Slide 1: JB Hi-Fi Limited Full Year Results Presentation
JB Hi-Fi Limited Full Year Results Presentation 30 June 2014 11 August 2014
Slide 2: Agenda
AG E N DA 1. Performance – FY14 Highlights 2. Profit and Loss Statement 3. Trading Performance 4. FY14 Store Update 5. In Store 6. Out of Store 7. Cash Flow and Balance Sheet 8. Capital Management 9. Trading Outlook 10. Growth Opportunities Richard Murray Nick Wells CEO CFO
Slide 3: Performance – FY14 Highlights
1. P E R F O R M A NC E – F Y 1 4 HI G HL I G HTS Total sales up 5.3% Comparable sales up 2.0% Gross margin up 17 bps EBIT up 7.5% and EBIT Margin up 11 bps NPAT up 10.3% EPS up 9.1% Total dividend up 16.7% to 84.0 cps Dividend payout ratio increased to 65% On-market buy-back of 1.
Slide 4: Profit and Loss Statement
2 . P R OF I T A N D L OS S S TAT E ME N T AUST NZ (NZD) CONSOLIDATED $m FY13 FY14 Growth FY13 FY14 Growth FY13 FY14 Growth Sales 3,140.8 3,292.8 4.8% 209.4 211.4 0.9% 3,308.4 3,483.8 5.3% Gross Profit 682.5 721.6 5.7% 37.1 38.1 2.8% 712.2 756.0 6.1% Gross Margin 21.7% 21.9% +18 bps 17.7% 18.0%
Slide 5: Trading Performance
3. T R A DI NG P E R F O R M A NC E Sales Sales Growth 1HY14 2HY14 FY14 Total consolidated sales grew by 5.3% to $3.48b, with Total Comps. Total Comps. Total Comps. comparable sales up 2.0%. Australia 6.5% 2.3% 2.7% 0.1% 4.8% 1.3% Australia New Zealand (NZD) 0.5% 0.3% 1.5% 1.5% 0.9% 0.8% Total 6.8%
Slide 6: Trading Performance – Gross Margin
3. T R A DI NG P E R F O R M A NC E . . . Gross Margin Consolidated gross margin was 21.7%, a 17 bps increase on the pcp. GROSS MARGIN FY13 FY14 In Australia, the gross margin increased by 18 bps on the pcp to Australia 21.7% 21.9% 21.9%. New Zealand 17.7% 18.0% Total 21.5% 21.7% The market re
Slide 7: Trading Performance – Cost of Doing Business
3. T R A DI NG P E R F O R M A NC E . . . Cost of Doing Business (CODB) Consolidated CODB was 15.2%, up 9 bps over the pcp. CODB FY13 FY14 Operating costs were in line with Company expectations. Australia 15.1% 15.2% New Zealand 15.4% 15.4% We seek to maintain our low CODB through continued fo
Slide 8: Trading Performance – Earnings
3. T R A DI NG P E R F O R M A NC E . . . Earnings Consolidated EBIT was up 7.5% to $191.1m and EBIT margin was EBIT MARGIN up 11 bps on the pcp at 5.5%. FY13 FY14 Australia 5.6% 5.7% In Australia, EBIT was up 7.1% to $188.3m and EBIT margin was New Zealand 1.1% 1.5% up 12 bps on the pcp at 5.7%
Slide 9: Trading Performance – Earnings continued
3. T R A DI NG P E R F O R M A NC E . . . Earnings… Net interest expense was down $1.3m driven primarily by a lower interest rate environment. Effective tax rate was 29.7%, down from 30.6% in the pcp, driven primarily by the exercise of 1.4m employee share options during the period (FY13: 0.1m).
