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ANNUAL REPORT
2021
Financial Summary
FINANCIAL PERFORMANCE
2017(i)
Underlying(ii)
2018
Statutory
2019
Statutory
2020
Statutory
2021
Statutory
Growth
Statutory
Sales
EBIT
NPAT
$5.63b
$6.85b
$7.10b
$7.92b
$8.92b
$306.3m
$350.6m
$372.8m
$483.3m
$743.1m
$207.7m
$233.2m
$249.8m
$302.3m
$506.1m
Earnings per share
186.0cps
203.1cps
217.4cps
263.1cps
440.8cps
Total dividend - fully franked
118cps
132cps
142cps
189cps
287cps
12.6%
53.8%
67.4%
67.5%
51.9%
Sales $8.92b
EBIT $743.1m
$743.1m
$8.92b
$7.92b
$6.85b
$7.10b
$5.63b(i)
$483.3m
$372.8m
$350.6m
$306.3m(i)(ii)
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
NPAT $506.1m
$506.1m
Earnings per share
440.8cps
440.8cps
$302.3m
263.1cps
$249.8m
$233.2m
$207.7m(i)(ii)
186.0cps(i)(ii)
203.1cps
217.4cps
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
(i)
(ii)
JB Hi-Fi acquired The Good Guys on 28 November 2016, all amounts disclosed for the 2017 fi nancial year include The Good Guys for the period
under JB Hi-Fi ownership.
2017 underlying results exclude transaction fees and implementation costs totaling $22.4m associated with the acquisition of The Good Guys in
November 2016 and $15.8m of fi xed asset and goodwill impairments in New Zealand.
JB Hi-Fi Limited ABN 80 093 220 136
916CRN8482_JB_Hi-Fi_Annual_Report_2021 - 2 - Inside Cover_v1.indd 2
23/08/2021 8:07:16 PM
Chairman’s and Group Chief Executive Offi cer’s Report
Dear fellow shareholder,
FY21 has been a strong year for JB Hi-Fi Limited and its
subsidiaries (the “Group”). We were pleased to report record
sales and earnings for the year ended 30 June 2021, a period
where we continued to respond and adapt to the challenges
resulting from Covid-19. We would like to recognise and thank
our team members across Australia and New Zealand who
worked tirelessly to deliver this record result.
Our continued focus on the customer, combined with the
strength and competitive advantage of our multichannel
offer, be it in-store, online or over the phone, enabled us to
seamlessly meet our customers’ increased demand throughout
this period.
As the challenges associated with Covid-19 continued
throughout FY21, the health, safety and wellbeing of our
team members, customers, business partners and the wider
community remained our highest priority.
The relationship between the Board and management is strong
and remains engaging and constructive.
Group CEO Transition
The dual branded retail approach is underpinned by five key
enablers that provide the Group with a unique competitive
advantage, being:
•
•
•
•
•
scale;
a low cost operating model, evidenced by the Group’s
low cost of doing business (“CODB”);
quality store locations;
strong supplier partnerships; and
our multichannel capabilities.
It continues to be an integral part of the Group’s strategy to
innovate and diversify in new products, online, supply chain,
merchandising formats, advertising and property locations in
a controlled and responsible manner. This approach provides
opportunities to increase revenue, margin and productivity.
The Group achieved sales of $8.9 billion in FY21, up 12.6%
on the prior year. EBIT was up 53.8% to $743.1 million and
Net profit after tax (NPAT) was up 67.4% to $506.1 million.
Earnings per share was up 67.5% to 440.8 cents per share
and the total dividend for FY21 was up 51.9% to 287 cents
per share.
Following a smooth and successful transition period, Group
Chief Executive Officer Richard Murray left the Group in
Brand Overview
August 2021 and has been succeeded by Managing Director
of The Good Guys and former JB Hi-Fi CEO, Terry Smart.
JB Hi-Fi Australia
The Board thanks Richard for his outstanding contribution to
the Company over the past 18 years, wishes him all the best
for the future and looks forward to Terry continuing to deliver
on the Group’s previous success.
Both Terry and Group Chief Financial Officer, Nick Wells, joined
the Board as Executive Directors on 27 August 2021.
Total sales grew by 12.0% to $5.96 billion, with comparable
sales up 13.0%. Sales momentum was strong through
the year, with heightened customer demand for consumer
electronics and home appliance products. The key growth
categories were Communications, Computers, Games
Hardware, Visual and Small Appliances. Online sales grew
93.0% to $780.0 million or 13.1% of total sales.
Group Overview
The Group comprises two leading retail brands: JB Hi-Fi,
with a focus on Technology and Consumer Electronics; and
The Good Guys, with a focus on Home Appliances and
Consumer Electronics.
The value proposition for each brand centres around ranging
the best brands at low prices supported by exceptional
customer service across our 316 store network, our online and
phone channels, and through our commercial business.
Gross profit increased by 13.4% to $1.33 billion with gross
margin up 27 bps to 22.2%, driven primarily by improvements
in key categories. CODB was 11.2%, down 91 bps on the pcp.
The business’ low CODB remains a competitive advantage
and is maintained through a continued focus on productivity,
minimising unnecessary expenditure and leveraging scale.
Elevated sales growth, gross margin expansion and disciplined
cost control resulted in strong earnings growth. EBIT was up
33.6% on the pcp to $523.0 million, with EBIT margin up
142 bps to 8.8%.
1
CHAIRMAN’S AND GROUP CHIEF EXECUTIVE OFFICER’S REPORT (continued)
JB Hi-Fi New Zealand
Generating sustainable long-term growth
Total sales were up 17.4% to NZD261.6 million, with
The Group’s FY21 Sustainability Report outlines our
comparable sales up 17.4%. The key growth categories were
commitment to having a positive impact on our people, our
Computers, Visual, Communications, Games Hardware and
communities and our environment.
Small Appliances. Online sales in New Zealand grew 35.6%
to NZD27.6 million, or 10.6% of total sales. Gross margins
The Group is committed to:
increased by 129 bps to 17.8% and CODB was 13.1%, down
•
developing our people and providing them with a safe and
109 bps on the pcp. EBIT was NZD5.8 million.
respectful workplace, whilst looking for ways to improve
The Good Guys
work fl exibility, diversity and inclusion;
•
giving back to the communities within which our team
Total sales grew by 13.7% to $2.72 billion, with comparable
members live and work; and
sales up 13.7%. Sales momentum was strong through the
year, with heightened customer demand for home appliance
and consumer electronics products. The key growth
•
minimising the impact of waste and greenhouse gases
generated by our operations on the natural environment.
categories were Refrigeration, Laundry, Floorcare, Portable
The Group is pleased with the progress made across these key
Appliances and Visual. Online sales were up 48.5% to
areas of focus, which in FY21 included:
$258.3 million or 9.5% of total sales.
•
roll out of an updated Equal Opportunity and Workplace
Gross profit was $608.6 million with gross margin up 189 bps
Behaviour policy to all team members;
to 22.4%, driven by strong improvements in key categories.
CODB was 11.7%, down 100 bps as store wages remained
well controlled throughout the year. Strong operating leverage
from the elevated sales growth, gross margin expansion and
disciplined cost control drove strong EBIT growth. EBIT was
up 90.2% on the pcp to $214.7 million, with EBIT margin up
318 bps to 7.9%.
Group Balance Sheet, Capital Management and Dividends
The Group’s balance sheet continued to be strong with low
financial and operating leverage, evidenced by our solid fixed
charges cover of 4.6 times, gearing of 0.0 and interest cover
of 228.4 times.
JB Hi-Fi Limited regularly reviews all aspects of its capital
structure with a focus on maximising returns to shareholders
and maintaining balance sheet strength and flexibility.
The Board declared a final dividend of 107 cents per share
fully franked, up 17 cents per share or 18.9%, bringing the
total dividend for FY21 to 287 cents per share, up 98 cents
per share or 51.9%, and representing 65% of NPAT.
•
launching a set of Diversity and Inclusion initiatives, to
continue to improve diversity in leadership and inclusion;
•
workplace giving donations totalling $3.7 million and
$28.1 million since inception;
•
JB Hi-Fi’s Helping Hands program winning Workplace
Giving Australia’s 2020 Best Overall Program and Best
Innovation awards;
•
continuing to work with suppliers to embed our ethical
sourcing policy;
•
committing to net-zero direct (scope 1 and 2) carbon
emissions by 2030, with solar power generation recently
installed at the JB Hi-Fi Chadstone Homemaker
Centre store;
•
continuing to explore waste reduction, re-use and
recycling initiatives led by the Group’s operational waste
and recycling working group; and
•
continuous improvements in sustainable packaging.
The FY21 Sustainability Report can be found on the Group’s
Total dividend up 51.9% to 287cps
investor website (https://investors.jbhifi.com.au/)
Management alignment with Shareholders
The Board firmly believes that equity participation for
management through the Group’s share ownership-based
287
remuneration schemes creates strong alignment with
shareholders and is a critical tool in attracting new management,
189
retaining existing management and rewarding performance.
118
132
142
FY17
FY20
FY19
FY18
Dividend per Share (cents)
FY21
2
Outlook
Whilst we have experienced some disruption and variability to
sales as a result of the various state based COVID restrictions,
we have continued to see heightened customer demand and
strong sales growth rates over a two-year period.
In view of the ongoing uncertainty arising from Covid-19, we
do not currently consider it appropriate to provide FY22 sales
and earnings guidance.
The health, safety and wellbeing of our team members,
customers, business partners and the wider community will
remain our highest priority.
While the retail environment remains uncertain, we have
continued to demonstrate our ability to adapt, respond and
thrive in the face of changing circumstances. The combination
of our passionate and knowledgeable team members, our
multichannel offer, and our ongoing investment in our supply
chain gives us confidence in the outlook for the business.
We look forward to another successful year in FY22.
Stephen Goddard
Terry Smart
Chairman
Group Chief Executive Officer
30 August 2021
3
Annual Report
for the fi nancial year ended 30 June 2021
Governance statement
Directors' report
Operating and fi nancial review
Remuneration report
Auditor's independence declaration
Independent auditor’s report
Directors' declaration
Statement of profi t or loss
Statement of profi t or loss and other comprehensive income
Balance sheet
Statement of changes in equity
Statement of cash fl ows
Notes to the fi nancial statements
Additional securities exchange information
Page
5
14
19
31
55
56
60
61
62
63
64
65
66
98
4
JB Hi-Fi Limited ABN 80 093 220 136
GOVERNANCE STATEMENT
JB Hi-Fi Limited (“the Company” or “JB Hi-Fi”) recognises the importance of Governance matters and the Board continually reviews
and monitors developments in corporate governance which are relevant to the Group (being the consolidated entity consisting of
the Company and the entities it controls). The Company’s Governance Statement is set out below. The Company also recognises
the importance of environmental and social matters to its shareholders, suppliers and customers and has released its 2021
Sustainability Report to the ASX at the same time as this Report.
CORPORATE GOVERNANCE STATEMENT
The directors and management of the Group are committed to ensuring that the Group’s business is conducted ethically and in
accordance with high standards of corporate governance.
The Board believes that:
•
the Group’s policies and practices comply in all material respects with the 4th edition of the ASX Corporate Governance
Council Principles and Recommendations (the “ASX Recommendations”); and
•
during the 2021 fi nancial year, the Company has been compliant with the spirit of the principles contained in the ASX
Recommendations.
This Corporate Governance Statement has been approved by the Board and is effective as at 16 August 2021.
THE BOARD
Role
The primary role of the Board is to protect and enhance long-term sustainable shareholder value. The Board is accountable to
shareholders for the performance of the Company and it directs and monitors the business and affairs of the Group on behalf of
shareholders.
The Board’s responsibilities include: overseeing the business and affairs of the Group and demonstrating leadership of the Group;
defi ning the Group’s purpose and approving the Group’s statement of values and code of conduct so as to underpin the desired
culture within the Group and overseeing management’s implementation of these values; setting (in consultation with management)
the strategic and fi nancial objectives of the Group and overseeing management’s implementation of these objectives; approving
the appointment and replacement of senior executives including the Group CEO; monitoring the performance of management
and, where required, challenging management and holding it to account; approving the adoption of the Group’s major corporate
governance policies; ensuring that the Group has in place an appropriate risk management framework (for both fi nancial and
non-fi nancial risk); overseeing the reliability and integrity of the Group’s accounting, fi nancial reporting and fi nancial management
and disclosure practices and systems; overseeing the Group’s process for making disclosure to the market; approving the Group’s
remuneration framework and satisfying itself that the Group’s remuneration policies are aligned with the Group’s values, strategic
objectives and risk appetite; and the establishment of a formal and transparent procedure for the selection, appointment and review
of directors.
The Group Chief Executive Offi cer, who is accountable to the Board, is responsible for managing, directing and promoting the
profi table operation and development of the Group.
A copy of the Board Charter can be found on the Company’s investor website at https://investors.jbhifi .com.au via the “Investors”
and “Corporate Governance” sections.
Composition of the Board / Selection and appointment of directors
Details of each of the Directors are set out on pages 14 and 15 of this Report.
The Board seeks to ensure that the combination of its members provides an appropriate range of experience, skills, diversity,
knowledge and perspective to enable it to carry out its obligations and responsibilities.
The Board believes that having a range of different skills, backgrounds, experience and gender ensures a diversity of viewpoints
which facilitate effective governance and decision making.
5
GOVERNANCE STATEMENT (continued)
The Company believes that skills and experience in the areas listed below are desirable for the Board to perform its role effectively.
The Board considers that its current composition possesses an effective blend of these skills and experience which enables it and
its Committees to effectively govern the business, operate effectively and add value in the context of the Company’s strategy.
•
•
Executive/Management
Retail, both physical and online/digital
• Operational Management
•
•
Finance
Property
• Online/Digital
• Mergers & Acquisitions
• Governance
• Other Listed Board Experience
•
•
Executive Remuneration
Risk Management
The Company maintains a majority of non-executive directors on its Board. The Board currently comprises seven directors, being six
non-executive directors, including the Chairman, and one executive director, being the Group Chief Executive Offi cer. The Company
has written agreements with each director setting out the terms of their appointment. Apart from the Group Chief Executive Offi cer,
directors are subject to shareholder re-election by rotation at least every three years. The Company provides shareholders with all
material information in its possession relevant to the election or re-election of a director.
A copy of the Company’s Board Composition & Succession Policy, which includes the procedure for the selection and appointment
of directors, can be found on the Company’s investor website at https://investors.jbhifi .com.au via the “Investors” and “Corporate
Governance” sections. The Board will undertake appropriate checks before appointing any person, or putting forward to
shareholders a candidate for election, as a director.
Details of the directors as at the date of this Report, including further information about their experience, expertise and term of
offi ce, are set out in the Directors’ Report.
Independence
The Company considers that each of its directors (including the Chairman) is independent with the exception of Richard Murray, the
Group Chief Executive Offi cer.
The Board regards directors as independent directors if they: do not have a material relationship with the Company other than solely
as a result of being a director; are independent of management; and do not have any business or other relationship that
could compromise the independent exercise of their judgement and their ability to act in the best interests of the Company.
The independence of each director is considered on a case-by-case basis.
Richard Uechtritz was Chief Executive Offi cer of the Company between July 2000 and May 2010 and a consultant to the Company
from May 2010 to November 2013. Given the passage of time, the Board is of the opinion that Richard is an independent
director, and that neither these previous roles, nor his relationship with current management, compromises his ability to exercise
independent, unfettered judgement or act in the best interests of the Company.
Beth Laughton is a non-executive director and chair of the audit, compliance & risk management committee of GPT Funds
Management Limited (“GPTFM”), the responsible entity for the GPT Wholesale Shopping Centre Fund. Mark Powell is a
non-executive director and chair of the ESG committee of Kiwi Property Group Limited. The Board notes that both the GPT
Wholesale Shopping Centre Fund and Kiwi Property Group Limited have ownership interests in shopping centres in which the
Group currently leases stores. The Board is of the opinion that Beth and Mark are independent directors on the basis that individual
leasing arrangements within the Group, GPTFM and Kiwi Property Group Limited are generally determined at a managerial level
rather than Board level.
In addition, the Company’s internal protocols provide that Beth and Mark would be excluded from any discussion and decision making
where any confl ict of interest arises between their roles as a director of the Company and of GPTFM/Kiwi Property Group Limited.
Geoff Roberts was previously a partner at Deloitte until 2015. During the period that Geoff was a partner, Deloitte were the
appointed auditors of the Group, however at no stage during the term of his partnership was Geoff involved in the provision of audit
or other services to the Group. The Board is therefore of the opinion that Geoff is an independent director.
6
Confl ict of interest
Directors must keep the Board advised, on an ongoing basis, of any interests that could potentially confl ict with those of the
Company. Directors are required to promptly disclose to the Board interests in contracts, other directorships or offi ces held, possible
related party transactions and any other material personal interests in a matter relating to the Company’s affairs. If a material confl ict
of interest arises, the director concerned does not receive the relevant Board papers, is not present at the meeting whilst the item is
considered and takes no part in decision making.
Board meetings
The Board meets regularly, dependent on business requirements. Prior to any meeting, the directors receive all necessary Board
papers. As well as holding regular Board meetings, the Board also meets to comprehensively review business plans and the
strategy of the Group.
Access to information and independent advice
Each director has the right of access to all relevant Company information and to the Group’s executives. Subject to prior
consultation with the Chairman, each director may seek independent professional advice at the Company’s expense.
Professional development of directors
The Company recognises the need for its directors to develop and maintain the skills and knowledge needed to perform their roles
as directors effectively. The Company periodically reviews the need for directors to undertake professional development to maintain
the skills and knowledge necessary to perform their roles. This includes, where necessary, management (including the Group Chief
Financial Offi cer and the Company Secretary & General Counsel) and external advisors providing the directors with briefi ngs and
advice on developments in both the law and current practice in areas relevant to the Company and their role as directors (including,
for example, corporate governance, accounting and remuneration). Individual directors also take advantage of professional
development opportunities provided by third parties such as the Australian Institute of Company Directors and major accounting
and legal fi rms.
The Company also has an induction program for new directors.
BOARD COMMITTEES
Details of the Committees established by the Board are set out below.
Audit and Risk Management Committee
The Board has an Audit and Risk Management Committee.
The Audit and Risk Management Committee is charged primarily with assisting the Board in its:
•
oversight of the reliability, adequacy and integrity of the Group’s fi nancial management, fi nancial reporting and disclosure, its
related non-fi nancial reporting and disclosure practices, and its fi nancial reporting framework;
•
•
oversight of the independence, performance, appointment and removal of the external auditor;
review of the Group’s policies on risk oversight and management, and in discharging its responsibility to satisfy itself that
a sound system of risk management and internal control has been implemented to manage the material risks affecting the
Group’s businesses, including compliance with all applicable laws; and
•
review of the Group’s plans, actions and reporting in relation to sustainability.
A copy of the Audit and Risk Management Committee Charter can be found on the Company’s investor website at
https://investors.jbhifi .com.au via the “Investors” and “Corporate Governance” sections.
During the 2021 fi nancial year, the Audit and Risk Management Committee comprised the following non-executive directors, all of
whom were independent and have relevant fi nancial, commercial and risk management experience, including an independent chair
who is not the Chair of the Board:
•
Beth Laughton: Chair of Committee;
• Mark Powell;
• Melanie Wilson; and
• Geoff Roberts: member of Committee since 16 January 2021.
7
GOVERNANCE STATEMENT (continued)
Details of the background and experience of each of these non-executive directors are included in the Directors’ Report.
The Audit and Risk Management Committee meets regularly. Details of the meetings held and members’ attendance during
the 2021 fi nancial year are listed in the Directors’ Report. Directors who are not members of the Audit and Risk Management
Committee may attend any Audit and Risk Management Committee meeting.
Remuneration and Nominations Committee
The Board has a Remuneration and Nominations Committee.
The Remuneration and Nominations Committee is charged primarily with:
•
reviewing and making recommendations to the Board regarding the framework, structure and quantum of remuneration of
executive offi cers and non-executive directors; and
•
reviewing and making recommendations to the Board regarding Board succession planning, the appointment and
re-appointment of non-executive directors, the induction and continuing professional development of non-executive directors,
the process for evaluating the performance of the board, its committees and directors, and the succession of the Group CEO
and other senior executives.
A copy of the Remuneration and Nominations Committee Charter can be found on the Company’s investor website at
https://investors.jbhifi .com.au via the “Investors” and “Corporate Governance” sections.
During the 2021 fi nancial year, the Remuneration and Nominations Committee comprised the following directors, each of whom are
considered by the Company to be independent:
•
•
Stephen Goddard: Chair of Committee;
Beth Laughton; and
• Mark Powell.
The Remuneration and Nominations Committee meets as required. Details of the meetings held and members’ attendance during
the 2021 fi nancial year are listed in the Directors’ Report. Directors who are not members of the Remuneration and Nominations
Committee may attend a Committee meeting at the invitation of the Chairman when considered appropriate.
COMPANY SECRETARY
The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of
the Board.
CODE OF CONDUCT
The Group acknowledges the need for directors, executives and employees to observe the highest ethical standards of corporate
behaviour. The Group has adopted a Code of Conduct to provide directors, executives and employees with guidance on what the
Group deems to be acceptable behaviour. The Group will ensure that the Board and/or Audit and Risk Management Committee is
informed of any material incidents in breach of this Code. No such incidents have been reported in FY2021.
A copy of the Code of Conduct can be found on the Company’s investor website at https://investors.jbhifi .com.au via the
“Investors” and “Corporate Governance” sections.
WHISTLEBLOWER POLICY AND ANTI-BRIBERY, CORRUPTION & FRAUD POLICY
The Group has a Whistleblower Policy and an Anti-Bribery, Corruption & Fraud Policy. The Group will ensure that the Board and/or
Audit and Risk Management Committee is informed of any material incidents reported under or in breach of these policies. No such
incidents have been reported in FY2021.
Copies of these policies are available on the Company’s investor website at https://investors.jbhifi .com.au via the “Investors” and
“Corporate Governance” sections.
DIVERSITY
The Group recognises the importance of diversity and values the competitive advantage that is gained from a diverse range of skills,
backgrounds, experience and gender at all levels of the organisation. The Group has a Diversity Policy which is available on the
Company’s investor website at https://investors.jbhifi .com.au via the “Investors” and “Corporate Governance” sections.
8
The Group has a Group Diversity Strategy for both the JB Hi-Fi and TGG businesses. This strategy is focussed on identifying and
growing internal talent, underpinned by common and meaningful competency-based criteria. The Group Diversity Strategy and
associated program of work is fundamental to enabling diversity by supporting women’s progression to leadership roles, and is
further supported by work to identify and remove potential barriers to this progression.
Details of the Group’s diversity initiatives, measurable objectives and performance are set out in the Group’s Sustainability Report which
can be found on the Company’s investor website at http://investors.jbhifi .com.au in the “Corporate Social Responsibility” section.
SAFETY
The Group is committed to providing a healthy and safe work environment for all its team members, contractors, customers and
visitors. Details of the Group’s health and safety policies and performance are set out in the Group’s Sustainability Report which can
be found on the Company’s investor website at http://investors.jbhifi .com.au in the “Corporate Social Responsibility” section.
SHAREHOLDINGS OF DIRECTORS AND EMPLOYEES
Directors’ current shareholdings are detailed in the Directors’ Report and are updated by notifi cation to the ASX as required.
The Board has approved and adopted a Securities Trading Policy setting out the rules and procedures applying to directors,
offi cers and employees dealing in securities.
All Key Management Personnel (being all Non-Executive Directors and the Executive KMP listed on page 33), are subject to the
Company’s Minimum Shareholding Policies which require:
• Non-Executive Directors to hold the equivalent of 1.0 times base Board fees in shares;
•
•
the Group CEO to hold the equivalent of 1.5 times fi xed pay in shares; and
other Executive KMP to hold the equivalent of 1.0 times fi xed pay in shares.
This level of shareholding is required to be built over 5 years from the introduction of the policy in FY2019 (or appointment, if later).
Subject to certain specifi c and limited exceptions, directors and key employees may only trade in the Company’s shares, and
any other securities of the Company, during designated Trading Windows. These four-week Trading Windows follow the release
of the Company’s Final Results (August/September), Interim Results (February/March) and the Annual General Meeting
(October/November). Directors and Group executives are required to obtain the Chairman’s consent in advance of any such trading
and any transaction conducted by directors in shares of the Company is notifi ed to the ASX.
A copy of the Securities Trading Policy can be found on the Company’s investor website at https://investors.jbhifi .com.au via the
“Investors” and “Corporate Governance” sections.
INTEGRITY OF REPORTING
The Company has controls designed to ensure the integrity of its fi nancial reporting and that the Company complies with all
regulatory requirements relevant to this reporting.
In accordance with the Corporations Act and the ASX Recommendations, the Group Chief Executive Offi cer and Group Chief
Financial Offi cer have stated in writing to the Board that, in their opinion:
(a)
the fi nancial records of the Group (consisting of the Company and the entities it controlled during the fi nancial year) for the
fi nancial year ended 30 June 2021 have been properly maintained in accordance with section 286 of the Corporations Act;
(b)
the fi nancial statements for the fi nancial year and the notes required by the accounting standards give a true and fair view of
the consolidated entity’s fi nancial position and performance, and comply with the accounting standards;
(c)
the statements in (a) and (b) above are founded on a sound system of risk management and internal control which is operating
effectively; and
(d)
subsequent to 30 June 2021, no changes or other matters have arisen that would have a material effect on the operation of
the risk management and internal control systems of the Group.
The Company’s full year fi nancial statements and remuneration report are subject to an annual audit by an independent, professional
auditor who also reviews the Company’s half-yearly fi nancial statements. The Audit and Risk Management Committee oversees this
process on behalf of the Board. Deloitte has been the Company’s external auditor since 2002. The audit engagement partner is
rotated every fi ve years.
9
GOVERNANCE STATEMENT (continued)
Information on procedures for the selection and appointment of the external auditor and for the rotation of external audit
engagement partners can be found in the Charter of the Audit and Risk Management Committee on the Company’s investor
website at https://investors.jbhifi .com.au via the “Investors” and “Corporate Governance” sections.
The Company also has a process in place to verify the integrity of any periodic corporate report that it releases to the market that
is not audited or reviewed by the independent auditor. Such reports are written by the relevant members of the Company’s senior
management team and are then independently reviewed by appropriate executives to ensure the information is accurate and stated
assumptions or opinions are reasonable. Data is verifi ed by reference to a reliable source of information and information is checked
to ensure that it is consistent with any audited reports where relevant. A ‘third line’ check is then completed by an independent
internal review team. Finally, the reports are reviewed in detail by the Company’s Audit and Risk Management Committee and then
by the full Board which must formally authorise the release of any such report to the market.
CONTINUOUS DISCLOSURE
The Company seeks to provide relevant and timely information to its shareholders and is committed to fulfi lling its continuous
disclosure obligations.
The Board has approved a Continuous Disclosure Policy to ensure that the procedures for identifying and disclosing material price
sensitive information in accordance with the Corporations Act and ASX Listing Rules are clearly articulated. This policy sets out the
obligations of employees in respect of such information. The Group Chief Executive Offi cer, in consultation with the Chairman where
appropriate, is responsible for communication with the ASX.
A copy of the Continuous Disclosure Policy can be found on the Company’s investor website at https://investors.jbhifi .com.au via
the “Investors” and “Corporate Governance” sections.
The Company ensures that the Board receives copies of all material market announcements before, or promptly after, they have
been made.
The Company releases a copy of any substantive investor or analyst presentation to the ASX ahead of the presentation.
SHAREHOLDER COMMUNICATIONS
The Company’s investor website at https://investors.jbhifi .com.au contains an overview of the Group’s businesses and their history
and the following information for shareholders:
•
•
•
•
•
•
all market announcements and related documents, which are posted immediately after release to the ASX;
details relating to the Company’s directors and other key management personnel;
Board and Board Committee charters and other corporate governance documents;
a calendar of forthcoming key dates such as the date of results releases and the Company’s AGM;
a summary of the Company’s dividend policy and its dividend payment history; and
details of how investors can contact the Company and its share registry.
Shareholders can elect to receive communications from, and send communications to, the Company’s share registry electronically.
