Harvey Norman Holdings Ltd · ASX:HVN
Harvey Norman — FY2019 Earnings Presentation
24 slides from Harvey Norman's earnings presentation, Aug 30, 2019
Slide 1: Presentation of Results for the Year Ended 30 June 2019
PRESENTATION OF RESULTS FOR THE YEAR ENDED 30 JUNE 2019 ACN 003 237 545 Kezie Apps Ali Brigginshaw Captain, NSW Women’s State of Origin Team Captain, QLD Women’s State of Origin Team
Slide 2: Contents
2 CONTENTS 8 Countries, 8 Flagships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Key Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Reported Profit Before Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Solid PBT Retu
Slide 3: 8 Countries, 8 Flagships
8 COUNTRIES, 8 FLAGSHIPS 3 At Harvey Norman®, we strive to continually deliver the highest levels of quality, value and service for our customers. These principles inform every facet of our business, from top to bottom, and it is with these principles in mind that we devised our Flagship strategy. A
Slide 4: Key Financial Highlights
KEY FINANCIAL HIGHLIGHTS 4 •R eported PBT up by 8.4% to $574.56 million This was primarily achieved from the continued dominance of our 90 Harvey Norman® company-operated retail stores overseas, improved profitability of property segments and sale of equity investments during the year. 540 FRANCHISE
Slide 5: Reported Profit Before Tax
REPORTED PROFIT BEFORE TAX REPORTED PBT YEAR ENDED 30 JUNE 2019 More °974.56m PROFIT BEFORE TAX AS REPORTED ($M) (Including net property evaluations) 5639.81m °530.17m : $493.76m ON PREVIOUS YEAR 2015 2018 2019 YEAR ENDED 30 JUNE (including property revaluations) I Denotes the contribution of net pr
Slide 6: Reported Profit Before Tax: Key Contributors
REPORTED PROFIT BEFORE TAX: Key Contributors 6 Increase of $44.39m in Reported PBT due to: • $13.57m increase in the profitability of the overseas company-operated retail stores ($129.70m vs 116.13m), up +11.7% S ingapore & Malaysia + $12.04m (+48.1%) mainly due to 2 new store openings in Malaysia,
Slide 7: Solid PBT Return on Net Assets
SOLID PBT RETURN ON NET ASSETS % 7
Slide 8: Key Statistics: Balance Sheet
KEY STATISTICS: BALANCE SHEET 8 FY2019 FY2018 Incr/(Decr) TOTAL ASSETS $4.80bn $4.58bn +4.8% TOTAL LIABILITIES ($1.60bn) ($1.64bn) (-2.4%) NET ASSETS $3.20bn $2.94bn +8.8% NET DEBT TO EQUITY % 19.46% 25.50% DIVIDENDS PER SHARE 33.0c 30.0c EPS 34.70c 33.21c +4.5%
Slide 9: Outstanding Performance Overseas: Overseas Businesses Continue to Thrive
OUTSTANDING PERFORMANCE OVERSEAS: Overseas Businesses Continue to Thrive & Outperform in the Local Markets 9 OFFSHORE SEGMENT FY2019 FY2018 Incr/(Decr) PROFIT RESULT NEW ZEALAND $77.39m $82.31m (-6.0%) SINGAPORE & MALAYSIA $37.06m $25.01m +48.1% IRELAND & NORTHERN IRELAND $7.80m $1.41m +452% SLOVENI
Slide 10: Outstanding Performance Overseas: Offshore Company-Operated Retail Revenue
OUTSTANDING PERFORMANCE OVERSEAS: Significant Increase in Offshore Company-Operated Retail Revenue 10 OFFSHORE COMPANY-OPERATED Main reason for revenue growth was rise in offshore retail revenue by $181.06m (+9.7%), from RETAIL REVENUE $1.87bn to $2.05bn: OVER $2 BILLION • $77.07m increase in Singap
Slide 11: Outstanding Performance Overseas: Highest-Ever Offshore Retail Profit
OUTSTANDING PERFORMANCE OVERSEAS: Highest-Ever Offshore Company-Operated Retail Profit Result 11 • $12.04m (+48.1%) increase in Singapore & Malaysia result from $25.01m in FY18 to OVERSEAS COMPANY-OPERATED $37.06m in FY19 RETAIL SEGMENT we are proud of our successful expansion into Asia and we now h
Slide 12: Aggregated Sales Revenue
AGGREGATED SALES REVENUE: Headline & Comparable Aggregated Sales Revenue 12 AGGREGATED SALES INCREASE / (DECREASE) IN CONSTANT LOCAL CURRENCIES: TOTAL SALES 1Q2019 2Q2019 3Q2019 4Q2019 FY2019 HEADLINE AGGREGATED SALES OF vs. vs. vs. vs. vs. $ 7.651bn FOR FY19 1Q2018 2Q2018 3Q2018 4Q2018 FY2018 vs $7
