Harvey Norman Holdings Ltd · ASX:HVN
Harvey Norman — FY2018 Earnings Presentation
28 slides from Harvey Norman's earnings presentation, Aug 31, 2018
Slide 1: Presentation of Results for the Year Ended 30th June 2018
TEAM HARVEY For personal use only PRESENTATION OF RESULTS FOR THE YEAR ENDED 30TH JUNE 2018 ACN 003 237 545
Slide 2: Contents
CONTENTS Team Harvey Junior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Key Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . 4 For personal use only Underlying Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Profit Before Tax & PBT Ret
Slide 3: Team Harvey Junior: Building a Bright Future for the Sportswomen of Tomorrow
TEAM HARVEY JUNIOR: 3 BUILDING A BRIGHT FUTURE FOR THE SPORTSWOMEN OF TOMORROW. For personal use only Harvey Norman® has been a driving force behind the promotion of female athletes for over a decade – ensuring they get the support they need and the recognition they deserve. In 2017 the Team Harvey
Slide 4: Key Financial Highlights FY2018
KEY FINANCIAL HIGHLIGHTS FY2018 4 540 Outstanding performance of Harvey Norman® overseas delivering best-ever trading result now represents 22% of total consolidated profit before tax result FRANCHISEES Strong PBT return on net assets of 18.05% IN AUSTRALIA 195 FRANCHISED COMPLEXES For personal use
Slide 5: Key Financial Highlights: Underlying Profit
KEY FINANCIAL HIGHLIGHTS: UNDERLYING PROFIT 5 UNDERLYING PBT FOR YEAR ENDED 30 JUNE 2018 For personal use only UNDERLYING NET PROFIT $ BEFORE TAX* 532.54m DOWN BY 0.96 % (*excluding net property revaluations, Coomboona JV trading losses and Coomboona JV impairment losses) UNDERLYING PROFIT BEFORE TA
Slide 6: Key Contributors to Underlying Profit
KEY CONTRIBUTORS TO UNDERLYING PROFIT 6 •$ 116.13m profit from company-operated offshore retail operations, up +15.1% from $100.86m in FY17 best-ever trading result & highest profitability of Harvey Norman® company-operated stores, individually and in aggregate, since commencement overseas For perso
Slide 7: Reconciliation of Underlying Profit to Reported Profit Before Tax
RECONCILIATION OF UNDERLYING PROFIT TO REPORTED PROFIT BEFORE TAX 7 FY2018 FY2017 Incr/(Decr) REPORTED PROFIT BEFORE TAX $530.17m $639.81m -17.1% For personal use only Less: Net property revaluation increment (a) ($51.65m) ($108.05m) Profit Before Tax Excluding Net Property $478.53m $531.76m -10.0%
Slide 8: Reported Profit Before Tax & PBT Return on Net Assets
REPORTED PROFIT BEFORE TAX & PBT RETURN ON NET ASSETS % 8 REPORTED PBT FOR YEAR ENDED 30 JUNE 2018 For personal use only NET PROFIT BEFORE TAX $530.17m DOWN BY 17.1 % REPORTED PBT RETURN ON NET ASSETS (%) $ 2.94bn 2.81bn $ 2.69bn $ 2.56bn $ 22.75% 2.49bn $ 18.36% 18.05% 14.79% 12.09% 639.81m $ 493.7
Slide 9: Consistently Strong PBT Return on Net Assets
CONSISTENTLY STRONG PBT RETURN ON NET ASSETS % 9 DRIVERS OF PBT RETURN ON NET ASSETS OF 18.05% For personal use only • We operate a diversified, unique business model integrated retail, franchise, property and digital strategy continues to deliver strong, stable income streams • We are not just limi
Slide 10: Reported Profit Before Tax: Key Contributors