The registry also gives shareholders the opportunity to manage their account details and holdings electronically. Shareholders are
also able to send communications to the Company and receive responses to these communications electronically.
A copy of the Company’s Shareholder Communication Policy can be found on the Company’s investor website at
https://investors.jbhifi .com.au via the “Investors” and “Corporate Governance” sections.
The Company has an investor relations program which involves regular meetings with signifi cant current and potential investors, and
with analysts and the fi nancial media.
The Company holds an Annual General Meeting to which all shareholders are invited. In 2020, the Annual General Meeting was held
“virtually” to take account of restrictions arising from the Covid-19 pandemic. All resolutions at Annual General Meetings are decided
by a poll rather than a show of hands. Shareholders who are unable to attend are able to appoint a proxy to attend and vote or,
alternatively, can vote electronically in advance of the Meeting. The Company ensures that the external auditor attends its Annual
General Meetings and is available to answer shareholder questions about the conduct of the audit and the preparation and content
of the auditor’s report.
10
RISK IDENTIFICATION AND MANAGEMENT
The Group’s policy is to consider the balance of risk and reward, as far as practicable, in order to optimise the returns gained from its
business activities, and to meet the expectations of its shareholders, other key stakeholders and the broader community.
The Board has delegated to the Audit and Risk Management Committee responsibility for overseeing the implementation of policies
and procedures aimed at ensuring that the Group conducts its operations in a manner that adequately manages risk to protect its
people, the environment and the Group’s assets and reputation. The Group has an effective risk management framework in line with
ISO31000 which enables management to identify and manage risk appropriately. The Committee regularly reviews and revises this
framework and the Board reviews the framework at least annually to satisfy itself that it continues to be sound and that the Group is
operating with due regard to the risk appetite set by the Board. The risk management framework was last reviewed by the Board in
November 2020.
Risk identifi cation and management is also a key focus of the executive and management teams.
The Group does not have a formal internal audit function. Instead, risk identifi cation and management is managed on a day-to-day
basis by a dedicated risk management and business assurance team. The risk management and business assurance team evaluate
and look to continually improve the effectiveness of the Group’s governance, risk management and internal control processes.
A copy of the Group’s Risk Management Policy can be found on the Company’s investor website at https://investors.jbhifi .com.au
via the “Investors” and “Corporate Governance” sections.
SUSTAINABILITY AND ENVIRONMENTAL AND SOCIAL RISKS
The Group recognises the material environmental and social risks that are relevant to its activities and takes action to manage those
risks. A Group Sustainability Plan has been established to provide a foundational framework to integrate sustainability and the
management of these risks into the operations and strategic priorities of the businesses. Governance and oversight of the approach
and progress is provided by the Audit and Risk Management Committee. Further detail about these environmental and social risks
is set out in the Operating and Financial Review.
The Company has released its 2021 Sustainability Report to the ASX and this Report can be found on the Company’s investor
website at http://investors.jbhifi .com.au in the “Corporate Social Responsibility” section. This Report provides disclosure around
the material sustainability-related issues for the Group’s businesses and how the Group plans to prioritise and manage these
going forward.
OUR PURPOSE & VALUES
The Group’s purpose is to connect customers with the products and services that make life better.
The Group aims to do this through its two iconic and trusted retail brands, JB Hi-Fi (a leading retailer of technology and consumer
electronics) and The Good Guys (a leading retailer of home appliances and consumer electronics).
Set out below are the Values which the Group and all of its team members are guided by in their activities.
Passion – We love what we do. We:
•
•
•
are passionate about our people, our customers and our products
show enthusiasm and take pride in our work
strive to exceed our customers’ expectations and create amazing experiences
Respect and Empower – We value and respect everyone. We:
•
•
•
empower, support and trust our people
treat everyone fairly and without discrimination
act with humility, listen openly, and value others’ opinions
Integrity – We act honestly and do the right thing. We:
•
•
•
accept responsibility for our actions
act lawfully, ethically and responsibly
call out things that aren’t right
11
GOVERNANCE STATEMENT (continued)
Innovative – We embrace change and adapt quickly. We:
•
•
•
never stand still and constantly evolve
are entrepreneurial and look for opportunities
are not afraid to fail and we learn from our mistakes
Driven – We are focused and deliberate. We:
•
are results oriented and deliver on the things we commit to
• make decisions based on facts and experience
•
focus on productivity and effi ciency
Social Conscience – We care about our people, our community and our environment. We:
•
•
•
give back to the communities where we live and work
ensure our business is safe, inclusive and welcoming for everyone
strive to minimise our impact on the environment
Authentic – We are diverse and embrace individuality. We:
•
•
•
are informal and don’t take ourselves too seriously
are energetic and enthusiastic
have fun, enjoy ourselves and celebrate success
BOARD AND EXECUTIVE PERFORMANCE
JB Hi-Fi monitors and evaluates the performance of its Board, Board Committees, individual directors and executives in order to
fairly review and continuously improve Board and management effectiveness.
In June/July of each year, each director completes a written board review and assessment document, and subsequent one-on-one
interviews then take place between the Chair and each director which cover:
•
•
•
review of Board performance as a whole;
review of the individual director’s performance; and
review of the Chair’s performance.
The Chair reports back to the Board on the discussions and the Board considers any issues as necessary.
Directors may also discuss the Chair’s performance with the Chair of the Company’s Audit and Risk Management Committee, who
will report back to the Board if necessary.
The Chair provides informal feedback to directors throughout the year as necessary.
Each Board Committee reviews its performance and reports the results of the review to the Board. Where necessary,
recommendations will be made to the Board for improving the effectiveness of the relevant Committee.
Review of the Group CEO’s performance is evaluated by the Chair, with ultimate oversight by the Board. This involves an
assessment against both fi nancial and non-fi nancial performance measures. All other Group executives are evaluated by the
Group CEO including: (i) assessment against both fi nancial and non-fi nancial performance measures; and (ii) a one-on-one meeting
between the Group CEO and executive to discuss the executive’s performance. The Group CEO provides a summary of the
evaluation of each executive to the Board and the Remuneration and Nominations Committee.
Evaluation of the performance of the Board, Board Committees, individual directors and Group executives has been conducted in
respect of the 2021 fi nancial year.
12
DIRECTORS’ FEES AND EXECUTIVE REMUNERATION
Directors’ fees
The details of remuneration paid to each non-executive director during the fi nancial year and the principles behind the setting of
such remuneration are included in the Remuneration Report.
Executive KMP remuneration
The amount of remuneration, both monetary and non-monetary, for the executives who had authority and responsibility for
planning, directing and controlling the activities of the Group during the fi nancial year, and the principles behind the setting of such
remuneration, are included in the Remuneration Report.
13
DIRECTORS’ REPORT
The directors of JB Hi-Fi Limited (the “Company”) submit herewith the annual fi nancial report of the consolidated entity consisting
of the Company and the entities it controlled (the “Group”) for the fi nancial year ended 30 June 2021. In order to comply with the
provisions of the Corporations Act 2001, the Directors report as follows:
The names and particulars of the directors of the Company during or since the end of the fi nancial year are:
Name
Mr Stephen Goddard
Non-Executive Director
MSc. BSc (Hons)
Ms Beth Laughton
Non-Executive Director
B.Ec, FAICD, FCA
Particulars
Stephen was appointed to the Board in August 2016 and became Chairman on 1 July 2020.
Stephen is also Chair of the Company’s Remuneration and Nominations Committee and was a
member of the Audit and Risk Management Committee until 30 June 2020. Stephen has more
than 30 years’ retail experience having held senior executive positions with some of Australia’s
best known retailers. These include Finance Director and Operations Director for David Jones,
founding Managing Director of Offi ceworks, and various senior management roles with Myer.
Stephen is currently a non-executive director and Chair of the Audit and Risk Management
Committees of GWA Group Limited, Accent Group Limited and Nick Scali Limited.
Beth was appointed to the Board in May 2011, became Chair of the Audit and Risk
Management Committee in June 2012, and is also a member of the Company’s Remuneration
and Nominations Committee. After qualifying as a Chartered Accountant, Beth spent over
25 years in corporate fi nance, providing mergers and acquisition advice and arranging equity
funding for companies in a range of industries including specialty retail. For 12 years her
primary focus was on information technology, telecommunications and entertainment.
She is also a member of the board of GPT Funds Management Limited and Chair of its Audit,
Compliance & Risk Management Committee, and a non-executive director of Shopping
Centres Australasia Property Group and Chair of its Audit, Risk Management and
Compliance Committee. Beth was previously a member of the Defence SA Advisory Board,
a non-executive director of Port Adelaide Maritime Corporation, a non-executive director
and chair of the Audit Committee of both Sydney Ferries and CRC Care Pty Ltd, and a
non-executive director of the ASX listed Australand Property Group companies.
Mr Mark Powell
Non-Executive Director
BSc (Hons), MSc, MBA (Distinction),
BApp. Theol, MA (Hons)
Mark was appointed to the Board in March 2017 and is a member of the Audit and Risk
Management Committee and the Remuneration and Nominations Committee. Mark has over
25 years’ executive experience in retail, logistics and wholesale distribution in the UK, Spain,
North America, Australia and New Zealand. This includes being UK Logistics Operations
Director for Tesco Plc, running Wal-Mart Canada’s logistics operations and CEO of Warehouse
Stationery in NZ. Mark also spent fi ve years as Group CEO for The Warehouse Group, a
NSX listed retail group which includes Noel Leeming, NZ’s largest technology and appliances
retailer. He was also an advisor to the board of The Good Guys for 18 months prior to its
acquisition by JB Hi-Fi. Mark is currently a non-executive director and Chair of the ESG
Committee of NZX listed Kiwi Property Group Limited, and a non-executive director of Bapcor
Limited and Chair of its Nominations, Remuneration and ESG Committee. He is also involved
on a voluntary basis on the boards of several not-for-profi t organisations.
Mr Geoff Roberts
Geoff was appointed to the Board in January 2021. He recently retired as Group Chief
Non-Executive Director
Financial Offi cer of Seek Limited, having joined them in 2015. He has over 35 years’ fi nance
Exec. MBA, B.Comm, FCA, FAICD
experience, including as Group CFO of AXA Asia Pacifi c Holdings Limited for seven years.
Geoff is a Committee (Board) member and Chair of the Finance and Audit Committee of
the Melbourne Cricket Club Committee, and was formerly a director and Chair of the Audit
Committee of AMP Limited.
Geoff was previously a partner at Deloitte and Managing Partner, Victoria from 2011 until 2015.
During the period that Geoff was a partner, Deloitte were the appointed auditors of the Group,
however at no stage during the term of his partnership was Geoff involved in the provision of
audit or other services to the Group.
Mr Richard Uechtritz
Non-Executive Director
Richard has over 30 years’ experience in retailing. He was co-founder of Australia’s two
leading photo chains, Rabbit Photo and Smiths Kodak Express, and was a director of Kodak
(Australasia) Pty Ltd. Richard led the management buy-in of JB Hi-Fi in July 2000 and was
CEO and Managing Director until his resignation from these positions in May 2010. Richard
re-joined the Board in April 2011 as a non-executive director. He is also a non-executive
director of Seven Group Holdings Limited.
14
Ms Melanie Wilson
Non-Executive Director
MBA, B.Comm (Hons), GAICD
Melanie was appointed to the Board in June 2020 and is a member of the Audit and Risk
Management Committee. Melanie gained extensive experience in senior management roles
across global retail brands, including Woolworths (Head of Online, Big W and Manager,
Strategy Group), Limited Brands (Victoria’s Secret and Bath & Bodyworks, New York), and
Diva/Lovisa. Her retail experience includes online/e-commerce, store operations, merchandise
systems, marketing, brand development and logistics/fulfi lment. Melanie has also held roles
with Bain & Company (Boston) and Goldman Sachs (Hong Kong/Sydney) and completed
an MBA at Harvard Business School. Melanie is currently a non-executive director of Baby
Bunting Group Ltd and Chair of its Remuneration & Nominations Committee, and a
non-executive director of iSelect Limited and Chair of its Audit & Risk Committee. She is
also a non-executive director of EML Payments Ltd and Property Guru Group (Singapore).
Melanie was previously a non-executive director of Shaver Shop Group Limited.
Mr Richard Murray
Richard became Chief Executive Offi cer in July 2014 having been appointed to the Board in
Group Chief Executive Offi cer and
June 2012. Richard has 25 years’ experience in retail and fi nance. He joined JB Hi-Fi as CFO
Executive Director
in 2003 and took the business through the IPO process. Prior to this Richard worked with
B.Comm, Grad.Dip. Applied
Deloitte for 10 years. He is currently Chairman of Workplace Giving Australia’s Leadership
Finance & Investment, FCA
Group, which aims to encourage Australian businesses to set up workplace giving programs.
As detailed below, Richard will leave Company and cease to be a director at the end of
August 2021.
Each of the aforementioned directors held offi ce for the whole fi nancial year and since the end of the fi nancial year, other than
Geoff Roberts as set out above.
Board changes
As announced on 28 April 2021, Richard Murray will leave the Company at the end of August 2021 and Terry Smart (currently
Managing Director of The Good Guys business) has been appointed to succeed Richard as Group CEO. Both Terry and Group
CFO, Nick Wells, will be appointed to the Board as Executive Directors upon Richard’s departure. Both Terry and Nick will be
considered to be non-independent directors. In accordance with the Company’s Constitution, Nick will be subject to shareholder
re-election by rotation at least every three years but Terry, as the Group CEO, will not.
Company Secretary
Particulars
Mr Doug Smith
BA (Hons). Admitted to legal
practice in Victoria & in England
& Wales.
Doug was appointed Company Secretary in June 2012. Doug joined JB Hi-Fi as General
Counsel in September 2010 and has over 25 years’ legal and company secretarial experience
in-house and in private practice.
Directorships of other listed companies
Directorships of other listed companies held by directors in the 3 years immediately before the end of the fi nancial year, and since
the end of the fi nancial year, are as follows:
Name
Company
Stephen Goddard
GWA Group Limited
Accent Group Limited
Nick Scali Limited
Period of Directorship
Since October 2016
Since November 2017
Since March 2018
Beth Laughton
Shopping Centres Australasia Property Group
Since December 2018
Mark Powell
Kiwi Property Group Limited (NZX)
Bapcor Limited
Geoff Roberts
AMP Limited
Since October 2017
Since September 2020
July 2016 – May 2019
Richard Uechtritz
Seven Group Holdings Limited
Since June 2010
Melanie Wilson
Baby Bunting Group Ltd
iSelect Limited
EML Payments Ltd
Shaver Shop Group Limited
Since February 2016
Since March 2016
Since February 2018
June 2016 – May 2020
15
DIRECTORS’ REPORT (continued)
Principal activity
The Group’s principal activity in the course of the fi nancial year was the retailing of home consumer products. The Group offers
a wide range of leading brands with particular focus on consumer electronics, software (including music, games and movies),
whitegoods and appliances. There have been no signifi cant changes in the nature of the principal activity of the Group during the
fi nancial year.
Operating and Financial Review
The Operating and Financial Review, which forms part of this Directors’ Report, is presented separately on pages 19 to 30.
Changes in state of affairs
During the fi nancial year there was no signifi cant change in the state of affairs of the Group.
Subsequent events
A number of JB Hi-Fi and The Good Guys stores have been temporarily closed to customers at various times since 1 July 2021 as a
result of Covid-19 restrictions. The majority of these stores have continued to fulfi l online and Click- and-Collect orders whilst closed
to customers.
There have been no other matters or circumstances occurring subsequent to the end of the fi nancial year that have signifi cantly
affected, or may signifi cantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group
in future fi nancial years.
Future developments
Information regarding likely developments in the operations of the Group in future fi nancial years is set out in the Operating and
Financial Review and elsewhere in the Annual Report.
Environmental regulations
The Group’s operations are not subject to any particular and signifi cant environmental regulation. The Group’s Sustainability Report
provides disclosure around the material sustainability-related issues for the Group’s businesses. The Group has not incurred any
signifi cant liabilities under any environmental legislation during the fi nancial year.
Dividends
In respect of the fi nancial year ended 30 June 2020, as detailed in the Directors’ Report for that fi nancial year, an interim dividend of
99.0 cents per share and a fi nal dividend of 90.0 cents per share, both franked to 100% at the 30% corporate income tax rate, were
paid to the holders of fully paid ordinary shares on 6 March 2020 and 11 September 2020 respectively.
In respect of the fi nancial year ended 30 June 2021, an interim dividend of 180.0 cents per share was paid to the holders of
fully paid ordinary shares on 12 March 2021 and the directors have declared the payment of a fi nal dividend of 107.0 cents per
share to be paid to the holders of fully paid ordinary shares on 10 September 2021. Both dividends are franked to 100% at the
30% corporate income tax rate. The total dividend for the fi nancial year of 287.0 cents per share represents a payout ratio of
approximately 65% of net profi t after tax of $506.1 million.
Indemnifi cation of offi cers and auditors
The Company indemnifi es current and former directors and offi cers for any loss arising from any claim by reason of any wrongful
act committed by them in their capacity as a director or offi cer (subject to certain exclusions as required by law). During the fi nancial
year, the Company has paid premiums in respect of contracts insuring the directors and offi cers against any liability of this nature.
In accordance with normal commercial practices, under the terms of the insurance contracts the nature of the liabilities insured
against, and the amount of the premiums paid, are confi dential. The Company has not otherwise, during or since the end of the
fi nancial year, except to the extent permitted by law, indemnifi ed or agreed to indemnify an offi cer or auditor of the Company or of
any related body corporate against a liability incurred as such by an offi cer or auditor.
16
Directors’ meetings
The following table sets out the number of directors’ meetings (including meetings of Committees of directors) held during the 2021
fi nancial year and the number of meetings attended by the members of the Board or the relevant Committee. During the fi nancial
year, 21 Board meetings, 7 Remuneration and Nominations Committee meetings and 6 Audit and Risk Management Committee
meetings were held.
Directors
S. Goddard
B. Laughton
M. Powell
G. Roberts (aptd 16/1/21)
R. Uechtritz
M. Wilson
R. Murray
Board of Directors
Remuneration and Nominations
Committee
Audit and Risk Management
Committee
Held
Attended
Held
Attended
Held
Attended
21
21
21
11
21
21
17*
21
21
21
11
21
21
17*
7
7
7
–
–
–
–
7
7
7
–
–
–
–
–
6
6
2
–
6
–
–
6
6
2
–
6
–
* Mr Murray was not invited to, and did not attend, Board meetings relating to his resignation as Group CEO.
Directors’ shareholdings
The following table sets out each director’s relevant interest in shares, debentures, and rights or options in shares or debentures of the
Company, or a related body corporate, as at the date of this Report.
Fully paid ordinary shares
Executive share options
Direct number
Indirect number
Total
Direct number
Indirect number
Total
4,500
5,804
4,000
–
4,816
–
136,498
–
–
–
–
–
1,500
2,304
4,500
5,804
4,000
–
4,816
1,500
–
–
–
–
–
–
138,802
46,705
–
–
–
–
–
–
–
–
–
–
–
–
–
46,705
Directors
S. Goddard
B. Laughton
M. Powell
G. Roberts (aptd 16/1/21)
R. Uechtritz
M. Wilson
R. Murray
Remuneration Report
The Remuneration Report, which forms part of this Directors’ Report, is presented separately on pages 31 to 54.
Proceedings on behalf of the Company
The directors are not aware of any persons applying for leave under s.237 of the Corporations Act 2001 to bring, or intervene in,
proceedings on behalf of the Company.
Non-audit services
Given the size and complexity of the Group, it can be in the interests of the Group to engage the services of its auditor to assist
in a range of related projects. The directors are aware of the issues relating to auditor independence and have in place policies
and procedures to address actual, potential and perceived confl icts in relation to the provision of non-audit related services by the
Company’s auditor.
In FY2021 the Group engaged its auditor to provide non-audit services in the form of taxation services for The Good Guys group
of companies relating to the period prior to the acquisition of those companies by the Group. The Group did not pay any fees to its
auditor for this work in FY2021 and does not anticipate paying any fees to its auditor for any further work, as such fees will be borne
by the previous owners of those companies. The directors are satisfi ed that the provision of these non-audit services during the year
by the auditor (or by another person or fi rm on the auditor’s behalf) is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001.
17
DIRECTORS’ REPORT (continued)
Based on advice received from the Audit and Risk Management Committee, the directors are of the opinion that these services as
disclosed in note 28 to the fi nancial statements do not compromise the auditor’s independence, for the following reasons:
•
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the
auditor; and
•
none of the services undermine the general principles relating to auditor independence as set out in the Code of Conduct
APES 110 Code of Ethics for Professional Accountants issued by the Australian Professional & Ethical Standards Board,
including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company,
acting as advocate for the Company or jointly sharing economic risks and rewards.
Auditor’s independence declaration
The auditor’s independence declaration is included on page 55 of the Annual Report.
Rounding off of amounts
The Company is a company of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 dated 24 March 2016, and in accordance with that Corporations Instrument, amounts in the Directors’ Report and
fi nancial report are rounded off to the nearest hundred thousand dollars, unless otherwise indicated.
Signed in accordance with a resolution of the directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the directors
Stephen Goddard
Chairman
16 August 2021
Richard Murray
Group Chief Executive Offi cer
18
OPERATING AND FINANCIAL REVIEW
OVERVIEW OF OPERATIONS
The Group includes two iconic retail brands:
•
JB Hi-Fi – a leading retailer of technology and consumer electronics with a strong position with a young tech-savvy
demographic; and
•
The Good Guys – a leading retailer of home appliances and consumer electronics with a strong position with home-making
families and Generation X demographics.
Both businesses aim to sell the best brands, providing a big range, at low prices with exceptional customer service provided by
passionate, knowledgeable team members.
The Group holds signifi cant market-share in many of its product categories and sells the following products:
•
•
•
consumer electronics and technology products including televisions, audio equipment, computers and cameras;
telecommunications products and services;
home appliances including whitegoods, cooking products, heating & cooling products, small appliances and kitchen
accessories; and
•
software (music, movies and games).
The Group also provides information technology and consulting services.
The Group has multi-channel sales capability with sales primarily from its branded retail store networks (197 JB Hi-Fi/JB Hi-Fi Home
stores in Australia, 14 JB Hi-Fi stores in New Zealand and 105 The Good Guys stores in Australia as at 30 June 2021), online
operations (JB Hi-Fi and The Good Guys websites) and over the phone. Sales are also generated from the Group’s commercial and
education businesses.
The Group Model is underpinned by 5 unique competitive advantages:
Scale:
•
•
•
#1 player in the Australian market with the opportunity for further consolidation;
relevance to global suppliers; and
investments can be spread across a large base and drive effi ciencies.
Low Cost Operating Model:
•
The Group has a low cost of doing business relative to retail peers driven by:
•
•
productive fl oor space with high sales per square metre; and
a continued focus on productivity and minimising unnecessary expenditure.
•
This low cost of doing business is an enabler for maintaining low prices (gross margins of ~22%) and responding to
market prices.
Quality Store Locations:
•
JB Hi-Fi stores are in high foot traffi c areas and convenient locations - major shopping centres, CBD locations, homemaker
centres and airports; and
•
The Good Guys stores are in easily accessible destination locations – leading homemaker centres and standalone stores.
Supplier Partnerships:
•
•
•
•
strong partnerships with all major suppliers, both locally and globally;
store locations and high traffi c websites provide suppliers with high visibility for their products;
knowledgeable team members assist and inform the customer of product benefi ts; and
dual brand retail approach provides ranging and merchandising optionality and the ability to execute strategic initiatives
at scale.
19
OPERATING AND FINANCIAL REVIEW (continued)
Multichannel Capability:
•
•
integrated, high quality in-store, online and phone offer provides customers with choice on how to transact with the businesses;
store network provides fast online fulfi llment (via delivery from store or click and collect) and online customers with after sales
service and support; and
•
national Commercial business supports corporate, government and education customers.
GROUP FINANCIAL PERFORMANCE FY2021 – HIGHLIGHTS
Total Sales ($m)
Earnings before interest and tax ($m)
Net profit after tax ($m)
Earnings per share (basic ¢)
Dividend per share (¢)
FY2021
8,916.1
743.1
506.1
440.8
287.0
FY2020
7,918.9
483.3
302.3
263.1
189.0
Growth
997.2
259.8
203.8
+178cps
+98cps
+12.6%
+53.8%
+67.4%
+67.5%
+51.9%
Total sales grew by 12.6% to $8,916.1 million, with continued heightened customer demand for consumer electronics and home
appliance products. There was exceptional growth in online, with sales up by 78.1% to $1.1 billion, representing 11.9% of total
sales (FY2020: 7.5%). Excluding Victorian sales where stores were temporarily closed during the fi rst half of FY2021, online sales
represented 10.3% of total sales.
EBIT grew 53.8% to $743.1 million, with strong operating leverage from the elevated sales growth, gross margin expansion and
disciplined cost control. Net profi t after tax grew by 67.4% to $506.1 million and earnings per share were up 67.5% to 440.8 cps.
Dividends per share are up 98.0 cps or 51.9% to 287.0 cps, with the fi nal dividend of 107.0 cps up 17.0 cps or 18.9%.
As announced to the ASX in April 2021, Richard Murray will leave the Group at the end of August 2021 and Terry Smart will succeed
him as Group CEO. Both Terry and Nick Wells, Group CFO, will join the Board as Executive Directors upon Richard’s departure.
Biag Capasso has been appointed as Managing Director of The Good Guys, taking over from Terry. Tania Garonzi has been appointed
as Merchandise Director of The Good Guys. Tania joins The Goods Guys from Hisense Australia where she was the General Manager
for 15 years and oversaw the introduction and successful establishment of the Hisense brand in the Australian market.
The Group continued its investments in online and supply chain operations, including upgrades to the websites and expanded
delivery and warehouse options, along with continued investment in sustainability initiatives including committing to net-zero direct
(scope 1 and 2) carbon emissions by 2030. The Group continued its expansion of, and investment in, the Group’s Commercial
businesses product and service offering.
COVID-19
The Group’s operations were affected signifi cantly by the Covid-19 pandemic and resulting government actions.
The Group remained committed to supporting government and community efforts to limit the spread of the virus. The Group’s
highest priority is the health and wellbeing of its team members, customers, business partners and the wider community, whilst
responding to its customers’ changing needs and maintaining fi nancial stability.
During the year, the Group continued to take measures to protect the health and safety of everyone who worked in or visited its
premises. Some stores were closed at various times throughout the fi nancial year in accordance with government restrictions but
continued to fulfi l online and click-and-collect orders where possible. In addition, the Group voluntarily closed its airport stores
and some CBD stores for certain periods in response to a shift in foot traffi c away from these areas. Despite these challenges,
performance across the JB Hi-Fi and The Good Guys businesses remained strong with elevated sales growth driven by homemaker
and free-standing stores and a signifi cant acceleration in online, as the businesses provided customers with the essential products
they needed to prepare for and respond to Covid-19. These included technology products that enabled remote working, learning
and communication, essential home appliances for food storage and preparation and home entertainment products as customers
spent more time at home. The Group was pleased with its well-executed promotional program and how its online businesses scaled
and maintained a high level of customer service and on-time delivery during a period of signifi cantly increased volume. The Group
will continue to respond and adapt to its customers’ changing needs through the pandemic.
20
DIVISIONAL PERFORMANCE
JB Hi-Fi Australia
Total Sales ($m)
Gross Profit ($m)
Gross Margin (%)
Cost of Doing Business (%)
EBITDA ($m)
EBITDA Margin (%)
EBIT ($m)
EBIT Margin (%)
FY2021
5,956.8
1,325.2
22.25%
11.19%
658.5
11.06%
523.0
8.78%
FY2020
5,318.9
1,169.0
21.98%
12.10%
525.6
9.88%
391.5
7.36%
Growth
+12.0%
+13.4%
+27bps
(91 bps)
+25.3%
+117 bps
+33.6%
+142 bps
Total sales were up 12.0% to $5,956.8 million (FY2020: $5,318.9 million) with comparable sales growth up 13.0%. Sales
momentum was strong through the year, with heightened customer demand for consumer electronics and home appliance
products. Total sales growth over two years was 26.0%.
