For personal use only. JB Hi-Fi Limited. HY18 Results Presentation

Transcription

1 JB Hi-Fi Limited HY8 Results Presentation 5 FEBRUARY AUGUST PAGE

2 Agenda. Group Performance Overview. JB HI-FI 3. The Good Guys 4. Group Balance Sheet and Cash Flow 5. Outlook Richard Murray Group CEO Nick Wells Group CFO PAGE

3 . Group Performance Overview Financial highlights AUD HY8 HY7 Growth Total sales ($m) 3,689.8,66., % Earnings before interest and tax ($m) % Net profit after tax ($m) % Earnings per share (basic ) cps 3.7% Dividend per share ( ) cps 9.4% NPAT of $5.7 million, up.0% on underlying NPAT in the pcp (up 37.4% on statutory NPAT in the pcp) Interim dividend of 86 cents per share fully franked and in line with the current Group dividend payout ratio of 65% Unless otherwise stated, all HY7 results disclosed in this presentation are underlying results which exclude transaction fees and implementation costs totaling $5.3m associated with the acquisition of The Good Guys in November 06. Refer Appendix I for reconciliations of statutory and underlying results PAGE 3

4 . Group Performance Overview Divisional performance Sales ($m) Growth $m % - JB HI-FI Australia,476.0, % - JB HI-FI New Zealand (NZD) (0.5) (0.4%) - The Good Guys, % Total Sales (AUDm) 3,689.8,66., % EBIT ($m) - JB HI-FI Australia % - JB HI-FI New Zealand (NZD) (.0) (97.3%) - The Good Guys % Total EBIT (AUDm) % EBIT Margin (%) HY8 HY7 - JB HI-FI Australia 7.4% 7.4% + bps - JB HI-FI New Zealand 0.0% 0.78% (76 bps) - The Good Guys 3.8% 5.4% (60 bps) Total EBIT Margin (%) 6.% 6.9% (79 bps), 3 Underlying results (refer to note on page 3) The Good Guys was acquired on 8 November 06. The Good Guys underlying results presented for HY7 are for the period of ownership (8 November 06 to 3 December 06) 3 The Good Guys EBIT margin of 5.4% in HY7 reflects the seasonal impact of the month of December, refer note above. EBIT Margin was 3.69% for the period 8 November 06 to 30 June 07 PAGE 4

5 . JB HI-FI JB HI-FI Australia performance summary AUD HY8 HY7 Growth Sales ($m),476.0, % Gross Profit ($m) % Gross Margin (%).0%.% (0 bps) Cost of Doing Business (%) 3.76% 3.93% (7 bps) EBIT ($m) % EBIT Margin (%) 7.4% 7.4% + bps Stores (#) stores Sales Growth Sales Category Splits.% 3.3%.7% 0.8% 88.8% 86.7% 9.7% 8.% 7.8% 4.9% Sales Total sales grew by 0.8% to $.48 billion, with comparable sales up 7.8% Hardware and Services 3 sales in HY8 were up 3.5%, with comparable sales up 0.4% driven by the Communications, Computers, Audio, Drones and Games Hardware categories Software sales were down 6.5% and on a comparable basis were down 9.3% as a result of an acceleration in the decline in the Movies category but partially offset by growth in the Games Software category Online sales in Australia for HY8 grew 40.6% (HY7: 40.4%) on the pcp to $9.3 million or 4.8% of total sales (HY7: 3.8%), as we continue to invest in and improve our Online offer The Solutions business recorded double digit sales growth and remains on track to deliver on the longer term aspirational sales target of approximately $500 million per annum, through both organic growth and strategic acquisitions Q Total Q Comp Q Total Q Comp HY8 Total HY8 Comp HY8 HY7 Software Hardware & Services Underlying results (refer to note on page 3) As at 30 June 07 3 Hardware & Services is defined as all sales excluding the Music, Movies and Games Software categories PAGE 5

6 . JB HI-FI JB HI-FI Australia performance summary AUD HY8 HY7 Growth Sales ($m),476.0, % Gross Profit ($m) % Gross Margin (%).0%.% (0 bps) Cost of Doing Business (%) 3.76% 3.93% (7 bps) EBIT ($m) % EBIT Margin (%) 7.4% 7.4% + bps Stores (#) stores Gross Profit Gross Profit and Margin Gross profit increased by 9.8% to $545.3 million Gross margin was.0%, a 0 bps decrease on the pcp, primarily driven by: sales mix, as we manage the growth of low margin categories and the decline in higher margin software categories; and price investment to reinforce our market leadership We continue to be a sales led organisation with a focus on growing top line sales and gross profit dollars $40m $409m $439m $497m $545m HY4 HY5 HY6 HY7 HY8 Underlying results (refer to note on page 3) As at 30 June 07 PAGE 6

