Super Retail Group Limited (SUL) Earnings Call Transcript & Summary

Good morning, everyone. I am Sally Pitkin, Chair of Super Retail Group, and I'm delighted to welcome you to our 2022 Annual General Meeting of Shareholders. I note that a quorum is present, and I formally declare the meeting open. For those of us gathered in person today, we are meeting on the home lands of the Turrbal and Jagera people, and I would like to acknowledge the Traditional Owners and recognize their continuing connection to land waters and culture. We pay our respects to the elders past, present and emerging and extend that respect to any Aboriginal or Torres Strait Islander people here today. Safety is our highest priority at Super Retail Group, so I now need to outline the emergency procedures for this venue. The emergency exit path for this room is via the doors behind you, and we all then need to proceed to the fire stairs located behind the lift lobby that we would have entered upon arrival. So we just need to make sure we've identified those exits. And of course, in the event of an emergency, 1 of 2 alarms may sound. We've all heard them before. But if an alarm sounds, we've got to check our surroundings and standby for further instructions. In the unlikely event that we need to evacuate, a BOP alarm will sound, and then we will evacuate using the nearest safe exit. And of course, the lift should not be used in the event of an evacuation. The evacuation assembly area is located across -- in the park across the road from this building adjacent to the river. And as a courtesy to everyone, can we all just check our mobile phones now to make sure they switch to silent. So we're meeting in Brisbane today for the first time since 2019, and it's wonderful to see you all. With the lifting of the COVID restrictions, it's so good to have the opportunity for us to be together in person. The notice of meeting has been distributed to shareholders, and I will take it as read. I'd now like to introduce to you my fellow Directors and our Chief Legal Officer and Company Secretary. So starting on our far left, we have Nonexecutive Directors, Judith Swales, who is standing for election today, Annabelle Chaplain; Reg Rowe, the Founder of Super Retail Group; and Rebecca Farrell, our Company Secretary and General Counsel. And on my far right, we have Peter Everingham, who's the Chair of our HR and Remuneration Committee; Howard Mowlem, the Chair of our Audit and Risk Committee; and Anthony Heraghty, our Chief Executive Officer and Managing Director. We also have members of the executive leadership team here today. And I know that shareholders will have the opportunity to meet them and talk to them after our meeting. Representing our external auditor, we have partner Alicia Clarke, present. So Alicia will be available to respond to any questions that you have in relation to the audit of Super Retail Group's financial statements. As explained in the Notice of Meeting, we will be holding a poll on all of the resolutions that are put before this meeting, and I now open the poll. Any shareholders who you need to leave early, you can place your completed voting cards in the ballot boxes at the exit doors. So in terms of meeting procedure, firstly, I'm going to provide some highlights of the past financial year. Anthony will then take you through the group's results and activities for financial year '22 in more detail and also update you on the first quarter for the current financial year and the business generally. We will then proceed to the formal items of business for the meeting, which is set out in the notice of meeting. For each item of business, I will first address questions that have been submitted in advance and then take questions from the floor, and there will be ample opportunity for shareholders to address the meeting if you would like to do so. To shareholders who have submitted questions prior to the meeting, thank you. Anthony and I have certainly sought to address many of those questions in the formal addresses that we will be making today. Our meeting is being website live via Super Retail Group's website, and a recording of the meeting will be available on our website very shortly after the meeting. And following the conclusion of the meeting, I invite you to join me, my fellow directors and senior management for some light refreshments. So now to my address, I am very pleased to report to you today on the 2022 financial year despite the economic and community impact of COVID-19 during the year, your company has delivered a strong financial and operating performance, underlined by another year of record sales. The strong result was underpinned by our best ever online performance and strategic inventory management, which allowed us to capture increased consumer demand as the economy emerged from the pandemic restrictions. 2022 was also a significant year for Super Retail Group on another measure of success that is far removed from the bottom line. During the year, we marked an important milestone for the company, celebrating the 50th anniversary of the business in a world of increasing uncertainty and change in an era of heightened customer expectations and wider choice, this is no small achievement. I'm sure many shareholders will be familiar with our company's humble beginnings. We started out as an automotive accessories mail order business based in the home of our founders, Nonexecutive Director, Reg Rowe and his wife Hazel right here in Brisbane. And it's a real tribute to Reg and Hazel but one of their key pillars when establishing the business an unwavering commitment to customers to this day remains a central tenant for Anthony and our 14,000 team members. Reaching the 50th birthday rightly prompted a time for reflection at Super Retail Group about the journey the company is taking. And Reg would be the first to acknowledge about the journey the company is taking. And Reg would be the first to acknowledge that it's appropriate we take the opportunity to acknowledge the contribution of our shareholders, team members, customers, business partners and the wider community to our success. From those modest early days, we have grown remarkably. Five decades on, we are now recognized as a successful omni retailer with 4 core brands that are household names across Australia and New Zealand. As Super Retail Group, we are approaching 20 years as a public company listed on the Australian Securities Exchange. It's a remarkable Queensland and Australian success story. Against the backdrop of ongoing domestic and global volatility over the past 12 months, shareholders will be pleased to hear we continue to drive the growth and evolution of the group despite the impact of COVID-19 lockdowns and other restrictions on economic activity. Fortunately, your company was sustained during the most challenging periods of the COVID downturn due to its strong prepandemic financial position and a resilient omni-retail strategy. The highly effective execution of the strategy, significant enhancements to our digital capability and another year of dedicated and energetic commitment from our team members helped drive the strong