Harvey Norman Holdings Ltd · ASX:HVN
Harvey Norman — H1 FY2016 Earnings Presentation
21 slides from Harvey Norman's earnings presentation, Feb 26, 2016
Slide 1: Presentation of Results for the Half Year Ended 31 December 2015
PRESENTATION OF RESULTS FOR THE HALF YEAR ENDED 31° DECEMBER 2015 Harvey Norman HOLDINGS LIMITED
Slide 2: For personal use only
2 For personal use only Page 3 Key Financial Highlights 4 Key Drivers of Improved Profitability 5 Strategy 8 Global Sales Revenue 9 Franchisee Sales Revenue 10 Review of the Income Statement for the half year ended 31 December 2015 12 Review of the Balance Sheet as at 31 December 2015 14 Review of t
Slide 3: Key Financial Highlights
3 HY2016 HY2015 Incr/(Decr) For personal use only DEC15 DEC14 EBIT $276.65m $218.21m +26.8% REPORTED PBT $262.01m $200.79m +30.5% PBT $279.52m $205.74m +35.9% (excluding impairment losses1) PBT $240.82m $196.93m +22.3% (excluding property revaluations2) REPORTED NPAT $185.51m $141.98m +30.7% NPAT $1
Slide 4: Key Drivers of Improved Profitability
4 For personal use only Main factors impacting net profit before tax: a 30.7% (+$35.33m) increase in the profitability of the franchising operations segment to $150.42m for HY16 due to: 10.2% (+$38.34m) increase in franchise fees; -26.5% (-$10.54m) decrease in tactical support provided to fran
Slide 5: Strategy: Property
5 Property: the ownership of high-quality, well-located complexes, with Harvey Norman, Domayne and Joyce Mayne franchisees as anchor tenants, is the foundation of the Harvey Norman For personal use only integrated model and is the basis for our success attracts additional customers to Harvey Nor
Slide 6: Strategy: Omni Channel
6 Omni Channel Strategy provides a For personal use only seamless experience across digital and physical stores, creating a leading Australian integrated retail network. Platform (online, mobile, social) distinctions increasingly meaningless; one digital experience Geographically distributed ful
Slide 7: Strategy: Operational Efficiency Initiatives
7 For personal use only Continued rollout of the two initiatives implemented in FY15 1. Merchandise, inventory and supplier management: good progress in expanding the number of categories and suppliers being replenished via the merchandise, inventory and supplier management system majority of la
Slide 8: Global Sales Revenue
8 For personal use only Global Sales Increase / (Decrease) in Constant Local Currencies – TOTAL SALES Headline Sales 1Q2016 2Q2016 HY2016 Increase / (Decrease) % vs vs vs 1Q2015 2Q2015 HY2015 Australia $A 5.7% 9.4% 7.7% New Zealand $NZ 4.8% 7.7% 6.4% Slovenia / Croatia € Euro 3.2% (-3.6%) (-0.5%) Ir
Slide 9: Franchisee Sales Revenue
9 headline Australian franchisee sales revenue increased 7.7% to $2.72bn in HY16 vs $2.53bn in HY15 like-for-like franchisee sales increased 8.8% to $2.71bn in HY16 vs $2.52bn in HY15 For personal use only Q2 of FY16 marked the 12th consecutive quarter-on quarter increase in Australian franchi
Slide 10: Review of the Income Statement: Revenues
10 Total Revenues HY2016 HY2015 Incr/(Decr) % DEC15 DEC14 For personal use only Sales Revenue* $911.98m $839.33m +$72.66m +8.7% Gross Profit $282.42m $246.13m +$36.28m +14.7% Revenues & Other Income $626.43m $565.16m +$61.27m +10.8% Sales Revenue by $23.42m increase in NZ sales due to: $72.66m
Slide 11: Review of the Income Statement: Expenses and Profit