Slide 13: Franchisee Aggregated Sales Revenue
FRANCHISEE AGGREGATED SALES REVENUE 13 • 195 franchised complexes in Australia, with 540 franchisees responsible for the day-to-day management and control of their respective franchisee businesses. • Retail sales in Australia remain subdued, particularly in the 2nd half of FY19, impacted by the chal
Slide 14: Segment Analysis: Franchising Operations Segment
SEGMENT ANALYSIS: Franchising Operations Segment 14 FY2019 FY2018 Incr/(Decr) % AGGREGATED FRANCHISEE HEADLINE SALES REVENUE $5.66bn $5.76bn (-$0.10bn) (-1.8%) FRANCHISING OPERATIONS SEGMENT RESULT $248.40m $282.54m (-$34.14m) (-12.1%) FRANCHISING OPERATIONS MARGIN % 4.39% 4.90% -51bps
Slide 15: Segment Analysis: Franchising Operations Segment (continued)
SEGMENT ANALYSIS: Franchising Operations Segment (continued) 15 FY2019 FY2018 Incr/(Decr) % FRANCHISING OPERATIONS SEGMENT RESULT $248.40m $282.54m (-$34.14m) (-12.1%) FRANCHISING OPERATIONS SEGMENT REVENUE $838.67m $857.69m (-$19.03m) (-2.2%) FRANCHISING OPERATIONS MARGIN % 4.39% 4.90% -51bps FRANC
Slide 16: Segment Analysis: Property
SEGMENT ANALYSIS: PROPERTY 16 FY2019 FY2018 Incr/(Decr) % PROPERTY SEGMENT REVENUE $332.16m $304.62m $27.54m +9.0% NET PROPERTY REVALUATION INCREMENT $70.30m $51.65m $18.66m +36.1% PROPERTY SEGMENT EBITDIA $235.08m $218.19m $16.90m +7.7% PROPERTY SEGMENT RESULT BEFORE TAX $204.68m $188.57m $16.11m +
Slide 17: Review of the Income Statement
REVIEW OF THE INCOME STATEMENT 17 FY2019 FY2018 Incr/(Decr) % SALES REVENUE* $2,234.12m $1,993.76m $240.36m +12.1% GROSS PROFIT $723.39m $667.42m $55.96m +8.4% REVENUES & OTHER INCOME $1,186.07m $1,165.73m $20.34m +1.7% * Includes the sales revenue of company-operated stores in New Zealand, Singapor
Slide 18: Review of the Income Statement (continued)
REVIEW OF THE INCOME STATEMENT (continued) 18 FY2019 FY2018 Incr/(Decr) % TOTAL EXPENSES ($1.344.68m) ($1.308.77m) ($35.91m) (-2.7%) SHARE OF NET PROFIT OF JV ENTITIES $9.79m $5.79m $4.0m +69.0% PROFIT BEFORE TAX $574.56m $530.17m $44.39m +8.4% INCOME TAX EXPENSES ($165.56m) ($150.12m) ($15.44m) (-1
Slide 19: Review of the Balance Sheet
REVIEW OF THE BALANCE SHEET 19 JUN 2015 JUN 2016 JUN 2017 JUN 2018 JUN 2019 TOTAL ASSETS $4.33bn $4.43bn $4.19bn $4.58bn $4.80bn TOTAL LIABILITIES $1.77bn $1.74bn $1.38bn $1.64bn $1.60bn TOTAL EQUITY $2.56bn $2.69bn $2.81bn $2.94bn $3.20bn • +$44.50m (+26.1%) increase in cash and cash equivalents du
Slide 20: Review of the Statement of Cash Flows
REVIEW OF THE STATEMENT OF CASH FLOWS 20 FY2019 FY2018 Incr/(Decr) % OPERATING CASH FLOWS $372.84m $454.17m (-$81.33m) (-17.9%) Solid operating cash flows in FY19 of $372.84m achieved by receiving $2.40bn from customers, $858.37m net receipts from franchisees, offset by $2.68bn payments to suppliers
Slide 21: Review of the Statement of Cash Flows (continued)
REVIEW OF THE STATEMENT OF CASH FLOWS (continued) 21 FY2019 FY2018 Incr/(Decr) % INVESTING CASH FLOWS ($66.20m) ($303.49m) $237.28m +78.2% FINANCING CASH FLOWS ($246.29m) ($68.10m) ($178.19m) -262% NET INCREASE/(DECREASE) IN CASH FLOWS $60.35m $82.58m ($22.23m) CASH & CASH EQUIVALENTS AT BEGINNING O
Slide 22: Outlook
OUTLOOK 22 • We intend to continue growing our international retail footprint and expect to open up to 21 new stores overseas within the next 2 years, with 17 of those new stores in Singapore and Malaysia. By the end of FY21, we anticipate having 111 Harvey Norman® company-operated stores across 7 o
Slide 23: Outlook (Continued)
OUTLOOK (Continued) 23 • Strong sales growth in New Zealand, Slovenia, Croatia, Ireland and Northern Ireland • Sales in Malaysia are cycling higher comparable sales, relating to the removal of the 6% GST by the Malaysian Government in the months of June, July and August 2018 which resulted in except
Slide 24: Questions
QUESTIONS (limited to 30 minutes) 24
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