financial performance. Additionally, in reviewing the year, our decision to invest heavily in inventory in response to disruptive global supply chains was fundamental to the group's strong financial performance. This preempted and strategic management of the supply chain challenges enabled our 4 core brands to capture the increased consumer demand when retail spending bounced back following the end of COVID-19 lockdowns. Looking ahead, we expect economic uncertainty to endure, particularly given the ongoing global volatility, the high inflationary environment and the inevitable impact of rising interest rates as well as the continuing impact of the pandemic. In this environment, it does remain prudent to maintain a continual review of the capital management. The group's strong financial performance and balance sheet has supported the Board's decision to determine a fully franked final dividend of $0.43 a share. So that brings the total dividend for FY '22 to $0.70 a share. The total dividend represents a full year payout ratio of 65%, in line with the group's policy. Despite the external uncertainty, we continue to invest in the business to strengthen our competitive position and generate long-term value for you, our shareholders. This investment will continue with a particular focus over the next 2 years on our loyalty programs and data analytics to capitalize on the strategic opportunities presented by one of the largest active club memberships in Australia and New Zealand. In continuing to deliver sustainable growth, the Board also recognizes that the group's performance across social and environmental aspects is more important than ever. At last year's Annual General Meeting, I revealed we were undertaking a review and refresh of our vision, mission and values. We considered that the widespread changes to society since our values were first articulated necessitated a reappraisal and we wanted to ensure that our values remain relevant to our increasingly diverse team members and the broader community across Australia and New Zealand. The Board and senior leadership team understood the importance of remaining aligned with our stakeholders. And our vision, mission and values helps us communicate our intentions as an organization and provide a reference point for our decisions and actions. Appropriately, these principles were developed organically created by team members for team members. The Board also continues to prioritize ethical and sustainable stewardship of the group's operations, building a company that is successful and sustainable over the long term requires a commitment to ethical and sustainable practices. While we have been long-term advocates of this approach to our business operations, we recognize the need to continually evolve. And we are continuing to embed environmental, social and governance standards and practices to position the business for the long term and support this work with transparent reporting about how we're performing against robust aspirations. Within this domain, we are determined to play our role in mitigating the impact of climate change and actively managing our carbon footprint to ensure we remain aligned with community sentiment. In our day-to-day operations, we consistently consider the need to transition to a lower carbon footprint in our decision-making, and at a strategic level, the Board regards ESG as a critical component in its risk management considerations. Following direct feedback from team members, customers and other valued stakeholders, the Board reviewed and strengthened our sustainability framework. The framework provides guidance for our people, customers, investors and stakeholders on the standards that we are setting for the future as a benchmark for all our operations. In practical terms, this means we have reset our carbon emissions targets with a new and ambitious goal for the business of 0 emissions for Scope 1 and 2 by 2030. We have also strengthened our commitment to climate governance, enhancing transparency around our climate-related financial disclosures. And Anthony will elaborate on our sustainability performance as part of his review. As Chair, I recognize the need for the Board to evaluate the skill sets, experience and diversity of directors as part of the important ongoing process of succession planning. The Board needs the appropriate mix of expertise and capabilities to effectively govern and shareholders would expect succession planning is a regular item on our agenda. Given my 12 years on the Board, my intention is at the end of my current 3-year term in 2024, I would not be putting my name forward for reelection as a Director. As part of our active Board regeneration policy during the year, I was delighted to welcome -- we were delighted to welcome Judith Swales to the Board as a Nonexecutive Director. With both Director and Executive Management experience from a range of global business, Judith has made an immediate impact on Board discussions and decisions. And on behalf of the Board, I would also like to thank Gary Dunne for his contribution to the group. Gary retired from the Board during the year after his appointment as the Chief Executive Officer of Melbourne-based RPM Property Group. To my fellow directors, thank you for your wise counsel and strong support during the year. Given the strong FY '22 performance and high team member engagement, I would particularly like to acknowledge the leadership of Group Managing Director and Chief Executive Officer, Anthony Heraghty and his management team. Their strategic planning has positioned the group for continued success. The preemptive move to invest in inventory is a prime example of this prudent approach and underwrote 2 years of record sales. Of course, the strategy is only as good as its execution. And for our company, nothing happens without a committed and engaged team. Our reputation for knowledgeable and dedicated service for customers is built on the commitment of our 14,000 team members. And in the past 12 months, our team members have once again demonstrated willingness to go above and beyond. And this was probably best illustrated in our response to the devastating floods that ravaged communities across the nation. These communities were facing significant pressures and our team members stood up when it counted. As we look to the future, the group is well placed to navigate what is expected to remain a challenging external environment for the broader retail sector, we're fortified by the strength of our brands and customer value proposition, the resilience of our auto and sports businesses and good sales momentum in our leisure and outdoor categories. This reinforces our determination to keep playing the long game, creating a positive impact on the communities in which we operate and positioning Super Retail Group for shareholder returns over the long term, because we want to ensure the next 50 years are as successful as the first. On behalf of the Board and management, I'd like to thank team members, customers, partners and shareholders for your continuing support. I'll now hand over to Anthony to discuss the performance for the year.