Slide 10: FY14 Store Update
4 . f Y 1 4 S T O R E U P DAT E FY14 store movements Eight new stores opened in FY14 (seven JB HI-FI and one JB HI-FI HOME): NSW: Roselands, Castle Towers, Homebush (JB HI-FI HOME) VIC: Melton, Craigieburn FY14 TAS: Rosny Park 182 stores 177 WA: Ocean Keys 13 168 13 QLD: Indooroopilly 15
Slide 11: In Store – Continued growth in market share
5. I N S T O R E Continued growth in market share JB has the ability to bring brands to life and create engagement in categories. Reputation for taking the deal and price leadership. Leverage our high foot traffic. High level of customer service. Passionate and knowledgeable staff. High
Slide 12: In Store – Innovative displays create greater engagement
5. I N S T O R E . . . Innovative displays create greater engagement with our customers …driving continued growth in market share! 12
Slide 13: JB HI-FI HOME – Capturing the opportunity
5. I N S T O R E . . . JB HI-FI HOME – Capturing the opportunity Significant sales growth opportunity as we grow our share of the circa $4.6 billion home appliances market. Leveraging the strength and trust in the brand. Positive sales mix impact with medium term gross margins for the HOME cat
Slide 14: JB HI-FI HOME – FY14 Results
5. I N S T O R E . . . JB HI-FI HOME – FY14 Results The converted HOME stores achieved comparable sales growth of 10.6% in FY14 post conversion. Results to date suggest annualised incremental sales per store of circa $3m in the first year post conversion and increasing to circa $5m in the second
Slide 15: JB HI-FI HOME – The Future
5. I N S T O R E . . . JB HI-FI HOME – The Future JB HI-FI will become the retail destination for the connected home. With 22 HOME stores open at the end of FY14, our rollout is 1 year ahead of our original schedule. We anticipate converting 26 existing stores to HOME in FY15, with 17 to be co
Slide 16: Out of Store – Online
6 . O u t of s t o r e Online We continue to leverage the benefits of a strong online presence combined with our bricks and mortar locations. In FY14, online sales grew 13.9% on the pcp to $75.0m or 2.2% of sales (FY13: 2.0%). Unique visitations grew 9.9% over the pcp to an average of 1.3 mill
Slide 17: Out of Store – Digital
6 . O u t of s t o r e . . . Digital Entertainment anywhere, anytime! Allows us to remain relevant, follow consumers’ present and future content consumption behaviour, and stay engaged with our customers after the physical purchase has been made. Note: offer above for illustrative purposes only.
Slide 18: Out of Store – Commercial and Supply Chain
6 . O u t of s t o r e . . . Commercial JB HI-FI has continued to see strong growth in its Commercial business. Our four divisions provide an integrated offer (product and services) to business and education clients across Australia, be they large or small. We remain on track to deliver on our
Slide 19: Cash Flow and Balance Sheet
7. C A S H F L O W A N D B A L A NC E S H E ET Cash Flow Statement Working Capital AUDm FY13 FY14 AUDm FY13 FY14 EBITDA 211.0 226.7 (Increase)/decrease in current assets Change in Working Capital (8.2) (122.0) Inventory 4.5 (29.6) Net Interest Paid (8.4) (7.1) Receivables (1.1) (6.2) Income Tax Paid
Slide 20: Cash Flow and Balance Sheet – Balance Sheet and Inventory Bridge
7. C A S H F L O W A N D B A L A NC E S H E ET. . . Balance Sheet Inventory Bridge – FY13 to FY14 AUDm FY13 FY14 500 Cash 67.4 43.4 Receivables 64.2 70.7 450 5.7 14.3 Inventories 426.0 458.6 Other 6.0 5.3 19.4 Total Current Assets 563.7 578.1 (6.7) $20.0m Fixed Assets 181.1 181.6 400 $m Intangibles
