JB JB Hi Hi-Fi Fi Limited ed Half Year Results Presentation 31 December 2015 8 February 2016
AGENDA 1. HY16 Highlights 2. Profit and Loss Statement 3. Trading Performance 4. In Store 5. Out of Store 6. Cash Flow and Balance Sheet 7. Capital Management 8. Trading Outlook Richard Murray Nick Wells CEO CFO
1. H Y 16 HIGHLIGHTS Total sales up 7.7% to $2.12 billion Comparable sales up 5.2% Gross profit up 7.6% NPAT up 7.5% to $95.2 million EPS up 7.5% to 96.1 cps Interim dividend up 4 cps to 63 cps 3
2. PROFIT AND LOSS STAT E MENT AUST NZ (NZD) CONSOLIDATED HY15 HY16 HY15 HY16 HY15 HY16 $m Growth Growth Growth 7.7% p Sales 1,862.1 2,000.9 7.5% 113.0 127.3 12.7% 1,965.1 2,116.8 7.6% p Gross Profit 408.7 438.6 7.3% 20.4 23.0 12.9% 427.3 459.6 (3 bps) q Gross Margin 21.95% 21.92% (3 bps) 18.03% 18.07% +4 bps 21.74% 21.71% 1 8.3% p CODB 263.3 283.9 7.8% 16.7 19.5 16.7% 278.5 301.6 6.2% p EBITDA 145.4 154.7 6.4% 3.7 3.5 (4.2%) 148.7 157.9 5.3% p Depreciation & Amortisation 17.7 18.4 4.0% 1.2 1.5 26.8% 18.8 19.8 6.3% p EBIT 127.7 136.4 6.8% 2.5 2.0 (19.6%) 130.0 138.2 (9 bps) q EBIT Margin 6.86% 6.82% (4 bps) 2.17% 1.55% (62 bps) 6.61% 6.53% (39.7%) q Net Interest 2.9 1.7 7.4% p Profit before Tax 127.1 136.4 Tax Expense 38.5 41.2 7.0% 7.5% p NPAT 88.5 95.2 Headline Statistics: +4 cps p Dividends per share (¢) 59.0 63.0 +7.5% p Earnings per share (basic ¢) 89.4 96.1 Cost of doing business 1 +8 bps p 14.14% 14.19% +5 bps 14.78% 15.31% +53 bps 14.17% 14.25% 2 2 2 +7 stores p Stores 173 179 +6 stores 14 15 +1 store 187 194 1 Refer to Appendix II(c) for reconciliation of consolidated CODB. 2 As at 30 June 2015. 4
3. T R ADING PERFOR M ANCE Sales Sales Growth Q1 FY16 Q2 FY16 HY16 Total consolidated sales grew by 7.7% to $2.12b, with Total Comps. Total Comps. Total Comps. comparable sales up 5.2%. Australia 4.7% 3.4% 9.5% 6.5% 7.5% 5.2% Sales in November and December 2015 were strong, with a New Zealand (NZD) 18.4% 10.9% 8.9% 1.5% 12.7% 5.2% well executed promotional plan supported by good inventory 5.3% 3.7% 9.5% 6.3% 7.7% 5.2% Total depth. Australia Sales Category Splits by Value 2 Total sales grew by 7.5% to $2.0b, with comparable sales up 5.2%. 16.0% 18.1% 20.8% 23.5% 25.4% Hardware and Services 1 sales in HY16 were up 10.2%, with comparable sales up 7.9% driven by the Telco, Fitness, Accessories, Computers and Home Appliance categories. Software sales in HY16 were negative 4.6% and on a comparable basis were negative 6.6%. 84.0% New Zealand 81.9% 79.2% 76.5% 74.6% Total sales were up 12.7% to NZ$127.3m, with comparable sales up 5.2%. Sales growth has been driven by two new stores opened in the past 12 months and elevated market wide demand for third party prepaid content cards. Excluding the sales impact HY12 HY13 HY14 HY15 HY16 of these cards (NZ$8.4m), total growth in New Zealand was 1 Hardware & Services Software 5.3%, with comparable sales negative 1.8%. 1 Hardware & Services is defined as all sales excluding the Music, Movies and Games Software categories. 2 Consolidated. 5
3. T R ADING PERFOR M ANCE . . . Gross Margin GROSS PROFIT GROSS MARGIN Consolidated gross profit increased by 7.6% to $459.6m. HY15 HY16 Growth HY15 HY16 Growth Australia $408.7m $438.6m 7.3% 21.95% 21.92% (3 bps) Consolidated gross margin was 21.7%, a 3 bps decrease New Zealand (NZD) $20.4m $23.0m 12.9% 18.03% 18.07% +4 bps on the pcp. $427.3m $459.6m 7.6% 21.74% 21.71% Total (3 bps) In Australia, gross margin decreased by 3 bps on the pcp to 21.9%, which was a solid result given the change in sales mix. In New Zealand, gross margin increased 4 bps to 18.1%. Gross Margin 21.7% 21.7% 21.6% 21.5% 21.2% HY12 HY13 HY14 HY15 HY16 6
3. T R ADING PERFOR M ANCE . . . Cost of Doing Business (CODB) CODB HY15 HY16 Consolidated CODB was 14.3%, up 8 bps on the pcp. Australia 14.14% 14.19% New Zealand 14.78% 15.31% In Australia, CODB increased by 5 bps to 14.2%. Operating costs remained well 14.17% 14.25% Total controlled as we invested in our HOME store rollouts. In New Zealand, CODB was up 53 bps to 15.3%. We seek to maintain our low CODB through continued focus on productivity and minimising indirect expenditure. CODB 14.2% 14.2% 13.9% 13.8% 13.6% HY12 HY13 HY14 HY15 HY16 7