Hardware and services sales (all sales excluding Music, Movies and Games Software categories) were up 14.1% for the fi nancial
year, with comparable sales up 15.1%, driven by the Communications, Computers, Games Hardware, Visual and Small Appliances
categories. Software sales were down 14.5%, and on a comparable basis were down 14.2%, as a result of a decline in the Movies
and Games Software categories offset by growth in Music. By value, software sales represented 5.5% of total sales (FY2020: 7.3%).
Online sales in Australia grew 93.0% (FY2020: 56.6%) to $780.0 million or 13.1% of total sales (FY2020: 7.6%). Excluding Victorian
sales during the period where stores were temporarily closed during the fi rst half of FY2021, online sales represented 11.1% of total
sales. The strength of the online offer was evidenced through the business’ ability to scale and maintain a high level of customer
service and on-time delivery throughout the year.
The Commercial business recorded solid sales growth as the Group continued to expand its product and service offering.
Gross profi t increased by 13.4% to $1,325.2 million, with gross margin increasing by 27 bps to 22.25%, driven by strong
improvements in key categories. Cost of Doing Business (“CODB”) was down 91 bps to 11.2% for the year and in absolute
terms CODB grew 3.6%, with disciplined cost control throughout the year. Depreciation grew by 1.1% with an increase in both
depreciation on right-of-use assets and fi xed assets. EBIT was up 33.6% to $523.0 million, with EBIT margin up 142 bps to 8.8%.
JB Hi-Fi New Zealand(i)
Total Sales (NZ$m)
Gross Profit (NZ$m)
Gross Margin (%)
Cost of Doing Business (%)
EBITDA (NZ$m)
EBITDA Margin (%)
EBIT (NZ$m)
EBIT Margin (%)
Underlying EBIT ($m)
Underlying EBIT Margin (%)
FY2021
261.6
46.6
17.83%
13.12%
12.3
4.70%
5.8
2.23%
6.0(iii)
2.28%
FY2020
222.8
36.8
16.54%
14.21%
Growth
+17.4%
+26.6%
+129 bps
(109 bps)
5.2
+137.5%
2.32%
(22.3)
+238 bps
n/m
(10.01%)
+1224 bps
(1.2)(ii)
n/m
(0.52%)
+280 bps
(i) Amounts disclosed for JB Hi-Fi New Zealand are in local currency to remove the impacts of foreign currency translation on trading performance.
The Australian dollar performance is presented in Note 2 of the fi nancial statements.
(ii) FY2020 Underlying EBIT excludes a NZD21.1 million non-cash impairment of JB Hi-Fi New Zealand right of use assets and fi xed assets.
(iii) FY2021 Underlying EBIT excludes the benefi t of a NZD6.3 million reduction to depreciation expense arising from the FY2020 impairment offset by
a NZD6.5 million non-cash impairment of JB Hi-Fi New Zealand right of use assets and fi xed assets.
21
OPERATING AND FINANCIAL REVIEW (continued)
Total sales were up 17.4% to NZ$261.6 million, with comparable sales up 17.4%. Hardware and Services sales (all sales excluding
Music, Movies and Games Software categories) were up 18.3%, with comparable sales up 18.3% driven by the Computers, Visual,
Communications, Games Hardware and Small Appliance categories. Software sales were up 7.4% with comparable sales up 7.4%,
with a decline in the Movies category offset by growth in Music and Games Software. Software sales were 7.1% of total sales
(FY2020: 7.8%). Online sales in New Zealand grew 35.6% to NZ$27.6 million or 10.6% of total sales (FY2020: 9.1%). Total sales
growth over 2 years was 10.8%.
Gross margin was up 129 bps on FY2020 to 17.8%. CODB was down 109 bps on FY2020 to 13.1% as store wages remained well
controlled. In absolute terms CODB grew 8.4% on FY2020. EBITDA was NZ$12.3 million, up 137.5%, driven by sales growth, gross
margin expansion and cost control.
Statutory EBIT for FY2021 was NZ$5.8 million, up NZ$28.1 million from a loss of NZ$22.3 million in FY2020. Underlying EBIT,
excluding the impact of impairments in the current and prior year, was NZ$6.0 million, up NZ$7.2 million on FY2020.
The Good Guys
Total Sales ($m)
Gross Profit ($m)
Gross Margin (%)
Cost of Doing Business (%)
EBITDA ($m)
EBITDA Margin (%)
EBIT ($m)
EBIT Margin (%)
FY2021
2,715.7
608.6
22.41%
11.67%
291.7
10.74%
214.7
7.90%
FY2020
2,388.8
490.2
20.52%
12.67%
187.5
7.85%
112.9
4.72%
Growth
+13.7%
+24.2%
+189 bps
(100 bps)
+55.6%
+289 bps
+90.2%
+318 bps
Total sales grew by 13.7% to $2,715.7 million (FY2020: $2,388.8 million) with comparable sales growth of 13.7%. Sales momentum
was strong throughout the year, with heightened customer demand for home appliance and consumer electronics products. Total
sales growth over 2 years was 26.4%.
The key growth categories for FY2021 were Refrigeration, Laundry, Floorcare, Portable Appliances and Visual.
Online sales for FY2021 were up 48.5% to $258.3 million or 9.5% of total sales (FY2020: 7.3%). Excluding Victorian sales during
the period where stores were temporarily closed during the fi rst half of FY2021, online sales represented 8.4% of total sales. The
strength of the business’ online offer was evidenced through its ability to scale and maintain a high level of customer service and
on-time delivery throughout the year while it experienced a signifi cant increase in volumes.
Gross profi t for FY2021 was up 24.2% to $608.6 million from $490.2 million in FY2020, with gross margin up 189 bps to 22.4%
(FY2020: 20.5%) driven by strong improvements in key categories. CODB for FY2021 was down 100 bps to 11.7% and in absolute
terms grew 4.7% on FY2020 as store wages remained well controlled throughout the year. Depreciation grew by 3.3% with an
increase in both depreciation on right-of-use assets and fi xed assets.
Strong operating leverage from the elevated sales growth, gross margin expansion and disciplined cost control drove strong EBIT
growth of 90.2% to $214.7 million with EBIT margin up 318 bps to 7.9%.
GROUP BALANCE SHEET, CAPITAL MANAGEMENT AND DIVIDENDS
The Group’s total net assets at the end of the fi nancial year were $1,308.4 million, which was $202.7 million higher than at the end
of FY2020.
During the year, as a result of the continuing strong cash position of the Group, the Group’s trade fi nance facility was reduced from
$400.0 million to $200.0 million and the Group’s term debt facilities were reduced from $380.0 million to $138.0 million. The Group’s
bank overdraft facilities were also reduced from $59.3 million to $29.3 million.
The Group now has $367.3 million total facilities as follows, with $356.9 million undrawn as at 30 June 2021:
$200.0 million trade fi nance facility renewable annually;
$20.0 million and NZ$10.0 million overdraft facilities renewable annually (total AU$29.3 million); and
$138.0 million term debt facility with an expiry date of July 2022.
•
•
•
22
The fi nancial covenants included in the Group’s fi nancing facilities are leverage and fi xed charges cover ratios. The Group has
complied with each of its fi nancial covenants throughout the period.
At the end of the fi nancial year the Group had a bank overdraft of $10.4 million and cash on hand of $273.6 million, resulting in net
cash of $263.2 million, compared to net cash of $251.5 million in the prior year. The net cash position has been maintained this
fi nancial year as the Group continued to increase working capital to historical levels, as detailed below.
The total dividend for the 2021 fi nancial year of 287.0 cents per share represents a payout ratio of approximately 65% of the full
year earnings. The Board will continue to regularly review the Groups capital structure, with a focus on maximising returns to
shareholders and maintaining balance sheet strength and fl exibility.
The fi nal dividend for the 2021 fi nancial year of 107.0 cents per share fully franked will be paid on 10 September 2021 with a record
date of 27 August 2021.
INVESTMENTS FOR FUTURE PERFORMANCE
Investments of $57.7 million were made during the fi nancial year in capital expenditure projects, an increase of $14.6 million from
$43.1 million during the previous fi nancial year. Capital expenditure was in line with expectations as the Group continued to invest in
the store portfolio, online offerings and strategic initiatives.
The Group’s investing activities are anticipated to contribute towards earnings growth in FY2022 and beyond.
WORKING CAPITAL
Total inventory on hand increased from the previous fi nancial year by $199.5 million to $938.8 million, as inventory availability
continued to improve from the low FY2020 closing inventory position resulting from Covid-19 related supply shortages. Inventory
turnover was up 61 bps to 8.3 times from 7.7 times in FY2020.
Payables, which would ordinarily grow in line with inventory, were down in FY2021 as inventory was purchased earlier to replenish
inventory levels and support the continued heightened customer demand.
Receivables were down year on year as a result of actively managing outstanding receivables.
Other current liabilities increased primarily due to income tax payable arising from the elevated profi t in the current fi nancial year.
Financial and operating leverage remains low as is evidenced by solid fi xed charges cover1 of 4.6 times (FY2020: 3.4 times) and
interest cover1 of 228.4 times (FY2020: 40.4 times). The Company’s gearing ratio was maintained at 0.0 as there continued to be no
borrowings at 30 June 2021.
Operating cash fl ows and operating cash conversion were impacted by the increases in working capital required to replenish
inventory levels from the low FY2020 closing position, but remain strong over the last two years. The Group had net cash of
$263.2 million at 30 June 2021.
1 Calculated prior to the impact of AASB 16
23
OPERATING AND FINANCIAL REVIEW (continued)
STORES
The Group’s sales are primarily from its branded retail store networks, located both in stand-alone destination sites and shopping
centre locations.
The store locations as at 30 June 2021 are set out below.
1
2
5
10
14
22
JB Hi-Fi Australia
JB Hi-Fi New Zealand
The Good Guys
23
39
30
61
28 55
3
5
1
3
Total JB Hi-Fi Stores – 211
Total The Good Guys Stores – 105
14
In Australia, one new JB Hi-Fi store was opened and one was closed in FY2021. In addition, one JB Hi-Fi store was relocated.
There were no JB Hi-Fi New Zealand or The Good Guys stores opened or closed in during FY2021.
24
BUSINESS STRATEGIES AND PROSPECTS
The following factors are considered important in understanding the strategy of the Group and the main opportunities and threats
that may have a signifi cant effect on its results and its prospects for future years. These factors are listed regardless of whether they
were signifi cant in FY2021.
Business risks
There are a number of factors, both specifi c to the Group and of a general nature, which may threaten both the future operating
and fi nancial performance of the Group, and the outcome of an investment in the Group. There can be no guarantee that the Group
will achieve its stated objectives or that forward looking statements will be realised. The operating and fi nancial performance of the
Group is infl uenced by a variety of general economic and business conditions, including levels of consumer spending, infl ation,
interest and exchange rates, access to debt and capital markets, government fi scal, monetary and regulatory policies and, at
the present time, the ongoing effect on the economy of the Covid-19 pandemic. A prolonged deterioration in general economic
conditions, including an increase in interest rates or a decrease in consumer and business demand, may have an adverse impact on
the Group’s business or fi nancial condition.
The specifi c material business risks faced by the Group, and how the Group manages these risks, are set out below.
•
Competition – the markets in which the Group operates remain highly competitive and any increased competition from new
and existing competitors may lead to price defl ation and a decline in sales and profi tability. As the #1 player in a fragmented
Australian market, the Group’s scale allows it to maintain focus on market share and absorb margin pressure during periods of
heightened market price activity and consolidation. The Group also believes that its competitive advantages and the plans for
growth set out below will allow it to maintain its market leading position.
•
A loss or erosion of reputation – both the JB Hi-Fi business and The Good Guys business enjoy a high level of loyalty and
trust with customers. The JB Hi-Fi business has been consistently ranked among Australia’s most reputable companies in the
Corporate Reputation Index released by the Reputation Institute and AMR. Between them, the JB Hi-Fi business and The Good
Guys business have won the Roy Morgan Customer Satisfaction Award for Furniture/Electrical store of the year six times since
2011, including the JB Hi-Fi business winning in 2021. Additionally, The Good Guys Business has won the Canstar Blue Most
Satisfi ed Customers Electronic Retailers Award every year from 2011 to 2020. Any decline in this high level of loyalty and trust
could compromise the market leading positions of the JB Hi-Fi business and The Good Guys business and adversely affect the
Group’s operating and fi nancial performance. This could occur as a result of a wide range of factors or events, including:
•
a loss or erosion of the reputation of the JB Hi-Fi and The Good Guys businesses for price leadership. The Group
constantly reviews and updates its pricing strategy and takes a pro-active approach to responding to the competitive
environment including careful monitoring of its competitors’ pricing and strategic and tactical marketing campaigns to
maintain its price position;
•
a loss or erosion of the reputation of the JB Hi-Fi and The Good Guys businesses for high levels of customer service,
and/or the in-store experience provided by the businesses does not meet customer expectations. The Group seeks
to mitigate this risk through the use of customer service and engagement analytics, senior management monitoring of
customer complaints, targeted capex investment, optimising fl oor layouts and category space allocation, the trialling of
new store formats, and an ongoing program of work to improve in-store experience and evolve its service model including
the development of team members and the use of technology to improve the quality and consistency of customer service.
The Group uses market share and other data to understand customer behaviour and needs;
•
a major information security breach of the Group’s IT systems. The Group seeks to mitigate this risk through investment in
IT security measures, including incident response planning and testing;
•
a major workplace health and safety incident or customer injury. The Group seeks to mitigate this risk through having
appropriate occupational health and safety procedures and staff training in place for all of its sites;
•
a signifi cant breach of regulatory or legislative requirements. The Group seeks to mitigate this risk through appropriate
staff training on key regulatory and legislative requirements relevant to its business, as well as making legal and regulatory
compliance a key focus of the management team; or
•
the Group failing to meet its sustainability or corporate social responsibility objectives, or not operating in accordance
with community and stakeholder expectations in these areas and the potential for adverse media coverage should this
occur. The Group seeks to mitigate this via its sustainability and corporate social responsibility initiatives under its Group
Sustainability Framework. In addition, the Group actively monitors both social and traditional media on an ongoing basis
and, where appropriate, responds to issues raised, as well as taking any steps necessary to promptly address valid
concerns or underlying issues.
25
OPERATING AND FINANCIAL REVIEW (continued)
•
Consumer discretionary spending and changes in consumer demands – the Group is exposed to both the upside and
downside of consumer spending cycles and changes in consumer demands. A reduction in consumer spending and
demand may lead to a decline in the Group’s sales and profi tability. The Group maintains its relevance using its strong market
position supported by its everyday low price proposition. Many of the products sold by the Group are now considered less
“discretionary” than in the past, with products such as mobile phones and computers now being seen as “essential” by many
consumers. The Group’s stores, which are both in convenient and high traffi c locations, seek to maximise both destination and
impulse sales, refl ected in the Group’s high sales per square metre of fl oor space. The Group also closely monitors changes
in the economic environment, consumer demand and new products, and is able to respond quickly to such changes. During
FY2021, the Group’s diverse store portfolio (including its online stores) meant that the Group was able to continue to respond
to changes in consumer behaviour brought about by Covid-19, as foot traffi c shifted away from CBD stores, Tier 1 shopping
centres and airports, to homemaker and free-standing stores and online shopping.
•
Online competition taking sales from the Group’s stores – the Group seeks to provide customers with a quality online offer,
while leveraging the benefi ts of its physical stores. The Group continues to innovate both in-store and online in order to give
customers the choice as to how to transact with the JB Hi-Fi and The Good Guys businesses and is focusing on continuing
to integrate the in-store and online experience. The Group continues to invest in its digital and online capability. The Group’s
market leadership and scale gives it global relevance with suppliers and drives signifi cant buying power which enables the
Group to compete successfully with online players, as does its low cost of doing business. The Group also believes that the
existence of its store networks will continue to provide confi dence in after-sales service and support to its online customers,
whilst also enabling fast online fulfi lment via delivery from stores and click & collect.
•
Digitisation of physical software leading to a fall in traditional software sales beyond expectations – the JB Hi-Fi business will
maintain a software presence in store while the category is still providing solid returns, whilst adjusting inventory, range and
in-store space allocated to the category as appropriate.
•
Ineffective inventory management – a failure to maintain suffi cient inventory (or holding excessive inventory) may adversely
affect the Group’s operating and fi nancial performance. The Group mitigates this risk through regular monitoring of inventory
quality and stock levels.
•
Failure to maintain key supplier relationships – the Group has strong partnerships with all major suppliers, with its dual brand
retail approach providing ranging and merchandising optionality and facilitating the execution of strategic initiatives at scale.
The Group’s store locations and high traffi c websites provide suppliers with high visibility for their products. The Group has
signifi cant supplier management processes to mitigate the risk of failing to maintain key supplier relationships and, whilst at any
one time certain products and suppliers are more important than others, the large and diverse range of products stocked by
the businesses means that reliance on any one supplier or product is less than for some smaller competitors. In addition, the
JB Hi-Fi and The Good Guys businesses have proven records of expansion into new product categories and introducing new
brands, rather than remaining reliant on those products and brands which were successful in previous years.
•
Supply chain capability does not support the Group’s growth objectives – the Group continues to develop and improve its
supply chain through initiatives such as the rationalisation of the previous third party operated warehouse network into Group
owned and operated Home Delivery Centres, and the improvement of inventory planning and ordering processes.
•
Growth of JB Hi-Fi Solutions and The Good Guys Commercial – if the JB Hi-Fi Solutions and The Good Guys Commercial
businesses do not deliver the expected growth outcomes for the Group. The Group continues to invest in these businesses to
support their continued growth and expand their product and service offerings.
•
Growth from expansion of the Group’s product and services offerings do not deliver the expected growth outcomes for the
Group. The Group continues to invest and innovate in these areas to support continued growth.
•
JB Hi-Fi New Zealand business - if the improved performance of the JB Hi-Fi New Zealand business is not sustained, this may
have an adverse impact on the Group’s operating and fi nancial performance. The Group is continuing to execute its strategy to
improve performance in the JB Hi-Fi New Zealand business.
•
Increasing cost of doing business – certain costs of doing business are outside of the Group’s control. For example, the
Group’s cost of doing business is impacted by the annual Fair Work Award wage reviews (which have resulted in increases
totalling 14.8% over the past 5 years to 30 June 2021), and rising energy costs. However, the increasing scale of the Group’s
operations continues to deliver cost reductions which mean that higher wage costs can be offset to some extent by cost
reductions in other areas.
26
•
Leasing arrangements – the ability to identify suitable sites and negotiate suitable leasing terms for new and existing stores is
key to the Group’s ongoing growth and profi tability. The Group believes that it will continue to be able to do this as it has done
successfully to date.
•
Loss of, or inability to attract and retain, key staff – the Group’s ability to attract and retain talented staff is critical to its
operating and fi nancial performance. In recognition of this, succession planning and executive/senior management team
composition is a key focus for the Board and Group executive team. The Group continues to focus on providing a safe,
inclusive and welcoming environment for all of its employees and on developing and improving its programs and strategies
relating to diversity & inclusion, and the prevention of harassment, discrimination or bullying.
•
IT systems – the Group’s increasing reliance on IT systems means that outages, disruptions and security breaches could have
a detrimental impact on its operating and fi nancial performance, and any failure to maintain and upgrade its IT systems over
time has the potential to inhibit the achievement of the Group’s business initiatives. To mitigate these risks, the Group has
documented disaster recovery processes (including off-site IT back-up infrastructure) and invests in IT security measures.
The Group also continues to invest and develop its IT resources and capabilities to support the Group’s strategic objectives.
•
Sustained disruption to operations resulting from external factors – external factors outside of the Group’s control, such as
pandemic or extreme weather events could materially impact the Group’s businesses. The Group mitigates these risks by
contingency planning as far as practicable, and its fl exible model allows management to quickly take appropriate action to
react to any such risks as they arise. This includes, for example, the Group changing its marketing and stock buying patterns,
developing contactless click-and-collect and home deliveries, and redeploying team members and stock to stores and
categories with heightened demand, in response to the Covid-19 pandemic.
•
Changes in regulatory environment – changes in the regulatory environment in which the Group operates may increase
compliance costs, and even (in extreme cases) affect the ability of the Group to sell certain types of products and services or
conduct certain activities. Whilst such changes are outside the control of the Group, the Group monitors proposed changes
in the regulatory environment so that it can assess the impact of such changes and develop appropriate response strategies
where possible.
•
Finance – a breach of the Group’s debt covenants or inability to access fi nancing facilities would adversely affect the Group’s
operating and fi nancial performance. The Group has signifi cant headroom in both its debt facilities and covenants. Additionally,
cash fl ow forecasts and debt capacity are closely monitored by management. Details of the Group’s fi nancing facilities are set
out on pages 22 and 23.
•
Fraud and corruption – the Group has no history of material fraud or corruption and seeks to minimise the risk of loss arising
from fraud and corruption through appropriate policies, procedures and controls. Risk identifi cation and management is
managed on a day-to-day basis by a dedicated risk management and business assurance team which evaluates and looks to
continually improve the effectiveness of the Group’s governance, risk management and internal control processes.
•
Litigation/breach of legal or regulatory requirements – legal proceedings and claims may arise from time to time in the
ordinary course of the Group’s businesses and may result in high legal costs, adverse monetary judgements and/or damage
to the Group’s businesses which could have an adverse impact on the Group’s fi nancial position and fi nancial performance.
Additionally, a signifi cant breach of regulatory requirements or laws could adversely impact the Group’s ability to carry on its
business. The Group seeks to mitigate this risk through appropriate staff training on key regulatory and legislative requirements
relevant to its business, as well as making legal and regulatory compliance a key focus of the management team.
Business Strategies
The Group believes that the following strategies/factors will continue to drive growth in sales and earnings:
•
continuing to prioritise the safety of team members and customers through Covid-19 whilst adapting and responding to
changing customer needs;
•
•
focus on driving sales across all sales channels – in-store, online, phone and commercial;
diverse product range, continued technological innovation, and the launch of new products and updated models which will
continue to drive new and replacement sales. In FY2022 the businesses will focus, in particular, on the expansion of the
communications, rideables, small appliances and pop culture categories within JB Hi-Fi and the connected-home appliances
market in The Good Guys;
27
OPERATING AND FINANCIAL REVIEW (continued)
•
proactive management of its store portfolio with continued investment in, and optimisation of, the store network to maximise
profi tability. The JB Hi-Fi business will continue to trial alternative store formats to increase market penetration and The Good
Guys will continue its store upgrade program, focusing on adjacencies, supporting growth categories, and showcasing the
home appliance categories. The Group will continue its disciplined approach to selecting new stores based on high foot traffi c
and closure of underperforming or sub-scale existing stores;
•
enhancement of the Group’s partnerships with major suppliers to extend its capabilities, with a focus for The Good Guys
in FY2022 on evolving the product offering with improved ranging and the introduction of new brands, and the continued
expansion of its telecommunications products and services in partnership with Telstra;
•
•
•
continued execution of the Group’s strategy to improve the performance of the JB Hi-Fi New Zealand business;
design and implementation of expanded services offerings for the JB Hi-Fi Australia business;
utilisation of the Group’s supply chain capability within The Good Guys business to provide customers with an enhanced
delivery experience;
•
continued development of the Group’s websites and online offering, aimed at enhancing the user experience across multiple
platforms (e.g. computer, tablet and phone) to meet changing customer needs;
continued integration of the in-store and online experience;
expansion of the online product range and depth beyond that which is practical in store;
continued focus on productivity (as demonstrated by the Group’s high sales per square metre relative to its peers), minimising
unnecessary expenditure, and leveraging the scale of the Group, with a focus for FY2022 being the roll-out of technology to
streamline in-store processes, inventory effi ciency and the simplifi cation of operational processes, with a focus on improved
stock fl ow into store and back of house processes to drive productivity;
improved supply chain and logistics systems to support the Group’s expansion;
personalisation of marketing and customer experiences;
continued focus on customer service and in-store experience;
signifi cant opportunities to grow JB Hi-Fi Solutions and The Good Guys Commercial and expand into new markets; and
continued mitigation of the business risks faced by the Group detailed on pages 25 to 27.
•
•
•
•
•
•
•
•
Environmental & Social risks
There are a range of environmental and social risks that could negatively impact the Group:
•
•
if its activities adversely affect the natural environment or human society; and/or
if its activities are adversely affected by changes in the natural environment or human society.
In order to understand and prioritise these risks, the Group has undertaken a materiality assessment utilising a globally recognised
assessment framework. The most material environmental and social risks identifi ed, and the actions to mitigate those risks are set
out below and additional information can be found in the Group’s 2021 Sustainability Report:
• Health and Safety – the Group promotes and reinforces a culture of safety throughout its operations by:
• maintaining a strong leadership focus and implementing a Group Strategy for safety;
•
employing a systematic approach to incident management and risk mitigation, supported by its Group Occupational
Health and Safety System;
•
implementing policies and practices to provide a safe, inclusive and welcoming environment for all of its customers and
employees, and by taking positive action to prevent harassment, discrimination or bullying; and
•
establishing key performance indicators and safety targets to monitor and improve performance.
28
•
Diversity and Inclusion – The Group recognises the importance of diversity and understands that by adapting to the differing
needs of its teams, it will build stronger teams and create value for its customers and shareholders. Initiatives implemented
in FY2021 under the Group’s enhanced Diversity and Inclusion Strategy include: the setting of revised measurable objectives
for gender diversity within the workforce, development of common competency-based criteria to identify and grow diverse
talent, along with systematic talent mapping across all key roles; expansion of the Group’s Equal Opportunity and Workplace
Behaviour Policy and training program; and the expansion of fl exible working practices for Support Offi ce employees.
•
Employee engagement, labour practices and communication – an engaged workforce is key to the success of the Group’s
businesses. The Group seeks to engage its employees through regular communication and surveys its employees periodically
to understand the level of employee engagement and to identify opportunities for improvement. In FY2021 the Group invested
in a platform which will increase the accessibility and regularity of engagement surveys to encourage feedback from our team
members.
•
Responsible business – the Group’s stakeholders expect the Group to act responsibly and ethically and to comply with all
relevant laws and regulations. The Group acts with integrity in conducting its businesses and has established a Statement
of Values and a Code of Conduct to help guide its behaviours, together with additional policies and procedures including a
Whistle-blower Policy, an Anti-Bribery, Corruption and Fraud Policy, and a Securities Trading Policy which clearly outline the
standards of behaviour required and which provide avenues to report wrong-doing.
•
Ethical sourcing and human rights – the Group recognises the importance of sourcing responsibly, and the potential social and
environmental impacts that its purchasing decisions can have. The Group also recognises the risk of modern slavery and the
potential for human rights abuses in its supply chain. To mitigate these risks, the Group has an Ethical Sourcing Policy outlining
the minimum standards expected of its suppliers’ labour, safety, environmental and ethical practices. Supporting this policy is a
risk-based approach to supplier due diligence, which helps the Group assess compliance with the Ethical Sourcing Policy.
Initiatives taken in FY2021 include: the submission of the Group’s fi rst Modern Slavery Statement; continued membership of,
and utilisation of the resources of, the Responsible Business Alliance; ongoing engagement with suppliers; and progression of
the Group’s supplier due diligence program through self-assessment questionnaires and independent social compliance audits
for locations of higher risk.
•
Packaging, Waste and Recycling – the products that the Group sells and related packaging can have an adverse impact on
the environment if not recycled or re-used. To mitigate this risk, the Group has operational processes and systems in place
to facilitate the recycling of cardboard, paper, hard and soft plastics and polystyrene waste. Processes are also in place to
facilitate the salvage and re-use of unwanted technology from both the Group’s own operations, and from product returns
by customers. Initiatives taken in FY2021 include the establishment of a Waste and Recycling Working Group to provide
strategic direction in reducing the Group’s operational waste and increase recycling and re-use across the Group; development
of a strategy to achieve the Australian Packaging Covenant’s (APCO) 2025 targets; the design and successful trial of new
100% recyclable packaging for three of the Group’s private label products with the program to be rolled out to more private
label products in FY2022; a 42.8% reduction in plastic bag use compared to FY2020; the communication of our packaging
expectations to all third party branded suppliers including encouragement to utilise the APCO Sustainable Packaging
Guidelines; increasing the Group’s operational recycling capability for big and bulky products; launching a trial of the Group’s
fi rst in-store dedicated e-waste collection point; and the launch of The Good Guys National Uniform Recycling Program.
