Equities Australia Retailing 3 May 2012 Hold Important: The above recommendation has been made on a 12 month view and may not suit your investment needs or timeframe. The basis it is prepared on is summarised on the last page of this report. PLEASE CONTACT YOUR ADVISER TO DISCUSS THIS GENERAL RECOMMENDATION BEFORE ACTING ON IT. Moderate Volatility Harvey Norman Holdings Harvey Normalise? The commentary around today's result supported our view that current levels of acute discounting should abate. HVN's focus on cash flow expansion in 3Q12, together with industry stock liquidation, should not be repeated to the same extent, we believe. Our concern for HVN, however, is that sales momentum has not improved in line with other retailers, suggesting to us market share losses in AV and IT. TP A$1.82 (from A$2.00) Event: 3Q12 trading a significant step down HVN120503 RBS Refiner Price (close 02 May) A$2.07 3M high/low A$2.22/1.85 Market cap A$2.21bn Av (12M) turnover A$7.90m Freefloat 45% Reuters HVN.AX Bloomberg HVN AU Net debt (cash) FY11 A$488.98m 3yr EPS CAGR 12-14F (5.4)% Income (2013F div yield) 4.3% Source: RBS forecasts, Bloomberg RBS vs consensus NPAT ($Am) RBS Cons % diff 20121F 191 206-7% 2013F 179 221-19% 2014F 205 249-18% Source: RBS, IBES HVN today reported its 3Q12 unaudited results, with PBT down 44% on the pcp. If the same momentum is carried through 4Q12, by our calculation the 2H12 franchisee EBIT margin would decline approximately 300bp to 1.7%. However, there is evidence from today s analyst briefing to support our view that current levels of discounting are acute and short term. Evidence includes: 1) Harvey Norman management had a dedicated plan in 3Q12 to accelerate franchisee cashflow (stock liquidation); 2) the company cleared A$35m of precautionary IT stock purchased in anticipation of stock shortages with the Thailand floods; and 3) liquidation of A$40m of WOW Sight & Sound inventory. In other regions, Ireland revenue continues to improve off a low base, translating into a lower constant currency PBT loss. NZ revenues and margin remain challenged, although have held up better than Australian franchisees. Forecasts: Downgrades to FY12 and FY13 We lower our NPAT forecasts by 11% to A$191m in FY12 and 20% to A$179m in FY13. Our forecasts reflect management s views that Australian franchisee turnover will continue to contract in FY13. We do, however, factor in margin improvement in 2H13 as the current pricing environment is cycled. In a scenario whereby Dick Smith is retained by Woolworths (downscaled or closed), it would likely bring more protracted margin pressure and therefore downside risk to our revised FY13 forecasts. As irrational discounting eases and with pending new product releases in the TV category specifically, earnings momentum should recover. Further interest rate cuts would also be beneficial. Valuation: Hold recommendation maintained; TP cut to A$1.82 Price performance (1M) (3M) (12M) Price (A$) 1.98 2.04 2.69 Absolute (%) 4.5 1.5-23.0 Rel to mkt*(%) 2.0-2.4-16.3 *S&P/ASX200 Source: Bloomberg Key events Date Aug-12 Oct-12 RBS Morgans Limited (A.B.N. 49 010 669 726) AFSL235410 A Participant of ASX Group Sourced from RBS Equities (Australia) Limited, ABN 84 002 768 701, AFS Licence 240530 www.rbsmorgans.com Event FY result AGM Source: Company We believe HVN has a strong investment case; however investors risk downside earnings surprises in FY13F. Property assets continue to underpin the valuation, with the lack of smallscale developer activity creating further opportunities for HVN. Sector consolidation is a mediumterm opportunity across most segments. Given the near-term risk to earnings, however, we rate the stock Hold. We lower our target price and valuation to A$1.82 (from A$2.00) to reflect the downgrades to our earnings forecasts. Key downside risks to our target price are an extended downturn in retail activity, new competitors opening a larger number of stores than expected and potentially taking share from Harvey Norman, and sustained softness in Ireland earnings. The key upside risk is a greater-than-expected improvement in underlying retail conditions. Key forecasts year to Jun FY10A FY11A FY12F FY13F FY14F EBITDA (A$m) 542.0 491.6 394.5 & 405.5 & 447.6 & Normalised net profit (A$m)¹ 290.0 242.0 190.9 & 178.8 & 204.6 & Norm fully diluted EPS (c)¹ 27.30 22.78 17.97 & 16.83 & 19.26 & Normalised EPS growth 15.80-16.6-21.1-6.38 14.50 Dividend per share (c) 14.00 12.00 9.00 & 9.00 & 10.00 & Dividend yield (%) 6.76 5.80 4.35 4.35 4.83 Normalised PE 7.58 9.09 11.52 12.30 10.75 Use of %& indicates that the line item has changed by at least 5%. 1. Pre non-recurring items and post preference dividends Accounting standard: A-IFRS Important disclosures regarding companies that are the subject of this report and an explanation of recommendations and volatility can be found at the end of this document.
