Slide 1: Full Year Results Presentation 30 June 2012
JB Hi-Fi Hi Fi Limited Full Year Results Presentation 30 June 2012 13 August 2012
Slide 2: Agenda
AGENDA 1. Performance Summary 2. Profit and Loss Statement 3. Trading Performance 4 4. Looking Forward 5. Competitive Advantages 6. Future Growth Opportunities 7. Ch ll Challenges Ahead Ah d 8. Outlook 9. Cash Flow and Balance Sheet 10. Dividends 11. Store Update 12 Investment Checklist 12. Terry y
Slide 3: Performance Summary – Highlights
1. PERFORMANCE SUMMARY – HIGHLIGHTS JB Hi-Fi branded store sales up 7.0% 2nd half sales showed an improving trend Online sales up 77.3% NZ sales up 17.8% and EBIT up 330.6% Company NPAT in line with guidance 3
Slide 4: Performance Summary
1. PERFORMANCE SUMMARY Normalised1 Statutory FY11 FY12 Mvt FY11 FY12 Mvt Sales $2.96b $3.13b +5.7% $2.96b $3.13b +5.7% Gross Margin 22.0% 21.1% -94 bps 22.0% 21.1% -94 bps Cost of Doing Business 14.5% 14.9% +43 bps 15.6% 14.9% -70 bps EBIT $196.0m $161.5m -17.6% $162.6m $161.5m -
Slide 5: Profit and Loss Statement
2. PROFIT AND LOSS STATEMENT 1 AUST NZ (NZD) CONSOLIDATED $m FY11 FY11 FY12 FY11 FY11 FY12 FY11 FY11 FY12 Normalised Statutory Statutory Normalised Statutory Statutory Normalised Statutory Statutory Sales 2,814.6 2,814.6 2,954.6 188.7 188.7 222.2 2,959.3 2,959.3 3,127.8 Gross Profit 627.0 627.0 629.
Slide 6: Trading Performance – Sales Growth
3. TRADING PERFORMANCE Sales Growth Sales – Total JB Hi-Fi branded store growth of 7.0% FY12 Comps. Total Comps. 1HY12 2HY12 Australia: JB Hi-Fi JB Hi-Fi branded store sales grew by 6.3% to $2.92b. - Australia 6.3% (1.8%) (3.1%) (0.1%) - New Zealand (NZD) 17.8% 11.7% 16.0% 6.4% JB Hi-Fi branded
Slide 7: Trading Performance – New Zealand
3. TRADING PERFORMANCE… New Zealand – Sales momentum continued Sales Growth FY12 Comps. Sales grew by 17.8% to NZ$222.2m. Total Comps. 1HY12 2HY12 Comparable store sales grew 11.7%. JB Hi-Fi - Australia 6.3% (1.8%) (3.1%) (0.1%) We are getting good traction with the JB Hi-Fi brand resonating -
Slide 8: Trading Performance – Gross Margin
3. TRADING PERFORMANCE… Gross Margin – Competitive environment Consolidated gross margin was 21.1%, a 94 bps decrease on FY11 1HY12 2HY12 FY12 the prior period. Australia 22.3% 21.5% 21.0% 21.3% New Zealand 17.3% 16.7% 18.9% 17.7% In Australia, the gross margin in FY12 was impacted by the Consol
Slide 9: Cost of Doing Business
3. TRADING PERFORMANCE… Cost of Doing Business (CODB) – Customer service is the key Consolidated CODB was 14.9% (Aust: 14.9%, NZ: 15.0%). FY11 FY12 We have maintained our high levels of service to ensure a continued Normalised Statutory positive customer experience. Australia 14.4% 14.9% New Zea
Slide 10: Trading Performance – Earnings
3. TRADING PERFORMANCE… Earnings – Competitive trading environment. Consolidated EBIT was $161.5m (Aust: $158.7m, NZ: NZ$3.6m). FY11 FY12 Normalised Statutory In Australia, earnings were impacted by gross margin pressures. Australia ($m) 197.2 158.7 In New Zealand, EBIT increased by 330.6% to
Slide 11: Out of Store
3. TRADING PERFORMANCE… Out of Store Our multi channel strategy continues to develop and has delivered some good results in FY12. Strategy is to give customers a choice on how they wish to shop with JB Hi-Fi and to also make transacting as easy as possible. Online Online sales grew 77.3% on
Slide 12: Looking Forward
4. LOOKING FORWARD Market to remain challenging, however we are very well positioned for any rebound in consumer spending Operating in an environment with both cyclical and structural challenges, however quantifying the impact of each is difficult. Not all retailers will be impacted by these cha