•
Energy and emissions – the majority of greenhouse gas (GHG) emissions resulting from the Group’s business operations
come from the electricity used to power its store and warehouse network. In addition, the Group consumes natural gas
for heating and fuel for company-owned cars as well as domestic and international business travel. In FY2021 the Group:
undertook an assessment to better understand the risks and opportunities associated with climate change for our business;
developed a plan to start reducing the Group’s Green House Gas (GHG) emissions through the use of renewable energy,
and energy effi ciency and reduction initiatives; and established an Energy and Emissions Working Group to provide strategic
and operational oversight of the Group’s energy consumption and emissions. Importantly, the Group has set a strategic goal
to achieve net-zero direct (scope 1 and 2) carbon emissions by 2030 (measured against the Group’s FY20 emissions
(66,776 t-CO20-e).
29
OPERATING AND FINANCIAL REVIEW (continued)
SALES UPDATE AND TRADING OUTLOOK – AS AT 16 AUGUST 2021
FY2022 YTD sales update
The Group provides the following FY2022 YTD sales update, for the period 1 July 2021 to 15 August 2021:
Sales Growth FY2022 YTD
Comparable
Total
JB Hi-Fi Australia
JB Hi-Fi New Zealand (NZD)
The Good Guys
vs FY2021
vs FY2020
vs FY2021
vs FY2020
(14.9%)
8.4%
(8.6%)
19.4%
14.8%
28.2%
(14.6%)
8.4%
(8.1%)
19.1%
14.8%
28.9%
Whilst the Group has experienced some disruption and variability to sales as a result of the various state based Covid restrictions,
the Group has continued to see heightened customer demand and strong sales growth rates over a two-year period.
In view of the ongoing uncertainty arising from Covid-19, the Group does not currently consider it appropriate to provide FY2022
sales and earnings guidance.
30
REMUNERATION REPORT (audited)
CONTENTS
•
•
Summary (page 31)
Executive KMP Remuneration for FY2021 (page 33)
• Non-Executive Director Remuneration (page 41)
• Other Information (page 42)
•
•
•
Key Management Personnel Compensation (page 43)
Key Management Personnel Equity/Options (page 48)
Share Ownership Based Remuneration Schemes (page 51)
SUMMARY
Remuneration overview
The Board recognises that the performance of the Group depends on the quality and motivation of its people, including both the
Executive KMP (being those persons listed on page 33) and the approximately 13,200 employees of the Group across Australia
and New Zealand. The Company’s remuneration strategy seeks to appropriately reward, incentivise and retain key employees.
The Board aims to achieve this by setting competitive remuneration packages (“packages”) that include a mix of fi xed remuneration
and incentives under the Company’s Variable Reward Plan (“VRP”).
Snapshot
Another year of fi nancial and strategic achievement
The 2021 fi nancial year has been an outstanding year for the Group, with management having delivered record revenue (up 12.6%),
EBIT (up 53.8%) and EPS (up 67.5%). Sales momentum was strong throughout the year, with continued heightened consumer
demand for consumer electronics and home appliance products. Gross margins were well managed with strong improvements in
gross margins in all businesses. This gross margin improvement, combined with disciplined cost control and strong sales growth,
drove signifi cant operating leverage.
In addition to driving these exceptional fi nancial outcomes, management has also executed strongly on a number of key strategic
initiatives aimed at further developing and reinforcing the Group over the longer term. These include further enhancing and growing
the Group’s online channels, improving supply chain capability, successfully implementing sustainability initiatives and strengthening
succession plans through internal talent development.
Executive KMP FY2021 Incentive Achievement
This very strong performance has been refl ected in vesting outcomes in respect of FY2021 VRP incentives, with Executive KMP
earning between 97% and 98% of rewards available for FY2021. As the Group CEO resigned prior to the end of the fi nancial year,
the Board determined he is not eligible for the equity component of his FY2021 VRP reward (value of $2,553,525).
The VRP scorecard for FY2021 provided that 75% of available rewards were linked to fi nancial measures, primarily Group EPS
growth, and 100% of available rewards for fi nancial performance were earned by each Executive KMP. The remaining 25% of
available rewards were dependent upon the achievement of various strategic measures deemed relevant for the individual executive
and between 88% and 92% of available rewards for this strategic component were earned by Executive KMP. Further detail is set
out on pages 34 to 36.
As with recent years, 25% of VRP rewards achieved in relation to FY2021 are paid in cash and the remaining 75% of the VRP
rewards achieved in relation to FY2021 are delivered in deferred shares. One third of these shares will be released from dealing
restrictions in each of August 2022, August 2023 and August 2024, such that the vast majority of VRP rewards will therefore
be subject to the share price performance and align Executive KMP with the experience of shareholders over the medium to
longer term.
31
REMUNERATION REPORT (continued)
Management succession and transition
Management has outperformed once again in FY2021 and remains motivated to continue to drive shareholder value in FY2022.
In April and May 2021 announcements were made regarding the transition of several Executive KMP roles in FY2022, each of
which has been fi lled via promotion of internal talent, demonstrating the quality and depth of the Group’s current and upcoming
management team talent.
•
Terry Smart (currently Managing Director – The Good Guys) will take over as Group CEO from Richard Murray during August
2021. Terry is a natural successor to the role, having previously led the Group as CEO between 2010 and 2014 and re-joined
the Group in 2017 following the acquisition of The Good Guys.
•
Both Terry and Nick Wells (Group CFO) will join the Board as Executive Directors during August 2021. Nick has held various
roles in the Group since 2009 and has been Group CFO since 2014.
•
Once Terry assumes the role of Group CEO, his role as Managing Director – The Good Guys will be taken up by Biag Capasso
(currently Merchandise Director – The Good Guys). Biag has been with The Good Guys since 2011 and played a key role in its
integration into the JB Hi-Fi Group.
FY2021 remuneration packages – Executive KMP
To remain competitive in attracting and retaining key talent in FY2021 the Board considered the remuneration levels for Executive
KMP with reference to external market benchmarks as well as the skills, experience, complexity and responsibilities of the Executive
KMP roles. The Board also noted that, with the exception of the Group CFO, fi xed remuneration and annual remuneration packages
for these individuals had not been increased from FY2019 to FY2020.
The Board concluded that Executive KMP remuneration had fallen behind market peers and consequently, the Board increased
fi xed remuneration (by 2% in most cases) and VRP opportunities available (by 7% to 10% in most cases) for all Executive KMP.
In the case of the Group CEO, in FY2021 the Board approved an increase to fi xed remuneration of 11% and VRP opportunity of
26% following the statements in the Company’s FY2020 Remuneration Report that his package was modest when compared to
peers, but would not be increased in FY2020 given the uncertain market conditions at that time. As noted above, the Group CEO
subsequently resigned, his employment will end during August 2021 and he will not receive any equity component of his FY2021
VRP reward.
Further detail and explanation is set out on page 33.
Non-Executive Directors – FY2021 remuneration
Fees for non-executive directors remained at the levels set for FY2018, FY2019 and FY2020, with no increases.
32
EXECUTIVE KMP REMUNERATION FOR FY2021
Details of executive key management personnel
The following executive directors and Group executives, each of whom was engaged throughout and since the end of the fi nancial
year (Executive KMP), are considered members of key management personnel for reporting purposes:
Executive Director
Richard Murray
Group Chief Executive Offi cer
Executive KMP
Terry Smart
Nick Wells
Managing Director – The Good Guys
Group Chief Financial Offi cer
Cameron Trainor
Managing Director – JB Hi-Fi
As noted in the Snapshot and on page 15, Richard Murray will leave the Company at the end of August 2021 and Terry Smart has
been appointed to succeed Richard as Group CEO. Both Terry Smart and Nick Wells will be appointed to the Board as Executive
Directors upon Richard’s departure, and Biag Capasso will take up Terry’s current role as Managing Director – The Good Guys.
Executive KMP remuneration policy – FY2021
The Board believes that remuneration for Executive KMP should be fair and reasonable, structured effectively to attract, motivate,
retain and reward valued executives, and designed to produce value for shareholders.
The Remuneration and Nominations Committee annually reviews the remuneration packages of Executive KMP and makes
recommendations to the Board. Remuneration packages are reviewed with due regard to performance and data on remuneration
paid by comparable companies. Where appropriate, the Remuneration and Nominations Committee may receive expert
independent advice regarding remuneration levels required to attract, retain and compensate Executive KMP given the nature of
their work and responsibilities.
In setting the FY2021 remuneration packages, the Board and the Remuneration and Nominations Committee considered a number
of factors, including current market practice, external benchmarking, and the extent (if any) to which remuneration increases had
been granted for FY2020. The Company benchmarks its Remuneration Packages for Executive KMP against the companies
comprising the ASX 51 – 150 and the ASX 76 – 125 indices. The Group’s policy in relation to executive remuneration is to target
total remuneration levels (i.e. fi xed pay plus the maximum opportunity under the Variable Reward Plan) at a level between the 60th
and 75th percentile of peers. This is because the Board believes executive reward should approach top quartile outcomes if the
challenging targets set under the incentive plans are achieved.
The Remuneration and Nominations Committee also considered current market conventions with regard to the splits between fi xed
remuneration and incentive elements. The package splits for FY2021 were as follows:
Executive
R. Murray
T. Smart
N. Wells
C. Trainor
Fixed
30%
37%
37%
37%
Incentive
70%
63%
63%
63%
Total
100%
100%
100%
100%
Further details on each of the key elements of Executive KMP remuneration for the 2021 fi nancial year are set out below.
Fixed remuneration – FY2021
Fixed remuneration is paid by way of base salary, motor vehicle allowances and superannuation. No elements of fi xed remuneration
are dependent on performance conditions.
Fixed remuneration for each Executive KMP was increased for FY2021 taking the policy referred to above into account. It was also
noted that, with the exception of the Group CFO, fi xed remuneration and annual remuneration packages for these individuals had
not been increased from FY2019 to FY2020.
For almost all Executive KMP, fi xed remuneration was increased by 2%. In the case of the Group CEO, in FY2021 his fi xed
remuneration was increased by 11% in line with the Board’s statements in the Company’s FY2020 Remuneration Report that his
package was modest when compared to peers, but would not be increased in FY2020 given the uncertain market conditions
presented for that fi nancial year. As announced to the ASX on 28 April 2021, the Group CEO resigned during FY2021 and his
employment ends in August 2021.
33
REMUNERATION REPORT (continued)
Variable Reward Plan Incentive – FY2021
The Group operates a variable reward plan to incentivise, attract and retain valued executives. The VRP allows for fl exibility in setting
performance targets year by year to take into account changing trading conditions which is particularly important in a fast moving
and volatile retail environment. It therefore provides a more motivating remuneration framework for Executive KMP, as well as greater
alignment with shareholders, than traditional structures. Following a review of the Executive KMP remuneration structure for FY2021
and the performance of the Group, the Board remained of the view that the VRP was the most appropriate form of incentive plan.
Under the VRP, performance is assessed at the end of each fi nancial year against a scorecard of robust measures and awards
under the VRP are delivered:
•
•
25% in cash at the end of the one-year performance period; and
75% in restricted shares, to be released progressively in equal tranches over years 2, 3 and 4.
By granting the majority of the reward as shares that are restricted over the medium to longer term and are subject to long term
share price risk and clawback, the VRP provides for strong alignment with shareholders. This, combined with the minimum
shareholding guidelines as set out on page 40, encourages Executive KMP to think and act like shareholders and to make decisions
in the long term interests of the Group.
During the restricted period, dividends are paid on the restricted shares and the executive may exercise votes attaching to these
shares. The market value of a share used to calculate the number of restricted shares granted will be the volume weighted average
price of shares traded on the ASX in the 5 trading days immediately following the release of the Company’s fi nancial results for the
year to which the award relates.
All rewards under the VRP are subject to clawback at the Board’s discretion in the event of fraud, dishonesty, material misstatement,
material breach or negligence by the executive and in certain other circumstances.
Subject to the Board exercising its discretion to the contrary, an executive will not be eligible to receive a VRP award in respect
of a particular performance period if, during that period, the executive ceases to be employed, or has given notice of his or her
resignation from employment or has been given notice of termination from employment. An executive who ceases to be employed
during the restriction period may, subject to the Board’s discretion:
•
•
forfeit the restricted shares if they are a “bad leaver” (termination for cause or resignation to work for a competitor); or
retain the restricted shares, subject to the restrictions, if they are a “good leaver” (retirement, redundancy, disablement,
mental/terminal illness or death).
Treatment of restricted shares where an executive leaves in other circumstances is at the Board’s discretion.
Further detail on the performance measures for each of the Executive KMP under the FY2021 VRP is set out below.
FY2021 VRP incentive scorecard – performance conditions and outcomes
Under the VRP, performance is assessed at the end of each fi nancial year against a scorecard of robust measures. 75% of the
rewards under the plan for each executive are dependent on fi nancial targets and the remaining 25% of the scorecard are based
on strategic measures approved by the Board and aligned with the Group’s long term corporate plans. The fi nancial targets in the
scorecard are predominantly based on Group EPS, with some executives also having targets relating to aspects of the business for
which that executive is responsible or where particular focus is required.
As detailed in the Company’s FY2020 Remuneration Report, at the start of FY2021 the Board determined that the FY2021 fi nancial
targets for the VRP would be set off the Group’s FY2020 (pre-Covid) NPAT guidance ($270 million) rather than the reported NPAT
result of $302.3 million or the underlying FY2020 NPAT result of $332.7 million. This approach was consistent with the Company’s
approach to measuring FY2020 incentive achievement in removing any impact of Covid-19 from FY2020 profi t. The Company set
growth targets under the VRP of between 0 and 10% EPS growth in FY2021 from this, noting that achieving the 10% stretch target
in FY2021 would represent approximately 19% growth over the two years from FY2019 to FY2021.
In FY2021 Group EPS grew 87.6% from 235.0 (based on the Group’s $270 million (pre-Covid) NPAT guidance for FY2020) to
440.8 cents per share and as a result 100% of available rewards for the fi nancial performance component (primarily EPS growth)
were earned by each of the Executive KMP. The Board notes that, had the reported FY2020 NPAT result of $302.3 million or the
underlying FY2020 NPAT result of $332.7 million been used as the basis of the FY2021 fi nancial targets for the VRP, Executive KMP
would still have earned 100% of the awards available based on fi nancial targets, with 67.5% EPS growth from $302.3 million and
52.2% growth from $332.7 million having been achieved.
34
FY2021 VRP achievement outcomes for each member of KMP, measured against the fi nancial and strategic measures, are set out
in the tables below.
GROUP CEO – RICHARD MURRAY
MEASURE
PERFORMANCE COMMENTARY
Note on outcomes for the Group CEO
The Board determined that, in light of his resignation and scheduled departure in early FY2022 and having regard to the
circumstances of his departure (including the exceptional performance of the company in FY2021), the Group CEO will forgo
the right to receive any earned part of his FY2021 VRP rewards that would otherwise have been awarded in restricted shares.
The Group CEO’s maximum FY2021 VRP achievement has therefore been reduced by 75% and is reflected in the tables
below. He will receive a cash reward under the FY2021 VRP awarded based on his performance.
Financial Measures (75%)
1. Group EPS
1.
Group EPS – Above Target (87.6% growth from 235.02 to 440.8 cents per share)
Achievement 100% (as a % of maximum available)
Strategic Measures (25%)
1. Group OHS
2. Diversity
3. Succession/Talent
4. Strategic Initiatives
5.
Investor Relations
1.
2.
3.
Group OHS – At Target, with strong results in OHS metrics as set out in
Sustainability Report
Diversity – At Target, with good progress made on implementation of Group
diversity strategy and introduction of other significant diversity initiatives as set out
in Sustainability Report
Succession/Talent – Above Target, with strong succession planning and talent
development, including senior management internal appointments
4. Strategic Initiatives – At Target, as key strategic initiatives were implemented
5.
Investor Relations – Above Target, with strong investor relations engagement in a
challenging climate
Achievement 88% (as a % of maximum available)
Total (100%)
Unadjusted achievement 97% (as a % of maximum available)
Adjusted achievement of 24.25% (taking account FY2021 VRP restricted
share rewards foregone)
2 Based on the Group’s $270 million (pre-Covid) NPAT guidance for FY2020
MANAGING DIRECTOR, THE GOOD GUYS – TERRY SMART
MEASURE
PERFORMANCE COMMENTARY
Financial Measures (75%)
1. Group EPS
2. TGG EBIT
Strategic Measures (25%)
1. TGG OHS
2. Succession/Talent/Diversity
3. TGG Brand Strategy
4. Online Growth
5. Category Architecture
6.
Process Improvements and
Simplification
1.
2.
Group EPS – Above Target (87.6% growth from 235.02 to 440.8 cents per share)
TGG EBIT – Above Target, with 90% EBIT growth from FY2020
Achievement 100% (as a % of maximum available)
1.
2.
3.
4.
5.
6.
TGG OHS – At Target, with strong results in OHS metrics as set out in
Sustainability Report
Succession/Talent/Diversity – Above Target, with strong succession planning and
talent development, including senior management internal appointments, and
continued progress on diversity initiatives
TGG Brand Strategy – Above Target, with ongoing implementation of TGG Brand
Strategy
Online Growth – Above Target, with continued enhancement of online channels
and significant growth
Category Architecture – Above Target, with significant advancements in category
architecture and store layouts
Process Improvement/Simplification – At Target, with implementation of process
improvements
Achievement 92% (as a % of maximum available)
Total (100%)
Achievement 98% (as a % of maximum available)
2 Based on the Group’s $270 million (pre-Covid) NPAT guidance for FY2020
35
REMUNERATION REPORT (continued)
GROUP CFO – NICK WELLS
MEASURE
PERFORMANCE COMMENTARY
Financial Measures (75%)
1. Group EPS
1.
Group EPS – Above Target (87.6% growth from 235.02 to 440.8 cents per share)
Achievement 100% (as a % of maximum available)
Strategic Measures (25%)
1. Group OHS
2. Succession/Talent/Diversity
3. Risk Management/Sustainability
4. Strategic Initiatives
5.
Investor Relations
1.
2.
3.
Group OHS – Above Target, with strong results in OHS metrics including leading
the Group’s response to Covid-19
Succession/Talent/Diversity – Above Target, with continued progress in
succession planning, talent development and diversity initiatives
Risk Management – Above Target, with strong results including leading the
Group’s response to Covid-19 and implementation of sustainability initiatives
4. Strategic Initiatives – At Target, as key strategic initiatives were implemented
5.
Investor Relations – Above Target, with strong investor relations engagement in a
challenging climate
Achievement 89% (as a % of maximum available)
Total (100%)
Achievement 97% (as a % of maximum available)
2 Based on the Group’s $270 million (pre-Covid) NPAT guidance for FY2020
MANAGING DIRECTOR, JB HI-FI – CAMERON TRAINOR
MEASURE
PERFORMANCE COMMENTARY
Financial Measures (75%)
1. Group EPS
2.
JB Hi-Fi EBIT
Strategic Measures (25%)
1.
JB Hi-Fi OHS
2. Succession/Talent/Diversity
3.
JB Hi-Fi Brand Strategy
4. Online Growth
5. Category Architecture
6.
Process Iimprovements and
Simplification
1.
2.
Group EPS – Above Target (87.6% growth from 235.02 to 440.8 cents per share)
JB Hi-Fi EBIT – Above Target, with 34% EBIT growth from FY2020
Achievement 100% (as a % of maximum available)
1.
2.
3.
4.
5.
6.
JB Hi-Fi OHS – Above Target, with strong results in OHS metrics as set out in
Sustainability Report
Succession/Talent/Diversity – At Target, with continued progress in succession
planning, talent development and diversity initiatives
JB Hi-Fi Brand Strategy – At Target, with ongoing development of JB Hi-Fi Brand
Strategy
Online Growth – Above Target, with continued enhancement of online channels
and significant growth
Category Architecture – Above Target, with continued improvements in category
architecture
Process Improvement/Simplification – Above Target, with implementation of
significant process improvements
Achievement 89% (as a % of maximum available)
Total (100%)
Achievement 97% (as a % of maximum available)
2 Based on the Group’s $270 million (pre-Covid) NPAT guidance for FY2020
Legacy Long-Term Incentive (“LTI”) Option Plan – pre FY2019
Some of the options granted to Executive KMP prior to FY2019 under the Company’s previous LTI structure vested in FY2021.
Details of options that vested and were exercised are set out on page 50. Further details of the terms of these options are included
under the heading “Group Incentive Plans” on pages 51 and 52.
36
Relationship between fi nancial performance and remuneration
The remuneration of Executive KMP is directly related to the performance of the Group through the linking of the incentives to
certain fi nancial measures as detailed previously and shown below.
The fi nancial performance of the Group is summarised in the table below, whilst the alignment of Executive KMP remuneration to the
performance of the Group is detailed in the graph and the table on page 38.
Growth
FY2017(vi)
FY2018(vi)
FY2019(vi)
FY2020
FY2021
FY2021
1.
Financial performance:
Sales ($m)
EBIT ($m)
NPAT ($m)
Basic EPS (cents)
2.
Shareholder value created:
Company share price at the end of
the reporting period ($)
5,628.0
6,854.3
7,095.3
7,918.9
8,916.1
290.5(v)
192.2(v)
172.1(v)
350.6
233.2
203.1
372.9
249.8
217.4
483.3
302.3
263.1
743.1
506.1
440.8
23.37
22.52
25.85
43.03
50.58
Market capitalisation ($m)
2,674.0
2,587.2
2,969.7
4,943.4
5,810.8
Enterprise value(i) ($m)
3,160.0
2,984.5
3,289.6
4,691.9
5,547.6
13%
54%
67%
68%
18%
18%
18%
CAGR
Last
5 years(iii)
18%
27%
27%
23%
16%
19%
18%
Movement in enterprise value during
the financial year ($m)
Dividends paid to shareholders
during the financial year ($m)
Shareholder value created(ii)
717.5
(175.5)
305.1
1,402.3
855.7
119.1
151.6
157.4
172.3
310.2
80%
27%
- per annum ($m)
836.6
(23.9)
462.5
1,574.6
1,165.9
- cumulative ($m) since IPO
3,928.1
3,904.2
4,366.7
5,941.3
7,107.2
20%
22%(iv)
(i) Enterprise value is measured as the sum of market capitalisation and net debt.
(ii) Shareholder value created is measured as the increase in the enterprise value, plus cash dividends and share buy-backs paid during the fi nancial
year. Cumulative shareholder value is measured from the date of listing in October 2003 when opening shareholder value was $201.7m.
(iii) Percentage movement shown is the compound annual growth rate over the last 5 years.
(iv) Percentage movement shown is the compound annual growth rate since IPO in 2003.
(v) FY2017 EBIT, net profi t and EPS exclude transaction fees and implementation costs totalling $22.4m associated with the acquisition of The Good
Guys in November 2016 but include New Zealand Goodwill and New Zealand Fixed Asset impairments of $15.8 million.
(vi) FY2017 to FY2019 results are prior to the adoption of AASB 16 Leases.
37
REMUNERATION REPORT (continued)
The graph below shows the relationship between total Executive KMP remuneration and EPS over the past 5 years (following
the acquisition of The Good Guys in FY2017) and the high correlation between Executive KMP remuneration with Company
performance.
Executive KMP remuneration and EPS over the last 5 fi nancial years:
14,000,000
12,000,000
10,000,000
$
n
o
i
t
a
r
e
n
u
m
e
R
8,000,000
6,000,000
4,000,000
2,000,000
-
Notes
500
450
400
350
300
250
200
150
100
50
-
)
e
r
a
h
s
r
e
p
s
t
n
e
c
(
S
P
E
LTI/VRP Shares
STI/VRP Cash
Fixed
EPS
2017
2018
2019
2020
2021
1. The graph shows the aggregate total of remuneration for Executive KMP for each year from 2017 to 2021, excluding payments made in relation to
departures from the Group. For the purposes of this graph, Executive KMP for 2018 – 2021 were R. Murray, C. Trainor, T. Smart and N. Wells and
for 2017 were R. Murray, C. Trainor, T. Smart, N. Wells and M. Ford (MD of The Good Guys until April 2017).
2. LTI/VRP expense is the current period LTI/VRP expense only, excluding any prior period write-backs.
3. EPS in FY2017 excludes transaction fees and implementation costs totalling $22.4m associated with the acquisition of The Good Guys in
November 2016 but includes New Zealand Goodwill and New Zealand Fixed Asset impairments of $15.8 million.
4. FY2017 to FY2019 EPS numbers are prior to the adoption of AASB 16 Leases.
Group CEO STI and VRP incentive achievement over the last 5 fi nancial years:
Executive KMP incentive achievement outcomes continue to align with the fi nancial performance and strategic objectives of the
Group. The table below sets out the Group CEO’s incentive achievement over the last 5 years, with FY2019 – FY2021 under the
VRP and FY2017 – FY2018 under the Group’s previous STI incentive structure.
Group Financial Target
Incentive
Target
(Growth)
0 - 10%
23% - 34%(ii)
0 - 10%
0 - 10%
0 - 10%
Actual
Growth
21.2%
30.8%
7.1%
23.6%(iii)
87.6%(v)
Achievement
Non-Financial
Target
Achievement
Total
Achievement
100%
71%
77%
91%(iv)
100%
100%
96%
74%
78%
88%
100%
77%
76%
87%
97%(vi)
Financial Year(i)
2017
2018
2019
2020
2021
Notes
(i)
FY2017 – FY2018 STI target based on EBIT, FY2019 - FY2021 VRP targets based on EPS.
(ii) FY2018 target increased due to the acquisition of The Good Guys and JB Hi-Fi New Zealand goodwill impairment in the base in the prior year,
on an underlying basis this represented 0-10% growth target.
(iii) Based on statutory profi t prior to the impact of AASB 16 Leases.
(iv) FY2020 achievement of Group Financial Target based on the Group’s (pre-Covid) guidance of $270 million rather than reported NPAT result of
$302.3m.
(v) FY2021 EPS growth from the Group’s FY2020 $270 million (pre-Covid) NPAT guidance.
(vi) Unadjusted achievement of 97%, adjusted achievement of 24.25% taking account FY2021 VRP restricted share rewards foregone following
R. Murray’s resignation and scheduled departure in early FY2022.
38
The effectiveness of the Executive KMPs’ performance related remuneration in driving performance is refl ected in the long term
growth of the share price of the Company. The following graph plots the JB Hi-Fi closing share price and the ASX 200 on a daily
basis between listing on the ASX and 1 August 2021. The JB Hi-Fi closing share price compound annual growth rate between
listing and 1 August 2021 is 20.6%, whilst the ASX 200 compound annual growth rate over the same period is 4.6%.
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JB Hi-Fi Share Price
ASX 200 (rebased against JBH share price)
Key terms of Executive KMP employment agreements
The remuneration and other terms of employment for each of the Executive KMP are set out in individual Company employment
agreements. None of these executives are subject to a fi xed term of employment.
Name
T. Smart
N. Wells
C. Trainor
Notice Periods/Termination Payment/Non-compete
12 months’ notice (or payment in lieu)
12 months’ post termination non-compete and non-solicitation restriction
6 months’ notice (or payment in lieu)
6 months’ post termination non-compete and non-solicitation restriction
9 months’ notice (or payment in lieu) if terminated by the Company
6 months’ notice if notice is given by the executive
6 months’ post termination non-compete and non-solicitation restriction
As announced to the ASX on 28 April 2021, R. Murray resigned and will leave the Company at the end of August 2021.
Each Executive KMP may be terminated immediately for serious misconduct. In no instance would a payment in lieu of notice
exceed the termination payments limits set out in the Corporations Act 2001.
Each of the Executive KMP service contracts contains contractual entitlements for the Company to clawback incentive remuneration
in the event of fraud, dishonesty, or material misstatements in, or omissions from, the Company’s fi nancial statements or
misstatements concerning the satisfaction of a performance condition.
39
REMUNERATION REPORT (continued)
Richard Murray (Group CEO) exit terms
As announced to the ASX on 28 April 2021, and set out on page 15 of this Report, Richard Murray will leave the Company at the
end of August 2021.