RBS Equities Forecasts: Harvey Norman Holdings Income statement A$m, year to June FY10A FY11A FY12F FY13F FY14F Revenue 2449 2697 2522 2511 2644 Cost of sales n/a n/a n/a n/a n/a Gross profit 2449 2697 2522 2511 2644 Operating costs -1907-2205 -2128-2105 -2196 EBITDA 542.0 491.6 394.5 405.5 447.6 DDA & Impairment (ex gw) -82.9-91.4-90.7-104.9-105.9 EBITA 459.1 400.1 303.8 300.6 341.7 Goodwill (amort/impaired) n/a n/a n/a n/a n/a EBIT 459.1 400.1 303.8 300.6 341.7 Net interest -27.9-43.0-44.8-41.0-45.7 Associates (pre-tax) n/a n/a n/a n/a n/a Other pre-tax items -0.00 0.00 0.00 0.00 0.00 Reported PTP 431.2 357.1 258.9 259.6 296.0 Taxation -148.5-107.8-60.3-72.7-82.9 Minority interests -6.58-7.36-7.73-8.12-8.53 Other post-tax items 13.2 0.00 0.00 0.00 0.00 Reported net profit 289.4 242.0 190.9 178.8 204.6 Tot normalised items -0.66 0.00 0.00 0.00 0.00 Normalised EBITDA 536.2 491.6 394.5 405.5 447.6 Normalised EBIT 453.3 400.1 303.8 300.6 341.7 Normalised PTP 425.4 357.1 258.9 259.6 296.0 Normalised net profit 290.0 242.0 190.9 178.8 204.6 Balance sheet A$m, year ended June FY10A FY11A FY12F FY13F FY14F Cash & market secs (1) 157.2 162.8 150.0 300.0 550.0 Other current assets 1399 1465 1280 1333 1407 Tangible fixed assets 1928 2114 2210 2234 2263 Intang assets (incl gw) 24.2 58.3 69.8 69.8 69.8 Oth non-curr assets 195.4 204.3 195.3 194.3 197.5 Total assets 3705 4004 3905 4131 4487 Short term debt (2) 154.3 105.3 114.3 107.3 119.4 Trade & oth current liab 807.0 889.1 799.6 820.9 872.6 Long term debt (3) 346.8 546.5 497.2 619.3 773.7 Oth non-current liab 239.1 234.7 224.2 223.5 241.1 Total liabilities 1547 1776 1635 1771 2007 Total equity (incl min) 2157 2228 2270 2360 2480 Total liab & sh equity 3705 4004 3905 4131 4487 Net debt 343.9 489.0 461.5 426.6 343.1 Cash flow statement A$m, year to June FY10A FY11A FY12F FY13F FY14F EBITDA 542.0 491.6 394.5 405.5 447.6 Change in working capital -6.75 56.5 73.8-22.1-26.2 Net interest (pd) / rec -27.7-35.3-31.2-31.2-29.3 Taxes paid -132.8-126.9-116.0-82.3-87.0 Other oper cash items 12.1-26.9-10.1-3.99-6.67 Cash flow from ops (1) 386.9 359.0 310.9 266.0 298.5 Capex (2) -171.8-343.5-186.6-125.5-132.2 Disposals/(acquisitions) 6.01 5.03 0.00 0.00 0.00 Other investing cash flow 2.75-28.3-4.25-0.73-6.12 Cash flow from invest (3) -163.0-366.7-190.8-126.3-138.3 Incr / (decr) in equity 321.4 164.5 0.00 0.00 0.00 Incr / (decr) in debt -376.4 0.32-51.2 115.2 166.5 Ordinary dividend paid -138.1-138.1-116.9-95.6-95.6 Preferred dividends (4) n/a n/a n/a n/a n/a Other financing cash flow 8.82-1.15 24.9-10.4 21.7 Cash flow from fin (5) -184.3 25.6-143.1 9.17 92.6 Forex & disc ops (6) 0.00 0.00 0.00 0.00 0.00 Inc/(decr) cash (1+3+5+6) 39.5 17.8-23.0 148.9 252.8 Equity FCF (1+2+4) 215.1 15.5 124.3 140.4 166.3 Page 2