7 . JB HI-FI JB HI-FI Australia performance summary AUD HY8 HY7 Growth Sales ($m),476.0, % Gross Profit ($m) % Gross Margin (%).0%.% (0 bps) Cost of Doing Business (%) 3.76% 3.93% (7 bps) EBIT ($m) % EBIT Margin (%) 7.4% 7.4% + bps Stores (#) stores EBIT $ $84m $66m $3m $8m $36m CODB Our low CODB remains a competitive advantage and is maintained through continued focus on productivity and minimising unnecessary expenditure CODB was 3.8%, down 7 bps on the pcp CODB in absolute terms grew 9.5% Total operating costs remained well controlled as we managed increased volumes through the store network driven by new products, Click and Collect, Online and Commercial order fulfilment EBIT Strong sales growth, combined with operating cost leverage, drove strong EBIT growth. EBIT was up 0.9% on the pcp to $83.7 million while EBIT margin was up bps at 7.4% Stores Seven new stores were opened in HY8 HY4 HY5 HY6 HY7 HY8 Underlying results (refer to note on page 3) As at 30 June 07 PAGE 7

8 . JB HI-FI JB HI-FI New Zealand performance summary NZD HY8 HY7 Growth Sales ($m) (0.4%) Gross Profit ($m) (9.%) Gross Margin (%) 7.5% 9.0% (69 bps) Cost of Doing Business (%) 6.3% 7.% (79 bps) EBIT ($m) (97.3%) EBIT Margin (%) 0.0% 0.78% (76 bps) Stores (#) 5 6 ( store) Sales Growth 8.7% 3.9%.4% Total sales were down 0.4% to NZD4.6 million Comparable sales for HY8 were up.4%, with Q comparable sales up 8.7% Online sales in New Zealand for HY8 grew 89.8% on the pcp to NZD4.8 million or 3.8% of total sales (HY7:.0%) following the launch of the new website in August 07 Gross margin was down 69 bps on the pcp to 7.5% We continue to reposition the New Zealand business as part of our strategy to improve performance. One JB HI-FI store was closed and we have exited Whitegoods (JB HI-FI HOME) and rebranded the four stores to JB HI-FI The store closure impact to sales was NZD4.6 million and included in the HY8 result are one-off costs associated with the store closure and exit of Whitegoods of NZD0.4 million (0.4%) (6.3%) (6.%) Q Total Q Comp Q Total Q Comp HY8 Total HY8 Comp As at 30 June 07 PAGE 8

9 3. The Good Guys The Good Guys performance summary AUD HY8 HY7 Growth Sales ($m), % Gross Profit ($m) % Gross Margin (%) 0.79% 9.65% +3 bps Cost of Doing Business (%) 6.0% 3.5% +68 bps EBIT ($m) % EBIT Margin (%) 3.8% 5.4% (60 bps) Stores (#) stores 4.% Q Total 3.4% Q Comp Sales Growth (vs same six months last year) 0.9% Q Total 0.4% Q Comp.4% HY8 Total.8% HY8 Comp All performance indicators and ratios for HY7 are for the period of ownership, and reflect the seasonal impact of the month of December Sales Total sales for the six months to 3 December 07 were $.0 billion In HY7, we consolidated only one month s sales, as a result sales on a statutory basis were up 38.0% For comparative purposes for the same six months (July to December), total sales were up.4% with comparable sales up.8% Key growth categories were Seasonal Products, Cooking, Communications, Visual and Dishwashers Online sales for the period were down.7% to $7.7 million or 6.6% of total sales Gross Profit and Margin Gross profit was $8.6 million with gross margin at 0.8% The Good Guys was acquired on 8 November 06. The Good Guys underlying results (refer to note on page 3) presented for HY7 are for the period of ownership (8 November 06 to 3 December 06) As at 30 June 07 PAGE 9

10 3. The Good Guys The Good Guys performance summary AUD HY8 HY7 Growth Sales ($m), % Gross Profit ($m) % Gross Margin (%) 0.79% 9.65% +3 bps Cost of Doing Business (%) 6.0% 3.5% +68 bps EBIT ($m) % EBIT Margin (%) 3.8% 5.4% (60 bps) Stores (#) stores All performance indicators and ratios for HY7 are for the period of ownership, and reflect the seasonal impact of the month of December CODB CODB was 6.% Total operating costs were in line with expectations and store wages remained well controlled EBIT EBIT was $4.0 million and in line with expectations Stores Two new The Good Guys stores were opened during HY8 at Robina and Tingalpa The Good Guys was acquired on 8 November 06. The Good Guys underlying results (refer to note on page 3) presented for HY7 are for the period of ownership (8 November 06 to 3 December 06) As at 30 June 07 PAGE 0