11 Expenses & Profit HY2016 HY2015 Incr/(Decr) % DEC15 DEC14 For personal use only Total Expenses ($647.16m) ($617.49m) +$29.67m +4.8% Share of JV investments $0.34m $6.99m -$6.65m -95.2% Profit Before Tax $262.01m $200.79m +$61.23m +30.5% Income Tax Expense ($74.94m) ($58.68m) +$16.26m +27.7% Non-C
Slide 12: Balance Sheet: Key Stats
BALANCE SHEET: KEY STATS 12 NET DEBT TO EQUITY RATIO DEC 2015 22.29" oo am OO _ 4 2.24" —, a ae nl TO EQUITY Saeen LOW NET DEBT R ATIO 976.83n $694.60n 8168.81 "58856n *504.94m — *2,278.5m *2,320.8m °2 472.20 *2568.9m $2,688.00 Deo 11 Deo 12 Deo 13 Deo 14 Deo 15 Deo11 Deo12 Deo13 Deo14 Deo15 Deo11 D
Slide 13: Review of the Balance Sheet
13 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 For personal use only Total Assets $4.20bn $4.24bn $4.39bn $4.36bn $4.58bn Total Liabilities $1.94bn $1.93bn $1.94bn $1.82bn $1.93bn Net Assets $2.26bn $2.32bn $2.45bn $2.54bn $2.65bn Total Assets $152.41m increase in trade & other receivables mainly due to
Slide 14: Statement of Cash Flows: Operating Cash Flows
14 HY2016 HY2015 Incr/(Decr) % For personal use only DEC15 DEC14 Operating Cash Flows $141.77m $136.21m +$5.56m +4.1% Operating cash $46.24m increase in net receipts from franchisees mainly due to increase in revenue received from flows by franchisees by $38.22m and reduction in tactical support
Slide 15: Statement of Cash Flows: Investing and Financing
15 HY2016 HY2015 Incr/(Decr) % DEC15 DEC14 For personal use only Investing Cash Flows ($106.64m) ($30.89m) -$75.75m -245% Financing Cash Flows ($180.28m) ($197.16m) +$16.88m +8.6% Net Increase/(Decrease) in Cash Flows ($145.15m) ($91.83m) -$53.32m Cash & Cash Equivalents At Beginning of Period $153.
Slide 16: Franchising Operations Segment
16 HY2016 HY2015 Incr/(Decr) % For personal use only DEC15 DEC14 Franchising Operations Revenue $489.88m $454.64m +$35.24m +7.8% Franchising Operations Result $150.42m $115.09m +$35.33m +30.7% Franchising Operations Margin % 5.53% 4.55% the franchising operations segment contributes over 57% to th
Slide 17: Franchised Complexes
17 Franchised Complexes HY2014 HY2015 HY2016 DEC13 DEC14 DEC15 For personal use only Number of franchised 202 195 191 complexes in Australia Openings during period +1 HN - +1 HN - - - Rebranded during period - - +1 DM -1 JM Closures during period -7 HN -5 HN -3 HN -3 JM -2 JM -2 JM Number of franchi
Slide 18: Property Segment
18 Total Property Segment HY2016 HY2015 Incr/(Decr) % DEC15 DEC14 For personal use only Property Revenue $137.13m $119.24m +$17.89m +15.0% Net Property Revaluation Adjust. $21.19m $3.86m +$17.33m +449% Property EBITDIA $97.12m $80.45m +$16.67m +20.7% Property Result Before Tax $76.80m $66.05m +$10.7
Slide 19: Company-Operated Retail Segment
19 For personal use only Company- $24.15m increase in NZ revenue due to: operated retail $23.42m increase in sales partly due to a full 6-month‟s contribution from the Napier store revenue ↑by (opened Sep-14), favourable economic conditions and robust housing market $78.77m $26.54m increase i
Slide 20: Outlook
20 For personal use only The omni channel strategy, incorporating the Harvey Norman integrated retail, franchise, property and digital platforms, is robust and remains the most flexible and adaptable format to effectively capitalise on changes in consumer demand and emerging trends. This integrate
Slide 21: Questions
Questions (limited t6.30
Harvey Norman Holdings — H1 FY2016 Earnings Presentation on 6ix