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    nnual report 2013.


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    SuperGroup Plc Annual Report and Financial Statements 2013


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    SuperGroup Plc Annual Report and Financial Statements 2013 Introduction Contents Highlights 01 At a Glance 02 Chairman’s Statement 03 Introduction Performance Governance Financial Statements


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    SuperGroup Plc Annual Report and Financial Statements 2013 Contents Introduction Highlights 01 At a Glance 02 Chairman’s Statement 03 Performance Business Review 07 - 16 Financial Review 18 - 22 Risk 23 - 25 Operating Responsibly 26 - 27 Governance Board of Directors 30 - 31 Directors’ Report 32 - 35 Corporate Governance Statement 38 - 42 Audit Committee Report 43 - 45 Directors’ Remuneration Report 48 - 57 Statement of Directors’ Responsibilities 59 Independent Auditors’ Report 60 - 61 Financial Statements Group and Company Financial Statements 64 - 69 Notes to the Group and Company Financial Statements 70 - 106 Shareholder Information 107


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    SuperGroup Plc Annual Report and Financial Statements 2013 01 Highlights Financial highlights 2013 2012 Growth Group revenue £m 360.4 313.8 +14.9% Group gross profit margin % 58.3 57.0 +130bps Underlying operating profit margin % 14.4 13.6 +80bps Underlying profit before income tax £m 52.2 42.8 +22.0% Profit before income tax £m 51.8 51.4 +0.8% Introduction Underlying basic earnings per share pence 47.8 38.1 +25.5% Basic earnings per share pence 44.7 45.0 -0.7% Year end net cash £m 54.5 30.9 +76.4% Group consolidated revenue Underlying Group PBT £m £m £360.4m £52.2m £50.2m £313.8m 400 60 £42.8m £237.9m 50 300 £26.5m 40 £139.4m £ £ 200 30 £76.1m 20 £7.6m 100 Performance 10 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Underlying Group operating Closing net cash margin % £m £54.5m 21.1% 19.1% 25 60 £32.2m £30.9m 50 £28.0m 14.4% 20 13.6% 40 10.0% 15 £ 30 % 10 20 £(1.7)m 10 5 0 0 -10 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Governance Operational highlights ● Retail sales like-for-like up 5.7% year-on-year. ● Total space in the UK and European store portfolio: 536,000 square feet, +13.8%. ● Net 56 international franchised and licensed stores opened in the year, taking the total to 162 (2012: 106). ● E-commerce sales increased by 27.8% and now contribute 11.2% of Group revenue (2012: 10.0%). ● Internet sales made to 122 territories through 16 Superdry websites. ● Announcement of a new distribution centre and appointment of a new third party logistics partner. Financial Statements ● Investment in high calibre senior management. ● Agreement to buy out the Group’s Spanish distributor. Note: Underlying is defined as reported results adjusted to reflect the impact of the gain/loss recognised on fair valuing deferred contingent share consideration, financial derivatives, exceptional items and, when appropriate, the related income tax. The directors believe that the underlying results provide additional guidance to statutory measures to help understand the performance of the Group. Further details of the adjustments are included in note 13. All references to underlying are after making these adjustments. Retail and Wholesale segments are presented before inter-segment royalties.


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    02 SuperGroup Plc Annual Report and Financial Statements 2013 At a Glance SuperGroup Plc is the owner of the Superdry brand and operates in the branded fashion clothing sector. Superdry targets the young fashion market with affordable, premium quality clothing and accessories for both men and women in the 15 to 25 age bracket, although the brand has become increasingly appealing to a much broader group as it develops its breadth of product ranges. Superdry focuses on high quality fashionable products fusing vintage Americana and Japanese inspired graphics with a British style. Superdry clothes are characterised by: ● super-soft hand feel cotton with authentic vintage washes; ● premium fabric with vintage detailing; ● world leading hand-drawn graphics; and ● tailored fits with diverse styling. The Group operates from 401 retail locations globally including 113 owned stores in the UK and Europe, 162 franchised and licensed stores and 126 concessions. Superdry has a significant and growing retail presence around the world: Europe Asia Middle East Rest of World Austria Netherlands Hong Kong Egypt Australia (L) Belgium Norway India Jordan Canada Denmark Republic of Ireland Indonesia Kuwait Colombia Finland Slovenia Georgia Lebanon Panama France Spain Malaysia Qatar South Africa Germany Switzerland Philippines Saudi Arabia USA (L) Greece UK Singapore United Arab Emirates Venezuela Hungary South Korea Italy Thailand Luxembourg Taiwan (L): License Complementing the store presence, the Group operates 16 international Superdry websites including 15 local language sites: Belgium (Dutch and French) France Norway Canada (English and French) Italy Spain Denmark Germany Sweden Finland Netherlands Switzerland (French and German) The Group’s business model is to establish a presence in a geographical territory through the Wholesale business which can include: franchises, independent retailers, concessions, licences and the internet. As the brand develops traction with the consumer and achieves recognition, the Group seeks to replace wholesale activity with a retail model of owned stores in territories where that is appropriate. In the UK the Group has stated its intention to achieve this goal in the long-term and has reduced its franchised stores to three and the number of independent retailers stocking Superdry products continues to decline through natural attrition. In Europe the acquisition of SuperGroup Europe BVBA has provided a platform, through an existing portfolio of stores and an experienced local management team that will allow the development of both Retail and Wholesale revenues. The Group’s strategy is to grow revenues and profits though the following: ● expanding the UK and European standalone retail estate; ● delivering an e-commerce platform that increases its penetration of Group revenue; ● driving international franchised store expansion; ● extending the product range; and ● developing an infrastructure that delivers operational efficiency and a platform for growth.


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    SuperGroup Plc Annual Report and Financial Statements 2013 03 Chairman’s Statement In the Annual Report last year I gave a frank assessment of Over the next year we have planned substantial investments what had been a difficult year for our company. This year in our IT and Logistics infrastructure. These programmes I am pleased to report solid progress in a number of key will enhance our capacity for future growth as well as areas. enabling efficiencies within our existing operations. I also anticipate that in the next 12 months the Group will see The Group’s results show continued expansion of the significant developments in the international expansion of business, growing revenues and increased profits. More our activities. importantly, we have met market expectations on a consistent basis. Improvements to internal forecasting and SuperGroup has, in many respects, grown up over the last review processes have enabled clearer and more accurate year. The new people who have joined us have brought Introduction external communications about our performance and new skills and have often been a stimulus for change, but expectations. it would not have been possible without the commitment and enthusiasm of those who have worked for the Group Our management team has been strengthened significantly. for many years and, above all, a preparedness to learn and A year ago Susanne Given and Shaun Wills had recently improve throughout the company. On behalf of the board joined in their respective roles as Chief Operating Officer I’d like to thank everyone who works for SuperGroup for and Chief Financial Officer. These key appointments what has been achieved over the last year. have brought new skills and disciplines to the executive team which have complemented Julian Dunkerton and James Holder well. The last 12 months have also seen Peter Bamford key appointments of a Head of UK and Ireland Retail, a Chairman Director of HR, a Director of IT, and a Head of Logistics. 10 July 2013 Most recently Hans Schmitt has been appointed to head up the International and Wholesale division. The board has changed significantly too. In addition to Performance Susanne’s and Shaun’s appointments, Theo Karpathios resigned from his role as Chief Executive of the International and Wholesale business last August, while Steven Glew and Indira Thambiah stood down from their positions as non-executive directors at the end of January. I would like to thank all three for their contributions to the development of SuperGroup, most notably Theo for his role as a co- founder and in laying the foundations of our international business. Minnow Powell and Euan Sutherland joined the board at the end of November and have added new perspectives and brought an improved balance to the board. The Superdry brand is in good health. It continues to be in demand in all geographies and our brand tracking research Governance shows it is distinctive and robust. Julian Dunkerton’s vision, leadership and commercial skills combined with James Holder’s design talent have moved our product range forward on many fronts. Financial Statements


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    04 SuperGroup Plc Annual Report and Financial Statements 2013


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    SuperGroup Plc Annual Report and Financial Statements 2013 05 Introduction Performance Business Review 07 - 16 Financial Review 18 - 22 Risk 23 - 25 Operating Responsibly 26 - 27 Performance Governance Financial Statements


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    06 SuperGroup Plc Annual Report and Financial Statements 2013


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    SuperGroup Plc Annual Report and Financial Statements 2013 07 Business Review Introduction The Group is planning to add around 80,000–100,000 square feet during financial year 2014 and will take a pan- SuperGroup operates in the branded fashion clothing sector European approach to identifying store locations. selling Superdry branded premium quality clothing and accessories for both men and women at accessible price The Group has added 66,000 square feet during the year points. The Group operates an expanding international taking the total UK and European portfolio to 536,000 business and continues to grow market share in the UK, square feet (2012: 471,000 square feet). Twelve new stores Europe and beyond through its internet operation and store were opened including five stores that were extended, one opening programme. relocated to a larger site, and one store closed at the end of its lease. Group strategy Introduction The Group’s strategy is focused in five key areas: The success of Superdry products in the Group’s 20 Cult stores resulted in the decision to rebrand the stores as 1. expanding the UK and European standalone retail Superdry and this was successfully completed ahead of estate; peak Christmas trading in 2012. As a consequence of 2. delivering an e-commerce platform that increases its the rebranding Cult now only trades through the website penetration of Group revenue; Cult.co.uk. 3. driving international franchised store expansion; E-commerce 4. extending the product range; and 5. developing an infrastructure that delivers operational The e-commerce sites are complementary to standalone efficiency and a platform for growth. stores and the Group now sells to 122 territories worldwide through its websites. During the year the Group added Progress continues to be made in each of these areas and ten local language sites: Canada (English and French), all are important contributors to the Group’s growth. Denmark, Finland, Italy, Norway, Spain, Sweden and Switzerland (French and German). There are now 16 sites Performance Standalone stores operating throughout the world, all fulfilled from the UK, and the Group will continue to open international sites in the The Group operates three types of store: smaller boutique forthcoming year. China represents an exciting opportunity stores, typically found in Europe; medium-sized stores and a transactional website is planned to be trialled during of around 5,000 square feet, principally in the UK but 2014. The site, which is currently under development, will increasingly in Western Europe; and the much larger also be fulfilled from the UK, which will allow it to carry the flagship stores in key cities of up to 25,000 square feet. full range of Superdry products. Governance Financial Statements