No severance payment will be made upon Richard’s departure.
At the time of his departure, Richard will hold a number of restricted shares in the Company issued in previous years following
testing against the applicable year’s performance scorecard pursuant to its Variable Reward Plan. He will be permitted, pursuant to
the terms of that Plan, to continue to hold those shares subject to the applicable restriction periods.
As set out on page 35 of this Report, recognising that Richard led the Group for the whole of FY2021, the Board determined that
Richard will be paid the cash element (25%) of his Variable Reward Plan benefi ts for FY2021, subject to the achievement of the
relevant KPIs. However, Richard will not receive the remaining 75% of his FY2021 VRP, which would otherwise have been paid in
restricted shares.
Richard’s employment contract contains a one-year restraint prohibiting him from working for competitors of JB Hi-Fi for 12 months
following his departure (until August 2022), and a 12 month non-solicitation restriction. Richard has agreed the non-solicitation
restriction will be increased in duration to 36 months and cover senior employees of the Group. In the event that Richard were to
breach the non-compete or non-solicitation provisions, he will forfeit any of the restricted shares issued pursuant to the Variable
Reward Plan that he holds at that time.
Minimum shareholding guidelines
Building Executive KMP shareholdings is a priority of the Board in the context of retention, and to ensure Executive KMP are
invested in the long term success of the Group and aligned with shareholder interests.
In conjunction with introducing the VRP, a minimum shareholding requirement for Executive KMP was introduced in FY2019, being:
•
•
1.5 times fi xed pay for the Group CEO; and
1.0 times fi xed pay for the other Executive KMP.
This level of shareholding is required to be built over 5 years from the introduction of the VRP (or appointment, if later).
FY2022 Executive KMP remuneration
The Company will retain the same structure for FY2022 executive KMP remuneration as was used in FY2021.
As disclosed in the Company’s “CEO Transition” announcement to the ASX in April 2021, Terry Smart’s fi xed annual remuneration
as Group CEO will be $1.7 million with a maximum incentive opportunity of 206% of this amount. Nick Wells’ remuneration package
has increased by 14.3% from FY2021, recognising his increased responsibilities within the Group and his appointment as an
Executive Director.
The Group fi nancial component of the FY2022 VRP (EPS growth) will be set by reference to annual budgets, longer term corporate
plans and current market expectations, taking account of the effects of Covid-19 including elevated sales and profi t in FY2020 and
FY2021 and ongoing restrictions throughout much of Australia.
40
NON-EXECUTIVE DIRECTOR REMUNERATION
FY2021 Non-Executive Director Remuneration
The following persons acted as non-executive directors of the Company both during and since the end of the fi nancial year
(except to the extent specifi ed otherwise below) and are considered members of key management personnel for FY2021:
Stephen Goddard
Non-executive Director, Chair of the Board and of the Remuneration and Nominations Committee
Beth Laughton
Non-executive Director, Chair of the Audit and Risk Management Committee and Member of the
Remuneration and Nominations Committee
Mark Powell
Non-executive Director, Member of the Audit and Risk Management Committee and Member of the
Remuneration and Nominations Committee
Geoff Roberts
Non-executive Director and Member of the Audit and Risk Management Committee – with effect from
16 January 2021
Richard Uechtritz
Non-executive Director
Melanie Wilson
Non-executive Director and Member of the Audit and Risk Management Committee
The overriding objective of the JB Hi-Fi remuneration policies with regard to non-executive directors is to ensure the Company
is able to attract and retain non-executive directors with the skills and experience to enable the Board to discharge its oversight
and governance responsibilities in an effective and diligent manner. The Board also believes that remuneration for non-executive
directors should refl ect the time commitment and responsibilities of the role.
The remuneration packages for non-executive directors for FY2021 are set out below and are at the same level as those for
FY2018 - FY2020. Aggregate non-executive director remuneration for FY2021 was within the amount determined by the Company
in its Annual General Meeting on 26 October 2017 being $1,500,000.
Role
Chair of the Board
Non-executive director
Additional Committee Fees
Fees
2021
$
Fees
2020
$
$300,000
$300,000
$134,000
$134,000
Remuneration and Nominations Committee Chair
$25,000
$25,000
Audit and Risk Management Committee Chair
$32,000
$32,000
Audit and Risk Management Committee member
$16,000
$16,000
Remuneration and Nominations Committee member
$14,000
$14,000
Superannuation contributions are made by the Company on behalf of non-executive directors in line with statutory requirements
and are included in the remuneration package amount. It is the policy of the Company not to pay lump sum retirement benefi ts to
non-executive directors.
It is the policy of the Company not to have any elements of non-executive director remuneration at risk. Specifi cally, non-executive
directors do not receive any bonus payments and are not entitled to participate in any Company share option plans or the VRP.
In order to further align non-executive directors with shareholders of the Company, a minimum shareholding requirement for
non-executive directors was introduced in October 2018, being 1 times the base board fees for each non-executive director.
This level of shareholding is required to be built over 5 years from the introduction of the policy (or appointment, if later).
41
REMUNERATION REPORT (continued)
FY2022 Non-Executive Director Remuneration
Recognising the need to remain competitive in the market in order to continue to attract and retain talented directors, and noting
that there had been no increase in non-executive director fees since FY2018, the Board has decided to increase fees for
non-executive directors for FY2022 by 6%. There will be no change to the fees for Committee membership or chairing a Committee.
OTHER INFORMATION
Board policy with regard to executives limiting their exposure to risk in relation to equity options
The Company’s Securities Trading Policy prohibits directors, executives, senior management and other specifi ed employees from
altering the economic benefi t or risk derived by them in relation to any unvested equity options that they hold. The Policy also
requires directors and Group executives to obtain prior written approval from the Chair of the Board before altering the economic
benefi t or risk derived by them in relation to any shares or vested options in JB Hi-Fi held by them. Each year directors and
Executive KMP are required to sign a declaration that they are in compliance with all elements of the JB Hi-Fi Securities Trading
Policy. These declarations have been received in relation to the 2021 fi nancial year from all directors and Executive KMP.
42
KEY MANAGEMENT PERSONNEL COMPENSATION
Key management personnel for FY2021 include the non-executive directors and the four identifi ed executives set out on page 33.
The aggregate compensation of the key management personnel of the Group is set out below:
Short-term employee benefits
Salary, fees & allowances
Bonus
VRP Cash
Post-employment benefits
Superannuation
Share based payments
Options expense
VRP expense
Total compensation of Key Management Personnel
Consolidated
2021
$
2020
$
5,285,397
5,109,431
–
913,837
2,066,100
1,267,269
7,351,497
7,290,537
180,709
180,709
186,824
186,824
789,866
1,774,921
4,292,822
2,872,409
5,082,688
4,647,330
12,614,894
12,124,691
43
REMUNERATION REPORT (continued)
The compensation for each member of the key management personnel of the Group is set out below:
Short-term employee benefits
Post-
employ-
ment
benefits
Bonus(ii) VRP Cash(ii)
Total
short-term
employee
benefits
Super-
annuation
$
$
303,306
21,694
164,384
15,616
149,772
14,228
62,785
5,965
122,374
11,626
137,081
13,023
939,702
82,152
$
–
–
–
–
–
–
–
Share based payments
Options(i)(ii)
VRP(ii)(iii)
Total share
based
payments
$
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
Total
$
325,000
180,000
164,000
68,750
134,000
150,104
$
–
–
–
–
–
–
– 1,021,854
851,175 2,326,175
24,519
292,459 1,615,879(iv) 1,908,338
4,259,032
439,335 1,464,935
24,519
143,238
1,061,417 1,204,655
2,694,109
442,723 1,506,818
25,000
264,275
479,616
743,891
2,275,709
332,867 1,113,867
24,519
89,894 1,135,910(v) 1,225,804
2,364,190
– 2,066,100 6,411,795
98,557
789,866
4,292,822 5,082,688 11,593,040
– 2,066,100 7,351,497
180,709
789,866
4,292,822 5,082,688 12,614,894
2021
Non-executive
directors
S. Goddard
B. Laughton
M. Powell
G. Roberts
R. Uechtritz
M. Wilson
Executives
R. Murray
C. Trainor
T. Smart
N. Wells
Salary,
fees &
allowances
$
303,306
164,384
149,772
62,785
122,374
137,081
939,702
1,475,000
1,025,600
1,064,095
781,000
4,345,695
5,285,397
$
–
–
–
–
–
–
–
–
–
–
–
(i)
In accordance with Accounting Standards, remuneration includes the amortisation of the fair value of options issued in prior years under the
Group share option plans that are expected to vest, less any write-back on options lapsed or expected to lapse as a result of actual or expected
performance against non-market hurdles (“Option Accounting Value”). The fair value of options is measured at grant date in accordance with
the relevant accounting standard and progressively allocated to profi t and loss over the vesting period of the option. The amount included
in remuneration above may not be indicative of the benefi t (if any) that key management personnel may ultimately realise should the equity
instruments vest.
(ii) Performance based (other than as set out in note (v) below).
(iii)
In accordance with Accounting Standards, remuneration includes the amortisation of the value of VRP that is paid in restricted shares. The value
of shares is progressively allocated to profi t and loss over the restriction period of the share.
(iv) The VRP expense recognised for R. Murray in FY2021 represents the amortisation of the remaining fair value of VRP restricted shares allocated
in prior years. In view of his resignation and departure from the Company in August 2021, R. Murray will not receive any part of his FY2021 VRP
which would otherwise have been paid in restricted shares.
(v)
In addition to the amortisation of his “standard” performance based FY2021 VRP amount of $802,577 shown on page 45, the fi gure for N. Wells
includes amortisation of $333,334 relating to a one-off grant of restricted shares in 2019, to ensure the Group retained his services over the next
3 years. The grant value was equal to $800,000, being one year’s fi xed remuneration at that time, with half of the shares restricted until August
2021 and half restricted until August 2022. The shares will be forfeited in the event that N. Wells resigns prior to the end of the restriction period,
but retained if employment is terminated for reasons other than for cause. In all other respects the restricted shares will be treated in the same way
as restricted shares granted under the Company’s Variable Reward Plan in August 2019. In accordance with Accounting Standards, the value of
shares is progressively amortised to profi t and loss over the restriction period of the shares.
44
Performance based Short-term employee benefits
Bonus
VRP Cash
Maximum Potential
Actual
Maximum Potential
Actual
% of total
potential
remuneration
–
–
–
–
–
$
–
–
–
–
–
$
–
–
–
–
–
% of total
actual
remuneration
% of total
potential
remuneration
$
% of total
actual
remuneration
$
–
–
–
–
–
877,500
451,758
451,758
342,720
19%
16%
20%
14%
851,175
439,335
442,723
332,867
2,123,736
18% 2,066,100
20%
16%
19%
14%
18%
Performance based Share based payments
Options(iii)
VRP Shares(ii)
Maximum Potential
Actual
Maximum Potential
Actual
% of total
potential
remuneration
$
% of total
actual
remuneration
$
% of total
potential
remuneration
$
% of total
actual
remuneration
$
292,459
143,238
264,275
89,894
789,866
6%
5%
12%
4%
7%
292,459
143,238
264,275
89,894
789,866
7% 1,921,218
5% 1,176,071
12%
4%
489,405
881,280
42% 1,615,879
42% 1,061,417
22%
36%
479,616
802,577
7% 4,467,974
37% 3,959,489
38%
39%
21%
34%
34%
2021
Executives
R. Murray
C. Trainor
T. Smart
N. Wells
2021
Executives
R. Murray(i)
C. Trainor
T. Smart
N. Wells
(i) The VRP expense for R. Murray in FY2021 represents the amortisation of the remaining fair value of VRP restricted shares allocated in prior years.
In view of his resignation and departure from the Company in August 2021, R. Murray will not receive any part of his FY2021 VRP which would
otherwise have been paid in restricted shares.
(ii) The maximum potential and actual values represent the amortisation of the VRP restricted shares over the restriction period of the share in
accordance with Accounting Standards.
(iii) The maximum potential and actual values represent the amortisation of the fair value of the share options over the vesting period in accordance
with Accounting Standards.
The VRP Shares amounts included in the table above represent the FY2021 Maximum Potential accounting expense and Actual
accounting expense recognised in accordance with Accounting Standards.
The Maximum Potential VRP Shares available for each Executive KMP, based on their remuneration package, and the Actual VRP
Shares earned in FY2021, are set out in the table below. The VRP Shares earned in FY2021 will be allocated in August 2021.
VRP shares allocated to T. Smart and N. Wells (who will become Executive Directors at the end of August 2021), will be subject to
a condition subsequent that shareholder approval for the allocation be obtained at the Company’s Annual General Meeting held
in October 2021. If shareholder approval by simple majority of those voting is not obtained, the Board will consider alternative
remuneration arrangements for T. Smart and N. Wells which are consistent with the Company’s remuneration principles and policy.
2021
Executives
R. Murray
C. Trainor
T. Smart
N. Wells
VRP Incentive Package
VRP Incentive Achieved
Maximum
Potential
Cash
Maximum
Potential
Shares
Total VRP
Incentive
Package
Achieved
$
$
$
%
Actual
Cash
$
877,500
– (i)
877,500
97%(ii)
851,175
Actual
Shares
Total VRP
achieved
$
–
$
851,175
451,758
1,355,274
1,807,032
451,758
1,355,274
1,807,032
342,720
1,028,160
1,370,880
2,123,736
3,738,708
5,862,444
97%
98%
97%
97%
439,335
1,318,005
1,757,340
442,723
1,328,169
1,770,892
332,867
998,601
1,331,468
2,066,100
3,644,775
5,710,875
(i)
In view of his resignation and departure from the Company in August 2021, R. Murray will not receive any part of his FY2021 VRP Incentive
Package which would otherwise have been paid in restricted shares (Maximum Potential Shares value of $2,632,500).
(ii) Achievement of 97% of the Maximum Potential Cash component of R. Murray’s FY2021 VRP Incentive only. Overall Total VRP achievement for
R. Murray was 24.25% taking account the FY2021 VRP restricted share rewards foregone as per footnote (i) above.
45
REMUNERATION REPORT (continued)
Short-term employee benefits
Bonus(ii)
VRP Cash(ii)
Salary,
fees &
allowances
$
303,997
164,384
99,848
122,374
142,692
137,964
10,385
981,644
1,350,480
1,024,327
2020
Non-executive
directors
G. Richards
B. Laughton
W. Tang
R. Uechtritz
S. Goddard
M. Powell
M. Wilson
Executives
R. Murray
C. Trainor
T. Smart(iv)
N. Wells
$
–
–
–
–
–
–
–
–
–
–
Post-
employ-
ment
benefits
Total
short-term
employee
benefits
Super-
annuation
$
$
303,997
164,384
99,848
122,374
142,692
137,964
10,385
21,003
15,616
9,486
11,626
13,556
13,107
987
981,644
85,381
Share based payments
Options(i)(ii)
VRP(ii)(iii)
Total
share based
payments
$
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
Total
$
325,000
180,000
109,334
134,000
156,248
151,071
11,372
1,067,025
$
–
–
–
–
–
–
–
–
610,563
1,961,043
368,517
1,392,844
1,005,000
913,837
–
1,918,837
747,980
–
288,189
1,036,169
25,481
25,481
25,000
25,481
668,296
1,240,766
1,909,062
3,895,586
323,011
745,110
1,068,121
2,486,446
581,962
–
581,962
2,525,799
201,652
886,533(v)
1,088,185
2,149,835
4,127,787
913,837
1,267,269
6,308,893
101,443
1,774,921
2,872,409
4,647,330 11,057,666
5,109,431
913,837
1,267,269
7,290,537
186,824
1,774,921
2,872,409
4,647,330 12,124,691
(i)
In accordance with Accounting Standards, remuneration includes the amortisation of the fair value of options issued in prior years under the
Group share option plans that are expected to vest, less any write-back on options lapsed or expected to lapse as a result of actual or expected
performance against non-market hurdles (“Option Accounting Value”). The fair value of options is measured at grant date in accordance with
the relevant accounting standard and progressively allocated to profi t and loss over the vesting period of the option. The amount included
in remuneration above may not be indicative of the benefi t (if any) that key management personnel may ultimately realise should the equity
instruments vest.
(ii) Performance based (other than as set out in note (v) below).
(iii)
In accordance with Accounting Standards, remuneration includes the amortisation of the value of VRP that is paid in restricted shares. The value
of shares is progressively allocated to profi t and loss over the restriction period of the share.
(iv) Given T. Smart received a one-off 3 year grant of LTI on re-joining the Group in April 2017, he did not participate in the VRP for FY2020. Instead,
he was able to earn an STI in FY2020. 80% of this STI will be paid in cash with 20% paid in deferred shares.
(v)
In addition to the amortisation of his “standard” performance based FY2020 VRP amount of $553,200, the fi gure for N. Wells includes
amortisation of $333,334 relating to a one-off grant of restricted shares in 2019, to ensure the Group retained his services over the next
3 years. The grant value was equal to $800,000, being one year’s fi xed remuneration, with half of the shares restricted until August 2021 and half
restricted until August 2022. The shares will be forfeited in the event that N. Wells resigns prior to the end of the restriction period, but retained if
employment is terminated for reasons other than for cause. In all other respects the restricted shares will be treated in the same way as restricted
shares granted under the Company’s Variable Reward Plan in August 2019. In accordance with Accounting Standards, the value of shares is
progressively amortised to profi t and loss over the restriction period of the shares.
46
Performance based Short-term employee benefits
Bonus
VRP Cash
Maximum Potential
Actual
Maximum Potential
Actual
% of total
potential
remuneration
–
–
39%
–
9%
$
–
–
1,030,000
–
1,030,000
$
–
–
% of total
actual
remuneration
% of total
potential
remuneration
$
% of total
actual
remuneration
$
–
–
698,625
412,000
–
913,837
36%
–
913,837
–
320,000
8% 1,430,625
17%
16%
–
610,563
368,517
–
14%
288,189
12% 1,267,269
16%
15%
–
13%
11%
Performance based Share based payments
Options(iii)
VRP Shares(ii)
Maximum Potential
Actual
Maximum Potential
Actual
% of total
potential
remuneration
$
% of total
actual
remuneration
$
% of total
potential
remuneration
$
% of total
actual
remuneration
$
668,296
323,011
581,962
201,652
16%
12%
22%
9%
668,296
323,011
581,962
201,652
1,774,921
15% 1,774,921
17% 1,513,688
13%
892,667
36% 1,240,766
34%
745,110
22%
–
–
–
9%
650,000
16% 3,056,355
28%
553,200
26% 2,539,076
32%
30%
–
26%
23%
2020
Executives
R. Murray
C. Trainor
T. Smart(i)
N. Wells
2020
Executives
R. Murray
C. Trainor
T. Smart(i)
N. Wells
(i) Given T. Smart received a one-off 3 year grant of LTI on re-joining the Group in April 2017, he did not participate in the VRP for FY2020. Instead,
he was able to earn an STI in FY2020.
(ii) The maximum potential and actual values represent the amortisation of the VRP restricted shares over the restriction period of the share in
accordance with Accounting Standards.
(iii) The maximum potential and actual values represent the amortisation of the fair value of the share options over the vesting period in accordance
with Accounting Standards.
The VRP Shares amounts included in the table above represent the FY2020 Maximum Potential accounting expense and Actual
accounting expense recognised in accordance with Accounting Standards.
The Maximum Potential VRP Shares available for each Executive KMP, based on their remuneration package, and the Actual VRP
Shares earned in FY2020, are set out in the table below. The VRP Shares earned in FY2020 were allocated in August 2020 and
those allocated to the Executive Director, Richard Murray, were subsequently approved at the Company’s AGM in October 2020.
2020
Executives
R. Murray
C. Trainor
T. Smart
N. Wells
VRP Incentive Package
VRP Incentive Achieved
Maximum
Potential
Cash
Maximum
Potential
Shares
Total VRP
Incentive
Package
Achieved
$
$
$
%
Actual
Cash
$
Actual
Shares
$
Total VRP
achieved
$
698,625
2,095,875
2,794,500
412,000
1,236,000
1,648,000
–
–
–
320,000
960,000
1,280,000
1,430,625
4,291,875
5,722,500
87%
89%
–
90%
89%
610,563
1,831,689
2,442,252
368,517
1,105,551
1,474,068
–
–
–
288,189
864,567
1,152,756
1,267,269
3,801,807
5,069,076
All bonuses (including VRP cash) are paid in the fi nancial year following the year in which they were earned, for example the FY2021
bonuses are paid in August 2021 (the 2022 fi nancial year).
47
REMUNERATION REPORT (continued)
KEY MANAGEMENT PERSONNEL EQUITY/OPTIONS
Fully paid ordinary shares of JB Hi-Fi Limited
2021
S. Goddard
B. Laughton
M. Powell
G. Roberts
R. Uechtritz
M. Wilson
R. Murray
C. Trainor
T. Smart
N. Wells
Balance at
1 July 2020
No.
Granted as
compensation(i)
No.
Received on
exercise of options
No.
Net other change
No.
Balance at
30 June 2021
No.
Balance held
nominally
No.
4,500
5,804
3,000
–
4,816
–
154,027
30,881
9,405
48,247
260,680
–
–
–
–
–
–
36,687
22,143
3,660
17,316
79,806
–
–
–
–
–
–
65,088
31,044
53,156
19,177
168,465
–
–
1,000
–
–
1,500
(117,000)
(41,337)
–
(27,290)
(183,127)
4,500
5,804
4,000
–
4,816
1,500
138,802
42,731
66,221
57,450
325,824
–
–
–
–
–
–
–
–
–
–
–
(i) Shares allocated under the Company’s Variable Reward Plan and executive deferred STI plan.
2020
G. Richards
B. Laughton
R. Uechtritz
S. Goddard
M. Powell
M. Wilson
R. Murray
C. Trainor
T. Smart
N. Wells
Balance at
1 July 2019
No.
Granted as
compensation(i)
No.
Received on
exercise of options
No.
Net other change
No.
Balance at
30 June 2020
No.
Balance held
nominally
No.
26,486
5,804
11,516
4,500
2,000
–
110,122
36,819
56,416
32,758
–
–
–
–
–
–
51,723
30,881
4,690
47,306
286,421
134,600
–
–
–
–
–
–
79,462
32,209
–
19,483
131,154
(4,000)
–
(6,700)
–
1,000
–
(87,280)
(69,028)
(51,701)
(51,300)
22,486
3,455
5,804
4,816
4,500
3,000
–
154,027
30,881
9,405
48,247
–
–
–
–
–
–
–
–
–
(269,009)
283,166
3,455
(i) Shares allocated under the Company’s executive deferred STI and Variable Reward Plan including one-off grant to N. Wells as detailed on
page 44.
(ii) W. Tang ceased to be a non-executive director on 14 February 2020 and, at this time, held 5,000 shares in the Company. W. Tang had no
transactions in ordinary shares during the period in FY2020 in which she was a director.
48
Share options of JB Hi-Fi Limited
2021
R. Murray
C. Trainor
T. Smart
N. Wells
2020
R. Murray
C. Trainor
T. Smart
N. Wells
Balance at
1 July 2020
No.
Granted as
compensation
No.
111,793
53,881
106,312
33,530
305,516
–
–
–
–
–
Balance at
1 July 2019
No.
Granted as
compensation
No.
191,255
86,090
106,312
53,013
436,670
–
–
–
–
–
Exercised
No.
(65,088)
(31,044)
(53,156)
(19,177)
(168,465)
Exercised
No.
(79,462)
(32,209)
–
(19,483)
(131,154)
Net other
change
No.
Balance at
30 June 2021
No.
Balance vested
at
30 June 2021
No.
Options vested
during year
No.
–
–
–
–
–
46,705
22,837
53,156
14,353
137,051
–
–
–
–
–
65,088
31,044
53,156
19,177
168,465
Net other
change
No.
Balance at
30 June 2020
No.
Balance vested
at
30 June 2020
No.
Options vested
during year
No.
–
–
–
–
–
111,793
53,881
106,312
33,530
305,516
–
–
–
–
–
79,462
32,209
–
19,483
131,154
During the fi nancial year all options exercised by key management personal were zero exercise price options. During FY2020 75,597
zero exercise price options and 55,557 options with an exercise price were exercised by key management personnel. The weighted
average exercise price for options with an exercise price in FY2020 was $17.72 per ordinary share in JB Hi-Fi Limited.
Key management personnel options granted and exercised during the fi nancial year
The following table summarises the value of options granted and exercised during the fi nancial year to and by the key management
personnel:
2021
R. Murray
C. Trainor
T. Smart
N. Wells
Value of options granted –
at the grant date(i)
Value of options exercised –
at the exercise date
$
–
–
–
–
–
$
3,289,580
1,567,002
2,735,408
934,500
8,526,490
(i) The value of options granted during the period is recognised in remuneration over the vesting period of the option, in accordance with Accounting
Standards.
The value of options granted and exercised during the year is calculated based on the following:
•
•
fair value of the option at grant date multiplied by the number of options granted; and
the share price at the time the option is exercised multiplied by the number of options exercised.
Options granted during the fi nancial year
There were no share options granted during FY2021 to key management personal (or the fi ve most highly remunerated offi cers of
the Company). Instead, these employees participate in the VRP as set out on page 34.
49
REMUNERATION REPORT (continued)
Options exercised during the fi nancial year
The following table details the options exercised during the fi nancial year by key management personnel.
Number
of options
exercised
Exercise date
Number of
shares
Exercise price
$
Share price at
exercise date
$
R. Murray
C. Trainor
Series
130
147
163
130
147
163
18,382
19/08/2020
16,032
24/08/2020
30,674
19/08/2020
65,088
8,206
19/08/2020
6,026
24/08/2020
16,812
19/08/2020
31,044
T. Smart
158
53,156
24/08/2020
53,156
N. Wells
130
147
163
4,825
18/08/2020
3,735
24/08/2020
10,617
18/08/2020
19,177
168,465
Options lapsed during the fi nancial year
–
–
–
–
–
–
–
–
–
–
18,382
16,032
30,674
65,088
8,206
6,026
16,812
31,044
53,156
53,156
4,825
3,735
10,617
19,177
168,465
Performance
condition –
cumulative
EPS growth
per annum
4%-8%
4%-8%
9%-15%
4%-8%
4%-8%
9%-15%
$50.24
$51.46
$50.24
$50.24
$51.46
$50.24
$51.46
9%-15%
$48.07
$51.46
$48.07
4%-8%
4%-8%
9%-15%
Performance
condition –
achieved
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
There were no options issued to the identifi ed key management personnel that lapsed during the fi nancial year.
Key management personnel options granted, exercised and lapsed since the end of the fi nancial year
Since the end of the fi nancial year, no options have been granted to key management personnel (or the fi ve most highly
remunerated offi cers of the Company), and no options issued to key management personnel (or the fi ve most highly remunerated
offi cers of the Company) have been exercised or lapsed.
50
SHARE OWNERSHIP-BASED REMUNERATION SCHEMES
Group Incentive Plans
The Group has the following share ownership-based remuneration schemes for executives and non-executive management
(excluding non-executive directors).
Variable Reward Plan (as detailed on page 34)
Participants are Executive KMP, other executives and selected senior management.
Employee Share Option Plan (as detailed below)
Participants are executives and management. With effect from FY2019 Executive KMP no longer participate in this scheme and,
instead, participate in the Variable Reward Plan. Under this Employee Share Option Plan, participants are granted options to acquire
shares. Options under this Plan which are currently “on foot” or which vested, were exercised, or expired in FY2020 or FY2021 have
the following features.