Slide 13: Competitive Advantages
5. COMPETITIVE ADVANTAGES We continue to drive innovation within our model but passionately maintain our fundamental competitive advantages JB Hi-Fi Key Competitive Advantages Market Position – Value / low price focus, we have always been a discount retailer supported by our low cost model. model
Slide 14: Future Growth Opportunities
6. FUTURE GROWTH OPPORTUNITIES Growth will continue both in store and out of store! Existing Stores ▪ Continued expansion and enhancement of existing Hardware categories categories. ▪ Ongoing technological innovation will drive new and replacement sales. ▪ Computer category, in particular tablets
Slide 15: Challenges Ahead
7. CHALLENGES AHEAD There is no doubt that electrical retail faces some structural challenges however different models will be affected to varying y g degrees g and we believe JB Hi-Fi is best p positioned to face these challenges! g INDUSTRY JB Hi-Fi Positioning / Response CONCERNS Maintain relevan
Slide 16: Challenges Ahead (continued)
7. CHALLENGES AHEAD… There is no doubt that electrical retail faces some structural challenges however different models will be affected to varying y g degrees g and we believe JB Hi-Fi is best p positioned to face these challenges! g INDUSTRY JB Hi-Fi Positioning / Response CONCERNS ▪ Maintain M i
Slide 17: Challenges Ahead (continued)
7. CHALLENGES AHEAD… There is no doubt that electrical retail faces some structural challenges however different models will be affected to varying degrees and we believe JB Hi-Fi is best positioned to face these challenges! 17
Slide 18: Outlook
8. OUTLOOK Trading Outlook: FY13 sales update: Total consolidated sales growth for the JB Hi-Fi branded stores in July was 4.9%; and Consolidated comparable store sales growth for the JB Hi-Fi branded stores in July was -1.4%. While still early in the year, gross margin is currently in line
Slide 19: Outlook – Category Outlook
8. OUTLOOK… Category Outlook – Continued technology innovation The market is expected to remain very competitive across all categories. Constant technology innovation will drive continued industry growth. Computers / IT ▪ Windows 8 operating platform to be launched in October 2012. New touch f
Slide 20: Cash Flow Statement
9. CASH FLOW AND BALANCE SHEET Cash Flow Statement AUDm FY11 FY12 1 EBITDA 223.3 192.2 Change in Working Capital (62.2) 80.3 Net Interest Paid (3 8) (3.8) (12 2) (12.2) Income Tax Paid (52.2) (49.3) Other 4.8 3.9 Net Cash Flow from Operations 109.9 215.0 u c ases o Purchases of P&E & ( 3 9) (43.9) (
Slide 21: Working Capital
9. CASH FLOW AND BALANCE SHEET… Working Capital AUDm FY11 FY12 Inventory Management: (Increase)/decrease in current assets - Inventory levels and mix are in line with internal expectations. Inventory (73.4) (21.0) - Average inventory per store was down 1.6% at $2.55m per store. Receivables 5.1 ((0
Slide 22: Key Ratios
9. CASH FLOW AND BALANCE SHEET… Key Ratios Performance Indicators: FY11 FY11 FY12 Our balance sheet remains strong even after the Normalised Statutory Statutory challenging trading environment. Fixed Charge Ratio 4.0x 3.5x 3.1x Our low financial and operating leverage is evidenced by Interest Co
Slide 23: Balance Sheet
9. CASH FLOW AND BALANCE SHEET… Balance Sheet AUDm FY11 FY12 Cash 27.2 39.7 Receivables 58.3 58.4 Inventories 406.9 428.3 Other 8.6 7.7 Total Current Assets 501.1 534.1 Fixed Assets 169.6 182.0 g Intangibles & Goodwill 78.7 78.8 Other 17.8 16.2 Total Non-Current Assets 266.1 277.1 Total Assets 767.1