Key takeaways FY13 forecasts Below we detail our revised forecasts for FY12 and FY13. Management commented in today s analyst call that it is purchasing FY13 stock in anticipation that demand will be lower than in FY12. Our revenue forecasts for Australian franchisees reflect this. We expect the franchisee margins to deteriorate in 1H13 but recover in 2H13 as intensive tactical discounting is cycled. Table 1 : JBH: FY12 and FY13 forecasts A$m 1H12 1H13 Chg % 2H12 2H13 Chg % FY12 FY13 Chg % Franchising Sales 2580 2608 1% 2233 2268 2% 4813 4877 1% Franchising EBIT 105.5 82.2-22% 38.5 51.6 34% 144.0 133.8-7% Margin % 4.1% 3.2% -94bp 1.7% 2.3% 55bp 3.0% 2.7% -25bp Property EBIT 62.9 65.5 4% 59.8 61.3 2% 122.7 126.8 3% New Zealand Sales 289 297 3% 266 274 3% 555 571 3% New Zealand EBIT 20.6 21.4 4% 18.7 23.9 28% 39.3 45.2 15% Margin % 7.1% 7.2% 5bp 7.0% 8.7% 170bp 7.1% 7.9% 84bp Ireland Sales 115 127 9% 83 91 11% 198 218 10% Ireland EBIT -14.2-16.0 13% -13.0-18.0 38% -27.2-34.0 25% Other EBIT 10.8 9.6-11% 14.2 19.2 35% 25.0 28.8 15% Total EBIT 185.7 162.7-12% 118.1 137.9 17% 303.8 300.6-1% Source: RBS forecasts More a corporate model than a franchise model A number of questions in the analyst conference call focused on the potential fragility of AV/IT franchisees as competition accelerates. Management emphasised again today its intention to use the franchisors balance sheet to support franchisees through their working capital requirements. As such, we maintain the view that HVN maintains tight controls on franchisees to the extent that the model is effectively corporatized. The Australian store operational structure is becoming increasingly similar to the corporate model used in NZ. 3Q12 likely to be a low point for the franchisee margin In our view, there is enough evidence from today s analyst briefing to determine that current levels of discounting are acute and short term. Evidence includes: 1) Harvey Norman management had a dedicated plan to accelerate franchisee cashflow (stock liquidation); 2) Harvey Norman has successfully cleared A$35m of precautionary stock purchased at the time of the Thailand floods; and 3) the WOW sight & Sound liquidation. In other regions, Ireland revenue continues to improve off a low base, translating to a lower constant currency PBT loss. Risk of more store closures The Ex-Clive Peeters and Ex-Rick Hart stores have delivered improved operational results after having been rebadged as Harvey Norman. However, the improvement seems to be low and we estimate unlikely to be more than the marketing and head office costs saved by closing the CPR business. In our view, cannibalisation continues to be a major issue. Below, we show the Clive Peeters and Rick Hart stores converted to Harvey Norman and the number of existing Harvey Norman stores already in the same suburb and within a 5km radius. More than 50% of converted stores have an existing store in the same suburb. As such, we would expect further store closures in future years. Page 3