•
•
Issue Price – no issue price is payable on the issue of an option;
Exercise Price – for some of the options issued to Executive KMP and other executives prior to 30 June 2015, an exercise
price was payable on the exercise of an option. This exercise price was usually calculated as being the closing volume
weighted average share price (“VWAP”) of JB Hi-Fi Limited shares over the 5 trading days post and including the date of
release of the Group’s full year results, immediately prior to the grant of the option. In some circumstances, this price was
calculated by reference to another date or time period, for example where a grant of options occurred as the result of an
executive or non-executive manager joining the Group or being promoted and the grant did not occur following the release of
results. For options that had an exercise price payable on exercise of the option, a share price condition provided that options
would only vest if, during a trading window (as defi ned in the Group’s Securities Trading Policy), the VWAP of the shares
over 5 consecutive trading days exceeded the option exercise price (at a time when all other conditions had been satisfi ed);
•
Zero Exercise Price – for some options issued before 30 June 2015, and all options issued after 30 June 2015, a zero
exercise price;
•
Performance Conditions – for options issued to Executive KMP and other executives, the majority of options are subject
to performance conditions based on EPS growth. Some of the options issued to certain senior managers are also subject
to performance hurdles. These performance hurdles require compound annual earnings per share growth of between
4% and 15% per annum. To the extent that a performance condition is not achieved in one year, the hurdle is compounded
and reassessed in each subsequent year, until the earlier of the condition being satisfi ed or the option expiring. However, no
retesting takes place in the year of expiry;
•
Service Conditions – the options issued to Executive KMP and other executives in FY2015 to FY2017 (inclusive) vest a third
each on the third, fourth and fi fth anniversary of the grant date provided that the executive remains employed at that time.
The only exception to this was for options issued to Terry Smart in April 2017, which vested one half each on each of the third
and fourth anniversaries of the grant date, provided that he remained employed at that time. Options issued to Executive KMP
and other executives in FY2018 also vest one half each on each of the third and fourth anniversaries of the grant date, provided
the relevant executive remains employed at that time. Options issued to certain (non KMP) executives since FY2019 vest a third
each on the second, third and fourth anniversary of grant date provided that the non-executive manager remains employed
at that time. For all options issued to non-executive management, options vest a third each on the second, third and fourth
anniversary of grant date provided that the non-executive manager remains employed at that time;
•
•
Vesting – all conditions must be satisfi ed for an option to vest;
Expiry – options issued to non-executive management generally expire fi ve years after they are issued. Options issued to
Executive KMP and other executives prior to 30 June 2017 generally expire six years after they are issued. Options issued
to Executive KMP and other executives between 1 July 2017 and 30 June 2018 expire fi ve years after they are issued.
Options issued to certain (non KMP) executives since FY2019 also expire fi ve years after they are issued. All unvested options
generally expire immediately upon termination of employment although, depending upon the terms of issue, the Company
may have discretion to allow the options to continue or waive vesting conditions in certain circumstances. Upon termination of
employment, vested options either expire upon termination, 30 days after termination or continue in force depending upon the
circumstances of the employee’s exit and the terms of issue;
51
REMUNERATION REPORT (continued)
•
Valuation – options are valued using the Black-Scholes option pricing model, which takes into account the exercise price, term
of the option, the expected exercise date based on prior years’ experience, the share price at grant date, the expected price
volatility of the underlying share, the expected dividend yield and the risk-free interest rate;
•
•
Entitlement to Shares – each option entitles the holder to one ordinary share in JB Hi-Fi Limited;
Share Issues – holders of options do not have the right, under the options, to dividends or to participate in any share issue or
interest issue of JB Hi-Fi Limited or of any other body corporate or registered scheme;
•
Change of Control – upon a change of control of the Company all vested and unvested options will automatically lapse unless
the Company determines otherwise; and
•
Other Conditions – other conditions including, amongst other things, treatment of the options in the event of a capital
reorganisation.
On-market purchase of shares for purposes of Group incentive plans
During FY2021, 216,507 ordinary shares in the Company were purchased at an average price of $50.51 per share in order to satisfy
the entitlements of the Executives and employees to acquire securities under the Group’s incentive plans.
Shares under option
Details of interests under option at the date of this Report are set out below. 306,864 of the outstanding options are vested and
exercisable. All options entitle the holder to ordinary shares in JB Hi-Fi Limited.
Number
of shares
under
option
Grant date
(GD)
Share Price
at GD
$
Expiry date
Exercise
price
$
Weighted
average
expected
volatility(i)
Dividend
yield at
GD
Risk-free
interest
rate at GD
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
31.4%
31.3%
28.8%
28.6%
28.2%
27.5%
27.1%
27.0%
36.2%
33.6%
31.8%
34.4%
4.2%
3.4%
4.6%
4.0%
4.6%
5.0%
5.5%
4.5%
3.7%
3.7%
3.7%
4.1%
2.1%
1.5%
2.0%
2.1%
2.2%
2.2%
2.2%
0.7%
0.4%
0.4%
0.4%
0.3%
Weighted
average
fair value
at GD(i)
$
$17.45
$24.84
$20.68
$20.72
$20.70
$21.49
$19.22
$27.14
$46.35
$44.66
$43.03
$40.22
Option
series
142
148
159
162
880
2/05/2016
$22.18
1/05/2022
41,083
22/08/2016
$28.95
21/08/2022
53,156
18/04/2017
$24.46
17/04/2023
2,317
1/05/2017
$24.69
30/04/2022
164-167
168,153
29/08/2017
$23.56
28/08/2022
168-170
163,063
20/08/2018
$26.21
19/08/2023
172-173
5,064
3/12/2018
$23.40
2/12/2023
174-176
209,636
19/08/2019
$32.06
18/08/2024
177
178
179
45,711
17/08/2020
$49.60
16/08/2025
45,641
16/08/2020
$47.33
15/08/2025
45,593
14/08/2020
$47.33
13/08/2025
180-182
2,118
7/12/2020
$43.97
6/12/2025
782,415
(i) The values shown are the weighted average for the relevant series listed.
52
The following tables include all share options granted under the Group share option plans that were exercised during and since
the end of the current fi nancial year and during the previous fi nancial year. All shares are ordinary shares in JB Hi-Fi Limited and no
amounts remain unpaid.
2021
Option
Series
130
136
141
Grant date
Number
exercised
Number
of shares
14/08/2015
42,874
42,874
5/11/2015
2/05/2016
5,480
880
5,480
880
145-147
22/08/2016
78,528
78,528
154
157
158
161
19/10/2016
2/11/2016
18/04/2017
1/05/2017
492
492
53,156
2,317
492
492
53,156
2,317
163-167
29/08/2017
170,363
170,363
168-169
20/08/2018
81,563
81,563
171
174
3/12/2018
19/08/2019
2,531
921
2,531
921
439,597
439,597
Amount paid
per share
$
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
2020
Option
Series
Grant date
Number
exercised
Number
of shares
issued
Amount paid
per share
$
103-104
15/08/2014
109-113
15/08/2014
117-118
27/11/2014
123-127
27/11/2014
129-133
14/08/2015
135
139
140
5/11/2015
18/12/2015
2/05/2016
63,777
21,111
10,624
3,165
91,421
5,479
747
880
63,777
21,111
10,624
3,165
91,421
5,479
747
880
144-146
22/08/2016
78,474
78,474
153
156
160
165
19/10/2016
2/11/2016
1/05/2017
491
491
2,317
29/08/2017
75,581
491
491
2,317
75,581
354,558
354,558
$17.72
$0.00
$15.58
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Share price at
exercise date(i)
$
$48.07 to $50.24
$48.81
$48.07
$45.46 to $52.40
$47.91
$48.81
$51.46
$48.07
$44.62 to $52.40
$45.39 to $52.40
$51.59
$52.18
Share price at
exercise date(i)
$
$31.61 to $31.92
$30.97 to $32.06
$41.21
$41.21 to $42.95
$30.97 to $41.60
$36.73
$42.95
$31.92
$31.61 to $41.60
$36.72
$36.47
$30.99
$30.97 to $41.60
(i) Where a range of prices are shown, options within the series were exercised on various dates throughout the period. The share prices shown are
the maximum and minimum share prices on the exercise dates for the relevant series.
53
REMUNERATION REPORT (continued)
Long-term incentives subject to performance conditions
Certain executives have been issued with options under the Group share option plans as part of the Company’s long-term option
plans. Details of the features and conditions of such options are included in the section of this Report entitled “Group Incentive
Plans” on pages 51 and 52. The following table details the options outstanding at the date of this Report which feature performance
hurdles:
Option
Series
Grant Date
Performance
Hurdle(i)(ii)
Date
for first testing
Relevant
Financial Year
Exercise Price
$
Expiry Date
Vested (time based service condition and performance hurdle achieved)
142
159
164
2/05/2016
18/04/2017
29/08/2017
4%-8%
9%-15%
9%-15%
2/05/2021
18/04/2021
9/08/2021
2020
2021
2021
$0.00
$0.00
$0.00
1/05/2022
17/04/2023
28/08/2022
Not vested (performance hurdle achieved but time based service condition not achieved)
148
22/08/2016
4%-8%
22/08/2021
2021
$0.00
21/08/2022
(i)
For options shown with a 4%-8% performance hurdle, options vest as follows:
• where compound annual EPS growth of 4% is achieved 40% of the options vest;
• where compound annual EPS growth is between 4% and 5% an additional 10% will vest on a linear basis; and
• where compound annual EPS growth is between 5% and 8% the remaining 50% will vest on a linear basis.
(ii) For options shown with a 9%-15% performance hurdle, 50% of the options vest where compound annual EPS growth is 9%, and where
compound annual EPS growth is between 9% and 15% the remaining 50% of options vest on a linear basis.
54
AUDITOR’S INDEPENDENCE DECLARATION
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne, VIC, 3000
Australia
Phone: +61 3 9671 7000
www.deloitte.com.au
Board of Directors
JB Hi-Fi Limited
Podium Level, 60 City Road
Southbank VIC 3006
16 August 2021
Dear Board Members
Auditor’s Independence Declaration to JB Hi-Fi Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence
to the directors of JB Hi-Fi Limited.
As lead audit partner for the audit of the fi nancial statements of JB Hi-Fi Limited for the year ended 30 June 2021, I declare that to
the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Travis Simkin
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacifi c Limited and the Deloitte organisation.
55
INDEPENDENT AUDITOR’S REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne, VIC, 3000
Australia
Phone: +61 3 9671 7000
www.deloitte.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF JB HI-FI LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of JB Hi-Fi Limited (the “Company”) and its subsidiaries (the “Group”) which comprises the
consolidated balance sheet as at 30 June 2021, the consolidated statement of profit or loss, the consolidated statement of profit
or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash
flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and the
directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
• Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the
year then ended; and
•
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the
Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the
Company, would be in the same terms if given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most signifi cance in our audit of the fi nancial report
for the current period. These matters were addressed in the context of our audit of the fi nancial report as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacifi c Limited and the Deloitte organisation.
56
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Carrying value of The Good Guys cash generating unit
Our audit procedures included, but were not limited to:
Refer to Note 12 Intangible assets
•
Understanding managements processes and controls
As at 30 June 2021, the carrying value of The Good Guys
cash generating unit (“TGG CGU”) included $575.6 million of
related to the preparation of the VIU model for the
TGG CGU.
goodwill and $241.3 million of indefi nite useful life brand names,
•
Agreeing forecast cash flows for FY22 to the latest Board
both of which are required to be assessed for impairment
reviewed budget and assessing the historical accuracy of
annually or where there is an indicator of impairment.
budgeting for the TGG CGU.
The recoverable amount of the TGG CGU has been
•
Assessing how management factored in estimation
determined by management based on a value-in-use (“VIU”)
uncertainty in setting the FY22 budget and selecting key
model, which incorporates signifi cant judgement related to
assumptions, by comparing the estimates to historical
the estimation of future cash fl ows, short term growth rates,
performance, industry reports and industry peers.
long term growth rates and an appropriate discount rate.
•
In conjunction with our valuation specialists, assessing
The estimation uncertainty associated with future cash
the VIU methodology used by management and the
fl ows and key assumptions was elevated as at 30 June 2021
mathematical accuracy of the VIU model, as well as
due to the continuing uncertainty arising from the COVID-19
comparing the discount rate and long term growth rate
pandemic and its impact on macroeconomic factors, both
to external benchmark data.
globally and in Australia.
•
Performing independent sensitivity analysis to challenge
key assumptions.
•
Evaluating the appropriateness of the disclosures included
in Note 12 to the financial statements.
Lease accounting
Our audit procedures included, but not limited to:
Refer to Note 16 of Right of use assets and lease liabilities
•
Understanding managements processes and key controls
The Group holds right of use assets of $536.3 million and
related to the accounting for leases.
lease liabilities of $631.3 million.
•
Testing on a sample basis, movements in the right of use
In applying AASB 16 Leases, the Group is required to make
a number of signifi cant judgments and estimates as disclosed
assets and lease liabilities and recalculating the interest
and depreciation recognised in profi t or loss.
in Note 16, including:
•
Evaluating the estimates and judgements applied by
•
Measuring the lease term and determining whether
renewal options are ‘reasonably certain’.
•
Determining the ‘enforceable period’ for stores in
holdover, with reference to IFRS Interpretations
Committee Guidance.
management, including the probability of exercising
renewal options and the lease term assigned to leases
in holdover.
•
In conjunction with our treasury specialists, assessing
the incremental borrowing rates adopted by management,
by preparing an independent expectation of the
•
Determining an appropriate incremental borrowing rate
incremental borrowing rates.
to be applied in the measurement of right of use assets
and lease liabilities.
•
Evaluating the appropriateness of the disclosures included
in Note 16 to the financial statements.
Other Information
The directors are responsible for the other information.
The other information comprises:
•
the Governance Statement, Directors’ Report, Operating and Financial Review and additional securities exchange information,
which we obtained prior to the date of this auditor’s report, and are included in the Group’s Annual Report;
•
the Chairman’s and Group Chief Executive Offi cer’s Report, which will be included in the Group’s Annual Report, which is
expected to be made available to us after the date of this auditor’s report.
57
INDEPENDENT AUDITOR’S REPORT (continued)
The other information does not include the fi nancial report or the Remuneration Report and our auditor’s report thereon.
Our opinion on the fi nancial report does not cover the other information and we do not and will not express any form of assurance
conclusion thereon.
In connection with our audit of the fi nancial report, our responsibility is to read the other information identifi ed above and, in doing
so, consider whether the other information is materially inconsistent with the fi nancial report or our knowledge obtained in the audit,
or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained
prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
When we read the Chairman’s and Group Chief Executive Offi cer’s Report, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to the directors and use our professional judgement to determine the
appropriate action.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the fi nancial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the fi nancial report that gives a true and fair view and is free from material misstatement,
whether due to fraud or error.
In preparing the fi nancial report, the directors are responsible for assessing the ability of the Group to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the fi nancial report as a whole is free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to infl uence the economic decisions of users taken on the basis of this fi nancial
report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the fi nancial report, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is suffi cient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signifi cant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the fi nancial report or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the fi nancial report, including the disclosures, and whether the
fi nancial report represents the underlying transactions and events in a manner that achieves fair presentation.
•
Obtain suffi cient appropriate audit evidence regarding the fi nancial information of the entities or business activities within the
Group to express an opinion on the fi nancial report. We are responsible for the direction, supervision and performance of the
Group’s audit. We remain solely responsible for our audit opinion.
58
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and signifi cant audit
fi ndings, including any signifi cant defi ciencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most signifi cance in the audit of the
fi nancial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefi ts of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 31 to 54 of the Directors’ Report for the year ended 30 June 2021.
In our opinion, the Remuneration Report of JB Hi-Fi Limited, for the year ended 30 June 2021, complies with section 300A of the
Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with
section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our
audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Travis Simkin
Partner
Chartered Accountants
Melbourne, 16 August 2021
59
DIRECTORS’ DECLARATION
The directors declare that:
(a) in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable;
(b) the attached financial statements are in compliance with International Financial Reporting Standards, as stated in note 1 to
the financial statements;
(c) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and
performance of the consolidated entity; and
(d) the directors have been given the declarations required by s.295A of the Corporations Act 2001.
At the date of this declaration, the Company is within the class of companies affected by ASIC Corporations (Wholly-owned
Companies) Instrument 2016/785. The nature of the deed of cross guarantee is such that each company which is party to the
deed guarantees to each creditor payment in full of any debt in accordance with the deed of cross guarantee.
In the directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class
Order applies, as detailed in note 22 to the financial statements will, as a group, be able to meet any obligations or liabilities to
which they are, or may become, subject by virtue of the deed of cross guarantee.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Stephen Goddard
Chairman
16 August 2021
Richard Murray
Group Chief Executive Officer
60
STATEMENT OF PROFIT OR LOSS
for the fi nancial year ended 30 June 2021
Revenue
Cost of sales
Gross profi t
Other income
Sales and marketing expenses
Occupancy expenses
Administration expenses
Other expenses
Finance costs
Profi t before tax
Income tax expense
Profi t for the year attributable to Owners of the Company
Earnings per share
Basic (cents per share)
Diluted (cents per share)
Notes
5
Consolidated
2021
$m
2020
$m
8,916.1
7,918.9
(6,938.9)
(6,224.8)
1,977.2
1,694.1
2.9
(845.8)
(293.6)
(41.3)
(54.7)
(24.7)
720.0
(213.9)
506.1
3.6
(809.8)
(313.1)
(41.7)
(48.7)
(36.4)
448.0
(145.7)
302.3
Cents
Cents
440.75
437.83
263.11
260.69
6
7
3
3
The above statement of profi t or loss should be read in conjunction with the accompanying notes.
61
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the fi nancial year ended 30 June 2021
Profi t for the year
Other comprehensive income
Items that may be reclassifi ed subsequently to profi t or loss
Changes in the fair value of cash fl ow hedges (net of tax)
Exchange differences on translation of foreign operations
Other comprehensive income for the year (net of tax)
Consolidated
2021
$m
506.1
–
–
–
2020
$m
302.3
0.2
(0.4)
(0.2)
Total comprehensive income for the year attributable to Owners of the Company
506.1
302.1
The above statement of profi t or loss and other comprehensive income should be read in conjunction with the accompanying notes.
62
BALANCE SHEET
as at 30 June 2021
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Plant and equipment
Deferred tax assets
Intangible assets
Right-of-use assets
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Deferred revenue
Provisions
Lease liabilities
Current tax liabilities
Total current liabilities
Non-current liabilities
Deferred revenue
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
Consolidated
2021
$m
2020
$m
Notes
17
9
8
10
11
7
12
16
10
13
14
15
16
14
15
16
19
20
263.2
211.6
938.8
35.7
251.5
220.3
739.3
34.7
1,449.3
1,245.8
169.0
30.3
172.3
22.2
1,031.4
1,031.4
536.3
39.0
1,806.0
3,255.3
642.2
38.4
1,906.5
3,152.3
777.4
212.9
105.5
167.3
92.2
854.1
196.6
98.9
164.0
32.3
1,355.3
1,345.9
85.0
42.6
464.0
591.6
1,946.9
1,308.4
393.0
83.8
831.6
81.6
41.5
577.6
700.7
2,046.6
1,105.7
403.2
66.8
635.7
1,308.4
1,105.7
The above balance sheet should be read in conjunction with the accompanying notes.
63
STATEMENT OF CHANGES IN EQUITY
for the fi nancial year ended 30 June 2021
Consolidated
Notes
Balance at 1 July 2019
Adjustment on adoption of
AASB 16 (net of tax)
Restated total equity at the
beginning of the fi nancial
year
Profi t for the year
Cash fl ow hedges
(net of tax)
Exchange difference
on translation of foreign
operations
Total comprehensive
income for the year
Allocation of shares under
share option plans
Dividends paid
Share-based payments -
expense
Share-based payments -
income tax
19
4
Contributed
equity
$m
434.8
Equity
settled
benefi ts
reserve
$m
54.2
–
–
434.8
54.2
–
–
–
–
1.3
–
–
–
–
–
–
–
–
–
12.1
1.2
–
67.5
Acquisition of shares by
employee share trust
19
Balance at 30 June 2020
(32.9)
403.2
Balance at 1 July 2020
403.2
67.5
Profi t for the year
Total comprehensive
income for the year
Dividends paid
Acquisition of shares by
employee share trust
Share-based payments -
expense
Share-based payments -
income tax
4
19
–
–
–
(10.2)
–
–
Balance at 30 June 2021
393.0
–
–
–
–
13.5
3.5
84.5
Foreign
currency
translation
reserve
$m
Hedging
reserves
$m
Common
control
reserve
$m
Retained
earnings
$m
Total
equity
$m
5.0
–
5.0
–
–
(0.4)
(0.4)
–
–
–
–
–
4.6
4.6
–
–
–
–
–
–
0.6
–
0.6
–
0.2
–
0.2
–
–
–
–
–
0.8
0.8
–
–
–
–
–
–
(6.1)
555.6
1,044.1
–
(49.9)
(49.9)
(6.1)
–
–
–
–
–
–
–
–
–
505.7
302.3
–
–
994.2
302.3
0.2
(0.4)
302.3
302.1
–
1.3
(172.3)
(172.3)
–
–
–
12.1
1.2
(32.9)
(6.1)
635.7
1,105.7
(6.1)
–
–
–
–
–
–
635.7
506.1
506.1
(310.2)
–
–
–
1,105.7
506.1
506.1
(310.2)
(10.2)
13.5
3.5
4.6
0.8
(6.1)
831.6
1,308.4
The above statement of changes in equity should be read in conjunction with the accompanying notes.
64
STATEMENT OF CASH FLOWS
for the fi nancial year ended 30 June 2021
Cash fl ows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other fi nance costs paid on borrowings
Interest on lease liabilities
Income taxes paid
Net cash infl ow from operating activities
Cash fl ows from investing activities
Payments for plant and equipment
Proceeds from sale of plant and equipment
Net cash (outfl ow) from investing activities
Cash fl ows from fi nancing activities
Proceeds from issues of shares
Payments for shares acquired by the employee share trust
Repayment of borrowings
Payments for debt issue costs
Dividends paid to owners of the Company
Payment of lease liabilities
Net cash (outfl ow) from fi nancing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the fi nancial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
Consolidated
2021
$m
2020
$m
Notes
9,837.1
8,759.3
(9,096.7)
(7,624.5)
16
17
11
19
19
4
16
1.6
(3.3)
(21.3)
(158.7)
558.7
(57.7)
–
(57.7)
–
(10.2)
–
–
(310.2)
(168.9)
(489.3)
11.7
251.5
–
263.2
1.1
(11.5)
(24.9)
(118.2)
981.3
(43.1)
0.1
(43.0)
1.3
(32.9)
(440.0)
(0.1)
(172.3)
(161.8)
(805.8)
132.5
119.2
(0.2)
251.5
The above statement of cash fl ows should be read in conjunction with the accompanying notes.
65
NOTES TO THE FINANCIAL STATEMENTS
for the fi nancial year ended 30 June 2021
Contents of the notes to the consolidated fi nancial statements
Page
1
About this report ................................................................................................................................................................67
Group Performance .....................................................................................................................................................................68
2
3
4
5
6
7
Segment information ..........................................................................................................................................................68
Earnings per share .............................................................................................................................................................69
Dividends ...........................................................................................................................................................................70
Revenue ............................................................................................................................................................................70
Expenses ...........................................................................................................................................................................71
Taxation .............................................................................................................................................................................72
Operating Assets and Liabilities ................................................................................................................................................74
8
9
10
11
12
13
14
15
16
Inventories .........................................................................................................................................................................74
Trade and other receivables ...............................................................................................................................................74
Other assets ......................................................................................................................................................................75
Plant and equipment ..........................................................................................................................................................76
Intangible assets ................................................................................................................................................................77
Trade and other payables ...................................................................................................................................................78
Deferred revenue ...............................................................................................................................................................78
Provisions ..........................................................................................................................................................................79
Right-of-use assets and lease liabilities ..............................................................................................................................80
Capital Structure and Risk Management ..................................................................................................................................83
17
18
19
20
21
Notes to the cash fl ow statement .......................................................................................................................................83
Borrowings ........................................................................................................................................................................83
Contributed equity .............................................................................................................................................................84
Reserves............................................................................................................................................................................86
Financial risk management .................................................................................................................................................86
Group Structure ...........................................................................................................................................................................89
22
23
24
25
Subsidiaries .......................................................................................................................................................................89
Deed of cross guarantee ....................................................................................................................................................90
Parent entity ......................................................................................................................................................................92
Related party transactions .................................................................................................................................................92
Other Disclosures ........................................................................................................................................................................93
26
27
28
29
30
Key management personnel disclosures ............................................................................................................................93
Share-based payments ......................................................................................................................................................93
Remuneration of auditors ...................................................................................................................................................94
Summary of other signifi cant accounting policies ...............................................................................................................95
Events occurring after the reporting period .........................................................................................................................97
66
1 ABOUT THIS REPORT
These are the consolidated fi nancial statements of JB Hi-Fi Limited (Company or parent entity) and its controlled entities.
JB Hi-Fi Limited and its controlled entities together are referred to in this fi nancial report as the Group. For the purposes of preparing
the consolidated fi nancial statements the Company is a for-profi t entity.
(a) Basis of preparation
These general purpose fi nancial statements have been prepared in accordance with Australian Accounting Standards and
interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001.
(i) Compliance with IFRS
The consolidated fi nancial statements of JB Hi-Fi Limited comply with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).
(ii) Historical cost convention
These fi nancial statements have been prepared under the historical cost convention.
(iii) Corporation information
JB Hi-Fi Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered offi ce and principal place of
business is Podium Level, 60 City Road, Southbank, Victoria.
The fi nancial statements were authorised for issue by the directors on 16 August 2021.
(b) Rounding off of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated
24 March 2016, and in accordance with that Corporations Instrument, amounts in the fi nancial report are rounded off to the nearest
hundred thousand dollars, unless otherwise stated.
(c) Sections
The notes in these fi nancial statements have been organised into the following sections to help users fi nd and understand the
information they need to know:
(i) Group Performance: focuses on the results and performance of the Group;
(ii) Operating Assets and Liabilities: provides information on the assets and liabilities used to generate the Group’s
performance;
(iii) Capital Structure and Risk Management: outlines how the Group manages its capital and various fi nancial risks;
(iv) Group Structure: explains aspects of the group structure and how any changes have affected the fi nancial position and
performance of the Group; and
(v) Other Disclosures: provides information on items which require disclosure to comply with Australian Accounting Standards
and other regulatory pronouncements.
(d) Critical accounting estimates and assumptions
Estimates and judgements used in the preparation of these fi nancial statements are continually evaluated and are based on
historical experience and other factors, including expectations of future events that may have a fi nancial impact on the Group and
that are believed to be reasonable under the circumstances.
The estimates and assumptions that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next fi nancial year are included in the following notes:
Areas of judgement and estimate
Inventory net realisable value
Impairment of goodwill and other intangible assets
Right-of-use assets and lease liabilities
Note
8
12
16
67
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
GROUP PERFORMANCE
2 SEGMENT INFORMATION
(a) Description of segments
Management has determined the operating segments based on the reports reviewed by the Group Chief Executive Offi cer that are
used to make strategic and operating decisions.
The Group Chief Executive Offi cer considers the business primarily from a brand and geographic perspective. On this basis,
management has identifi ed three reportable segments, JB Hi-Fi Australia (JB Aust), JB Hi-Fi New Zealand (JB NZ) and The Good
Guys (TGG). The Group Chief Executive Offi cer monitors the performance of these three segments separately. The Group does not
operate any other brand or in any other geographic segment.
(b) Segment information provided to the Group Chief Executive Offi cer
The segment information provided to the Group Chief Executive Offi cer for the reportable segments for the year ended
(i) As a result of the asset impairments highlighted in Note 6, JB Hi-Fi New Zealand FY2021 profi t before tax has benefi tted from a reduction in
depreciation on right of use assets and fi xed assets of $5.9 million. After allowing for the impact of current year impairment losses of $6.0 million,
the net impact on JB Hi-Fi New Zealand FY2021 profi t before tax was a $0.1 million reduction (2020: $19.7 million).