Slide 24: Dividends
10. DIVIDENDS Dividends The final dividend is 16.0 cents per share fully franked, bringing the total dividends for FY12 to 65.0 cents per share. This represents a payout ratio of 60% of FY12 earnings which is in line with our dividend policy. The Board is confident that the group’s strong cash f
Slide 25: Store Update – 15 new stores opened in FY12
11. STORE UPDATE 15 new JB Hi-Fi stores opened in FY12 Australia VIC: Greensborough, Hoppers Crossing, Traralgon, Thomastown, Springvale, Waurn Ponds, Chirnside NSW: Caringbah, Bankstown, Jamisontown, Shellharbour QLD: Mackay, Garden City, Hervey Bay FY12 168 stores WA: Armadale 157 13 3 o
Slide 26: Store Update – 16 new stores in FY13
11. STORE UPDATE… 16 new JB Hi-Fi stores to be opened in FY13 NSW: Port Macquarie#, Coffs Harbour, North Sydney, Tamworth, Broadway VIC: Fountain Gate, The Glen QLD: Bundaberg#, Oxley ACT: Tuggeranong FY13 NT: Darwin (Berrimah) ~181 stores AUST: 4 undisclosed 168 14 NZ NZ: 1 undisclose
Slide 27: Investment Checklist
12. INVESTMENT CHECKLIST Strong and unique retail model. Operates mainly in the dynamic home entertainment and technology sector. Low cost of doing business – best of major listed retailers. Many new store opportunities - JB Hi-Fi branded stores circa 214 (164 Tier 1 format and 50 Tier 2 for
Slide 28: Appendix I – Store Movements
Appendix I Store movements during FY12 Geographic breakdown# FY12 FY11 Opened Closed Total Australia JB - Tier 1 123 12 - 135 JB - Tier 2 16 3 (1) 18 139 15 (1) 153 Clive Anthonys 5 - (3) 2 144 15 (4) 155 New Zealand 1 JB - Tier 1 9 - - 9 JB - Tier 2 4 - - 4 33 13 - - 13 TOTAL 157 15 (4) 168 18 9 JB
Slide 29: Appendix II – EBIT Reconciliation and NZ P&L
Appendix II a) EBIT reconciliation b) NZ Profit and Loss statement (AUD) AUDm FY11 FY11 FY12 NZ (AUD) Normalised Statutory Statutory $m FY11 FY11 FY12 Profit for the year (App 4E) 109.7 109.7 104.6 Normalised Statutory Statutory add back Sales 144.6 144.6 173.2 - income tax expense (App 4E) 48 9 48.
Slide 30: Appendix II – CODB Reconciliation
Appendix II… d) CODB reconciliation e) CODB as % of sales AUDm FY11 FY11 FY12 35% 32.06% Normalised Statutory Statutory Other income (ex interest received) (0.1) (0.1) (0.05) 30% 28.98% 26.37% Sales and marketing expenses (App 4E) 286.8 286.8 309.5 23.48% 25% Occupancy expenses (App 4E) 114.8 114.8
Slide 31: Appendix III – Profit and Loss Statement (5 years)
Appendix III Profit and Loss Statement (5 years) AUDm FY08 FY09 FY10 FY11 FY11 FY12 Statutory Statutory Statutory Normalised Statutory Statutory Sales 1,828.6 2,327.3 2,731.3 2,959.3 2,959.3 3,127.8 Gross Profit 399.7 503.6 594.2 652.0 652.0 659.8 Gross Margin 21.9% 21.6% 21.8% 22.0% 22.0% 21.1% EBI
Slide 32: Appendix III – Balance Sheet (5 years)
Appendix III… Balance Sheet (5 years) AUDm FY08 FY09 FY10 FY11 FY12 Cash (1.5) 35.8 51.7 27.2 39.7 Receivables 53.0 60.3 63.5 58.3 58.4 Inventories 271 9 271.9 324 5 324.5 334 8 334.8 406 9 406.9 428 3 428.3 Other 5.3 5.7 4.5 8.6 7.7 Total Current Assets 328.7 426.2 454.5 501.1 534.1 Fixed Assets 11
Slide 33: Appendix III – Cash Flow Statement (5 years)
Appendix III… Cash Flow Statement (5 years) AUDm FY08 FY09 FY10 FY11 FY12 1 EBITDA 117.0 160.7 198.4 223.3 192.2 Change in Working Capital (44.8) 19.6 1.2 (62.2) 80.3 Net Interest Paid (8 9) (8.9) (6 7) (6.7) (5 0) (5.0) (3 8) (3.8) (12 2) (12.2) Income Tax Paid (28.0) (41.3) (53.5) (52.2) (49.3) Ot