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    08 SuperGroup Plc Annual Report and Financial Statements 2013 Business Review International franchised business Through its global partners, Superdry opened 55 franchised stores of which 36 were in Europe. In addition seven concession stores opened and there were three further licensed stores, opened in the USA. It is anticipated that, circa 50 franchised stores will open during 2014. The Group will explore potential opportunities to buy out existing master franchise and agency agreements in Western Europe. This will allow the Group to accelerate store roll-out by investing its own capital, improve margins on the wholesale operation and retain the local operational and management expertise. Since the year end, an agreement has been reached to buy out the distribution operation in Spain. The consideration is €2.3 million of which €0.3 million will be settled in shares. In relation to this transaction SuperGroup Plc will be issuing 16,500 ordinary shares to OSAKA 68 S.L. in July 2013, with the same number to be issued in July 2014. Superdry’s worldwide presence FY13 FY12 Movement UK/ROI: Owned 85 79 6 Franchised 3 5 (2) Concessions 69 71 (2) Europe: Owned 28 24 4 Franchised 96 60 36 Concessions 10 4 6 Rest of World: Franchised: Asia 17 9 8 Middle East 15 8 7 South/Central America 8 6 2 Africa 3 1 2 Concessions: North America 4 4 0 Asia 42 42 0 Australia 1 0 1 Licensed: USA 13 10 3 Australia 7 7 0 Total worldwide locations 401 330 71 Owned 113 103 10 Franchised 142 89 53 Concessions 126 121 5 Licensed 20 17 3 Total 401 330 71


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    SuperGroup Plc Annual Report and Financial Statements 2013 09 Business Review Infrastructure The Group continues to develop its infrastructure; this investment is critical to the future growth ambitions of the Group and will take a number of years to complete. The Group is making good progress with the merchandising management system and point of sale system, both of which are planned to go live after peak Christmas trading 2013. During financial year 2014 there are planned system replacements for finance and human resources. Introduction During April 2013 the Group announced that it had entered into a long-term agreement with Clipper Logistics to provide an operational solution for the fulfilment of the Group’s multi-channel retail activities from a new distribution centre in Burton upon Trent. The capacity of the new warehouse will be 500,000 square feet and will support the Group’s growth aspirations in its next phase of development. The new distribution centre is ideally located for national carrier networks to supply the Group’s retail outlets more efficiently and to support fulfilment of the Group’s internet operations, both in the UK and internationally. This operating capability will support planned growth for at least the next five years. The new facility will require a capital investment of circa £5m. After the initial set-up and Performance transition phase this investment will deliver an opportunity for the Group to generate significant cost savings, improve operating margins and provide a platform for the Group to meet the increasing demands of e-fulfilment. The business has been further strengthened during the year with the recruitment of a Director of IT and Director of HR who have joined the executive team. During June 2013 the Group appointed a Managing Director, International Product range and Wholesale. In addition, the senior management teams The Group continues to enhance its ranges through the have been strengthened by the recruitment of a Head constant refreshing of core products such as outerwear, of Logistics, a Head of UK and Ireland Retail, a Head of hooded sweatshirts and casual tops, as well as the Women’s Design and, since the year end, a Group General introduction of new categories and range extensions. Counsel and a Group Financial Controller. The brand is increasing its consumer appeal through the introduction of more subtle branding, tailored product and Governance tactical collaborations. Further developments have been made in the Timothy Everest range with the introduction of women’s tailoring, which have received a positive reaction both from the customer and the fashion press. The anticipated improvement in womenswear sales from the spring/summer 2013 range was realised with strong positive like-for-like sales growth in the final quarter of the financial year. The new ranges, with a distinctive feminine handwriting, have resonated with customers and further developments are planned with the autumn/winter 2013 range. Financial Statements Accessories sales continue to grow strongly and, following last year’s success with iPod/iPad covers and bags, further accessories have been added to the range, including the launch of a new watch collection in November 2012 and a premium range of cosmetics in February 2013.


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    10 SuperGroup Plc Annual Report and Financial Statements 2013


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    SuperGroup Plc Annual Report and Financial Statements 2013 11 Business Review Own store locations UK and Europe Introduction 2009 2010 2011 2012 2013 Standalone stores (number) UK 25 42 60 79 85 Performance Europe – – 18 24 28 Total 25 42 78 103 113 Retail space (square feet) UK 126,704 211,680 306,571 431,860 488,846 Europe – – 21,917 38,804 47,467 Total 126,704 211,680 328,488 470,664 536,313 Wholesale worldwide partners Governance Financial Statements


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    12 SuperGroup Plc Annual Report and Financial Statements 2013 Business Review Retail retail space. The extensions include the opening of the second and final floor of Regent Street, taking the store to The Group has made changes to the way it reports its 25,000 square feet. divisional performances, details of which are included in the introduction of the Financial Review; the comparative In the UK a net six stores were opened including one of figures below are restated for these changes. 16,000 square feet at the new Trinity Shopping Centre in Leeds and a further store in Derby, which has led to the The Retail division comprises Superdry branded retail closure of the franchised stores in these cities. There are outlets in the UK and Europe, as well as concessions in the 85 stores (2012: 79 stores) in the UK trading from 489,000 UK and global e-commerce. square feet (2012: 432,000 square feet). The division delivered revenue of £242.5m (2012: £204.0m), Outlet stores continue to be an important destination for up 18.9% and representing 67% of total Group revenue customers and support the Group’s clearance activity and (2012: 65%). Like-for-like sales for the year, including the represent around 8% of total Retail sales. The Group trades European owned stores and e-commerce revenues, were from ten outlets (2012: nine outlets) in the UK. 5.7% (2012: 2.8%). Four stores were opened in Europe including Oberhausen Operating profit was £46.8m (2012: £37.9m). Underlying in Germany which has been modelled on the UK store operating profit in the year was £46.2m (2012: £38.0m) footprint and trades from circa 5,000 square feet, compared and underlying operating profit margin was 19.1% (2012: to the average European store at circa 1,600 square feet. 18.6%). The improvement in operating margin reflects the Twenty-eight standalone stores (2012: 24 stores) now gross margin accretion that has been generated across operate in Europe trading from 47,000 square feet. the Group driven by sourcing gains through better buying and sales mix, offset in part by distribution costs. The The total number of standalone stores increased to 113 existing warehousing and distribution operation, whilst fit (2012: 103 stores) and at the year end Retail traded from for purpose, is not optimally efficient and has resulted in 536,000 square feet (2012: 471,000 square feet). The above industry average costs per unit. In recognition of Group received £3.0m (2012: £7.7m) in cash as landlord this point, the Group has taken the decision to relocate the contributions which were used to finance the associated warehouse and replace its third party logistics partner. store refit costs. The operational performance of the standalone stores Internet traffic to the Superdry e-commerce sites has has improved during the year through the introduction of continued to grow, with the number of visitors, including a flexible store payroll model. Historically, stores teams from mobile devices, increasing by 39% to 29.9m visitors contained a high number of full-time colleagues; this has (2012: 21.5m visitors). Mobile phone and tablet apps, now changed to a broadly equal split of full-time and part- which were launched last year, have proved popular time employees. This has enabled stores to schedule with customers recording 4.6m visits (2012: 1.3m visits). the right level of staff in-store at key periods, which has Improving key performance indicators, including average resulted in an improvement in productivity. transaction values, have contributed to the continued success of the Group’s e-commerce proposition. During During the year 12 new stores were opened (including one the year internet revenues grew by 27.8% to 11.2% of total relocation), one store closed, and there were extensions Group revenue (2012: 10.0%). made to five stores, adding in total 66,000 square feet of


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    SuperGroup Plc Annual Report and Financial Statements 2013 13 Business Review Retail division 2012 2013 Restated Growth £m £m % External revenues 242.5 204.0 +18.9% Underlying operating profit 46.2 38.0 +21.6% Underlying operating profit margin (%) 19.1% 18.6% +50bps Financial derivatives 1.1 (0.1) Introduction Restructuring costs (0.5) – Retail operating profit 46.8 37.9 +23.5% Retail division — revenue and underlying profit growth £m 250 £242.5m ■ Retail revenue ■ Underlying operating profit £204.0m 200 £147.4m Performance 150 £ 100 £86.4m £48.9m £46.2m 50 £37.8m £38.0m £18.0m £4.7m 0 2009 2010 2011 2012 2013 Financial year 2012 has been restated to reflect the changes in segmental reporting; refer to the Financial Review (page 18) and note 4 (page 78). Governance Financial Statements


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    14 SuperGroup Plc Annual Report and Financial Statements 2013 Business Review Wholesale The Wholesale division comprises wholesale, franchise and licence arrangements as well as trade sales but excludes e-commerce sales. The division delivered external revenue of £117.9m, up 7.4% (2012: £109.8m), representing 33% of total Group revenue (2012: 35%). Operating profit in the year was £37.1m (2012: £31.8m), whilst underlying operating profit was £35.6m (2012: £31.4m). Underlying operating margin was 30.2% (2012: 28.6%). The improvement in operating margin of 160 basis points reflects gross margin accretion that has been generated across the Group, driven by sourcing gains through better buying, currency gains, and increased operating income. This is offset in part by: a higher level of marketing spend, an increase in the bad debt provision and costs associated with operating the international showroom at Regent Street. 2013 2012 Growth £m £m % Wholesale revenue by territory: UK and Republic of Ireland 34.7 41.5 –16.4% Europe 67.0 57.6 +16.3% Rest of World 16.2 10.7 +51.4% Total Wholesale revenue 117.9 109.8 +7.4% The revenue growth in Wholesale has been driven by both increased order levels from existing franchisees and new franchised stores opened during the year. As reported last year, and as anticipated, the UK wholesale market has continued to decline as consumers elect to shop in Superdry stores and websites. There are 142 Superdry branded franchise stores worldwide, 126 concessions (including 69 Retail concessions) and 20 licensed stores, operating in 60 countries. The Group opened 55 franchised stores during the year; 36 were in Europe, of which 15 were in Spain, 13 in France and 19 in the rest of the world. Stores were opened for the first time in the following countries: India (4), Norway (3), Greece (2), Lebanon (2) and one in each of Egypt, Georgia, Hungary, Philippines, Qatar and Thailand. In the UK the franchise stores in Derby and Leeds were closed leaving three franchise stores remaining. Seven concession stores were opened in Europe and Australia and three licensed stores were opened in the United States taking the total to 13.