11 4. Group Balance Sheet and Cash Flow Group Balance Sheet Inventory Bridge HY7 to HY8 AUDm HY8 FY7 HY7 $56.5m Cash Receivables Inventories Other Total Current Assets,56.9,67.5,37.6 ($5.3m) $37.3m $986.7m Fixed Assets Intangibles & Goodwill,037.3,037.3,05.0 Other Total Non-Current Assets,9.,9.3,34. $898.m Total Assets,809.,459.8,64.8 Payables, Other Total Current Liabilities, ,89.7 Borrowings Other Total Non-Current Liabilities Total Liabilities,850.4,606.3,769.0 Net Assets Net Debt / (Net Cash) HY7 Closing Inventory Closed Stores New Stores Existing Stores HY8 Closing Inventory Group inventory levels were in line with expectations, with inventory turnover in HY8 at 6.x Similar to prior half years, the 3 December payables and net debt / (net cash) positions are heavily influenced by the timing of Christmas inventory purchasing The comparative balances have been restated to reflect the finalisation of the accounting for the acquisition of The Good Guys PAGE

12 4. Group Balance Sheet and Cash Flow Group Cash Flow Statement Group Performance Indicators AUDm HY8 HY7 HY8 HY7 Statutory EBITDA Change in Working Capital Net Interest Paid (8.5) (0.) Income Tax Paid (58.9) (34.) Other Net Cash Flow from Operations Purchases of P&E (net) (30.) (0.0) Investments (net of cash acquired) - (846.5) Net Cash Flow from Investing (30.) (866.5) Free Cash Flow Proceeds / (Repayment) of borrowings (83.8) 35.0 Proceeds from issue of equity Share issue costs - (9.0) Dividends Paid (5.8) (36.7) Other - (.5) Net Cash Flow from Financing (33.8) Net Change in Cash Position Effect of exchange rates 0. (0.0) Cash at the end of Period Fixed Charge Ratio 3.0x 3.6x Interest Cover 7.x 66.0x Gearing Ratio Return on Invested Capital 9.6% 5.4% Operating cash conversion continues to be strong Capex remains well controlled as we continue to invest in the store portfolio and digital initiatives Free Cash Flow = Net Cash Flow from Operations less Purchases of P&E (net) PAGE

13 4. Group Balance Sheet and Cash Flow Capital Management HY8 dividend up 9.4% to 86 cps The Board regularly reviews its capital structure with a focus on maximising returns to shareholders and believes the current dividend payout ratio of 65% appropriately balances the distribution of profit to shareholders and the reinvestment of earnings for future growth The interim dividend is 86 cents per share (cps) fully franked, up 4 cps from the pcp, representing 65% of NPAT. The record date for the interim dividend is 3 February 08, with payment to be made on 9 March Final Interim FY4 FY5 FY6 FY7 HY8 Dividends (cps) PAGE 3

14 5. Outlook Outlook January 08 sales update: Total sales growth for JB HI-FI was 6.9% (January 07: 9.8%) with comparable sales growth of 4.5% (January 07: 7.%) Total sales growth for The Good Guys was -3.5% (January 07: 5.0%) with comparable sales growth of -4.7% (January 07: 3.5%). The Good Guys sales growth in January was impacted by cycling strong sales of Seasonal products (Air Conditioning) in the pcp FY8 Guidance: In HY8 we expect our focus on sales and market share, and continuing changes to sales mix, to result in sales growth exceeding gross profit dollar growth. As a result, in FY8 the Company expects: total Group sales to be circa $6.85 billion (JB HI-FI $4.75 billion and The Good Guys $. billion) total Group NPAT to be in the range of $35million to $40 million, an increase of 3.% to 5.5% on underlying NPAT in the pcp PAGE 4