30 June 2021 is as follows:
2021
Revenue from external customers
EBITDA
Depreciation and impairment
EBIT
Interest on leases
Interest revenue
Other fi nance costs
Profi t before income tax
Other segment information
Segment Assets
Segment Liabilities
2020
Revenue from external customers
EBITDA
Depreciation and impairment
EBIT
Interest on leases
Interest revenue
Other fi nance costs
Profi t before income tax
Other segment information
Segment Assets
Segment Liabilities
(i) EBIT and EBITDA
TGG
$m
Elimininations
$m
JB Aust
$m
5,956.8
658.5
(135.5)
523.0
(12.3)
JB NZ(i)
$m
243.6
11.4
(6.0)
5.4
(0.4)
2,715.7
291.7
(77.0)
214.7
(8.6)
510.7
5.0
206.1
1,689.2
1,444.3
47.3
35.9
1,731.8
679.7
(213.0)
(213.0)
TGG
$m
Elimininations
$m
JB Aust
$m
5,318.9
525.6
(134.1)
391.5
(15.3)
JB NZ
$m
211.2
4.9
(26.0)
(21.1)
(0.5)
2,388.8
187.5
(74.6)
112.9
(9.1)
376.2
(21.6)
103.8
1,452.5
1,261.0
45.9
39.6
1,656.2
748.3
(2.3)
(2.3)
–
–
–
–
–
–
–
–
–
–
–
–
Total
$m
8,916.1
961.6
(218.5)
743.1
(21.3)
1.6
(3.4)
720.0
3,255.3
1,946.9
Total
$m
7,918.9
718.0
(234.7)
483.3
(24.9)
1.1
(11.5)
448.0
3,152.6
2,046.6
The Group Chief Executive Offi cer assesses the performance of the Group’s operating segments based on EBIT and EBITDA.
EBIT excludes the effects of interest revenue, fi nance costs (including interest on leases) and income tax. EBITDA further excludes
depreciation, amortisation and impairment charges.
68
2 SEGMENT INFORMATION (continued)
(c) Covid-19
The Group’s operations were affected signifi cantly by the Covid-19 pandemic and resulting government actions.
The Group remained committed to supporting government and community efforts to limit the spread of the virus. The Group’s
highest priority is the health and wellbeing of its team members, customers, business partners and the wider community, whilst
responding to its customers’ changing needs and maintaining fi nancial stability.
During the year the Group continued to take measures to protect the health and safety of all people who worked in or visited its
premises. Some stores were closed at various times throughout the fi nancial year in accordance with government restrictions but
continued to fulfi l online and click-and-collect orders where possible. In addition, the Group voluntarily closed its airport stores
and some CBD stores for certain periods in response to a shift in foot traffi c away from these areas. Despite these challenges,
performance across the JB Hi-Fi and The Good Guys businesses remained strong with elevated sales growth driven by homemaker
and free-standing stores and a signifi cant acceleration in online, as the businesses provided customers with the essential products
they needed to prepare for and respond to Covid-19. These included technology products that enabled remote working, learning
and communication, essential home appliances for food storage and preparation and home entertainment products as customers
spent more time at home. The Group was pleased with its well executed promotional program and how its online businesses scaled
and maintained a high level of customer service and on-time delivery during a period of signifi cantly increased volume. The Group
will continue to respond and adapt to its customers’ changing needs through the pandemic.
3 EARNINGS PER SHARE
Basic (cents per share)
Diluted (cents per share)
Consolidated
2021
Cents
2020
Cents
440.75
437.83
263.11
260.69
Consolidated
2021
$m
2020
$m
(a) Reconciliation of earnings used in calculating earnings per share
Basic earnings per share
Profi t for the year attributable to owners of the Company
506.1
302.3
Diluted earnings per share
Profi t for the year attributable to owners of the Company
506.1
302.3
(b) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options
Consolidated
2021
Number
m
2020
Number
m
114.8
114.9
0.8
1.1
Weighted average number of ordinary and potential ordinary shares used as the
denominator in calculating diluted earnings per share
115.6
116.0
(c)
Information concerning the classifi cation of securities
Options
Options granted under the Company’s share option plans are considered to be potential ordinary shares and have been included
in the determination of diluted earnings per share to the extent to which they are dilutive (776,443 options are considered dilutive
(2020: 1,062,413), zero are considered anti-dilutive (2020: zero)). The options have not been included in the determination of basic
earnings per share. Details relating to the options are set out in note 27.
69
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
4 DIVIDENDS
Recognised amounts
Final Dividend - previous fi nancial year
Interim Dividend - current fi nancial year
Unrecognised amounts
2021
Cents
per share
2020
$m
Cents
per share
90.00
180.00
270.00
103.4
206.8
310.2
51.00
99.00
150.00
$m
58.6
113.7
172.3
Final Dividend - current fi nancial year
107.00
122.9
90.00
103.4
In respect of the fi nancial year ended 30 June 2021, the directors have recommended the payment of a fi nal dividend of 107 cents
per share. The record date is 27 August 2021.
All dividends declared and subsequently paid by the Company are franked to 100% at the 30% corporate income tax rate.
Consolidated
2021
$m
2020
$m
(a) Franking account balance
Franking credits available for subsequent reporting periods based on a tax rate of 30.0%
(2020: 30.0%)
470.1
384.3
The above amounts represent the balance of the franking account as at the end of the fi nancial year, adjusted for franking credits
that will arise from the payment of the amount of the provision for income tax.
The impact on the franking account of the dividend recommended by the directors since year end, but not recognised as a liability
at year end, will be a reduction in the franking account of $52.7 million (2020: $44.3 million).
5 REVENUE
Sale of goods and services - Stores and other
Sale of goods and services - Online
Total Revenue
(a) Product information
Consolidated
2021
$m
2020
$m
7,852.2
1,063.9
8,916.1
7,321.7
597.2
7,918.9
The Group operates in one product and services segment, being the sale of consumer electronics products and services, including
televisions, audio equipment, computers, cameras, telecommunications products and services, software, whitegoods, cooking
products, heating and cooling products, small appliances, kitchen accessories and information technology and consulting services.
The Group’s revenue is primarily generated on a point in time basis. The amount of revenue recognised by the Group on an ‘over
time’ basis is not material in the context of the Group’s total revenue.
(b) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns,
trade allowances, rebates and amounts collected on behalf of third parties.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefi ts
will fl ow to the entity and specifi c criteria have been met for each of the Group’s activities as described below. The Group bases
its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifi cs of each
arrangement.
Revenue is recognised for the major business activities as follows:
70
5 REVENUE (continued)
(b) Revenue recognition (continued)
(i) Sale of goods
Revenue associated with the sale of goods is recognised when the performance obligation of the sale has been fulfi lled and control
of the goods has transferred to the customer, which occurs at the point of sale when the goods are collected/delivered.
Gift cards and store credits are considered a prepayment for goods and services to be delivered in the future. The Group has an
obligation to transfer the goods or services in the future - creating a performance obligation. The Group recognises deferred
revenue for the amount of the prepayment and recognises revenue when the customer redeems the gift card or store credit and
the Group fulfi ls the performance obligation related to the transaction or likelihood of the gift card being redeemed by the customer
is deemed remote.
In recognising revenue from the sale of goods, the Group considers its historical experience with sales returns to determine if its
‘highly probable’ that a signifi cant reversal of revenue will arise in the future.
(ii) Commissions
The Group acts as an agent in the sale of various products and services to customers such as telecommunication contracts.
Commissions associated with agency sales are recognised on a point in time basis when all performance obligations have been
completed to entitle the Group to the commission.
(iii) Rendering of services
The Group generates revenue from the provision of various services including installation, customer delivery, IT services and
extended care and customer support services.
Revenue relating to installation, customer delivery and IT services is principally recognised on a point in time basis, which occurs
upon completion of the service given the short time period over which the services are provided.
Revenue relating to extended care and customer support services is recognised over the period of cover where the Group retains
the responsibility for the performance obligations associated with the services and at point of sale when a third party assumes
responsibility for the performance obligations associated with the services. Amounts collected for services not yet provided are
recorded as deferred revenue in the balance sheet.
6 EXPENSES
Profi t before income tax includes the following specifi c expenses:
Finance costs
Interest and other fi nance costs on borrowings
Interest on leases
Fair value loss on interest swaps designated as cash fl ow hedges
Other interest expense
Employee benefi ts expenses
Share-based payments - expense
Defi ned contribution superannuation expense
Other employee benefi ts
Depreciation and impairment
Depreciation - Plant and equipment
Impairment - Plant and equipment
Depreciation - Right-of-use assets
Impairment - Right-of-use assets
Consolidated
2021
$m
2020
$m
3.2
21.3
–
0.2
24.7
13.5
62.4
726.8
802.7
51.8
3.0
159.1
4.6
218.5
8.7
24.9
2.0
0.8
36.4
12.1
56.7
703.8
772.6
54.0
5.9
160.4
14.4
234.7
The impairment losses recognised in the current and prior year principally relate to JB Hi-Fi New Zealand. The Group is focused on
continuing to improve the performance of JB Hi-Fi New Zealand however, the past performance and ongoing uncertainty arising
from the current environment, has resulted in its right-of-use and plant and equipment assets being impaired.
71
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
7
TAXATION
(a)
Income tax expense
Current tax
Deferred tax
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profi t from continuing operations before income tax expense
Tax at the Australian tax rate of 30.0% (2020: 30.0%)
Effect of expenses that are not deductible in determining taxable profi t
Effect of different tax rates of subsidiaries operating in other jurisdictions
Effect of other deductibles in determining taxable profi t
Effect of New Zealand deferred tax asset derecognised
Unrecognised New Zealand tax losses recouped
Other
Tax expense
(c) Amounts recognised directly in equity
The following current and deferred amounts were charged directly to equity during the
period:
Current tax
Consolidated
2021
$m
2020
$m
222.0
(8.1)
213.9
720.0
216.0
4.4
(0.1)
(4.8)
–
(1.4)
(0.2)
146.2
(0.5)
145.7
448.0
134.4
4.3
0.2
(3.4)
10.1
–
0.1
213.9
145.7
Tax effect of employee share options in reserves
3.5
1.2
(d) Deferred tax
The balance comprises temporary differences attributable to:
Deferred tax assets
Provisions
Inventories
Deferred revenue
Lease liabilities
Other
Deferred tax liabilities
Brand names
Prepayments
Right-of-use asset
Net deferred tax assets/(liabilities)
All movements in the above temporary differences have been charged to income.
39.1
11.4
37.4
184.7
20.9
293.5
(85.2)
(17.1)
(160.9)
(263.2)
30.3
36.9
11.9
37.0
217.9
13.6
317.3
(85.2)
(17.2)
(192.7)
(295.1)
22.2
72
7
TAXATION (continued)
(e) Recognition and measurement
Current tax
Current tax represents the amount expected to be paid to taxation authorities on taxable income for the period, using tax rates
enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of previous years. Current tax
for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).
Deferred tax
Deferred tax is accounted for using the balance sheet liability method, providing for temporary differences between the carrying
amounts of assets and liabilities under fi nancial reporting and taxation purposes. Deferred tax is measured at the rates that are
expected to apply in the period in which the liability is settled or asset realised, based on tax rates enacted or substantively enacted
at the reporting date.
Deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a
business combination) of assets and liabilities in a transaction that affects neither the taxable profi t nor the accounting profi t or in
relation to the initial recognition of goodwill.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profi ts will be available against which the
deductible temporary differences or unused tax losses and tax offsets can be utilised. Deferred tax assets are reduced to the extent
that it is no longer probable that the related tax benefi t will be realised.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group
intends to settle its current tax assets and liabilities on a net basis.
Income tax is recognised in the statement of profi t or loss except to the extent that it relates to items recognised directly in equity,
in which case, the tax is also recognised directly in equity.
(f) Tax consolidation legislation
The Company and its wholly owned Australian resident entities are part of a tax consolidated group and are therefore taxed as a
single entity. The head entity within the tax consolidated group is JB Hi-Fi Limited. The members of the tax consolidated group are
identifi ed at note 22.
Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax
consolidated group are recognised in the separate fi nancial statements of the members of the tax consolidated group using the
‘separate taxpayer within group’ approach by reference to the carrying amounts in the separate fi nancial statements of each entity
and the tax values applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from unused
tax losses and relevant tax credits of the members of the tax consolidated group are recognised by the Company (as head entity in
the tax consolidated group).
Where the tax contribution amount recognised by each member of the tax consolidated group for a particular period is different to
the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax credits in respect
of that period, the difference is recognised as a contribution from (or distribution to) equity participants.
(g) Nature of tax funding and tax sharing agreements
Entities within the tax consolidated group have entered into a tax funding arrangement and a tax sharing agreement with the head
entity. Under the terms of the tax funding arrangement, JB Hi-Fi Limited and each of the entities in the tax consolidated group have
agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity.
Such amounts are refl ected in amounts receivable from or payable to other entities in the tax consolidated group.
The tax sharing agreement entered into between members of the tax consolidated group provides for the determination of the
allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations or if an entity
should leave the tax consolidated group. The effect of the tax sharing agreement is that each member’s liability for tax payable by
the tax consolidated group is limited to the amount payable to the head entity under the tax funding agreement.
JB Hi-Fi calculates deferred taxes in relation to investments within the tax consolidated group using the ‘change in tax status’ view.
This view results in no deferred tax being recognised until such time as an entity leaves the tax consolidated group.
73
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
OPERATING ASSETS AND LIABILITIES
8
INVENTORIES
Finished goods
(a) Recognition and measurement
Consolidated
2021
$m
2020
$m
938.8
739.3
Inventories are stated at the lower of cost and net realisable value. Costs are assigned to individual items of inventory on the basis of
weighted average costs. Costs of inventories are determined after deducting rebates and discounts. Net realisable value represents
the estimated selling price less estimated costs necessary to make the sale.
When determining the net realisable value of inventories (which is most applicable to obsolete, end of life and slow moving
inventory), the Group uses its judgement to determine the expected selling price and the estimated costs necessary to make the
sale considering the nature of the inventories. Determining the expected selling price requires the use of management judgement.
The key assumptions and variables affecting the expected selling price are reviewed at least annually. As the inventories held by
the Group are all fi nished goods, the estimated costs necessary to make the sale typically relate to staff commissions. Such costs
are not considered material to the estimation of net realisable value. Any change in the measurement of net realisable value in a
particular year will affect the cost of goods sold.
9
TRADE AND OTHER RECEIVABLES
Trade receivables
Allowance for expected credit losses
Non-trade receivables
(a) Terms and conditions
Trade receivables
Consolidated
2021
$m
59.8
(2.1)
57.7
153.9
211.6
2020
$m
59.7
(1.5)
58.2
162.1
220.3
The average credit period on account sales of goods is 30 days. No interest is charged on trade receivables. An allowance
has been made for expected credit losses using a provision matrix based on historical credit loss rates. Credit insurance is
carried for most commercial debtor accounts. Trade receivables are recognised at amortised cost less allowance for expected
credit losses.
Non-trade receivables
Non-trade receivables principally represent rebates receivable from suppliers for purchases of inventories and contributions from
landlords. Rebates associated with the purchases of inventory are recorded as a reduction in the cost of inventory on hand until
the inventory is sold. No amount is considered irrecoverable from suppliers and therefore no allowance has been made.
(b) Ageing of trade receivables (net of allowance for expected credit losses)
Not past due
Past due but not impaired:
0 - 30 days
31 - 60 days
61 - 90 days
91+ days
74
Consolidated
2021
$m
52.2
4.7
0.5
0.3
–
57.7
2020
$m
53.4
4.1
0.7
–
–
58.2
9
TRADE AND OTHER RECEIVABLES (continued)
(c) Movements in allowance for expected credit losses
Balance at the beginning of the year
Remeasurement of loss allowance
Receivables written off during the year as uncollectable
Consolidated
2021
$m
1.5
1.0
(0.4)
2.1
2020
$m
1.4
0.5
(0.4)
1.5
(d) Collectability of trade receivables
An allowance has been made for expected credit losses (ECL) calculated by using a simplifi ed provision matrix that is based on
historical credit loss rates. The historical loss rates are adjusted to refl ect current and forward-looking information specifi c to the
economic environment and affecting customers’ ability to settle their receivables. Trade receivables are written off against the
allowance account where there is no reasonable expectation of recovery.
The amount of the ECL is recognised in profi t or loss within other expenses. Subsequent recoveries of amounts previously written
off are credited against the same line item
10 OTHER ASSETS
Current
Prepayments
Other
Non-current
Prepayments
Consolidated
2021
$m
30.7
5.0
35.7
39.0
39.0
2020
$m
30.8
3.9
34.7
38.4
38.4
Prepayments includes payments made in relation to The Goods Guys Gold Service Extras program and general prepaid expenses.
75
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
11 PLANT AND EQUIPMENT
At 1 July 2019
Cost
Accumulated depreciation and impairment
Net book amount
Year ended 30 June 2020
Opening net book amount
Additions
Disposals
Depreciation charge
Impairment charge
Closing net book amount
At 30 June 2020
Cost
Accumulated depreciation and impairment
Net book amount
Year ended 30 June 2021
Opening net book amount
Additions
Disposals
Depreciation charge
Impairment charge
Closing net book amount
At 30 June 2021
Cost
Accumulated depreciation and impairment
Net book amount
(a) Recognition and measurement
Plant and
equipment
$m
Leasehold
improvements
$m
354.1
(221.8)
132.3
132.3
20.6
(0.7)
(36.2)
(4.2)
111.8
460.7
(348.9)
111.8
111.8
33.7
(6.0)
(31.2)
(2.6)
105.7
431.1
(325.4)
105.7
201.0
(141.8)
59.2
59.2
22.5
(1.7)
(17.8)
(1.7)
60.5
221.6
(161.1)
60.5
60.5
24.0
(0.2)
(20.6)
(0.4)
63.3
237.1
(173.8)
63.3
Total
$m
555.1
(363.6)
191.5
191.5
43.1
(2.4)
(54.0)
(5.9)
172.3
682.3
(510.0)
172.3
172.3
57.7
(6.2)
(51.8)
(3.0)
169.0
668.2
(499.2)
169.0
Plant and equipment and leasehold improvements are stated at cost less accumulated depreciation and impairment losses. Cost
includes expenditure that is directly attributable to the acquisition of the item.
Depreciation is provided on plant and equipment and leasehold improvements. Depreciation is calculated on a straight line basis
so as to write off the net cost of each asset over its expected useful life to its estimated residual value. The estimated useful lives,
residual values and depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes
recognised on a prospective basis.
The following estimated useful lives are used in the calculation of depreciation:
•
•
Leasehold improvements
1 to 15 years
Plant and equipment
1.5 to 15 years
Plant and equipment and leasehold improvements are tested for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifi able cash infl ows which are largely
independent of the cash infl ows from other assets or groups of assets (cash-generating units).
An item of plant and equipment is derecognised upon disposal or when no future economic benefi ts are expected to arise from the
continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of plant and equipment is determined as
the difference between the sales proceeds and the carrying amount of the asset, and is recognised in other expenses in the profi t
or loss.
76
Goodwill
$m
Brand
names
$m
Location
premiums
$m
Rights to
profi t share
$m
Total
$m
747.0
–
747.0
747.0
747.0
284.4
–
284.4
284.4
284.4
2.4
(2.4)
–
–
–
3.5
(3.5)
–
–
–
1,037.3
(5.9)
1,031.4
1,031.4
1,031.4
12
INTANGIBLE ASSETS
Year ended 30 June 2020
Opening net book amount
Adjustment on adoption of AASB 16
Closing net book amount
Year ended 30 June 2021
Opening net book amount
Closing net book amount
(a) Recognition and measurement
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifi able assets of
the acquired subsidiary or business at the date of the acquisition.
Goodwill is not amortised. Instead, it is tested for impairment annually, or more frequently if events or changes in circumstances
indicate that it might be impaired. Any impairment is recognised as an expense and is not subsequently reversed. Goodwill is carried
at cost less accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating
units) expected to benefi t from the synergies of the related business combination. Cash-generating units to which goodwill has
been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the
recoverable amount of the cash-generating unit (higher of its value in use and fair value less costs of disposal) is less than the carrying
amount of the unit, the impairment loss is allocated fi rst to reduce the carrying amount of any goodwill allocated to the unit and then
to the other assets of the unit pro-rata on the basis of the carrying amount of each asset.
Further details regarding the allocation of goodwill to cash generating units and the Group’s impairment testing results for the year
ended 30 June 2021, including an overview of key assumptions, is set out below.
Brand names
Brand names that are acquired as part of a business combination are recognised separately from goodwill. These assets are
measured at their fair value at the date of acquisition using the relief from royalty method. Brand names are subsequently carried at
cost less accumulated impairment losses.
Brand names have indefi nite useful lives and therefore do not attract amortisation. As at 30 June 2021, management has concluded
that an indefi nite useful life remains appropriate as the Group expect to continue using the brand names for the foreseeable future
and there are no legal, technical or commercial factors indicating that the brand names have a limited life.
For the purpose of impairment testing, brand names with indefi nite useful lives are assessed for impairment annually, or more
frequently when there is an indication that a brand name may be impaired.
An impairment loss is recognised for the amount by which the assets carrying value exceeds its recoverable amount (higher of its
value in use and fair value less costs of disposal). None of the Group’s brand names have incurred an impairment in previous periods.
77
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
12
INTANGIBLE ASSETS (continued)
(b)
Impairment testing
The carrying amount of goodwill and brand names is allocated to the following cash-generating units or groups of CGUs (CGUs) for
impairment testing purposes:
Goodwill
The Good Guys
JB Hi-Fi Australia
Brand names
The Good Guys
JB Hi-Fi Australia
Consolidated
2021
$m
575.6
171.4
747.0
241.3
43.1
284.4
2020
$m
575.6
171.4
747.0
241.3
43.1
284.4
The recoverable amount of each CGU has been determined based on value in use calculations.
The key assumptions used in the value in use calculations include the FY2022 fi nancial budget, sales growth, gross margin, cost
of doing business (CODB) and the discount rate. These assumptions are based on past experience and the Company’s forecast
operating and fi nancial performance for each CGU taking into account current market and economic conditions, risks, uncertainties
and opportunities for improvement for each CGU.
The value in use calculations use cash fl ow projections over a 5 year period, extrapolated into perpetuity using a long term growth
rate of 2.5% (2020: 2.5%), which is consistent with the mid-point of long-term infl ation forecasts by recognised bodies.
The cash fl ows projections in Year 1 are based on fi nancial budgets for the FY2022 fi nancial year, as reviewed by the Board.
The cash fl ow projections thereafter assume a steady growth rate of 2.5% (2020: 2.5%), consistent with historical experience.
A post-tax discount rate of 9.0% (2020: 9.0%) has been used for all CGUs.
Sensitivity analysis indicates that no reasonably possible change in key assumptions would result in an impairment loss. Accordingly,
the Group has concluded that no impairment is required based on current market and economic conditions and expected future
performance.
13 TRADE AND OTHER PAYABLES
Trade payables
Goods and services tax (GST) payable
Other creditors and accruals
Consolidated
2021
$m
716.1
39.8
21.5
777.4
2020
$m
796.2
22.6
35.3
854.1
Trade payables and other creditors and accruals represent liabilities for goods and services provided to the Group prior to the end of
fi nancial year which are unpaid. Trade and other payables are stated at amortised cost. The amounts are unsecured and are usually
settled within 45 days of recognition.
14 DEFERRED REVENUE
Current
Deferred revenue
Non-current
Deferred revenue
78
Consolidated
2021
$m
2020
$m
212.9
212.9
85.0
85.0
196.6
196.6
81.6
81.6
14 DEFERRED REVENUE (continued)
Deferred revenue relates to unfulfi lled services to be performed under The Good Guys Gold Service Extras program, unredeemed
gift cards and customer deposits. Refer to note 5(b) for the Group’s revenue recognition accounting policy.
It is expected that 74% (2020: 76%) of Non-Current Deferred Revenue will be recognised in the next 3 fi nancial years and the
remaining 26% (2020: 24%) recognised in the following 3 years.
15 PROVISIONS
Current
Employee benefi ts
Lease provision
Non-current
Employee benefi ts
Lease provision
Consolidated
2021
$m
104.0
1.5
105.5
9.4
33.2
42.6
2020
$m
97.0
1.9
98.9
8.2
33.3
41.5
(a) Recognition and measurement
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting
date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash fl ows
estimated to settle the present obligation, its carrying amount is the present value of those cash fl ows.
(i) Employee benefi ts
Liabilities for wages and salaries, including non-monetary benefi ts, are recognised in respect of employees’ services up to the end
of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual
leave and unpaid bonuses are recognised in the provision for employee benefi ts. All other short-term employee benefi t obligations
are presented as payables.
Contributions to defi ned contribution superannuation plans are expensed when employees have rendered services entitling them to
the contributions.
The liability for long service leave is recognised in the provision for employee benefi ts and measured as the present value of
expected future payments to be made in respect of services provided by employees, up to the end of the reporting period.
Expected future payments are discounted using the Australian corporate bond discount rate curve as published by Milliman with
terms to maturity and currency that match, as closely as possible, the estimated future cash outfl ows.
Management judgement is applied in determining the following key assumptions used in the calculation of long service leave at
balance date:
•
•
•
future increases in wages and salaries;
future on cost rates; and
experience of employee departures and period of service.
(ii) Lease provision
The lease provision includes the Group’s best estimate of the amount required to return the Group’s leased premises to their original
condition at the end of the lease term in accordance with the terms of the lease.
79
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
16 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
The Group leases various properties and equipment in Australia and New Zealand.
The non-cancellable period for these leases is generally between:
Properties
Stores
Offi ces
Warehouses
1-10 years
1-10 years
1-7 years
Equipment
1-5 years
The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
Extension options are included in a number of the Group’s lease agreements, which are used to maximise operational fl exibility.
The extension options held are exercisable only by the Group and not by the lessors. The Group does not have any options to
purchase leased assets.
Increase clauses are in line with market practices and include infl ation-linked, fi xed rates, resets to market rents and hybrids of
these. Certain store leases contain variable lease payment terms that are linked to store sales.
The carrying value of right-of-use assets and lease liabilities is presented below:
Properties
$m
Equipment
$m
Total
$m
(a) Right-of-use assets
At 1 July 2019
Cost
Accumulated depreciation and impairment
Carrying value
Year ended 30 June 2020
Opening carrying value
Adoption of AASB 16
Additions, modifi cations and other reassessments of leases
Depreciation
Impairment charge
Foreign exchange translation
Closing carrying value
At 30 June 2020
Cost
Accumulated depreciation and impairment
Closing carrying value
Year ended 30 June 2021
Opening carrying value
Additions, modifi cations and other reassessments of leases
Depreciation
Impairment charge
Closing carrying value
At 30 June 2021
Cost
Accumulated depreciation and impairment
Closing carrying value
80
747.9
–
747.9
–
747.9
63.3
(158.8)
(14.4)
(0.6)
637.4
810.6
(173.2)
637.4
637.4
53.3
(156.9)
(4.6)
529.2
869.0
(339.8)
529.2
3.9
–
3.9
–
3.9
2.5
(1.6)
–
–
4.8
6.4
(1.6)
4.8
4.8
4.5
(2.2)
–
7.1
10.9
(3.8)
7.1
751.8
–
751.8
–
751.8
65.8
(160.4)
(14.4)
(0.6)
642.2
817.0
(174.8)
642.2
642.2
57.8
(159.1)
(4.6)
536.3
879.9
(343.6)
536.3
16 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (continued)
Properties
$m
Equipment
$m
Total
$m
(b) Lease liabilities
Year ended 30 June 2020
Opening carrying value
Adoption of AASB 16
New and modifi ed leases
Payment of lease liabilities
Payment of interest on lease liabilities
Interest expense
Foreign exchange translation
Closing carrying value
At 30 June 2020
Current
Non-Current
Total
Year ended 30 June 2021
Opening carrying value
New and modifi ed leases
Payment of lease liabilities
Payment of interest on lease liabilities
Interest expense
Foreign exchange translation
Closing carrying value
At 30 June 2021
Current
Non-Current
Total
(c) Amounts recognised in the Statement of Profi t or Loss
Depreciation expense on right of use assets
Impairment expense on right of use assets
Interest expense on lease liabilities
Property lease expense(i)
–
832.9
64.4
(160.2)
(24.8)
24.8
(0.5)
736.6
162.5
574.2
736.7
736.7
54.2
(166.7)
(21.2)
21.2
(0.1)
624.1
165.1
459.0
624.1
–
4.0
2.6
(1.6)
(0.1)
0.1
-
5.0
1.5
3.4
4.9
4.9
4.5
(2.2)
(0.1)
0.1
–
7.2
2.2
5.0
7.2
2021
$m
159.1
4.6
21.3
6.2
–
836.9
67.0
(161.8)
(24.9)
24.9
(0.5)
741.6
164.0
577.6
741.6
741.6
58.7
(168.9)
(21.3)
21.3
(0.1)
631.3
167.3
464.0
631.3
2020
$m
160.4
14.4
24.9
7.2
(i)
The property lease expense includes short-term, low value and variable rent expenses not recognised as part of AASB 16 leases.