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    SuperGroup Plc Annual Report and Financial Statements 2013 15 Business Review Introduction Wholesale division Performance 2012 2013 Restated Growth £m £m % External revenues 117.9 109.8 +7.4% Underlying operating profit 35.6 31.4 +13.4% Underlying operating profit margin (%) 30.2% 28.6% +160bps Financial derivatives 1.5 0.4 Wholesale operating profit 37.1 31.8 +16.7% Wholesale division — revenue and underlying profit growth £m 140 ■ Wholesale revenue Governance ■ Underlying operating profit £117.9m 120 £109.8m 100 £90.5m 80 £ 60 £53.0m 40 £35.6m £31.4m Financial Statements £27.3m £21.4m 20 £10.8m £3.2m 0 2009 2010 2011 2012 2013 Financial year 2012 has been restated to reflect the changes in segmental reporting; refer to the Financial Review (page 18) and note 4 (page 78).


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    16 SuperGroup Plc Annual Report and Financial Statements 2013 Business Review Current trading and outlook Trading in the first nine weeks of the new financial year has been encouraging. Customers’ reactions to the new spring/ summer ranges have been positive and womenswear has performed well driving a further improvement in its sales participation. During 2014 the Group’s investment plans will require a capital expenditure of around £30m and will include opening 80,000–100,000 square feet of owned retail selling space in the UK and Europe. Internationally the Group anticipates adding circa 50 franchised stores. The board remains confident in the Group’s prospects for this financial year. Julian Dunkerton Chief Executive Officer 10 July 2013


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    18 SuperGroup Plc Annual Report and Financial Statements 2013 Financial Review Introduction The Group has made changes to the way it reports its divisional performances, details of which are included in note 4, segment information. The changes made provide greater transparency and allow for improved management of divisional performance and replace the previous methodology of reporting based upon the historical management of the corporate entities that comprise the Group. The principal changes are: ● inclusion of SuperGroup Europe retail stores in the Retail division; ● including all trade sales in Wholesale; and ● non-division specific central overheads have been moved to central costs. 2012 2013 Restated Growth £m £m % Revenue: Retail 242.5 204.0 +18.9% Wholesale 117.9 109.8 +7.4% Group revenue 360.4 313.8 +14.9% Underlying operating profit: Retail 46.2 38.0 +21.6% Wholesale 35.6 31.4 +13.4% Central costs (29.9) (26.7) +12.0% Underlying Group operating profit 51.9 42.7 +21.5% Finance income 0.3 0.1 Underlying Group profit before income tax 52.2 42.8 +22.0% Non-underlying and exceptional adjustments: Fair value movement on deferred share consideration (2.5) 8.3 Financial derivatives 2.6 0.3 Restructuring costs — exceptional items (0.5) – Reported Group profit before income tax 51.8 51.4 +0.8% Underlying operating profit margin: Retail 19.1% 18.6% +50bps Wholesale 30.2% 28.6% +160bps Group underlying operating profit margin 14.4% 13.6% +80bps Note: Underlying is defined as reported results adjusted to reflect the impact of the gain/loss recognised on fair valuing deferred contingent share consideration, financial derivatives, exceptional items and, when appropriate, the related income tax. The directors believe that the underlying results provide additional guidance to statutory measures to help understand the performance of the Group. Further details of the adjustments are included in note 13. All references to underlying are after making these adjustments. Retail and Wholesale segments are presented before inter-segment royalties.


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    SuperGroup Plc Annual Report and Financial Statements 2013 19 Financial Review Adjustments to reported results A number of adjusting items have been identified in establishing the underlying performance of the Group, which are either non-recurring items or accounting adjustments for derivatives. They are separated into non-underlying items and exceptional operating costs: 2013 2012 Growth £m £m % Revenue 360.4 313.8 +14.9% Operating profit 51.5 51.3 +0.4% Introduction Non-underlying items: (a) Loss/(gain) recognised on fair value of deferred share consideration1 2.5 (8.3) (b) Gain on financial derivatives2 (2.6) (0.3) Total non-underlying items (0.1) (8.6) Exceptional operating costs (note 13) 0.5 – Underlying operating profit 51.9 42.7 +21.5% Finance income 0.3 0.1 Underlying profit before income tax 52.2 42.8 +22.0% Notes: Non-underlying items 1 Statement of comprehensive income adjustment to reflect the fair value movement in the share price for the deferred contingent share consideration related to the acquisition of SuperGroup Europe BVBA. Performance 2 The revaluation of forward foreign exchange contracts to fair value by using the year end spot rate. Group operating profit Exceptional operating costs Underlying operating profit of £51.9m (2012: £42.7m) is up Restructuring costs and provisions totalling £0.5m 21.5% and compares to an overall growth in revenue of (2012: £nil) have been charged following the Group’s 14.9%. Underlying operating profit margin at 14.4% (2012: announcement on 15 April 2013 to relocate the Retail 13.6%) has improved by 80 basis points. and e-commerce distribution centre from Gloucester to Burton upon Trent. The costs relate to provisions for The Group’s gross profit of £210.0m (2012: £178.8m) is up redundancy, dilapidations, onerous leases and accelerated 17.4% compared to an overall growth in revenue of 14.9%. depreciation, and further exceptional costs will be incurred Group gross profit percentage at 58.3% (2012: 57.0%) has during financial year 2014. increased by 130 basis points on the prior year. Taxation The Group continues to increase its supplier base in order The Group’s income tax expense on underlying profit of to manage risk and meet growth expectations. During the £13.4m (2012: £12.2m) represents an effective tax rate Governance year, the number of suppliers increased to 79 (2012: 72) and of 25.7% for the period ended 28 April 2013 (29 April this trend is expected to continue. Changes to sourcing in 2012: 28.5%). This is higher than the statutory rate of recent years have resulted in the supply base being focused 23.9% (2012: 25.8%) primarily due to depreciation and in three principal territories: Turkey, China and India. This amortisation of non-qualifying assets. flexible sourcing model that the Group has adopted, both in terms of suppliers and territories, enables the Group to The UK corporation tax rate reduction from 24% to 23%, generate competitive tension between suppliers and de- with effect from 1 April 2013 is substantively enacted at the risk its sources of supply. balance sheet date so the deferred tax balances at 28 April 2013 have been remeasured resulting in an exceptional Underlying central costs were £29.9m (2012: £26.7m), an deferred tax charge of £1.5m (2012: £3.2m). increase of £3.2m on the prior year. The Group continues to grow its store portfolio and invest in its infrastructure, During the year the Group paid more than £29m in UK taxes, which have been the key drivers in the cost base growth. Financial Statements which includes corporation tax, import duty, business Employee benefit expenses have risen by £4.1m reflecting rates, employer’s national insurance and stamp duty. the continued investment in human resource and the costs of the long-term incentive plan. In preparation for the listing of the business on the London Stock Exchange, a substantial reorganisation Depreciation and amortisation has increased by £5.0m was undertaken with effect from 7 March 2010 and the representing the additional stores opened, store extensions Group’s subsidiaries acquired net assets with a total and store fixtures, and computer and office equipment. fair value of £375m. Within this amount, £340m was


