45: International selling restrictions
International selling restrictions Hong Kong For personal use only WARNING: This document has not been, and will not be, registered as a prospectus under the Companies Ordinance (Cap. 32) of Hong Kong (the "Companies Ordinance"), nor has it been authorised by the Securities and Futures Commission in
Slide 46: International selling restrictions
International selling restrictions New Zealand For personal use only This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Securities Act 1978 (New Zealand). The New Shares in the rights issue are not being offered or sold to the public in Ne
Slide 47: International selling restrictions
International selling restrictions Singapore For personal use only This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other doc
Slide 48: International selling restrictions
International selling restrictions United Kingdom For personal use only Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus (within the meaning of section 85
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