Table 2 : Store overlap with existing HVN network Store Same suburb Less than 5km Store Same suburb Less than 5km Braybrook 1 1 Loganholme 1 Coburg 1 Macgregor 1 Moorabbin 1 Mackay 1 Mornington Maroochydore Richmond 1 Morayfield 1 Ringwood 1 Belmont 1 Moonah 1 Joondalup 1 Aspley 1 Midland 1 Burleigh Waters Victoria Park 1 Source: Company data, RBS Earnings forecast changes We make downward revisions to our forecasts, as per the table below. Table 3 : RBS earnings changes FY12F FY13F FY14F (A$m) Previous Revised % change Previous Revised % change Previous Revised % change EBIT 337.3 303.8-10.0% 360.2 300.6-16.5% 404.0 341.7-15.4% NPAT 215.3 190.9-11.3% 222.7 178.8-19.7% 250.9 204.6-18.5% Normalised EPS (c) 20.3 18.0-11.3% 21.0 16.8-19.7% 23.6 19.3-18.5% Reported EPS (c) 20.3 18.0-11.3% 21.0 16.8-19.7% 23.6 19.3-18.5% DPS (c) 10.0 9.0-10.0% 12.0 9.0-25.0% 13.0 10.0-23.1% Source: RBS forecasts Investment view We believe HVN has a strong investment case; however investors risk downside earnings surprises near term. Property assets continue to underpin the valuation, with the lack of smallscale developer activity creating further opportunities for HVN. Sector consolidation remains a medium-term opportunity across most segments. Given the near-term risk to earnings, however, we rate the stock Hold. We lower our target price and valuation to A$1.82 (from A$2.00), reflecting the downgrades to earnings. Our PE and EV/EBIT target multiples are set at a discount to IBES Core Industrial multiples to reflect structural issues in the sector and the potential for downside to HVN earnings. Table 4 : HVN valuation summary Valuation measure Core Industrials multiples (FY13) Target multiple Target price PE 13.7 8.9 $1.52 EV/EBIT 10.6 6.9 $1.55 DCF $2.40 Average $1.82 Source: IBES, RBS estimates Page 4
Table 5 : Harvey Norman 3Q12 sales summary System sales (Harvey Norman complexes, commercial divisions and other outlets in Australia, New Zealand, Slovenia and Ireland) 1Q12 2Q11 3Q12 YTD Percentage growth -3.8% -8.2% -8.1% -6.7% Like-for-like growth -3.8% -8.0% -7.5% -6.6% Category performance Electrical Price deflation, WOW Sight & Sound inventory clearance (A$40m) and Dick Smith store closures all impacted GP margin and sales during the quarter. Furthermore, a proportion of A$200m in franchisee account receivables were recovered as franchisee inventory was cleared during the quarter. Computers HVN cleared additional stock (A$35m) as a result of stockpiling in anticipation of supply constraints with Thailand floods. Furniture & Bedding Category has continued to grow revenue during the quarter