REPORTED PROFIT BEFORE TAX: KEY CONTRIBUTORS 10 DECREASE OF $109.63m IN REPORTED PBT DUE TO: • $15.27m increase in profitability of overseas company-operated retail segment ($116.13m vs $100.86m) up +15.1% For personal use only outstanding performance of Harvey Norman® brand overseas: Singapore & Ma
Slide 11: Key Statistics: Balance Sheet
KEY STATISTICS: BALANCE SHEET 11 FY2018 FY2017 Incr/(Decr) TOTAL ASSETS $4.58bn $4.19bn +9.3% COMPOSITION OF TOTAL ASSETS OF $4.58bn TOTAL LIABILITIES ($1.64bn) ($1.38bn) -19.1% For personal use only NET ASSETS $2.94bn $2.81bn +4.4% $ 166.41m OTHER ASSETS NET DEBT TO EQUITY % 25.50% 22.59% +291bps 1
Slide 12: Outstanding Performance Overseas: Company-Operated Retail Segment
OUTSTANDING PERFORMANCE OVERSEAS: SIGNIFICANT IMPROVEMENT IN COMPANY-OPERATED RETAIL SEGMENT 12 RETAIL SEGMENT RESULT FY2018 FY2017 Incr/(Decr) NEW ZEALAND $82.31m $79.43m +3.6% For personal use only SINGAPORE & MALAYSIA $25.01m $19.30m +29.6% IRELAND & NORTHERN IRELAND $1.41m ($2.49m) +156.7% SLOVE
Slide 13: Company-Operated Retail Segment (continued)
OUTSTANDING PERFORMANCE OVERSEAS: SIGNIFICANT IMPROVEMENT IN COMPANY-OPERATED RETAIL SEGMENT (continued) 13 • $62.71m increase in Singapore & Malaysia sales revenue: COMPANY-OPERATED RETAIL REVENUE WAS Singapore up by $48.74m due to the ongoing strong performance of the Millenia Walk Flagship store,
Slide 14: Company-Operated Retail Segment (continued)
OUTSTANDING PERFORMANCE OVERSEAS: SIGNIFICANT IMPROVEMENT IN COMPANY-OPERATED RETAIL SEGMENT (continued) 14 • $5.71m (+29.6%) increase in Singapore & Malaysia result: HARVEY NORMAN® OFFSHORE Singapore solid sales growth for the Harvey Norman® brand offset by a decline in sales COMPANY-OPERATED RETAI
Slide 15: Planned Offshore Growth Within the Next 2 Years
PLANNED OFFSHORE GROWTH WITHIN THE NEXT 2 YEARS 15 •A ctively exploring opportunities to expand overseas anticipate opening up to 18 new Harvey Norman® stores offshore within the next 2 years For personal use only •A nticipated 20% expansion in store locations overseas from 89 stores to circa 107 st
Slide 16: Headline & Comparable Aggregated Total Sales Revenue
HEADLINE & COMPARABLE AGGREGATED TOTAL SALES REVENUE 16 AGGREGATED SALES INCREASE / (DECREASE) IN CONSTANT LOCAL CURRENCIES: TOTAL HEADLINE SALES 1Q2018 2Q2018 3Q2018 4Q2018 FY2018 For personal use only HEADLINE AGGREGATED SALES OF vs. vs. vs. vs. vs. $ 7.58bn FOR FY18 1Q2017 2Q2017 3Q2017 4Q2017 FY
Slide 17: Franchisee Aggregated Sales Revenue
FRANCHISEE AGGREGATED SALES REVENUE 17 TOTAL FRANCHISEE SALES COMPARABLE FRANCHISEE SALES FY2018 FY2018 For personal use only $ 5.76bn 2.6 UP BY % $ 5.72bn 2.2% UP BY • 195 franchised complexes in Australia, with 540 franchisees responsible for the day-to-day management and control of their respecti
Slide 18: Segment Analysis: Franchising Operations Segment
SEGMENT ANALYSIS: FRANCHISING OPERATIONS SEGMENT 18 FY2018 FY2017 Incr/(Decr) AGGREGATED FRANCHISEE HEADLINE SALES REVENUE $5.76bn $5.62bn +2.6% For personal use only FRANCHISING OPERATIONS SEGMENT RESULT $282.54m $304.53m (-7.2%) FRANCHISING OPERATIONS MARGIN % 4.90% 5.42% FRANCHISING OPERATIONS SE
Slide 19: Franchising Operations Segment (continued)