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    20 SuperGroup Plc Annual Report and Financial Statements 2013 Financial Review identified as intangible assets and goodwill, of which the Landlord contributions of £3.0m (2012: £7.7m) were directors believe that at least £187m should be deductible received during the year and will be amortised over the against taxable profits over the useful economic lives of length of the respective leases. The decline in contributions the respective assets. This gave rise to £52.4m of the received reflects the reduced number of stores opened exceptional deferred tax asset booked in 2010. Based on during the year, a move towards rent-free periods being this the directors consider that the Group’s future cash tax given as an incentive and opening of stores in prime expense should be reduced by approximately £3.3m per locations where incentives are less prevalent. annum using the corporation tax rate of 23%. Intangible assets, which comprise goodwill, lease Earnings per share premiums, distribution agreements, trademarks, the website and software, were £41.5m at the year end (2012: Underlying basic earnings per share is 47.8p (2012: 38.1p). £40.7m). Basic earnings per share is 44.7p (2012: 45.0p) based on a basic weighted average of 80,280,115 shares (2012: Investment in inventories, trade receivables and trade 80,234,588 shares). The increase in the basic weighted payables increased by 59.8% during the year to £68.4m average number of shares is due to 220,959 ordinary shares (2012: £42.8m) and as a proportion of Group revenue was being issued during February 2013 in accordance with 19.0% (2012: 13.6%). the deferred contingent share consideration agreement following the acquisition of SuperGroup Europe BVBA in Group inventory increased to £72.5m (2012: £55.5m), 2011. The transaction resulted in an increase of £1.5m in up 30.6%. The increase in inventory is predominantly share premium. represented by the planned arrival of the Spring/Summer 2013 range during February and March to ensure availability Underlying diluted earnings per share is 47.4p (2012: in-store for the season, compared to the prior year when 37.9p). Diluted earnings per share is 44.3p (2012: 44.7p) deliveries were received during May. based on a diluted weighted average of 81,049,304 (2012: 80,792,443) shares. Trade receivables (excluding prepayments) increased by 20.4% to £28.3m (2012: £23.5m) and were 7.9% (2012: Cash flow and balance sheet 7.5%) of Group revenue. This increase is in line with the The Group had net cash balances of £54.5m (2012: £30.9m) year-on-year growth in Wholesale revenue during the final at the end of the year. Cash generated from operations was quarter of the year. £46.5m (2012: £56.5m); the year-on-year decline is largely due to higher non-cash adjustments for depreciation Trade payables were £32.4m (2012: £36.2m), a decrease and the fair value adjustment on deferred contingent of 10.5% (2012: increase of 47.8%) representing 9.0% share consideration offset by an increase in working (2012: 11.5%) of Group revenue. This movement reflects capital, principally driven by an increase in inventories. A the timing of supplier payment runs around the year end. reduction in investing activities driven by decreased capital There had been an increase in payments made during the expenditure compared to the prior year has resulted in final period of the financial year compared to last year, as a a net increase in cash of £23.6m (2012: net decrease of result of the earlier stock intake, and this is reflected in the £1.3m). The business remains highly cash generative and it decrease in creditor days as noted in the Directors’ Report. is anticipated that the Group will continue to enjoy a strong balance sheet that will enable investment in infrastructure, new stores and working capital to support future growth. Net finance income of £0.3m (2012: £0.1m) arose from the cash reserves held throughout the year. The net book value of property, plant and equipment is £63.7m (2012: £63.8m). During the year, £15.0m (2012: £36.6m) of capital additions were made, of which £10.0m (2012: £23.5m) relates to leasehold improvements across the Group. The year-on-year decrease represents management’s decision to review and temporarily slow the store opening programme. The balance is made up of furniture, fixtures and fittings (£3.9m) and computer equipment (£1.1m).


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    SuperGroup Plc Annual Report and Financial Statements 2013 21 Financial Review Group cash flow £m 60 ■ Cash flow £54.5m ■ Closing cash 50 40 £32.2m £29.8m £30.9m 30 £28m Introduction £ £23.6m 20 10 £4.2m £0.4m 0 -£1.8m -£1.3m -10 2009 2010 2011 2012 2013 2013 2012 Growth £m £m % Performance Current assets Inventories 72.5 55.5 +30.6% Trade and other receivables Trade receivables 28.3 23.5 +20.4% Other receivables/derivatives 19.0 19.1 -0.5 % Subtotal 47.3 42.6 +11.0% Cash and cash equivalents 54.5 30.9 +76.4% Total current assets 174.3 129.0 +35.1% Current liabilities Trade payables 32.4 36.2 -10.5% Other payables/derivatives/ borrowings 25.0 17.0 +47.1% Total current liabilities 57.4 53.2 +7.9% Net current assets 116.9 75.8 +54.2% Governance Working Capital Inventories 72.5 55.5 +30.6% Trade receivables 28.3 23.5 +20.4% Trade payables (32.4) (36.2) -10.5% Total working capital 68.4 42.8 +59.8% Dividends The board of directors remains of the view that the business is best served by retaining current cash reserves to support growth. Consequently a recommendation will be made at the Annual General Meeting that no dividend is payable in relation to 2013 (2012: £nil). Financial Statements The board will keep the dividend policy under review by considering the Group’s profitability, underlying growth, availability of cash and distributable reserves and the investment opportunities open to the business.


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    22 SuperGroup Plc Annual Report and Financial Statements 2013 Financial Review Key performance indicators KPI Units 2013 2012 Change % Group revenue £m 360.4 313.8 +14.9% Like-for-like sales % +5.7% +2.8% +290bps Gross margin % 58.3 57.0 +130bps Underlying operating profit margin % 14.4 13.6 +80bps Underlying profit before income tax £m 52.2 42.8 +22.0% Total Retail selling space ’000 sq. ft. 536 471 +13.8% Total Retail store numbers No. 113 103 +10 stores Internet revenue as % of Group revenue % 11.2 10.0 +120bps Wholesale overseas revenue mix % 72 63 +9ppts International franchised and licensed stores No. 159 101 +58 stores Number of Wholesale territories No. 60 54 +11.1% Number of product suppliers No. 79 72 +9.7% ● Group revenue represents amounts receivable for Going concern goods supplied, net of discounts, returns and value The directors report that, having reviewed the current added taxes; performance forecasts, they have a reasonable expectation ● Like-for-like sales growth is defined as the year-on- that the company and the Group have adequate resources year increase in revenue from stores and concessions to continue their operations for the foreseeable future. open for more than one year and includes e-commerce For this reason they have continued to adopt the ‘going revenues; concern’ basis in preparing the financial information. ● Gross margin percentage is gross profit expressed as a percentage of Group revenue; Board approval ● Underlying operating profit margin is the ratio of On 10 July 2013 the board of directors of SuperGroup Plc operating profit, before charging non-underlying and approved this statement. exceptional items, to external revenue; ● Underlying profit before income tax is the net of Cautionary statement external revenue less cost of sales, selling, general and This report contains certain forward-looking statements administrative expenses, plus other gains and losses with respect to the financial condition, results of the (net), plus finance income, less finance costs and operations and businesses of SuperGroup Plc. These before charging non-underlying and exceptional items statements and forecasts involve risk, uncertainty and (note 13); assumptions because they relate to events and depend ● Total Retail selling space is defined as the trading floor upon circumstances that will occur in the future. There area of all standalone stores excluding stockroom, are a number of factors that could cause actual results or administration and other non-trading areas at the developments to differ materially from those expressed year end; or implied by these forward-looking statements. These ● Total Retail store numbers include all standalone stores forward-looking statements are relevant on the date of open and trading at the year end; publication of this statement. Nothing in this statement ● Internet revenue as a percentage of Group revenue is should be construed as a profit forecast. Except as required the ratio of internet revenue to Group revenue; by law, SuperGroup Plc has no obligation to update the forward-looking statements or to correct any inaccuracies ● Wholesale overseas revenue mix is the proportion of therein. Wholesale revenue sourced outside the UK, excluding royalty receipts; ● International franchised and licensed stores include all Shaun Wills franchised and licensed stores open and trading at the Chief Financial Officer year end; 10 July 2013 ● Number of Wholesale territories are the countries in which the Group’s products are sold primarily by distribution, franchise or agency arrangements to Wholesale customers; and ● Number of product suppliers is the number of suppliers that have supplied items for resale during the year.


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    SuperGroup Plc Annual Report and Financial Statements 2013 23 Risk In accordance with the UK Corporate Governance Code (the “Code”), the board understands the need for a robust system of internal control and risk management. Following a review of risks to the Group, a further assessment of the key risks and uncertainties facing the Group has been undertaken, which is reviewed by the executive committee and board. The directors consider the following matters to be the principal risks and uncertainties affecting the Group. These may not be exhaustive and there might be additional unknown risks that could have an adverse effect on the Group: Risk Potential impact Mitigation Change * Fashion and design The Group may The Group will continue to design new and trends may not be experience inventory innovative products, and will ensure a high Introduction responded to. shortages or excesses level of market awareness and understanding that could result in of fashion and consumer trends by carrying reduced margins, lost out market research, brand tracking, visits to revenue or customer trade fairs and product research. goodwill. The Group is constantly refreshing and updating its product range and this assists in differentiating the product to meet evolving consumer needs. As owner of the Superdry brand, the Group is less sensitive to fashion trends than many other clothing retailers. Risk of unfavourable The Group’s financial The Group has a documented foreign Performance changes in currency results become exchange policy and maintains constant exchange rates. unpredictable due to management oversight, including board changes in exchange review, of foreign exchange exposure and rates. opportunities. The Group’s policy is to hedge these risks by using forward foreign exchange contracts and this policy is set out in note 31 of this report. Economic and The Group’s results The Group will continue to monitor and assess financial conditions can be affected by the the status of the EU economic and financial result in challenging impact of economic environment and potential impacts. trading conditions. conditions on consumer confidence and buying The Group continues to implement its habits. strategies to develop and strengthen the Superdry brand globally thereby reducing its Governance dependency on specific markets. Ability to support Failure to manage A five year plan is in place which sets out planned growth of the the pace of change the key strategic initiatives which will be Group by developing effectively could impact required to support the planned growth of the its supply base, on the Group’s ability to Group. These initiatives are owned by senior infrastructure and achieve planned growth executives and are reported on regularly to people. targets. the board. The recruitment of experienced senior members of the management team will help drive the successful implementation of these initiatives as well as underpinning future Financial Statements operations. * Indicates the change in overall level of risk assessment during the course of 2013.


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    24 SuperGroup Plc Annual Report and Financial Statements 2013 Risk Risk Potential impact Mitigation Change * Failure to deliver Failure to manage key Robust board level project approval processes business critical projects could impact are in place to ensure that appropriate due projects. on the effectiveness and diligence is carried out before a project is efficiency of business undertaken. operations or delay growth opportunities. Improvements have been made to the project governance framework. Enhanced project and risk management disciplines are in place and reviews are carried out at key checkpoints. Failure to ensure There is potential for Ethical Trading matters are led by the COO to compliance in the the Group to suffer whom a dedicated sustainability team reports. supplier base to negative customer and SuperGroup is an active member of Ethical ethical trading policy. stakeholder sentiment Trading Initiative (ETI). with associated impact on customer and The Group actively engages with its supply investor appeal. base and expects to operate in accordance with its ethical trading code of practice. The Group assesses the status of operating practices through a schedule of focused audits and company visits, where necessary, working with suppliers on improvement plans. Key infrastructure or Should any of these The Group continues to invest in improving IT systems may be facilities be unavailable the availability, integrity and confidentiality of unavailable due to for an extended time its business systems and has a roadmap for operational problems period, the Group’s business system replacement. or a major incident. ability to trade will be impaired. A phased approach is being taken to improve the reliability, efficiency and scalability of the Group’s warehousing and distribution capabilities. Enhancements to the Group’s business continuity planning procedures continue to be developed. Loss of key individuals There could be The management team has been or the inability to significant focus strengthened considerably over the past 12 attract and retain from investors and months. Susanne Given as COO and Shaun talent. stakeholders relating to Wills as CFO are now well established in their our ability to maintain roles. New executive appointments have and expand the brand been made in the areas of HR, IT, Logistics and Group. and Retail during the past year. The Design team also continues to be expanded and Lack of appropriately strengthened. skilled and experienced resource could result in Following appointment of the new HR a delay in achieving the Director, the Group’s recruitment and retention Group’s strategic goals. processes are being reviewed and enhanced. * Indicates the change in overall level of risk assessment during the course of 2013.