3. T R ADING PERFOR M ANCE . . . Earnings EBIT MARGIN HY15 HY16 Consolidated EBIT was up 6.3% to $138.2m, driven by Australia with growth of 6.8%. Australia 6.86% 6.82% This was a solid result with sales and earnings momentum growing through the half New Zealand 2.17% 1.55% year. Total 6.61% 6.53% Consolidated EBIT margin was down 9 bps on the pcp at 6.5%, with Australia stable but New Zealand down on the pcp. Net interest expense was down 39.7% to $1.7m driven primarily by lower debt levels. Effective tax rate was 30.2%, down from 30.3% in the pcp. NPAT was up 7.5% to $95.2m and EPS was up 7.5% to 96.1 cps. EBIT $m EBIT Margin % EPS (cps) 96.1 90.5 89.4 138.2 6.8% 132.9 6.8% 6.8% 6.6% 83.0 130.0 6.5% 80.7 123.7 120.7 HY12 HY13 HY14 HY15 HY16 HY12 HY13 HY14 HY15 HY16 HY12 HY13 HY14 HY15 HY16 8
4. IN STOR E We continue to optimise the store portfolio HY16 Seven new stores were opened in HY16, four new JB HI-FI HOME stores (Aust: 4, NZ: nil) and three new JB HI-FI stores 1 (Aust: 2, NZ: 1). Nine existing JB HI-FI stores were converted to JB HI-FI HOME (Aust: 8, NZ: 1). This included two stores in Australia which were relocated as part of their conversion to JB HI-FI HOME stores. Small appliances were introduced to 22 existing JB HI-FI stores (Aust: 19, NZ: 3). FY16 A total of eight new stores are expected to open in FY16, HY16 194 five JB HI-FI HOME stores (Aust: 5, NZ: nil) and three JB 187 182 HI-FI stores 1 (Aust: 2, NZ: 1). 15 177 14 13 168 13 existing JB HI-FI stores are expected to be converted to 13 157 13 JB HI-FI HOME (Aust: 11, NZ: 2) in FY16. This includes 13 141 four stores (Aust: 4, NZ: nil) which will be relocated as part 10 of their conversion to JB HI-FI HOME stores. 123 14 105 214 12 89 179 173 169 12 164 155 144 131 109 93 77 66 48 32 26 21 15 10 Acquired FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 HY16 TARGET July 2000 Total Stores AUSTRALIA NEW ZEALAND 9 1 Including Small Appliances.
4. IN STOR E . . . JB HI-FI HOME During HY16 nine existing stores were converted to JB HI-FI HOME Stores HOME and four new JB HI-FI HOME stores were opened. We had 56 HOME stores at the end of HY16, including four in New ~75 Zealand. 56 In FY16 we anticipate opening five new JB HI-FI HOME stores and 43 converting 13 existing stores to JB HI-FI HOME. We expect to have 61 HOME stores at the end of FY16. 22 Our target of ~75 HOME stores should be reached during FY17. 8 We are targeting $3m incremental sales in the first full year post conversion, rising to circa $5m over the medium term as our rollout FY13 FY14 FY15 HY16 TARGET achieves scale. Small Appliances In HY16 small appliances were introduced to 22 existing JB HI-FI stores, with up to an additional 15 existing JB HI- FI stores expected to range small appliances by the end of FY16. In the long term we expect most stores to carry appliances, with the range (i.e. small appliances vs full HOME offer) tailored to suit each specific store. 10
5. Out of stor e JB HI-FI Solutions All departments enjoyed solid growth. We remain on track to deliver on our longer term aspirational sales target of approximately $500m per annum, through both organic growth and strategic acquisitions. Online and Digital We continue to leverage the benefits of a strong online presence combined with our bricks and mortar locations. Online sales for HY16 grew 28.9% on the pcp to $62.8m or 3.0% of total sales (HY15: 2.5%). Unique visitors to JB HI- FI’s websites during the 12 months to 31 December 2015 averaged 1.3 million per week, with a peak of 2.3 million around Christmas 2015. Supply Chain We continue to develop our low cost, fit-for-purpose supply chain and logistics solution, with facilities operating in Melbourne, Sydney, Brisbane, Perth, Newcastle and Auckland. In other states and regional centres where stand alone facilities are not currently economic, the HOME rollout allows for expanded back-of-house storage areas. 11
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