SEGMENT ANALYSIS: FRANCHISING OPERATIONS SEGMENT (continued) 19 1st HALF 2nd HALF FY2018 FRANCHISING OPERATIONS SEGMENT RESULT $167.21m $115.33m $282.54m For personal use only FRANCHISEE SALES REVENUE $3.00bn $2.76bn $5.76bn FRANCHISING OPERATIONS MARGIN % 5.57% 4.18% 4.90% MARGIN EXCLUDING B2B FRAN
Slide 20: Business Initiatives & Strategies
BUSINESS INITIATIVES & STRATEGIES: ASSIST FRANCHISEES TO PROVIDE SEAMLESS CUSTOMER SERVICE 20 • ONGOING DEVELOPMENT & ENHANCEMENT OF ONLINE-TO-OFFLINE (O2O) STRATEGY: - LivePerson - Near Real-Time Inventory For personal use only - Quick Reserve - 2-Hour Click & Collect - Improved Expert Reviews - Im
Slide 21: Segment Analysis: Property
SEGMENT ANALYSIS: PROPERTY 21 FY2018 FY2017 Incr/(Decr) % PROPERTY SEGMENT REVENUE $304.62m $357.61m ($52.99m) -14.8% For personal use only NET PROPERTY REVALUATION INCREMENT $51.65m $108.05m ($56.41m) -52.2% PROPERTY SEGMENT EBITDIA $218.19m $276.56m ($58.37m) -21.1% PROPERTY SEGMENT RESULT BEFORE
Slide 22: Review of the Income Statement
REVIEW OF THE INCOME STATEMENT 22 FY2018 FY2017 Incr/(Decr) % SALES REVENUE* $1,993.76m $1,833.12m $160.64m +8.8% For personal use only GROSS PROFIT $667.42m $597.52m $69.90m +11.7% REVENUES & OTHER INCOME $1,240.70m $1,305.34m ($64.64m) -5.0% * Includes the sales revenue of company-operated stores
Slide 23: Review of the Income Statement (continued)
REVIEW OF THE INCOME STATEMENT (continued) 23 FY2018 FY2017 Incr/(Decr) % TOTAL EXPENSES ($1,383.74m) ($1,268.26m) ($115.49m) -9.1% For personal use only SHARE OF NET PROFIT OF JV ENTITIES $5.79m $5.20m $0.59m +11.4% PROFIT BEFORE TAX $530.17m $639.81m ($109.64m) -17.1% INCOME TAX EXPENSES ($150.12m
Slide 24: Review of the Balance Sheet
REVIEW OF THE BALANCE SHEET 24 FY2014 FY2015 FY2016 FY2017 FY2018 TOTAL ASSETS $4.18bn $4.33bn $4.43bn $4.19bn $4.58bn For personal use only TOTAL LIABILITIES $1.69bn $1.77bn $1.74bn $1.38bn $1.64bn TOTAL EQUITY $2.49bn $2.56bn $2.69bn $2.81bn $2.94bn •$ 187.64m (+8.4%) increase in value of the inve
Slide 25: Review of the Statement of Cash Flows
REVIEW OF THE STATEMENT OF CASH FLOWS 25 FY2018 FY2017 Incr/(Decr) % OPERATING CASH FLOWS $454.17m $425.14m $29.03m +6.8% For personal use only •$ 141.70m increase in receipts from customers primarily due to higher sales generated by overseas company-operated stores OPERATING CASH FLOWS •$ 64.58 mil
Slide 26: Review of the Statement of Cash Flows (continued)
REVIEW OF THE STATEMENT OF CASH FLOWS (continued) 26 FY2018 FY2017 Incr/(Decr) % INVESTING CASH FLOWS ($303.49m) ($198.77m) ($104.72m) -52.7% For personal use only FINANCING CASH FLOWS ($68.10m) ($287.12m) $219.02m +76.3% NET INCREASE/(DECREASE) IN CASH FLOWS $82.58m ($60.75m) $143.33m CASH & CASH E
Slide 27: Outlook
OUTLOOK 27 • Flagships launched to date have outperformed expectations • 1st half FY2019 complete launch of 1 Flagship store in each of the 8 countries For personal use only • Will launch the Flagship store at Zagreb, Croatia in September 2018 • Will launch the Flagship complex at Auburn, Australia
Slide 28: Questions
QUESTIONS (limited to 30 minutes) 28 For personal use only Ikano, Kuala Lumpur (Malaysia Flagship store)
Harvey Norman Holdings — FY2018 Earnings Presentation on 6ix