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    SuperGroup Plc Annual Report and Financial Statements 2013 25 Risk Risk Potential impact Mitigation Change * Brand damage may The strength of the Brand tracking and sales analysis occurs to occur due to over- Superdry brand is ensure that the brand does not become over- exposure of the fundamental to the exposed in any of its markets. Growth in more Superdry brand or business. There is a mature markets is carefully planned to avoid counterfeit product. risk that the brand may over-saturation. be over-exposed or damaged by copied or Working with third party services the Group counterfeit products, constantly monitors its supply chain and the with inferior quality and global sales of Superdry branded product Introduction design. by unlicensed parties, taking necessary action to both stop and where possible take proceedings against them. A Brand Protection Manager has recently been appointed to strengthen these controls further. Regulatory and Legal Failure to comply with When operating outside the UK, the Group Frameworks. regulatory frameworks works with experienced partners who bring in the diverse markets significant local knowledge. Specialist in which the Group professional and legal advice is also sought operates could result relevant to the local markets. in financial penalties or reputational damage. The Group has recently strengthened both its internal legal team and the external support partners used. Performance Execution of The Group fails to Ownership of international strategic risks is international grow the international held by the recently appointed Managing expansion. business successfully Director, International and Wholesale, who has through franchise extensive international retail experience. operations, wholly owned businesses and Progress is regularly reviewed and discussed e-commerce. at the Group board. Risks that the Group Strong relationships developed with the key fails to prioritise the right stakeholders and identification of established, territories or investment. experienced and successful partners. The international Identification of appropriate ranges for the economic climate does country or territory and identifying a cultural fit Governance not support the Group’s with the Superdry brand. growth aspirations. * Indicates the change in overall level of risk assessment during the course of 2013. Financial Statements


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    26 SuperGroup Plc Annual Report and Financial Statements 2013 Operating Responsibly SuperGroup is committed to operating in a responsible Ethical Trading Initiative provides the Group with guidance manner and strives to become a more sustainable business. and support to ensure that the ethical trading programme For the Group this means working with suppliers, engaging remains on track. communities, attracting and retaining the best staff and reducing environmental impact to broaden business In 2013 the Group: benefits to all stakeholders. ● Made improvements in supporting supplier factories Governance and structure through the assessment and monitoring programme which led to a decrease in audit issues in key sourcing Overall accountability for Group corporate responsibility, countries; including matters relating to ethical trading in the supply chain, sits with the Chief Operating Officer (“COO”). ● Supported the delivery of a multi-supplier capability improvement workshop in China which provided The Group has a sustainability team responsible for factories with assistance and guidance on improving delivering all work streams associated with the Group’s conditions for workers; and environmental and ethical trading policies. This team ● Made further in-country visits to work with suppliers on collaborates with key areas of the business to identify country specific, industry-wide issues. opportunities to act in a more sustainable manner. The team reports directly to the COO on issues pertaining to Creating environmental value corporate responsibility. Other Group functions, including human resources and health and safety, ensure the well- SuperGroup recognises that it has a global responsibility being of the Group’s employees. to minimise the impact of the business on the natural environment. This objective is set out in our Environmental Factory conditions Policy Statement signed and endorsed by the Chief Executive Officer. SuperGroup has improved upon its ethical trading activities through financial year 2013, building on lessons learnt in In order to achieve these objectives, the sustainability previous years, in order to promote safe and fair working team cross-collaborates with many departments and conditions within the supply chain. external stakeholders to identify opportunities to reduce the environmental impact of the company. In doing so the The Group has expanded its monitoring and assessment Group continues to reduce the use and cost of resources capabilities through auditing and other mechanisms whilst such as energy. also helping suppliers improve working conditions through capability improvement programmes, ethical trading Progress is tracked using a number of databases that projects and tailored support. These are designed to monitor key variables. The Group annually measures its support continuous improvement against the SuperGroup carbon footprint and uses the information to put in place Ethical Trading Code of Practice. programmes to reduce greenhouse gas emissions. In 2013 a programme was initiated to roll out automated meter SuperGroup prides itself on transparency and collaboration reading devices to all stores to provide better electricity and continues to make regular in-country visits to key data for analysing, troubleshooting and billing. sourcing countries to maintain the support and buy-in from the supply chain. Participation as a full member of the


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    SuperGroup Plc Annual Report and Financial Statements 2013 27 Operating Responsibly The Group continues to increase its use of renewable Employees electricity. In the UK 87% of stores and offices are supplied Our people are ambassadors of our brand responsible for with renewable energy purchased from micro-generators delivering our business plans, designing and sourcing our across the UK, whilst in Europe renewable energy is being extraordinary range of products, and making the Superdry purchased from similar tariffs in different countries. experience a memorable one. We employ over 2,800 people, including part-time colleagues, across the UK and In 2013 the Group: Europe and this is set to grow over the coming year. We’re working hard to equip our people with the skills to drive ● Decreased its UK carbon footprint relative to business our business forward and offer them rewarding careers. growth; Sharing in our success is something we value and for a Rolled out a number of energy reduction measures Introduction ● second year we offered employees the opportunity to join across the store portfolio focusing primarily on reducing our Sharesave scheme. lighting loads; and ● Diverted 13.2 tonnes of textile waste from landfill and The Group encourages our employees to participate fully arranged for it to be recycled. Improved head office and in community projects and as part of this in May 2012 ten UK warehouse recycling rates to 75% of total waste, of them took part in one of the CARE International events from 50% in 2012. raising £6,500 to help provide relief against poverty. Recognising communities SuperGroup continues to be an attractive place to work and as a result receives a high volume of applications for During the year we have provided financial support to the jobs in Superdry stores. To manage this and improve the following: candidate experience the Group has invested in technology to support the initial stages of recruitment online. During ● Cheltenham Design Festival – a donation of £25,000 the year more than 35,000 applications were received and was made towards this Festival that promotes design the Group recruited in excess of 800 Christmas temps Performance excellence through their annual event, and the Saturday directly through the website to support the 2012 peak Design Academy (free to local students) introducing trading period. them to all areas of design. ● CARE International – the Group contributed £6,500 to Looking ahead CARE International, an aid agency that works globally With the Government’s pension auto-enrolment changes to provide relief against poverty and after natural effective from September 2013 the Group is preparing disasters. to extend its existing pension plan to all employees. In ● Neets project – £25,000 was donated to this local particular the aim is to help many of the young people charity that helps young people develop their skills so in our business understand the importance and value of they are better equipped to find employment. investing in a pension. ● As part of the Welsh carrier bag regulation the Group has raised more than £4,000 for its chosen charity The Group will be investing in a new payroll and HR system the Woodland Trust. The trust aims to plant six million which will enable employees to book time off online and native trees across the UK in 2013. receive electronic payslips. It will also provide insight into ● During the year the Group made one-off in-kind the Group’s rapidly growing workforce both within and Governance donations to various local charities and community outside of the UK. groups. SuperGroup recognises that as a people business it needs to continue to develop its HR function to support the future Health and safety plans of the business. Next year will see the Group focus A key objective of the Group is to provide a working on building leadership capability, training and development environment where the health, safety and well-being of to further enhance employees’ skills. In addition, career employees is continuously maintained and improved. The frameworks will be developed to ensure a pipeline of talent Group also seeks to ensure the safety of its customers and ready to meet the next phase of the Group’s growth. other business partners and to provide assurance to the board that there is a formal health and safety audit and assessment process, conducted by trained staff, that Financial Statements ensures all the premises are assessed on a regular and frequent basis.


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    28 SuperGroup Plc Annual Report and Financial Statements 2013


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    SuperGroup Plc Annual Report and Financial Statements 2013 29 Introduction Performance Governance Board of Directors 30 - 31 Directors’ Report 32 - 35 Corporate Governance Statement 38 - 42 Audit Committee Report 43 - 45 Directors’ Remuneration Report 48 - 57 Governance Statement of Directors’ Responsibilities 59 Independent Auditors’ Report to the Members of SuperGroup Plc 60 - 61 Financial Statements


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    30 SuperGroup Plc Annual Report and Financial Statements 2013 Board of Directors Peter Bamford Chairman Peter is chairman of the nomination committee. Peter is also Chairman of MCPS-PRS Alliance Limited (known as PRS for Music) and Six Degrees Technology Limited and is a non-executive director of Rentokil Initial Plc. Peter was a director of Vodafone Group Plc from 1998 to 2006 where he held senior executive roles, including Chief Marketing Officer, Chief Executive of Northern Europe, Middle East and Africa and Chief Executive of Vodafone UK. Prior to this he held senior positions with WH Smith Plc, Tesco Plc and Kingfisher Plc. Peter has served on the boards of public companies for the last 18 years and has extensive experience in developing and growing businesses and brands internationally. Julian Dunkerton Chief Executive Officer Julian is a member of the nomination committee. Julian has worked exclusively in the retail sector for over 26 years, co-founding the Cult retail chain from a market stall in Cheltenham and turning it into a successful retail chain. Together with James Holder, Julian established the Superdry clothing brand ten years ago. Julian has a deep understanding of the Superdry brand, strong commercial instincts and feel for its target customers, developed through his hands-on experience of building SuperGroup from the ground up. Susanne Given Chief Operating Officer Susanne is responsible for the UK Retail division together with the central support functions. Susanne has held senior positions in a number of leading retailers including John Lewis, TK Maxx, Harrods, Homebase and House of Fraser. She brings a disciplined and structured approach to the Group developed from over 21 years’ retailing experience across a diverse range of retailers and product sectors. Shaun Wills Chief Financial Officer Shaun was previously Chief Operating Officer at Habitat and Finance Director of Fat Face. Prior to these appointments Shaun held senior roles at New Look and Debenhams plc. Shaun has over 21 years’ experience in the retail sector in finance, strategy, and business development roles. He is a qualified accountant. James Holder Brand and Design Director James is responsible for brand and product development, and heads up SuperGroup’s team of in-house designers. James created the Bench clothing brand in 1992, which became the premier English skate- wear brand in the niche skate/BMX market. In 2003 he teamed up with Julian Dunkerton and developed the Superdry brand. James brings exceptional clothing design skills to the Group and has been central to the success of the Superdry brand in appealing to its target market.