Thank you, Sally, and good morning, everyone. It's nice to be here in person. It's my pleasure to provide you with an overview of the 2022 financial year and an update -- the all-important update on the year-to-date trading performance. This year, your company delivered another strong set of financial results despite the ongoing challenges of COVID-19. I'd like to thank our 14,000 team members for an extraordinary effort in contributing to this outcome. Once again, our team demonstrated remarkable resilience and determination to support our customers and just execute the plan. Our leadership team have continued to display strong leadership through a very challenging period for retail, and also thank them for continuing to find a way to engage our team, drive performance and deliver value for our customers, most importantly, our shareholders. Record online sales and the group's strategic decision to invest in inventory in response to a very disrupted global supply chain really underpinned a solid first half performance despite disruptions to store trading. Momentum continued to build in the second half as the pandemic fears eased and customers started to come back to stores with like-for-like sales increasing by 5%. This reflected a growing contribution from our successful new formats with positive like-for-like sales across 4 core brands and a record winter result for Macpac. Notwithstanding a more challenging retail environment ahead, I'm confident of the resilience of our key auto and sports businesses, together with the ongoing investment we've made during the pandemic, which holds us in very good state. We've built a better, stronger omni-retail business and the group remains in robust financial shape. We've got a conservative balance sheet with no bank debt. We remain well positioned to leverage our brand strength, a large active customer base and leading market positions in our lifestyle categories through the next phase of the economic cycle. Let's go to financial highlights, and you'll see that group sales have increased by almost 3% to a record $3.55 billion. This translated into a normalized profit before tax of $350 million. Pleasingly, the group achieved gross margin of 46.8% as targeted and effective promotions were partially offset by higher supply chain costs. The group delivered a net profit after tax of $241 million, while our underlying net profit after tax was $244 million reflecting another year-on-year reduction of below-the-line adjustments. If we go to customer and brand highlights, the business continues to attract and retain new customers, which is a good thing with more than 1 million new members added to our loyalty program in FY '22. We received 14% growth in active customer numbers this year, building our loyalty programs to a record 9.2 million active customers. These customers -- these club members contributed 70% of group sales in F '22, up from 63% in F '21. We have more customers than ever. I'm also pleased to report they're increasingly satisfied with our brands, our products and our service. Our Net Promoter Score increased to 64.6%, with all brands recording improved performance. Over the next 2 years, the group will undertake a significant capital investment to better leverage our customer data, we're also relaunching our loyalty programs and building customer analytics to allow our business to increasingly make personalized offers using our customers' analytically driven data and insights. The potential to better leverage our customer data represents an exciting opportunity for the group. So if we go to store network, and the value of our store network was further demonstrated in F '22. Despite lot of foot traffic in shopping due to -- the shopping centers due to COVID-19, despite that our record online sales -- it's important to note that more than 9 in 10 transactions involved a visit to a store, either through over-the-counter sales or Click & Collect fulfillment. Indeed, the reports of the death of brick and mortar, in our case, greatly exaggerated. The group opened 21 new stores in the past 12 months, a net addition of 18, taking our total number of stores to 716 over -- across Australia and New Zealand. But our investment in stores is not just about numbers. It's also about refurbishing the network, upgrading our fleet with new and exciting formats. In Supercheap Auto, we converted more than 30 stores to the next-generation format, and this has helped delivered solid uplift in our like-for-like sales particularly in the Tools category. In Rebel, we finished the year with 11 rCX stores, including our flagship, Rundle Mall, store in Adelaide, which is pictured on the slide. These large format stores that showcase a comprehensive range across key global brands with a focus on core categories. They provide a differentiated customer experience through physical experience zones like half-court basketball or indoor football pitches. This unique format is attracting co-investment from global sporting brands including Nike, Adidas and Under Armour and giving us access to exclusive products. More broadly across the network, we've continued our rollout of our specialized world of format in must-win categories of basketball, football, running kids and training. In BCF, we have small format regional stores with tailored products performing well above expectations. And in Macpac, sales and brand awareness have been boosted by the opening of 10 new stores and the introduction of Macpac product in more than 200 Rebel and BCF stores. Looking forward, our network expansion plan for FY '23 includes up to 30 new store openings, including a BCF superstore in Townsville. We expect to open additional 5 rCX stores in the next year. I'll be over to omni highlights. Following a sustained program in investment in our digital capability, group digital sales in F '22 grew by 44% to more than $600 million. This online sales result shows that we are capturing digital market share by constantly improving our omni execution. Since F '19, sales have increased by a factor of 3 and have increased as a proportion of overall sales from 7% to 17%. Click & Collect, which leverages the strength of our store network, grew by 73% to $332 million. These Click & Collect sales represent 55% of our total online sales and 9% of our total sales. Pleasingly, the investment we've made in our Order Management System is continuing to reap benefits. It enables us to reduce split deliveries, adding to the profitability of our home delivery sales. In FY '22, we strengthened our sustainability framework to deliver better outcomes for our people, our community and our planet. The enhanced framework outlines a commitment to 5 focus areas: team, community, responsible sourcing, circular economy and climate. These focus areas have 12 goals linked to measurable targets that are all set out in slide in front of you in a rather small time. Given time constraints and the small type, I won't speak to all of these detail now, but in terms of some of the key targets that we've said, I'd like to call out a few. We've reduced our carbon emission targets with the -- with a goal of 0 emissions for Scope 1 and 2 by 2030. We've set a 40-40-20 target for Board, executive and senior leadership positions. We're targeting 100% of private brand packaging to be reusable or recyclable by 2025. We're developing a Disability Action Plan, and we're also developing a Reconciliation Action Plan. I strongly encourage you to refer to our sustainability report for more details. Turning to the next slide. I'm very proud of the progress we've made in FY '22 against some of our key sustainability and team performance measures. Key sustainability highlights include a 16.9% reduction in greenhouse gas emissions, Scope 1 and 2 from the FY '17 base year. More than 1 million liters of oil has been recycled through Supercheap Auto and over 1 million bags have been reused since Macpac's Refuse a Bag program began in only 2018. Key team member highlights include a 45.5% female representation