15 Appendix I a) Group underlying EBIT reconciliation c) Group underlying CODB reconciliation AUDm HY8 HY7 AUDm HY8 HY7 Statutory EBIT Adjustments - Transaction Fees Implementation Costs -. Total Adjustments Underlying EBIT Other income (ex interest received) (0.4) (0.) Sales and marketing expenses (App 4D) Occupancy expenses (App 4D) less depreciation, amortisation & impairment (7.9) (0.5) Administration expenses (App 4D) less depreciation & impairment (.6) (.6) Other expenses (App 4D) b) Group underlying NPAT reconciliation AUDm HY8 HY7 Underlying CODB Sales 3,689.8,66. Underlying CODB (% of sales) 4.57% 4.04% Statutory NPAT Adjustments - Transaction Fees Implementation Costs -. Total Adjustments Tax impact - (0.4) Total After Tax Adjustments Underlying NPAT d) Group underlying EPS reconciliation HY8 HY7 Underlying NPAT (AUDm) Weighted average number of ordinary shares (m) Underlying EPS PAGE 5

16 Appendix II 3 stores across Australia and New Zealand Group store reconciliation FY7 HY8 Opened Converted Closed Total Australia JB HI-FI JB HI-FI HOME New Zealand JB HI-FI - 4 () 5 JB HI-FI HOME 4 - (4) () 5 JB HI-FI TOTAL () 07 THE GOOD GUYS TOTAL () 3 Store type: JB HI-FI () 48 JB HI-FI HOME 63 - (4) - 59 THE GOOD GUYS () 3 Store format: Shopping centre () 9 Other () 3 As at 3 December 07 PAGE 6

17 Appendix III a) Group Profit and Loss AUDm HY8 HY7 HY6 HY5 HY4 Sales 3,689.8,66.,6.8,965.,939.9 Gross Profit Gross Margin.5%.83%.7%.74%.63% EBITDA Depreciation & Amortisation EBIT EBIT Margin 6.% 6.9% 6.53% 6.6% 6.85% Net Interest Profit before Tax Tax Expense NPAT Headline Statistics: Dividends per share ( ) Earnings per share (basic ) Cost of doing business 4.57% 4.04% 4.5% 4.7% 3.88% Underlying results (refer to note on page 3) PAGE 7

18 Appendix III b) Group Profit and Loss - Breakdown AUDm JB HI-FI AUST JB HI-FI NZ (NZD) TGG Group JB HI-FI AUST JB HI-FI NZ (NZD) TGG Group Sales, , ,689.8, , % Gross Profit % Gross Margin.0% 7.5% 0.79%.5%.% 9.0% 9.65%.83% (3 bps) EBITDA % Depreciation & Amortisation % EBIT % EBIT Margin 7.4% 0.0% 3.8% 6.% 7.4% 0.78% 5.4% 6.9% (79 bps) Net Interest % Profit before Tax % Tax Expense % NPAT % Headline Statistics: HY8 Dividends per share ( ) % Earnings per share (basic ) % Cost of doing business 3.76% 6.3% 6.0% 4.57% 3.93% 7.% 3.5% 4.04% +53 bps Stores stores HY7 Growth Underlying results (refer to note on page 3) As at 30 June 07 PAGE 8

19 Appendix III c) Group Balance Sheet AUDm HY8 HY7 HY6 HY5 HY4 Cash Receivables Inventories Other Total Current Assets,56.9, Fixed Assets Intangibles & Goodwill,037.3, Other Total Non-Current Assets,9., Total Assets,809.,64.8,70.,090.0,05.9 Payables, Other Total Current Liabilities,37.0, Borrowings Other Total Non-Current Liabilities Total Liabilities,850.4, Net Assets Net Debt / (Net Cash) (0.4) (68.) 4.5 The comparative balances have been restated to reflect the finalisation of the accounting for the acquisition of The Good Guys PAGE 9

20 Appendix III d) Group Cash Flow AUDm HY8 HY7 HY6 HY5 HY4 Statutory EBITDA Change in Working Capital (45.8) Net Interest Paid (8.5) (0.) (.7) (.7) (3.7) Income Tax Paid (58.9) (34.) (33.6) (9.0) (5.9) Other Net Cash Flow from Operations Purchases of P&E (net) (30.) (0.0) (8.6) (7.5) (0.7) Investments (net of cash acquired) - (846.5) - (.4) (3.0) Net Cash Flow from Investing (30.) (866.5) (8.6) (9.9) (3.7) Free Cash Flow Borrowings / (Repayments) (83.8) 35.0 (40.0) (80.0) (75.) Proceeds from issue of Equity Share buy-back - - (3.) (5.0) - Share issue costs - (9.0) Dividends Paid (5.8) (36.7) (30.9) (8.8) (.0) Other - (.5) Net Cash Flow from Financing (33.8) (79.0) (.3) (77.4) Net Change in Cash Position (.8) Effect of exchange rates 0. (0.0) Cash at the end of Period PAGE 0