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    SuperGroup Plc Annual Report and Financial Statements 2013 31 Board of Directors Keith Edelman Senior Independent Non-executive Director Keith is chairman of the remuneration committee and a member of the nomination committee. He is also non-executive chairman of Goal Soccer Centres Plc (effective 19 July 2013) and Chairman at Beale Plc and a non-executive director at Safestore Holdings Plc, the London Legacy Development Corporation and Thorntons Plc. Keith was Managing Director of Arsenal Holdings Plc from 2000 to 2008 and Chief Executive of Storehouse Plc (encompassing BHS and Mothercare), from 1993 to 1999. Keith has extensive retail and international experience and has served on the boards of public companies for 30 years across a wide range of businesses and markets. Introduction Ken McCall Independent Non-executive Director Ken is a member of the audit committee. Ken is also Managing Director of Europcar Group UK Ltd. Ken was previously Chief Executive Officer of DHL Express UK & Ireland, Chief Executive Officer of TNT Middle East, Africa and Asia and Chief Executive Officer of TNT China. He brings over 30 years’ experience in the logistics sector and of running international businesses in Europe and Asia. Minnow Powell Performance Independent Non-executive Director Minnow was appointed on 1 December 2012. Minnow is chairman of the audit committee and is a member of the remuneration committee. Minnow is a non-executive director at Tui Travel Plc, having previously spent 25 years with Deloitte, where he was made a partner in 1985. He is a Chartered Accountant and was a member of the UK’s Audit Practices Board for six years. Euan Sutherland Independent Non-executive Director Euan was appointed on 1 December 2012. Governance Euan is a member of the audit committee and remuneration committee. Euan is Group Chief Executive Officer for the Co-op group of companies. Euan was previously Group Chief Operating Officer at Kingfisher Plc and a non-executive director with the Co-op Food Board, and prior to this was Chief Executive of AS Watson UK, owner of Superdrug. Euan has over 18 years’ experience within the retail sector having held roles with Boots, Dixons, Coca-Cola, Matalan and Mars. Financial Statements


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    32 SuperGroup Plc Annual Report and Financial Statements 2013 Directors’ Report Company Number: 07063562 The directors present their Annual Report together with the audited Financial Statements of the company and its subsidiaries (together “the Group”) for the 52 weeks ended 28 April 2013 (“the year”). The Corporate Governance Statement, set out on pages 38 to 42, forms part of this report. The company is incorporated and domiciled in the UK. Business review and future developments SuperGroup Plc is required to set out in this report a balanced, fair and understandable review of the business of the Group during the year to 28 April 2013 and of the position of the Group at the end of the financial year and a description of the principal risks and uncertainties facing the Group (known as the “Business Review”). The Business Review and the Financial Review can be found on pages 07 to 22. Their purpose is to enable shareholders to form a view as to how well the directors have performed their duties as set out in the Companies Act 2006 (in particular, the duty to promote the success of the Group). A table of key performance indicators is set out on page 22. A description of the principal risks and uncertainties facing the Group is included on pages 23 to 25. The report on Operating Responsibly is set out on pages 26 and 27. The Annual Report referred to above fulfils the requirements of the Business Review, and is incorporated by reference and forms part of this report. Principal activities SuperGroup Plc is a UK based designer of branded premium quality clothing and accessories selling through multiple routes to market including retail, wholesale and online. At the year end, the Group had 113 standalone retail stores, 126 concessions and a growing number of wholesale relationships. Superdry is sold in 122 territories worldwide via its websites and in 60 overseas territories through a well-established network of distributors, licensees, agents and franchisees. The company, SuperGroup Plc, is the holding company for the Group. Details of the principal operating subsidiaries are set out on page 94. Results and dividends The audited Financial Statements of the Group for the 52 weeks ending 28 April 2013 are set out on pages 64 to 106. The Group’s reported underlying profit before income tax for the year was £52.2m (2012: £42.8m), and profit before income tax of £51.8m (2012: £51.4m). The board of directors has concluded that the Group is best served by retaining current cash reserves to support growth. Consequently, a recommendation will be made to the AGM that no dividend is payable for 2013 (2012: £nil). Banking facility The Group had a bank facility with Barclays Bank Plc which expired in January 2013 and, given the availability of surplus cash, at this point in time the Group has not committed to extending them. The Group constantly monitors its funding requirements and will raise new facilities as and when required. Financial instruments The Group uses derivative financial instruments to minimise potential adverse effects on the Group’s financial performance. In particular, forward contracts relating to foreign exchange have been used to hedge the purchase of inventory. See note 31 to the Financial Statements for details of the Group’s financial risk management objectives and policies. Directors A brief biography of each director in office at the date of this report is set out on pages 30 and 31. Theo Karpathios resigned as a director on 14 August 2012. Minnow Powell and Euan Sutherland were appointed as directors on 1 December 2012. At the 2013 AGM, both these directors will be put forward for election. Steven Glew resigned as a director on 4 February 2013, and Indira Thambiah resigned as a director on 11 February 2013. The initial three year period of appointment for Peter Bamford, Keith Edelman and Ken McCall came to an end during the financial period and the board agreed that their appointments should be extended for a further three year period, subject to annual re-election at the AGM. Full details are set out within the Directors’ Remuneration Report on page 54. At the 2013 AGM, the other directors will retire and, being eligible, will offer themselves for re-election. This is in accordance with the Code which replaces the Combined Code for financial years starting on or after 29 June 2010.


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    SuperGroup Plc Annual Report and Financial Statements 2013 33 Directors’ Report The notice of this year’s AGM sets out why the board believes the directors should be re-elected. Details of the directors’ service agreements and letters of appointment are given in the Directors’ Remuneration Report on pages 54 and 55. Share capital Details of the issued share capital, together with details of movements in the issued share capital of the company during the year, are shown in note 32 which is deemed to be part of this report. The company has one class of ordinary shares which carries no right to fixed income. Each share carries the right to one vote at general meetings of the company. The ordinary shares are listed on the Official List and traded on the London Stock Exchange. As at 28 April 2013, the company had 80,455,547 ordinary shares in issue. Introduction Substantial shareholdings At 1 July 2013, the Group had been notified, in accordance with the Disclosure and Transparency Rules (DTR 5), of the following substantial interests in the ordinary share capital of the company (see table below): At 28 April 2013 At 1 July 2013 At 1 July 2013 Name of holder Number Number % held Julian Dunkerton 26,088,944 26,088,944 32.43 James Holder 11,850,003 11,850,003 14.73 Theo Karpathios 8,866,503 8,556,503 10.64 Oppenheimer Funds Inc 5,496,320 5,496,320 6.83 Standard Life Investments 4,214,840 4,498,334 5.61 Artemis Investment Management 1,600,000 1,688,308 1.95 Performance Share capital, control and restriction on voting rights As at 28 April 2013, the company’s issued share capital was 80,455,547 ordinary shares of 5 pence each in nominal value. Details of the company’s share capital are shown in note 32 to the Financial Statements on page 106. The rules about the appointment and replacement of directors are contained in the company’s Articles of Association. Specific rules regarding the re-election of directors are referred to in the Corporate Governance statement on pages 38 to 42. Changes to the Articles of Association must be approved by shareholders in accordance with the relevant legislation. Powers relating to the issuing and buying back of shares are included in the company’s Articles of Association and such authorities are renewed by shareholders each year at the AGM. Pursuant to the terms of an agreement entered into between the company and Julian Dunkerton dated 12 March 2010, Julian Dunkerton has undertaken to ensure that the company is able to operate independently of him as a shareholder Governance for as long as he and his connected persons together hold not less than 30% of the voting rights attached to the ordinary shares. He is restricted from exercising his voting rights in certain circumstances, including the requisition of a general meeting to appoint or remove a director. Share buy-backs At the AGM in 2012, shareholders approved a resolution to grant the directors authority to repurchase a maximum number of 8,023,459 ordinary shares (representing 10% of the company’s issued share capital) as shares become available. During the reporting year to 28 April 2013, there were no purchases by the company of its own shares. It is intended to renew this authority from shareholders at the AGM in September 2013 in respect of 8,045,555 ordinary shares (again, representing 10% of the issued share capital as at 28 April 2013). Further details are set out in the notice of the AGM. Change of control Financial Statements The provisions of the company’s employee share plans may cause options and awards granted under such plans to vest upon a change of control. Directors’ share interests The interests of the directors holding office at 28 April 2013 in the shares of the company are shown in the Directors’ Remuneration Report on page 57. There were no changes to the beneficial interests of the directors between 28 April 2013 and 1 July 2013.