at the executive leadership level. More than 2,500 team members participating in our, I Am Here, mental health program. High levels of engagement scores of 82 and 80 in our October and June team member surveys. This year, the group improved its Dow Jones Sustainability Index score from 60 to 62 placing us in the top quartile of the retail sector. We also received a comprehensive rating from the Australian Council of Superannuation for ESG reporting relative to our peers in the ASX 200. Turning to strategy. And in short, there's been no change. The company's strategy is based on 5 pillars: growing the core 4 brands, leveraging our closeness to customer, connecting our omni-retail supply chain, simplifying the business and excelling in omni retail. In FY '23, the group expects to spend $125 million in further strengthening our strategic outcomes. We remain focused on organic growth opportunities, including expansion and refurbishment of our store network, the ongoing investment in digital, personalization and loyalty. This slide shows a summary of the segment results for the full year. It's self-explanatory, and I might turn to the next slide, provide a bit more detail on performance of each of our brands, starting with Supercheap Auto. And I'm pleased to report that Australia remains firmly in love with their cars, especially their Ford Drives. Supercheap Auto delivered another record sales result in a COVID-disrupted year reinforcing the reliability of the auto category and just the strength of the Supercheap Auto brand. Benjamin Ward and his team continued to excel in customer acquisition, having added more than 1 million new club members to their program in the last 12 months alone. In terms of financial highlights, we saw sales increase to $1.34 billion. Online sales grew by 64% to $175 million and represent 13% of sales. Like-for-like sales fell for the year by 0.1%, but rebounded strongly in the second half. Half 2 like-for-like sales grew by 7.7%, driven by strong performance in lubricants, auto maintenance and tools. Gross margin declined by 60 basis points versus the prior corresponding period, as high trading margins were offset by supply chain costs and normalization of promotions on the previous year. Segment profit before tax fell 8% to $176 million. But pleasingly, second half profit -- second half PBT of $100 million was almost 12% higher than the prior corresponding period. Rebel also delivered a strong sales performance in FY '22 despite inventory challenges, peak Christmas trading period impacted by a reduction in footfall in CBD and large shopping malls. Faced with this challenge, Gary Williams and the Rebel team did a great job pivoting to online demand with Rebel lifting online sales by almost 40% to $268 million or 22% of total sales. In terms of financial highlights, we saw total sales increase to $1.21 billion. Like-for-like sales were down 2.8% for the year, but rebounded again in the second half as we saw foot traffic recover and footwear and apparel stocks were replenished at the end of the fourth quarter. Gross margin was 80 basis points lower than the PCP as higher trading margins were again offset by supply chain costs and increased promotional activities or normalization thereof and inventory supply challenges, segment normalized profit before tax fell 15% to $141 million. But pleasingly, again, the second half segment normalized profit before tax of $73 million was almost 5% higher than the prior period. BCF delivered a very strong top line result with another record year of sale. Paul Bradshaw and the BCF team are continuing to build this business through store network expansion, range improvements, tailored products. In terms of financial highlights, we saw total sales increase to $830 million, driven by like-for-like sales growth and contribution from new stores. Online sales grew by 36% to $117 million and represented 14% of total sales. Like-for-like sales for the year grew by 1.1% following a very strong second half performance. Half 2 like-for-like sales increased by 6.7%, driven by strong trading over the summer and Easter holiday periods, particularly in boating and camping. Profit before tax of $60 million was 38% lower than the prior period. However, the second half PBT of $28 million was only 14% below the prior year. To Macpac. After a challenging first half, which is impacted by COVID lockdowns in Australia and New Zealand, Cathy Seaholme and the Macpac team delivered an outstanding second half performance driven by a record June winter sale period in Australia, see cold weather is not always bad. In terms of financial highlights, sales increased to $177 million. Online sales grew by 35% to $41 million and represented 23% of total sales. Like-for-like sales grew -- for the year grew by 4.4% and by 8.5% in the second half. The strong performance was driven by our Australian stores where like-for-like sales increased by 12.4%. Cold weather spurred strong demand in rainwear, lots of rainwear and insulation. Our performance in New Zealand was more subdued, owing to the impact of COVID-19 and reduced tourism and travel sector. Pleasingly, wholesale sales of Macpac product into BCF and to Rebel increased by 95%, following the expansion of this offering to more than 200 Rebel and BCF stores. Gross margin was lower than the prior corresponding period, again, due to higher freight costs as a result in the significant uplift in home delivery sales in the first half. Second half gross margin was higher than the prior corresponding period. Macpac delivered a profit before tax of $18.6 million. Now to the trading update, I'm pleased to provide an update on our trading -- our year-to-date trading performance. For the first 16 weeks of this financial year, FY '23, the group has delivered the following like-for-like sales growth. Total group like-for-like of 20%, Supercheap 23%, Rebel 20%, BCF 4% off a very strong 2-year stack and Macpac 76%. Given the group is cycling lockdowns in the prior comparative period, investors are cautioned -- very cautioned against extrapolating this growth. Now online sales represent 10% of FY '23 sales year-to-date. Group gross margin percentage in the first 16 weeks is in line with the gross margin percentage delivered in the prior corresponding period. Supercheap Auto has continued to trade well, supported by a Store Refurbishment program with auto maintenance being the best-performing category. Sales growth in Rebel has been driven by the ongoing recovery of foot traffic in stores, improved stock availability from key global sports brands and an uplift in license sales during the AFL and NRL final season. BCF has maintained strong sales growth momentum well above the pre-COVID-19 levels. Year-to-date performance has been underpinned by growth in camping and apparel sales, supported by the success of new strategic brands including Yeti and Darche. BCF remains on track to open its brand-new superstore in Townsville in November. Macpac's year-to-date performance has been driven by strong store sales in Australia, which has benefited from a -- from wet weather. New Zealand store performance in the first quarter was impacted by a lack of team member availability due to COVID-19 lockdowns and a really slow recovery in tourism. Whilst current trading remains strong, the group does expect higher mortgage rates, increased cost of living expenses will really begin to impact consumer spending. However, the value proposition of the group's brands are very large active club member base and the resilience of our key auto and sports categories means the group is well positioned for more challenging retail trading conditions ahead. As always, a group's first half and indeed the full year result be highly dependent on the peak trading period over Christmas. I look forward to updating you with our progress throughout the year. And again, I would like to thank you, our shareholders, for your continued support. I'd now like to hand back to Sally to conduct the rest of the meeting.