despite an industry slowdown in the property sector. Australian franchise operation 3Q12 Growth (constant currency) Like-for-like growth (constant currency) -9.2% -7.7% Key takeaways Appliance and white goods performed solidly, with growth in the 3Q, furniture and bedding sales (and GP margins) were steady. AV and computers remained challenging categories. Tactical and clearance discounting should abate in 2H13F Windows 8 release expected in 4Q13, which should help drive some upgrades for Computers. Purchases for FY13 are expected by management to be slightly down yoy, in line with 3Q trading. New Zealand 3Q12 Growth (constant currency) Like-for-like growth (constant currency) -6.6% -7.9% Key takeaways Ongoing weak consumer sentiment has led to the continuation of soft sales in 3Q12 Sales & GP margin remain under pressure, but not to the extent experienced in Australia. A weaker currency is preventing comparatively higher levels of price deflation. Ireland 3Q12 Growth (constant currency) Like-for-like growth (constant currency) 1.3% 1.3% Key takeaways Like-for-like growth (constant currency) of 1.3% for 3Q12 indicates that reported like-for-like growth was flat due to the 5.9% deflation of the EUR/AUD over the pcp. In constant currency terms, the 2H loss should reduce on pcp. This would further reduce reflecting currency translation. Improved momentum in sales, however political issues (particularly French election) may cast general doubt over EU recovery near term. Slovenia 3Q12 Growth (constant currency) Like-for-like growth (constant currency) 9.3% 1.3% Key takeaways Like-for-like growth of -1.3% (constant currency) was affected by the depreciated EUR. New space to drive continued sales growth Company Overview Harvey Norman Holdings (HVN) is a retail company specialising in homewares, furniture, bedding, carpet and flooring, lighting, kitchens and bathrooms, and electrical goods. It operates through Harvey Norman franchises in Australia and company-owned stores in New Zealand. The company also has retail operations in Singapore, Malaysia, Slovenia and Ireland. HVN has a substantial property investment portfolio, including premises leased to HVN franchisees and other third parties. Page 5
HVN financial summary Year to 30 Jun (A$m) AIFRS AIFRS AIFRS AIFRS AIFRS Closing price (A$) 2.07 Price target (A$) 1.82 Income statement 2010A 2011A 2012F 2013F 2014F Valuation metrics Divisional sales 2443.3 2696.9 2522.1 2510.5 2644.1 Preferred methodology Blended valuation Val'n (A$) $ 1.82 Total revenue 2449.1 2696.9 2522.1 2510.5 2644.1 DCF valuation inputs EBITDA 542.0 491.6 394.5 405.5 447.6 Rf 5.25% 10-year rate 5.25% Depreciation -82.9-91.4-90.7-104.9-105.9 Rm-Rf 6.00% Margin 0.7% EBIT 459.1 400.1 303.8 300.6 341.7 Beta 0.73 Kd 6.00% Net interest expense -27.9-43.0-44.8-41.0-45.7 CAPM (Rf+Beta(Rm-Rf)) 9.6% Ke 9.6% Pre-tax profit 425.4 357.1 258.9 259.6 296.0 E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) 2899.1 Income tax expense -142.0-107.8-60.3-72.7-82.9 Equity (E/EV) 90.0% Minority interest (A$m) 32.6 After-tax profit 296.6 249.3 198.7 186.9 213.1 Debt (D/EV) 10.0% Net debt (A$m) 461.5 Minority interests -6.6-7.4-7.7-8.1-8.5 Interest rate 6.00% Investments (A$m) 144.5 NPAT 276.8 242.0 190.9 178.8 204.6 Tax rate (t) 30.0% Equity market value (A$m) 2549.6 Significant items -6.4 0.0 0.0 0.0 0.0 WACC 9.1% Diluted no. of shares (m) 1062.3 NPAT post abnormals 289.4 242.0 190.9 178.8 204.6 DCF valuation (A$) 2.40 Divisional sales revenue 2010A 2011A 2012F 2013F 2014F Multiples 2011A 2012F 2013F 2014F Franchising Operations 942.1 871.0 853.6 882.6 Enterprise value (A$m) 2696.6 2669.0 2634.2 2550.7 Property Investments 156.4 174.5 186.3 193.8 199.6 EV/Sales (x) 1.0 1.1 1.0 1.0 New Zealand 611.4 569.9 555.0 571.3 605.6 EV/EBITDA (x) 5.5 6.8 6.5 5.7 Asia 338.9 346.4 360.2 392.6 424.0 EV/EBIT (x) 6.7 8.8 8.8 7.5 Non-Franchised Retail 121.3 407.7 282.8 182.6 195.4 PE (pre-goodwill) (x) 9.1 11.5 12.3 10.7 Financial Services 10.4 14.7 7.5 7.9 8.3 PEG (pre-goodwill) (x) 1.0 1.3 1.4 1.2 Slovenia 65.5 66.8 78.8 92.7 97.3 Corporate (Other) -23.2-17.1-17.5-1.6-1.6 At target price 2011A 2012F 2013F 2014F Ireland 220.5 195.1 198.0 217.8 233.0 EV/EBITDA (x) 4.9 6.1 5.8 5.1 Other Property 0.0 0.0-0.1-0.1-0.1 PE (pre-goodwill) (x) 8.0 10.1 10.8 9.4 Divisional EBIT 2010A 2011A 2012F 2013F 2014F Comparable company data (x) 2012F 2013F 2014F Franchising Operations 327.5 276.5 144.0 133.8 151.5 Woolworths EV/EBITDA 8.6 7.7 7.0 Property Investments 89.4 109.6 122.7 126.8 127.6 Year to 30 Jun EV/EBIT 11.0 9.9 8.9 New Zealand 49.5 43.2 39.3 45.2 48.1 PE 14.9 13.0 11.7 Asia 10.5 13.9 10.8 12.5 14.0 PEG Non-Franchised Retail 8.4-30.8 0.2 9.7 10.5 JB Hi-Fi EV/EBITDA 6.4 5.9 5.1 Financial Services 10.4 14.7 8.7 0.0 0.0 Year to 30 Jun EV/EBIT 7.6 7.1 6.1 Slovenia 4.3 6.4 1.9 3.1 4.6 PE 9.0 8.4 7.4 Corporate (Other) 2.0 2.6 3.3 3.5 3.7 PEG 0.9 0.8 0.7 Ireland -43.0-36.0-27.2-34.0-18.4 Other Property 0.0 0.0 0.0 0.0 0.0 Per share data 2011A 2012F 2013F 2014F Cash flow statement 2010A 2011A 2012F 2013F 2014F No. shares 1062.3 1062.3 1062.3 1062.3 EBITDA 542.0 491.6 394.5 405.5 447.6 EPS (cps) 22.8 18.0 16.8 19.3 Change in working capital -6.7 56.5 73.8-22.1-26.2 EPS (normalised) (c) 22.8 18.0 16.8 19.3 Net interest (pd)/rec -27.7-35.3-31.2-31.2-29.3 Dividend per share (c) 12.0 9.0 9.0 10.0 Taxes paid -132.8-126.9-116.0-82.3-87.0 Dividend payout ratio (%) 52.7 50.1 53.5 51.9 Other oper cash items 12.1-26.9-10.1-4.0-6.7 Dividend yield (%) 5.8 4.3 4.3 4.8 Cash flow from ops (1) 386.9 359.0 310.9 266.0 298.5 Capex (2) -171.8-343.5-186.6-125.5-132.2 