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    34 SuperGroup Plc Annual Report and Financial Statements 2013 Directors’ Report Directors’ indemnity insurance The company maintains directors’ and officers’ liability insurance which gives appropriate cover for any legal action brought against its directors. In accordance with section 236 of the Companies Act 2006, qualifying third-party indemnity provisions are in place for the directors in respect of liabilities incurred as a result of their office, as far as is permitted by law. Both the insurance and indemnities applied throughout the year and through to the date of this report. The Takeover Directive The issued share capital of the company, as at 28 April 2013, consisted of 80,455,547 ordinary shares of 5 pence nominal value. The rights and obligations attached to these shares are as set out in the Articles of Association available on our website www.supergroup.co.uk. At the AGM in 2012, shareholders approved resolutions to allot shares up to an aggregate nominal value of £1,337,243 (representing, at that time, one-third of the company’s issued share capital). It is intended to renew this authority at the AGM in September 2013 in respect of shares with a nominal value of £1,340,926 (again, representing one-third of the issued share capital as at 28 April 2013). The disapplication of pre-emption rights for cash issues of shares was approved at the AGM in 2012 in respect of ordinary shares with a nominal value of £200,586 representing approximately 5% of the issued share capital. This disapplication will be renewed at the AGM in September 2013 in respect of ordinary shares with a nominal value of £201,139 (again, representing approximately 5% of the issued share capital). Other relevant disclosure requirements from the Takeover Directive are included elsewhere in the Directors’ Report, the Corporate Governance Statement, the Directors’ Remuneration Report and the Notes to the Group and Company Financial Statements. There are no agreements in place between the Group and its employees or directors for compensation for loss of office or employment that occur because of a takeover bid. Going concern The Group’s business activities and growth strategy, together with factors likely to affect the future development, performance and position of the Group, are set out in the Business Review and Financial Review on pages 07 to 22. The directors have reviewed the Group’s forecasts and projections. These include assumptions around the Group’s products, expenditure commitments and expected cash flows. Taking into account possible changes in trading performance and after making enquiries, the directors have a reasonable expectation that the company and the Group have adequate resources to continue their operations for the foreseeable future. For this reason, they have continued to adopt the going concern basis in preparing the Financial Statements. Creditor payment policy The Group’s policy, in relation to all of its suppliers, is to agree terms of payment when negotiating the terms of a transaction and to abide by those terms, provided that the Group is satisfied that the supplier has provided the goods and services in accordance with the agreed terms and conditions. At the year end, the Group had creditor days of 72 (2012: 95 days). The company has nil creditor days (2012: nil) as the company is not a trading entity. Donation There were charitable donations during the year of £56,500 (2012: £7,500), the details of which are included in the Operating Responsibly section on page 27. There were no political donations. Related party transactions Other than in respect of arrangements set out in note 5 to the Financial Statements and in relation to the employment of directors, details of which are provided in the Directors’ Remuneration Report on pages 48 to 57, there is no material indebtedness owed to or by the company or the Group to any employee or any other person or entity considered to be a related party. Employee practices The success of the Group is a direct result of the knowledge, skills, drive, passion and enthusiasm of its people. From its earliest days, the culture of the Group has been to create and maintain an environment where individuals can flourish in order to fulfil their potential.


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    SuperGroup Plc Annual Report and Financial Statements 2013 35 Directors’ Report The board has a Long-Term Incentive Plan for certain executives as a way of encouraging involvement and association with the long-term success of the Group. At the AGM in 2011, the Group obtained shareholder approval for the introduction of a Save As You Earn (“SAYE”) scheme to give employees the chance to buy shares in the company at a discounted value. Following this approval the Group has introduced a SAYE scheme annually, and it is intended to launch another one in October 2013. The Group has in place a whistleblowing policy so that employees are able to raise concerns without fear of reprisal. Equality and diversity are fundamental values supported by SuperGroup. The Group has an equal opportunities policy and takes its responsibilities under that policy seriously. In addition, the company and the Group give full and fair consideration to applications for employment by disabled people. In the event of members of staff becoming disabled, every effort Introduction is made to ensure that their employment with the Group continues and that the appropriate training is arranged as necessary. It is the policy of the Group that the training, career development and promotion of a disabled person should be, as far as possible, identical to that of a person who does not suffer from a disability. The Group strives to keep employees closely informed about matters of importance to them, whether financial or business, through an open culture of trust and two-way communication. This is complemented by a mix of informal briefings and electronic media. Health and safety The Group is committed to providing a safe place for employees to work and customers to shop. Group policies are reviewed on an ongoing basis to ensure that the policies regarding training, risk assessments, safe systems of working and accident management are appropriate. As part of this process, a rolling audit programme is in place to ensure that health, safety, environmental and security risks are stringently assessed and that robust control measures are in place to limit these risks. Performance Disclosure of information to auditors Each director who held office on the date of approval of this Directors’ Report confirms that, so far as he or she is aware, there is no relevant audit information of which the company’s auditors are unaware. Furthermore, each director has taken all the steps that he or she ought to have taken as a director to make himself or herself aware of any relevant audit information and to establish that the company’s auditors are aware of that information. Independent auditors The directors will put a resolution before the AGM to reappoint PricewaterhouseCoopers LLP as auditors for the ensuing year. Annual General Meeting The AGM of the company will be held at The Cheltenham Ladies’ College, Bayshill Road, Cheltenham, Gloucestershire, GL50 3EP on 10 September 2013 commencing at 11.30am. The Notice of this year’s AGM is included in a separate circular to shareholders, and will be sent out at least 20 working days before the meeting. This Notice is available to Governance view under the ‘Investor Centre’ section of the company’s website www.supergroup.co.uk. In accordance with the Code all valid proxy appointments are properly recorded and counted and made available at the AGM and published on our website after the meeting. The directors consider that each of the proposed resolutions to be considered at the AGM is in the best interests of the company and its shareholders as a whole and are most likely to promote the success of the company for the benefit of its shareholders as a whole. The directors unanimously recommend that shareholders vote in favour of each of the proposed resolutions, as the directors intend to do in respect of their own shareholdings. By order of the board Wendy Edwards Company Secretary Financial Statements 10 July 2013 Registered Office: Unit 60 The Runnings Cheltenham Gloucestershire GL51 9NW Company number: 07063562


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    38 SuperGroup Plc Annual Report and Financial Statements 2013 Corporate Governance Statement Statement of compliance with the UK Corporate Governance Code (the “Code”). The board remains committed to the achievement of high standards of corporate governance which it considers to be central to the effective management of the Group. Further progress has been made during the reporting year to continue to develop appropriate and adequate corporate governance arrangements. The following, together with the Directors’ Remuneration Report on pages 48 to 57, the Directors’ Report on pages 32 to 35, the Directors’ Biographies on pages 30 to 31, and the Audit Committee Report on pages 43 to 45 provide an explanation of how the principles of the Code have been applied and of areas of non-compliance during the period in which compliance with the Code was required. The board The board is responsible collectively for promoting the success of the Group and for implementing the business model as set out in the Business Review on pages 07 to 16. The board provides leadership for the Group and concentrates its efforts on strategy, performance, governance and internal control, as set out in the schedule of matters reserved for the board. As at the date of this report, the board has nine members: the non-executive Chairman, the Chief Executive Officer, three executive directors and four non-executive directors. Biographies of these directors appear on pages 30 to 31. At the start of the reporting period the board was not compliant with the ratio of non-executive directors to executive directors. From 14 August 2012, following the resignation of Theo Karpathios as an executive director, the board became compliant with this part of the Code. During the financial year ended 28 April 2013, SuperGroup complied with the relevant provisions set out in the Code, in all areas apart from those set out on page 41 under nomination committee and as set out above. Keith Edelman is the Group’s Senior Independent Director. A summary of the responsibilities of the Senior Independent Director is available on the corporate website. In his role as Senior Independent Director, he has met with shareholders to listen to their views. Non-executive director independence The independence of the non-executive directors is considered at least annually along with their commitment and performance on the board and relevant committees. During the year the Senior Independent Director took on an additional external role and there has been no impact to SuperGroup Plc. All the non-executive directors are considered by the board to be independent of management and free from any relationship that could materially interfere with the exercise of their independent judgement. The board meets regularly to consider issues relating to the overall performance, strategy and future development of the Group. In accordance with the Code, the schedule of matters reserved to it for decisions has been reviewed and approved by the board. The principal matters reserved for the board are: ● Setting and managing Group strategy; ● Changes relating to the Group’s capital structure including share issues and buy-backs; ● Financial reporting and controls; ● Ensuring maintenance of sound internal controls and risk management; ● Capital expenditure and long-term commitments; ● Board membership and appointment; ● Remuneration policy; ● Delegation of authority; and ● Corporate governance and company policies. The requirement for board approval on these matters is understood. The board receives appropriate and timely information to enable it to discharge its duties. The division of responsibilities between Chairman and Chief Executive Officer is set out in writing and agreed by the board.