Thank you, Anthony. So we now come to the formal items of business for the meeting. I will introduce each item of business separately and then respond to questions for that particular item. So firstly, just a brief explanation on the voting procedure. All voting items on the agenda will be considered as ordinary resolutions. And as noted earlier, voting will be by way of poll. If you are entitled to vote, you will have been given a yellow voting card. And during the meeting, the number of proxy and direct votes received prior to the meeting will be shown on the screens in front of you. All open proxies given to the chair will be voted by me in favor of all items. A voting exclusion is in place for Item 2 relating to the remuneration report and Item 4 relating to the grant of performance rights to the Group Managing Director and CEO. At the conclusion of the meeting, would you please place your completed voting cards in one of the ballot boxes that are located by the exit doors. And we will announce the poll results to the ASX later today and also post them on our website. Rachel Teo of Link Market Services, the Company's Share Registry, has been appointed as Returning Officer, and Rachel will determine the results of the polls. So let's move to Item 1, which is to receive and consider the financial report of Super Retail Group for the financial year ending second July 2022, together with the Director's report and the Auditor's report. So there's no vote on this item. Anthony and I, of course, have already discussed the company's performance for FY '22 and our addresses, but we're now happy to take questions from shareholders. And as I noted at the beginning of the meeting, Alicia Clarke, audit partner at PricewaterhouseCoopers is here with us today to answer any questions on the conduct of the audit, the preparation and conduct of the auditor's report, the accounting policies and their independence in relation to the conduct of the audit. So any questions for Alicia, please direct them through me. And we have 2 roving mics, 1 on either side of the room to assist shareholders with asking questions. Now we haven't received any written questions to the auditor in advance of the meeting, but if there are any questions for the auditor or any questions or comments on the financial statements, please ask.