Growth ratios 2011A 2012F 2013F 2014F Disposals/(acquisitions) 6.0 5.0 0.0 0.0 0.0 Sales growth 10.4% -6.5% -0.5% 5.3% Other investing cash flow 2.8-28.3-4.2-0.7-6.1 Operating cost growth 16.0% -3.5% -1.1% 4.3% Cash flow from invest (3) -163.0-366.7-190.8-126.3-138.3 EBITDA growth -8.3% -19.8% 2.8% 10.4% Incr/(decr) in debt -376.4 0.3-51.2 115.2 166.5 EBITA growth -11.7% -24.1% -1.0% 13.7% Ordinary dividend paid -138.1-138.1-116.9-95.6-95.6 Divisional EBIT growth Other financing cash flow 8.8-1.1 24.9-10.4 21.7 Franchising Operations -15.6% -47.9% -7.1% 13.2% Cash flow from fin (4) -184.3 25.6-143.1 9.2 92.6 Property Investments 22.6% 11.9% 3.3% 0.7% Inc/(decr) cash (1+3+4) 39.5 17.8-23.0 148.9 252.8 New Zealand -12.8% -9.1% 15.2% 6.4% Equity FCF (1+2) 215.1 15.5 124.3 140.4 166.3 Asia 32.0% -22.3% 16.1% 11.8% Non-Franchised Retail -464.1% -100.7% 4384.6% 9.0% Balance sheet 2010A 2011A 2012F 2013F 2014F Financial Services 40.9% -40.5% -100.0% n.m. Cash & deposits 157.2 162.8 150.0 300.0 550.0 Slovenia 49.4% -70.1% 59.7% 50.9% Trade debtors 1081.6 1065.2 943.2 975.8 1033.3 EBIT growth -11.7% -24.1% -1.0% 13.7% Inventory 261.7 336.7 280.7 299.5 312.3 NPAT growth -12.6% -21.1% -6.4% 14.5% Investments 140.6 159.0 144.5 144.5 144.5 Pre-goodwill NPAT growth -16.6% -21.1% -6.4% 14.5% Goodwill 0.0 0.0 8.5 8.5 8.5 Pre-goodwill EPS growth -16.6% -21.1% -6.4% 14.5% Other intangible assets 24.2 58.3 61.3 61.3 61.3 Normalised EPS growth -16.6% -21.1% -6.4% 14.5% Fixed assets 1928.2 2114.1 2210.1 2233.7 2263.1 Other assets 110.9 107.9 106.8 107.4 114.2 Operating performance 2011A 2012F 2013F 2014F Total assets 3704.5 4004.0 3905.0 4130.6 4487.2 Asset turnover (%) 17.5 15.9 15.6 15.3 Short-term borrowings 154.3 105.3 114.3 107.3 119.4 EBITDA margin (%) 18.2 15.6 16.2 16.9 Trade payables 739.7 854.9 750.6 779.8 824.1 EBIT margin (%) 14.8 12.0 12.0 12.9 Long-term borrowings 346.8 546.5 497.2 619.3 773.7 Net profit margin (%) 9.0 7.6 7.1 7.7 Provisions 0.0 0.0 0.0 0.0 0.0 Return on net assets (%) 18.0 13.4 12.7 13.8 Other liabilities 306.4 268.9 273.2 264.5 289.7 Net debt (A$m) 489.0 461.5 426.6 343.1 Total liabilities 1547.3 1775.5 1635.2 1770.9 2006.9 Net debt/equity (%) 21.9 20.3 18.1 13.8 Preference shares 0.0 0.0 0.0 0.0 0.0 Net interest/ebit cover (x) 9.3 6.8 7.3 7.5 Share capital 259.6 259.6 250.1 250.1 250.1 ROIC (%) 11.2 7.8 7.7 8.6 Retained earnings 1787.2 1901.3 1980.5 2069.6 2188.3 Other equity 56.4 32.6 6.5 6.5 6.5 Internal liquidity 2011A 2012F 2013F 2014F Total equity 2103.2 2193.6 2237.2 2326.2 2444.9 Current ratio (x) Minority interest 54.0 34.9 32.6 33.5 35.4 Receivables turnover (x) 2.5 2.5 2.6 2.6 Total shareholders' equity 2157.2 2228.5 2269.8 2359.7 2480.3 Payables turnover (x) 2.8 2.7 2.8 2.7 Page 6
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