Slide 21: Capital Management – Buy-back
8 . C API TA L M A NAG E ME N T Buy-back JB HI-FI regularly reviews all aspects of its capital structure with a focus on maximising returns to shareholders. Continued solid earnings growth and prudent management of our balance sheet, including relatively low gearing, enables us to consider vario
Slide 22: Capital Management – Dividends
8 . C API TA L M A NAG E ME N T. . . Dividends The Board has announced today an increase in the Company’s payout ratio from 60% to 65%, effective for the full year ended 30 June 2014. The final dividend is 29.01 cents per share (cps) fully franked, bringing total dividends for FY14 to 84.0 cps, up
Slide 23: Trading Outlook
9. T R A DI NG O U T L O O K Trading Outlook July 2014 sales update: - total consolidated sales growth was -3.2%; and - consolidated comparable sales growth was -5.5%. The sales result in July 2014 was impacted by recent market-wide declines in tablet sales. Although sales were down on last year
Slide 24: Growth Opportunities
1 0. G R O W T H OP P O RT UN I T I E S Growth Opportunities – Solid pipeline of properties (8 new stores to be opened in FY15). New stores – Will continue our disciplined approach to selecting new stores based on high foot traffic locations. – Target of 214 stores across Australia and New Zealand
Slide 25: Appendix I
Ap p e n dix I a) Store movements during FY14 b) Geographic breakdown1 FY14 FY13 Opened Converted Closed Total Australia JB HI-FI 155 7 (13) (2) 147 JB HI-FI HOME 8 1 13 - 22 163 8 - (2) 169 Clive Anthonys 1 - - (1) - 164 8 - (3) 169 2 New Zealand 34 JB HI-FI 13 - - - 13 TOTAL 177 8 - (3) 182 19 9 S
Slide 26: Appendix II
Ap p e n dix I I a) EBIT reconciliation b) NZ Profit and Loss statement (AUD) AUDm FY13 FY14 AUDm FY13 FY14 Profit for the full-year (App 4E) 116.6 128.4 Sales 167.6 190.9 add back 29.7 Gross Profit 34.4 - income tax expense (App 4E) 51.4 54.2 Gross Margin 17.7% 18.0% Profit before Tax 168.1 182.7 E
Slide 27: Appendix II – Impact of year end timing differences
Ap p e n dix I I. . . d) Impact of year end timing differences The FY12 and FY13 year end payables balances were influenced by timing differences. With the FY12 and FY13 year ends falling on a weekend, the 30 June creditor payments were made in the next financial year, thereby resulting in higher
Slide 28: Appendix III – Profit and Loss (5 years)
Ap p e n dix I I I a) Profit and Loss (5 years) AUDm FY10 FY11N FY12 FY13 FY14 Sales 2,731.3 2,959.3 3,127.8 3,308.4 3,483.8 Gross Profit 594.2 652.0 659.8 712.2 756.0 Gross Margin 21.8% 22.0% 21.1% 21.5% 21.7% EBITDA 198.4 223.3 192.2 211.0 226.7 Depreciation & Amortisation 23.3 27.3 30.8 33.2 35.5
Slide 29: Appendix III – Balance Sheet (5 years)
Ap p e n dix I I I. . . b) Balance Sheet (5 years) AUDm FY10 FY11 FY12 FY13 FY14 Cash 51.7 27.2 39.7 67.4 43.4 Receivables 63.5 58.3 58.4 64.2 70.7 Inventories 334.8 406.9 428.3 426.0 458.6 Other 4.5 8.6 7.7 6.0 5.3 Total Current Assets 454.5 501.1 534.1 563.7 578.1 Fixed Assets 164.0 169.6 182.0 18
Slide 30: Appendix III – Cash Flow (5 years)
Ap p e n dix I I I. . . c) Cash Flow (5 years) AUDm FY10 FY11N FY12 FY13 FY14 EBITDA 198.4 223.3 192.2 211.0 226.7 Change in Working Capital 1.2 (62.2) 80.3 (8.2) (122.0) Net Interest Paid (5.0) (3.8) (12.2) (8.4) (7.1) Income Tax Paid (53.5) (52.2) (49.3) (39.6) (60.6) Other 11.0 4.8 3.9 1.7 4.4 Ne