Hello. My name is Paul Donohue. I'm a proxy holder, and I'm here today representing the Australian Shareholders Association. We hold 162,000 proxy votes from shareholders today. My first question is on the format of the AGM, and I agree with Anthony's sentiment, so it is good to be here in person. But a lot of other companies are holding hybrid meetings in which you can attend in person or participate online through interactive experience. Today's meeting is being webcast, but it's not interactive. So shareholders would have had to ask questions in advance. So my question is, would you consider in subsequent AGMs holding a hybrid format.

Mr. Donohue, thank you for your question. This year, we thought first time that we've been able to meet in person, it was very important that we all gathered here today to have the opportunity for shareholders to not only participate in the meeting, but engage with us. And of course, we have taken, as you said, those additional steps to webcast, provide shareholders with an opportunity to cast votes ahead of the time, appoint a proxy and submit questions. Each year, we have a look at what would be the most appropriate format for the AGM for that period. So we will certainly take your suggestion on Board and consider a hybrid meeting in 2023. Thank you. And Mr. Donohue, just while you've got the floor for ASA, I just wanted to acknowledge [ Mr. McNally ] here who has been the ASA monitor for the last 4 years and who has engaged so constructively with the company. It's been very good dealing with you, [ Mr. McNally. ] You have another question, Mr. Donohue?