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    SuperGroup Plc Annual Report and Financial Statements 2013 39 Corporate Governance Statement The non-executive directors meet with the Chairman separately from time to time, without the executive directors present. During the year of reporting, the non-executive directors have each spoken to the Senior Independent Director to appraise the performance of the Chairman. All members of the board of directors, and the sub-committees, have sufficient resources and a budget set aside to allow access to independent advice as required. For non-executive directors, a relevant clause is included in their letters of appointment setting out their required time commitment. All directors have access to the advice and services of the Company Secretary, who is responsible to the board for ensuring that board procedures are complied with. The appointment of the Company Secretary is a matter for the board. Introduction Operational matters, trading performance and the development of proposals for the board, where required under the schedule of matters reserved for the board, are controlled by an executive committee that consists of the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, the Brand and Design Director, the Director of e-commerce, the Director of Europe, Director of HR, Director of IT and the recently appointed Managing Director, International and Wholesale. The board has appointed committees to carry out certain duties, and these are detailed below. Each of these committees is chaired by a separate chairman and has written terms of reference, available on the website, www.supergroup.co.uk. Minutes are prepared for each of these meetings by the Company Secretary and presented at the following respective meetings for approval. All committees have sufficient resources to undertake their duties. Committee membership: Audit committee: Minnow Powell (Chairman) Performance (Chairman from 5 February 2013, member of the committee from 1 December 2012) Euan Sutherland (from 1 December 2012) Steven Glew (Chairman and member until 4 February 2013) Indira Thambiah (until 11 February 2013) Ken McCall Remuneration committee: Keith Edelman (Chairman) Minnow Powell (from 1 December 2012) Euan Sutherland Governance (from 1 December 2012) Steven Glew (until 4 February 2013) Indira Thambiah (until 11 February 2013) Nomination committee: Peter Bamford (Chairman) Keith Edelman Julian Dunkerton Performance evaluation The annual board evaluation to assess the performance of the board, its non-executive directors and committees was Financial Statements carried out in May 2013, to assess performance for the financial period ending 28 April 2013. This year this took the form of an externally facilitated review using the services of an external consultant, Mark Goodridge of OECam LLP, in accordance with the Code. This review covered a range of issues around board and committee processes, board roles and responsibilities. In addition, a process of continued assessment has been undertaken during the financial period with the Chairman conducting meetings with the directors. The performance of the executive directors during the period of reporting was monitored by the Chief Executive Officer and the Chairman.


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    40 SuperGroup Plc Annual Report and Financial Statements 2013 Corporate Governance Statement The evaluation has highlighted how the changes to board composition over the last year have improved the effectiveness of the board and confirms that the board operating process and practices are appropriate for a fast growing entrepreneurial company at this stage of development. A number of areas have been identified for further improvement to include: the balance between the roles of executive and non-executive directors, strategy formulation and board administration. Re-election of directors At the AGM in 2012, all directors offered themselves for election or re-election. At the AGM in 2013, all of the directors will again retire and will offer themselves for re-election, with the exception of Minnow Powell and Euan Sutherland who, having been appointed during the period, will offer themselves for election. The board considers the directors offering themselves for election or re-election continue to be effective, committed to their roles and have sufficient time available to perform their duties. Remuneration committee A description of the work of the remuneration committee is set out on page 55. Board and committee attendance The table below gives details of directors’ attendance at scheduled board and committee meetings during the financial year ended 28 April 2013: Board Audit Nomination Remuneration meeting committee committee committee Number Number Number Number Number Number Number Number Maximum number eligible attended eligible attended eligible attended eligible attended Peter Bamford 11 11 – – 4 4 – – Keith Edelman 11 10 – – 4 4 6 6 Steven Glew 8 7 4 4 – – 4 4 Indira Thambiah 8 8 4 4 – – 4 4 Minnow Powell 5 4 3 3 – – 2 1 Euan Sutherland 5 5 3 3 – – 2 2 Ken McCall 11 10 6 4 – – – – Julian Dunkerton 11 11 – – 4 4 – – Theo Karpathios 3 3 – – – – – – James Holder 11 10 – – – – – – Susanne Given 11 11 – – – – – – Shaun Wills 11 11 – – – – – – During the year, additional ad hoc board meetings were held as required to respond to the needs of the Group. From time to time, committee meetings are attended by non-members by invitation from the relevant chairman. Attendance is set out in the various committee reports. Directors’ conflicts of interest The company’s Articles of Association permit the directors to consider and, if thought fit, to authorise situations where a director has an interest that conflicts, or may possibly conflict, with the interests of the Group. In deciding whether to authorise a conflict or potential conflict, the non-conflicted directors must act in a way they consider would be most likely to promote the success of the Group, and they may impose limits or conditions when giving their authorisation, or subsequently, if they think it is appropriate. Any authorisation given is recorded in the board minutes. As disclosed in prior years Julian Dunkerton’s brother-in-law was a director of Tokyo Retail Limited until this company was acquired by the Group (see note 5 on page 81). In accordance with the Companies Act 2006, the board has considered and authorised any director’s reported potential conflicts to date. The board will continue to monitor and review potential conflicts of interest on a regular basis.


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    SuperGroup Plc Annual Report and Financial Statements 2013 41 Corporate Governance Statement Nomination committee Peter Bamford is chairman of the nomination committee and the other committee members are Keith Edelman and Julian Dunkerton. The board is satisfied that the chairman was independent on appointment and Keith Edelman is an independent non-executive director. The board is aware that currently the majority of the committee are not independent. The board will continue to monitor this situation. The nomination committee is responsible for nominating candidates for appointment to the board, having assessed the skills and experience required by the Group, and role descriptions are drawn up accordingly. The Chairman and all non-executive directors have declared their other significant commitments, including all other board positions, to the board prior to being appointed. The Chairman and the non-executive directors are aware of their ongoing Introduction obligation to disclose any changes to their other commitments as they arise, and have adhered to this during the financial period. In accordance with the provisions of the Code, a broad indication of the time involved with other significant commitments is disclosed by the non-executive directors. Their expected time commitment to SuperGroup is included in the terms and conditions of appointment which are available for inspection at the Registered Office of SuperGroup Plc. During the year of reporting, the nomination committee held four meetings. Following a review of the skills and composition of the board of directors at the start of the reporting period it was decided to add additional expertise in the areas of senior operational capability and financial control. Job specifications for two additional non-executive directors were developed and the nomination committee appointed an external search company to assist with the recruitment of suitable candidates for these roles. The search for these two positions was based on merit and a set of objective criteria, resulting in the appointments of Minnow Powell and Euan Sutherland to the board on 1 December 2012 as non-executive directors. This coincided with Performance the decision by Steven Glew and Indira Thambiah not to serve for a further three year term, on the expiry of their initial three year terms in February 2013. The principal functions of the nomination committee include the following: ● To review the structure, size and composition of the board and recommend changes when appropriate; ● To consider and recommend succession planning for executive and non-executive directors; ● To identify and nominate candidates for the approval of the board to fill board vacancies or new positions as and when they arise; and ● To evaluate the skills, experience and knowledge of board members. The terms of reference of the nomination committee are available on our website at www.supergroup.co.uk. During the financial year, Minnow Powell and Euan Sutherland were appointed to the board and were given a full induction. Governance None of the existing executive directors holds non-executive directorships. Diversity We support the principle of boardroom diversity, to include gender. However, all board appointments are made on merit against objective criteria rather than aiming to achieve an externally prescribed target. At the start of the year 20% of the board was composed of women, but this is now at 11%, with the resignation of Indira Thambiah in February. A number of women have been appointed to senior management positions during the year, including Head of UK and Ireland Retail, Director of HR, Design Studio Manager and Head of Women’s Design. The executive committee is currently composed of 22% of women, having started the year at 16%. Financial Statements Information and professional development Non-executive directors meet regularly with members of the executive committee and members of the senior management team to gain first-hand experience of the business. Senior managers regularly attend board meetings to make presentations to the directors. This year, these presentations have included such topics as: sourcing, logistics, IT strategy, international franchise roll-out and product development. In addition, the non-executive directors make site visits to ensure that they are kept up to date with developments across the Group. To date, all directors have received instruction on their responsibilities as a director from the Group’s legal advisors and company’s stockbrokers.


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    42 SuperGroup Plc Annual Report and Financial Statements 2013 Corporate Governance Statement Communication with shareholders The company and the Group recognise the importance of communicating with shareholders. Communication with institutional shareholders is undertaken as part of SuperGroup’s investor relations programme, in which non-executive directors are encouraged to participate. The Chief Executive Officer, Chief Operating Officer and the Chief Financial Officer have continued to make presentations such as after the preliminary and interim results and communicate regularly on developments. The non-executive directors attend some of these meetings to hear feedback from shareholders. The Chairman and Senior Independent Director have arranged meetings with institutional shareholders to gain a balanced understanding of their views and concerns and discuss strategy development and corporate governance. In addition, in view of the market updates made during the previous financial period, there has been a need for a proactive approach to communicating with shareholders. The Chairman has led this and ensured that the views of shareholders are communicated to the board as a whole. The Chairman and the Senior Independent Director are in regular communication with the significant private shareholders (this includes two of the original executive directors), who sit on the board. The company’s AGM will be held on 10 September 2013, at which time shareholders will have the opportunity to ask questions. The chairmen of the audit, remuneration and nomination committees, together with all other members of the board of directors, will be present to answer shareholder questions. Shareholders will have the opportunity to meet non-executive directors at additional times in the year. The full Annual Report and Financial Statements are made available to all shareholders and potential investors. Other information about the company and Group is made available on the website at www.supergroup.co.uk. Financial statements The board is ultimately responsible for approving the Annual Report and Financial Statements and half year report. Internal control The board is ultimately responsible for the Group’s systems of internal control and for reviewing its effectiveness annually. Following the market update on 20 April 2012, a full and comprehensive review of the adequacy of the existing internal controls was undertaken, led by the Chief Operating Officer and the Chief Financial Officer. As a result of this exercise a number of initiatives were identified to ensure that the internal systems were improved and made more robust. This has resulted in the need for significant investment in additional resource, to include people and information systems. In accordance with the revised guidance for directors on internal control (the “Revised Turnbull Guidance”), the board confirms that there is a process for identifying, evaluating and managing the risks faced by the Group. This process was put in place prior to the IPO in March 2010 and has continued to be developed during the year. This process was in place throughout the year under review and up to the date of approval of the Annual Report and Financial Statements. These systems are there to manage rather than eliminate risk, and can provide only reasonable and not complete assurance against material misstatement or loss. The report was approved by the board of directors on 10 July 2013 and signed on its order: Wendy Edwards Company Secretary 10 July 2013 Registered Office: Unit 60 The Runnings Cheltenham Gloucestershire GL51 9NW

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