If I may. So topic here is cybersecurity, which is very topical. So of this Telstra, MyDeal, Medibank and today Australian Clinical Labs have all had data breaches. You mentioned you've got 9 million customers in a database somewhere which must represent an attractive target to malicious actors. So maybe we could get some insight to the sort of actions that have been taken to strengthen cybersecurity at Super Retail Group?

Yes. So of course, as we know, most Australian businesses are dealing with cyber threats on a daily basis. We are ever vigilant and we do have systems and processes in place to manage the cyber risk. Importantly, though, we do not have any customer identification information. So that makes us less attractive target, but we can't be complacent. We, like all organizations and sectors, I think, have got to work together to be collaborative so that we can build cyber resilience at a national level because the threats are not going to diminish probably just will increase.

Can I ask a third one?

Well, you can because no one else is jumping up Mr. Donohue, so go ahead.

Excellent. Topic here is the Autoguru write-down. So the annual report shows $5.9 million write-down for the noncore Autoguru investment after it was considered impaired. My question is, does Super Retail Group still own a stake in Autoguru?

Yes, we're still a shareholder, Mr. Donohue, but we have fully written-off that investment because as you rightly point out, it's a noncore asset for us. Are there any other questions on Item 1? So let's now move to the next item of business. And this is Item 2, the adoption of the remuneration report. So that's on Pages 47 to 77 of our 2022 Annual Report and the remuneration report sets out the Board's assessment of management's performance against the objectives that were established at the start of the financial year, and it also reports on the remuneration arrangements in place for Directors and Senior Management during that year. The vote on the remuneration report is advisory only and nonbinding. However, the Board will take note of the result of this vote as it reviews the company's remuneration policy and practices into the future. As I noted earlier, the group produced a very strong set of financial results in FY '22, including another year of record sales. By design, the reward outcomes for FY '22 reflect those results appropriately rewarding executives for their contribution to the success of the group through delivery of both short-term milestones and long-term sustainable value to you, our shareholders. The Board recommends that shareholders vote in favor of Item 2. Now the monitors at the -- we're going to put up the proxy votes in a moment, but I'd just like to offer the opportunity to shareholders to ask any questions that you might have on the remuneration report.

So my first question is on the CEO remuneration and the bias to cash. So the actual remuneration paid to Mr. Heraghty in FY '22 was 70% cash, I think, and 20% equity, that cash component seems a bit high compared to other companies. So the question is, is there any intention to increase the equity component to balance it out a bit?

Thank you, Mr. Donohue. So the equity component in FY '22 is actually higher than 28% when you count in the deferred STI. But in FY '23 the equity component, which is the long-term incentive opportunity as well as the deferred STI is moving to 44% of total remuneration. That's a -- we have had a significant shift over the last several years because we wanted to align Anthony's equity participation to peers. And at 44%, that aligns very well with our market peers in terms of the market capitalization group. And of course, it aligns also with contemporary remuneration practice.

Second question. I feel everyone else has a big plate of cookies over there.

That's right. You've got 160,000 -- 162,000 votes to represent. You are very welcome to ask questions.

So this question is on Board remuneration. I noticed that it increased during the year and Dr. Pitkin your fees rose by 15% to $360,000. The other director is a more modest 3% to 145,000. The ASA has access to market research that suggests that the Chair fees at the higher end of similar companies and much higher than some other notable companies. You've announced that you don't intend seeking reelection again. So the question is, at the end of your term, would you hand over to someone else, what the Board considered resetting that Chair's fee to something more aligned with other companies?

So you've got a couple of questions in there, Mr. Donohue. First comment I'd make is that in the same way that we use benchmarking data for executives, we use benchmarking data for the Board, and we use the same methodology for Board and executives. It's a very robust methodology, and we have used that methodology consistently now for a number of years. So I appreciate there are different methodologies which might produce different results, but our benchmarking, which Ernst & Young do for us on an independent basis indicates that the level of fees that we're paying for Board Chair, Board -- Committee Chairs and Nonexecutive Directors lines up with market practice. And in fact, that data that we referenced is actually aged. So by the time we implement remuneration decisions, it is possible that the further increases have come through. At the end of my tenure, it will be 14 years. And as much as I love this company, it's not appropriate to be carried out in a box. And good governance says that it will be time each year, though, the Board looks at that data and sets the fees appropriately. It won't be my decision, but I know my colleagues -- in terms of the fees for the next year, but I know my colleagues will reference that benchmarking data and take a decision that's in line with our remuneration policy in terms of positioning and something that's fair and equitable. Are there any other questions on the remuneration report? All right. So if there's no further questions, we will now -- I will now put the resolution for Item 2 to the meeting to vote. The direct voting and proxy position for Item 2 is now appearing on the screens. And of course, in accordance with the voting exclusion statement in the Notice of Meeting, the company will disregard votes cast by certain persons for this item. So if you have not already completed your voting card for Item 2, you could do so now. And I'll just give you a minute to do that. [Voting]

So let's move now to Item 3, which is the election of Judith Swales as a Director. So Judith was appointed to the Board as an Independent Nonexecutive Director on the 1st of November 2021, and she offers herself for election at this meeting. Information on Judith's background and experience is set out in the Notice of Meeting. Since her appointment, Judith has been a member of the Board's Audit and Risk Committee, and the Board with Judith abstaining, recommends that you vote in favor of Judith's election as a Director. And as is our usual practice, I'm now going to invite Judith to address you and briefly speak to her election nomination. Thank you, Judith.

Thanks, Sally. I'm clearly the shortest member of the Board, too. Good morning, everybody, and thank you for the opportunity to address today's Annual General Meeting in support of my election as a Director of Super Retail Group. I've been an independent Nonexecutive Director of Super Retail Group since November of last year and have served on the Audit and Risk Committee since joining the Board. In the nearly 12 months that I have been a Director of your company, I've been deeply impressed with the company's dedication to its loyal customers and the Board's focus on continuing to deliver for you, the shareholders. I have a long career in major customer-facing businesses both in Australia and internationally, including a dairy company, Fonterra, where I'm currently the Chief Executive Officer for Global Markets responsible for the company's Asia Pacific, Americas, Middle East and African business units. Before joining your company as a Nonexecutive Director last year, I made a personal commitment and assured the chair that I will give the Board my full attention and focus while continuing in my executive role. I recognize that shareholders expect and deserve committed leadership from their Directors and I'm determined to remain a vocal and thoughtful contributor to discussions around the Board table. I note the Australian Shareholders Association has sought assurances around my commitment to the Board given my position with Fonterra. I'm happy to provide a firm commitment today that I will have sufficient time and capacity to serve shareholders and appropriately discharge my responsibilities as a Director of Super Retail Group. My executive commitments have been carefully aligned to accommodate my Board duties with Super Retail Group. As we approach the end of the first year of my tenure as a Nonexecutive Director, I have recorded 100% attendance at Board meetings and not missed any meetings of the Audit and Risk Committee. I believe that I bring to Super Retail Group Board extensive executive management experience in the retail sector and the global markets perspective. Prior to Fonterra, I was Managing Director of Heinz Australia; and CEO and Managing Director of Goodyear Dunlop Australia and New Zealand. I also have significant listed company Board experience, having served as a Nonexecutive Director of Virgin Australia, DuluxGroup and Fosters, I'm passionate about our business. We have a management team -- great management team, strong and growing sales in the right categories and a robust balance sheet. I'm excited about our future prospects for this business. And it's been my pleasure to serve as a Director since November last year and subject to your vote today, I look forward to continuing to make an important contribution to the Board as we position the company for sustainable growth.