(d) Recognition and Measurement
The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the
lessee, except for short-term leases and leases of low value assets. Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an expense in profi t or loss. Short-term leases are leases with a lease
term of 12 months or less. Low-value assets primarily comprise offi ce equipment such as printers and photocopiers.
81
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
16 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (continued)
(d) Recognition and Measurement (continued)
Lease liability
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental
borrowing rate. The Group’s weighted average incremental borrowing rate used during the year ended 30 June 2021 was 3.25%
(2020: 3.24%).
Each lease payment is allocated between the lease liability and fi nance costs. The fi nance cost is charged to profi t or loss over the
period of the lease to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Lease payments included in the measurement of the lease liability comprise:
•
•
•
•
•
fi xed payments (including in-substance fi xed payments), less any lease incentives receivable;
variable lease payment that are based on an index or a rate;
amounts expected to be payable by the lessee under residual value guarantees;
the exercise price of a purchase option (if the lessee is reasonably certain to exercise); and
payments of penalties for terminating the lease, if the lease term refl ects the lessee exercising that option.
As a practical expedient, AASB 16 permits a lessee not to separate non-lease components, and instead account for any lease and
associated non-lease components as a single arrangement. The Group has elected to apply this practical expedient.
The carrying amount of a lease liability is remeasured if there is a modifi cation, a change in the lease term, a change in the lease
payments (e.g. infl ation-linked payments or market rate rent reviews). A corresponding adjustment is made to the right of use asset.
Right-of-use assets
Right-of-use assets are measured at cost comprising the following:
•
•
•
•
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and
estimated restoration costs.
Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses, with depreciation
recognised on a straight-line basis over the shorter of the asset’s useful life and the lease term. The Group applies AASB 136
Impairment of Assets to determine whether a right-of-use asset is impaired and accounts for any identifi ed impairment loss as
described in Note 12.
Extension options
The Group assesses at lease commencement whether it is reasonably certain to exercise extension options, and where it is
reasonably certain, the extension period is included in the lease liability. The Group considers an option to extend a lease to be
reasonably certain when the extension date is within 24 months, no decision has been made to terminate the lease, a decision has
been made to exercise the option or when there is a clear economic incentive for extension.
The Group reassesses whether it is reasonably certain to exercise the options if there is a signifi cant event or signifi cant change in
circumstances within its control.
Store leases in holdover
When a store lease enters holdover, management considers all facts and circumstances to determine whether an ‘enforceable
period’ exists in lieu of a contractual lease term. In reaching this conclusion, the Group considers their ability and economic incentive
to remain in the store location and the signifi cance of the economic penalty that would arise from termination of the arrangement.
When an ‘enforceable period’ is identifi ed, management estimate the expected lease term, lease liability and related right of use
asset based on information available at the date the store enters holdover. When a new lease agreement is subsequently entered
into, management account for any change in terms in accordance with the principles that apply to lease modifi cations.
82
CAPITAL STRUCTURE AND RISK MANAGEMENT
17 NOTES TO THE CASH FLOW STATEMENT
For the purposes of the cash fl ow statement, cash and cash equivalents includes cash on hand and in banks, net of outstanding
bank overdrafts and trade fi nance facilities.
(a) Reconciliation of cash and cash equivalents
Cash and cash equivalents at the end of the fi nancial year as shown in the cash fl ow statement is reconciled as follows:
Cash
Bank overdrafts
Cash and cash equivalents
(b) Reconciliation of net cash infl ow from operating activities to profi t
Profi t for the year
Depreciation and amortisation
Impairment charges
Share-based payments - expense
Share-based payments - income tax
Net loss on disposal of non-current assets
Change in operating assets and liabilities net of effects from acquisition of businesses:
(Increase) decrease in inventories
(Increase) decrease in current receivables
(Increase) decrease in other current assets
(Increase) decrease in deferred tax assets
(Decrease) increase in current provisions
(Decrease) increase in current payables
(Decrease) increase in current deferred revenue
(Decrease) increase in non-current deferred revenue
(Decrease) increase in other current liabilities
(Decrease) increase in non-current provisions
(Decrease) increase in other non-current liabilities
(Decrease) increase in current tax liabilities
Net cash infl ow from operating activities
18 BORROWINGS
Reconciliation of liabilities arising from fi nancing activities
Opening borrowings
Repayment of borrowings
Debt issue costs paid
Amortisation of debt issue costs
Consolidated
2021
$m
273.6
(10.4)
263.2
506.1
210.9
7.6
13.5
3.5
6.2
2020
$m
251.5
–
251.5
302.3
214.4
20.3
12.1
1.2
2.3
(199.3)
146.6
8.7
(1.0)
(8.1)
6.6
(76.7)
16.3
3.4
–
1.1
–
59.9
558.7
35.1
2.1
(0.5)
16.5
181.9
30.9
(8.5)
(0.2)
(2.8)
(0.3)
27.9
981.3
Consolidated
2021
$m
2020
$m
–
–
–
–
–
439.1
(440.0)
(0.1)
1.0
–
83
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
18 BORROWINGS (continued)
During the year, as a result of the continuing strong cash position of the Group, the Group’s trade fi nance facility was reduced from
$400.0 million to $200.0 million and the Group’s term debt facilities were reduced from $380.0 million to $138.0 million. The Group’s
bank overdraft facilities were also reduced from $59.3 million to $29.3 million and therefore the Group has total borrowing facilities of
$367.3 million of which $356.9 million are unused at 30 June 2021 in addition to cash on hand of $263.2 million. Refer to note 21(a)
for further details on the Group’s fi nancing facilities.
(a) Recognition and measurement
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost.
Borrowings are classifi ed as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting date, and intends to do so.
The Group monitors compliance with its fi nancial covenants on a monthly basis and reports compliance on a semi-annual basis to
the banks. The Group has complied with all such requirements during the current and previous year.
19 CONTRIBUTED EQUITY
(a) Share capital
Ordinary shares - fully paid
Parent entity
Parent entity
2021
Shares
2020
Shares
2021
$m
2020
$m
114,883,372
114,883,372
393.0
403.2
Ordinary shares issued are classifi ed as equity and are fully paid, have no par value and carry one vote per share and the right to
dividends. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the
proceeds.
If the entity reacquires its own equity instruments, for example, as the result of a share buy-back, those instruments are deducted
from equity and the associated shares are cancelled. No gain or loss is recognised in the profi t or loss and the consideration paid,
including any directly attributable incremental costs (net of income taxes), is recognised directly in equity.
(b) Movements in ordinary share capital
Date
Details
1 July 2019
Opening balance
Shares acquired by employee share trust
Allocation of shares under share option, variable reward and deferred STI plans
Balance excluding shares held by employee share trust
Unallocated shares held by employee share trust
30 June 2020 Closing balance
1 July 2020
Opening balance
Unallocated shares held by employee share trust
Balance excluding shares held by employee share trust
Shares acquired by employee share trust
Allocation of shares under share option, variable reward and deferred STI plans
Balance excluding shares held by employee share trust
Unallocated shares held by employee share trust
30 June 2021 Closing balance
Number of
shares
114,883,372
(895,147)
543,551
114,531,776
351,596
114,883,372
114,883,372
(351,596)
114,531,776
(216,507)
566,438
114,881,707
1,665
114,883,372
$m
434.8
(32.9)
1.3
403.2
–
403.2
403.2
–
403.2
(10.2)
–
393.0
–
393.0
84
19 CONTRIBUTED EQUITY (continued)
(c) Share options
In accordance with the provisions of the Company’s share option plans, as at 30 June 2021, executives and non-executive
management have options over 785,543 ordinary shares (of which 4,862 were vested), in aggregate, with various expiry dates.
As at 30 June 2020, executives and non-executive management had options over 1,091,782 ordinary shares (of which 3,197 were
vested), in aggregate, with various expiry dates.
Share options granted under the Company’s share option plans carry no rights to dividends and no voting rights.
(d) Capital management
The Board reviews the capital structure on an ongoing basis. The Group’s objective is to maintain an optimal capital structure which
seeks to reduce the cost of capital and to ensure the Group has access to adequate capital to sustain the future development of the
business.
As part of its capital management program, the Group monitors the return on invested capital and the gearing ratio. The Group
defi nes return on invested capital as earnings before interest and tax (EBIT) divided by the sum of total equity plus net debt and
the gearing ratio as term debt excluding capitalised borrowing costs, divided by earnings before interest, taxation, depreciation,
amortisation and impairment (EBITDA).
The Board has adopted a policy of monitoring the dividend payout ratio and targeting a payout ratio of 65% of net profi t after tax as
it seeks to strike a balance between shareholder returns and ensuring adequate capital is retained for the growth of the business so
as to maximise long term shareholder returns.
There were no changes in the Group’s approach to capital management during the year.
The Group’s return on invested capital and gearing ratios as at 30 June 2021 and 30 June 2020 were as follows:
Return on invested capital
Profi t before tax
Net fi nance costs
EBIT
Cash and cash equivalents
Total equity
Invested capital
Return on invested capital
Gearing ratio
Term debt
EBIT
Depreciation and impairment
EBITDA
Gearing ratio
Consolidated
2021
$m
720.0
23.1
743.1
(263.2)
1,308.4
1,045.2
2020
$m
448.0
35.3
483.3
(251.5)
1,105.7
854.2
71.1%
56.6%
–
–
743.1
218.5
961.6
483.3
234.7
718.0
0.00
0.00
85
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
20 RESERVES
Equity-settled benefi ts
Common control reserve
Hedging reserves
Foreign currency translation reserve
(a) Nature and purpose of reserves
(i) Equity-settled benefi ts
Consolidated
2021
$m
84.5
(6.1)
0.8
4.6
83.8
2020
$m
67.5
(6.1)
0.8
4.6
66.8
The equity-settled benefi ts reserve arises on the grant of share options and restricted shares to executives and non-executive
management under the Company’s share option plans and variable reward plan. Further information about share based payments is
in note 27 to the fi nancial statements.
(ii) Common control reserve
The common control reserve represents the excess of the purchase consideration over the balance of a non-controlling interest at
the date a change in ownership of a subsidiary occurs.
(iii) Hedging reserves
Hedging reserves include gains and losses recognised on the effective portion of cash fl ow hedges with respect to the Group’s
interest rate swaps, caps and forward foreign exchange contracts as described in note 29(a), in addition to gains and losses
recognised on the effective portion of foreign currency loans in previous periods designated as net investment hedges.
The cumulative deferred gain or loss on the interest rate swaps, caps and forward foreign exchange contracts is recognised in the
profi t or loss when the hedged transaction impacts the profi t or loss. The gains and losses deferred due to the net investment hedge
are recognised in the profi t or loss when the foreign operation is disposed.
(iv) Foreign currency translation
Exchange differences relating to the translation of the Group’s foreign controlled entities from their functional currencies into
Australian dollars are brought to account directly to the foreign currency translation reserve, as described in note 29(b).
21 FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of fi nancial risks, including market risk (foreign currency and interest rate risk), liquidity
risk and credit risk.
The Group seeks to minimise the effects of these risks, by using various fi nancial instruments, including derivative fi nancial
instruments. The Group does not enter into or trade fi nancial instruments, including derivative fi nancial instruments, for speculative
purposes. The use of fi nancial derivatives is governed by the Group’s policies approved by the Board of directors, which provide
written principles on the use of fi nancial derivatives.
The Group holds the following fi nancial assets and liabilities at reporting date:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Lease liabilities
86
Consolidated
2021
$m
263.2
211.6
474.8
777.4
631.3
2020
$m
251.5
220.3
471.8
854.1
741.6
1,408.7
1,595.7
21 FINANCIAL RISK MANAGEMENT (continued)
(a) Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board of directors, who assess the Group’s short, medium and
long term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves,
banking facilities and reserve borrowing facilities and by continuously monitoring forecast and actual cash fl ows.
Financing arrangements
The Group had access to the following borrowing facilities at the end of the reporting period:
Unsecured bank overdraft facility:
amount used
amount unused
Unsecured trade fi nance facility:
amount used
amount unused
Unsecured indemnity guarantees:
amount used
amount unused
Unsecured bank loan facilities (term debt):
amount used
amount unused
Headroom in total borrowing facilities (excluding security indemnity guarantees)
Consolidated
2021
$m
10.4
18.9
29.3
–
200.0
200.0
3.5
2.8
6.3
–
138.0
138.0
356.9
2020
$m
–
59.3
59.3
–
400.0
400.0
3.6
2.7
6.3
–
380.0
380.0
839.3
87
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
21 FINANCIAL RISK MANAGEMENT (continued)
(a) Liquidity risk (continued)
Maturities of fi nancial liabilities
The following tables detail the Group’s remaining contractual maturity for its fi nancial liabilities. The tables have been drawn up
based on the undiscounted cash fl ows of fi nancial liabilities based on the earliest date on which the Group can be required to pay.
The table includes both principal and estimated interest cash fl ows.
Cash fl ows for fi nancial liabilities without fi xed amount or timing are based on the conditions existing at the reporting date.
2021
Financial liabilities
Trade and other payables
Lease liabilities
Less than
6 months 6 - 12 months
$m
$m
Between
1 and 2 years
$m
Between
2 and 5 years
$m
Over 5 years
$m
Total
$m
777.4
94.6
872.0
–
90.7
90.7
–
160.7
160.7
–
284.6
284.6
–
62.5
62.5
777.4
693.1
1,470.5
Less than
6 months 6 - 12 months
$m
$m
Between
1 and 2 years
$m
Between
2 and 5 years
$m
Over 5 years
$m
Total
$m
854.1
93.6
947.7
–
91.6
91.6
–
175.7
175.7
–
352.7
352.7
–
95.3
95.3
854.1
808.9
1,663.0
2020
Financial liabilities
Trade and other payables
Lease liabilities
(b) Credit risk management
Weighted
average
effective
interest rate
%
–
3.25%
Weighted
average
effective
interest rate
%
–
3.24%
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in fi nancial loss to the Group.
The Group has endeavoured to minimise its credit risk by dealing with creditworthy counterparties. The Group’s exposure and the
credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst
approved counterparties.
The Group does not have any signifi cant credit risk exposure to any single counterparty or any group of counterparties having
similar characteristics.
The carrying amount of fi nancial assets recorded in the fi nancial statements, net of any allowance for impairment, represents the
Group’s maximum exposure to credit risk.
88
GROUP STRUCTURE
22 SUBSIDIARIES
The consolidated fi nancial statements incorporate the assets, liabilities and results of the following principal subsidiaries in
accordance with the accounting policy described below:
Name of entity
Parent entity
JB Hi-Fi Limited ^
Subsidiaries
JB Hi-Fi Group Pty Ltd ^
Clive Anthonys Pty Ltd
JB Hi-Fi (A) Pty Ltd ^
Rocket Replacements Pty Ltd
JB Hi-Fi Education Solutions Pty Ltd ^
JB Hi-Fi Group (NZ) Limited
JB Hi-Fi NZ Limited
JB Hi-Fi (B) Pty Ltd ^
The Muir Electrical Company Pty Ltd ^
The Muir Electrical Service Co Pty Ltd ^
The Good Guys Discount Warehouses (Australia) Pty Ltd ^
Muir Group Employee Share Plan Pty Ltd ^
The Muir Finance Company Pty Ltd ^
M.E.W. (Australia) Pty Ltd ^
The Muir Electrical Company Pty Ltd as Trustee of the Muir Investment Unit Trust ^
The Good Guys Discount Warehouses (Australia) Pty Ltd as Trustee of the various store Trusts
Home Services Network Pty Ltd ^
Notes:
(i)
(ii)
JB Hi-Fi Limited is the head entity within the tax consolidated group.
All Australian entities are members of the tax consolidated group.
(iii) Entities identifi ed with ‘^’ are party to a deed of cross guarantee.
Ownership interest
Country of
incorporation
2021
%
2020
%
Australia
-
-
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(iv) The Company has a trust to administer the Company’s share options plans and variable reward plan. This trust is consolidated, as the substance
of the relationship is that the trust is controlled by the Company.
(a) Principles of consolidation
(i) Subsidiaries
Subsidiaries are all entities which are controlled by the Company. Control is achieved when the Company:
•
•
•
has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above. Subsidiaries are fully consolidated from the date on which control is transferred
to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised
gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Non-controlling interests in
the results and equity of subsidiaries are shown separately in the consolidated fi nancial statements. Investments in subsidiaries are
accounted for at cost, less any impairment, in the separate fi nancial statements of JB Hi-Fi Limited.
89
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
22 SUBSIDIARIES (continued)
(a) Principles of consolidation (continued)
(ii) Changes in ownership interests
The Company treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity
owners of the Company. A change in ownership interest results in an adjustment between the carrying amounts of the controlling
and non-controlling interests to refl ect their relative interests in the subsidiary. Any difference between the amount of the adjustment
to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to
owners of JB Hi-Fi Limited (the common control reserve).
23 DEED OF CROSS GUARANTEE
The subsidiaries identifi ed with a ‘^’ in note 22 are parties to a deed of cross guarantee under which each Company guarantees to
each creditor payment in full of any debt in accordance with the deed of cross guarantee. By entering into the deed, the subsidiaries
who are party to the deed have been relieved from the requirement to prepare and lodge an audited fi nancial report under ASIC
Corporations (Wholly-owned Companies) Instrument 2016/785.
The consolidated statement of profi t or loss, statement of profi t or loss and other comprehensive income and balance sheet of the
entities party to the deed of cross guarantee are provided as follows:
(a) Consolidated statement of profi t or loss, statement of profi t or loss and other
comprehensive income
Statement of profi t or loss
Revenue
Cost of sales
Gross profi t
Other income
Sales and marketing expenses
Occupancy expenses
Administration expenses
Finance costs
Other expenses
Profi t before income tax
Income tax expense
Profi t for the year
Statement of profi t or loss and other comprehensive income
Profi t for the year
Other comprehensive income
Items that may be reclassifi ed to profi t or loss
Changes in the fair value of cash fl ow hedges (net of tax)
Other comprehensive income for the year (net of tax)
Total comprehensive income for the year
2021
$m
2020
$m
6,086.7
5,456.2
(4,740.5)
(4,264.1)
1,346.2
1,192.1
354.2
(623.9)
(252.6)
(33.0)
(24.2)
(49.0)
717.7
(213.9)
503.8
186.6
(587.2)
(197.0)
(33.5)
(35.8)
(56.9)
468.3
(141.3)
327.0
503.8
327.0
–
–
0.2
0.2
503.8
327.2
90
23 DEED OF CROSS GUARANTEE (continued)
(b) Balance sheet
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Plant and equipment
Right-of-use assets
Deferred tax assets
Intangible assets
Investments in subsidiaries
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Deferred revenue
Lease liabilities
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Deferred revenue
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2021
$m
2020
$m
253.5
192.5
643.1
35.2
1,124.3
123.6
536.3
102.8
77.9
911.8
377.4
236.4
199.3
508.4
34.2
978.3
131.0
642.2
94.6
77.9
911.7
337.4
2,129.8
3,254.1
2,194.8
3,173.1
769.6
142.0
162.1
92.2
104.9
823.1
138.0
159.7
32.3
101.6
1,270.8
1,254.7
85.0
453.5
31.5
570.0
81.6
566.7
40.3
688.6
1,840.8
1,413.3
1,943.3
1,229.8
405.5
79.7
928.1
414.5
63.3
752.0
1,413.3
1,229.8
91
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
24 PARENT ENTITY
Assets
Current assets
Non-current assets(i)
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Shareholders’ equity
Contributed equity
Reserves
Retained earnings
Profi t for the year
Total comprehensive income
Parent Entity
2021
$m
2020
$m
0.1
623.5
623.6
97.4
0.2
97.6
-
393.0
84.5
48.5
526.0
318.2
318.2
0.5
548.0
548.5
37.2
0.1
37.3
-
403.2
67.5
40.5
511.2
184.4
184.4
(i)
Non-current assets are predominantly loans to subsidiaries that have no set repayment and are effectively at call to enable the Parent entity
to satisfy any liabilities required to be settled within the next 12 months.
25 RELATED PARTY TRANSACTIONS
(a) Parent entity and equity interests in related parties
The parent entity of the Group is JB Hi-Fi Limited, a listed public company, incorporated in Australia.
(b) Equity interests in related parties
Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 22.
(c) Key management personnel
Disclosures relating to key management personnel are set out in the Directors’ report.
(d) Terms and conditions of transactions with related parties other than key management personnel or entities related
to them
Sales to, and purchases from, related parties for goods and services are made in arm’s length transactions at normal prices and on
normal commercial terms.
92
OTHER DISCLOSURES
26 KEY MANAGEMENT PERSONNEL DISCLOSURES
The aggregate compensation of the key management personnel of the Group is set out below:
Short-term employee benefi ts
Post-employment benefi ts
Share-based payments expense
Consolidated
2021
$’000
-
7,351
181
5,083
2020
$’000
7,291
187
4,647
12,615
12,125
Detailed remuneration disclosures are provided in the remuneration report on pages 31 to 54.
27 SHARE-BASED PAYMENTS
(a) Group share option plans
The Group has ownership-based remuneration schemes for executives and non-executive management (excluding non-executive
directors). In accordance with the provisions of these schemes, executives and non-executive managers within the Group are
granted options to purchase parcels of ordinary shares at various issue prices or to acquire shares at a zero exercise price.
Details of the features of outstanding share options are provided in the remuneration report on pages 51 to 54.
The following reconciles the outstanding share options granted under the Group’s share option plans at the beginning and end of
the fi nancial year:
2021
Balance at
start of
the year
Number
Granted
during
the year
Number
Exercised/
lapsed
during
the year
Number
Balance
at end of
the year
Number
Vested and
exercisable
at end of
the year
Number
Outstanding Zero Exercise Price Options
1,091,782
141,974
(448,213)
785,543
4,862
Balance at
start of
the year
Number
Granted
during
the year
Number
Exercised/
lapsed
during
the year
Number
Balance
at end of
the year
Number
Vested and
exercisable
at end of
the year
Number
2020
Outstanding Share Options with an exercise price
74,401
–
(74,401)
–
Outstanding Zero Exercise Price Options
1,178,530
1,252,931
217,561
217,561
(304,309)
1,091,782
(378,710)
1,091,782
–
3,197
3,197
Weighted average exercise price of those with
an exercise price
$17.41
–
$17.41
–
–
The weighted average remaining contractual life of share options outstanding at the end of the period was 903 days
(2020: 1,007 days).
Fair value of options granted
Equity settled share based payments with employees are measured at the fair value of the equity instrument at grant date.
The weighted average fair value of options granted during the year ended 30 June 2021 was $44.61 (2020: $27.14). The fair value
at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the
option, the expected exercise date based on prior years’ experience, the share price at grant date, the expected price volatility of
the underlying share, the expected dividend yield and the risk-free interest rate.
93
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
27 SHARE-BASED PAYMENTS (continued)
(a) Group share option plans (continued)
Fair value of options granted (continued)
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
The expected price volatility for options granted during the year ended 30 June 2021 is based on the daily closing share price for
the number of years preceding the issue of the series, that matches the years to vesting as all of these options are expected to be
exercised as soon as they vest.
Detailed share option disclosures for all options series granted and exercised during the year are provided in the remuneration report
on pages 31 to 54.
Share based payments expense
The fair value determined at the grant date of the equity-settled share based payments is expensed on a straight line basis over the
vesting period, based on the Group’s estimate of shares that will eventually vest, with a corresponding increase in equity.
At each reporting date the Group estimates the number of equity instruments expected to vest. The number of equity instruments
that are expected to vest is based on management’s assessment of the likelihood of the vesting conditions attached to the equity
instruments being satisfi ed. The key vesting conditions that are assessed are earnings per share targets and required service
periods. The impact of any revision in the number of equity instruments that are expected to vest is recognised as an adjustment to
the share based payments expense with the corresponding adjustment to the equity-settled benefi ts reserve in the reporting period
that the revision is made.
(b) Variable reward plan
In the 2019 fi nancial year, the Group introduced a Variable Reward Plan (VRP) for Group Executives which replaces their previous
short term and long term incentives. Under the VRP, performance is assessed at the end of each fi nancial year against a scorecard
of robust measures and awards under the VRP are delivered:
•
•
25% in cash at the end of the one-year performance period; and
75% in restricted shares, to be released progressively in equal tranches over years 2, 3 and 4.
There are also certain non-Group executives who participate in the VRP in addition to their existing short term and long term incentives,
however the whole amount is delivered in restricted shares that are released progressively in equal tranches over years 2, 3 and 4.
Further details on the VRP are set out in the remuneration report on page 34.
The component of the VRP that is paid in cash is treated as a bonus and is expensed to the profi t and loss in the period the bonus
is earned. The component of the VRP that is delivered in shares is expensed on a straight line basis over the restriction period of
each tranche, with the expense recorded as part of the share based payments expense and a corresponding increase in equity.
28 REMUNERATION OF AUDITORS
Audit and other services
Audit and review of group fi nancial statements
Audit and review of subsidiary fi nancial statements
Other assurance services
Total remuneration for audit and other services
The auditor of the Group is Deloitte Touche Tohmatsu.
Consolidated
2021
$’000
2020
$’000
704
34
9
747
678
34
9
721
During the current and prior fi nancial years the Group engaged Deloitte Touche Tohmatsu to assist with certain pre-acquisition tax
matters associated with The Good Guys. The fees associated with these services will be paid for by the previous owner and there
will be no cost to the Group.
94
29 SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES
The remaining principal accounting policies adopted in the preparation of these fi nancial statements that have not already been
disclosed are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured
to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether
the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain
derivatives as either:
•
hedges of a particular risk associated with the cash fl ows of recognised assets and liabilities and highly probable forecast
transactions (cash fl ow hedges); or
•
hedges of a net investment in a foreign operation (net investment hedges).
The Group documents at the inception of the hedging transaction the relationship between hedging instruments and hedged items,
as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions
have been and will continue to be highly effective in offsetting changes in fair values or cash fl ows of hedged items.
Movements in the hedging reserve in shareholder’s equity are shown in the statement of changes in equity.
(i) Cash fl ow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash fl ow hedges is recognised in
the cash fl ow hedge reserve within equity. The gain or loss relating to the ineffective portion is recognised immediately in profi t or
loss within other income or other expenses.
Amounts accumulated in equity are reclassifi ed to profi t or loss in the periods when the hedged item affects profi t or loss. The gain
or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in profi t or loss within
‘fi nance costs’.
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast
transaction occurs, resulting in the recognition of a non-fi nancial asset such as inventory. When the forecast transaction is no
longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately
reclassifi ed to profi t or loss.
(ii) Net investment hedges
Hedges of net investments in foreign operations are accounted for similarly to cash fl ow hedges.
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive
income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in profi t
or loss within other income or other expenses.
Gains and losses accumulated in equity are reclassifi ed to profi t or loss when the foreign operation is partially disposed of or sold.
(b) Foreign currency translation
(i)
Functional and presentation currency
Items included in the fi nancial statements of each of the Company’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The fi nancial statements are presented in Australian
dollars, which is JB Hi-Fi Limited’s functional and presentation currency.
95
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the fi nancial year ended 30 June 2021
29 SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Foreign currency translation (continued)
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profi t or loss, except
when they are deferred in equity as qualifying cash fl ow hedges and qualifying net investment hedges, or are attributable to part of
the net investment in a foreign operation.
(iii) Group companies
The results and fi nancial position of foreign operations (none of which has the currency of a hyperinfl ationary economy) that have a
functional currency different from the presentation currency are translated into the presentation currency as follows:
•
•
assets and liabilities presented are translated at the closing rate at the date of that balance sheet;
income and expenses are translated at average exchange rates (unless this is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the
dates of the transactions); and
•
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and
other fi nancial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a
foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are
reclassifi ed to profi t or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign
operation and translated at the closing rate.
(c) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable
from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash fl ows are presented on a gross basis. The GST components of cash fl ows arising from investing or fi nancing activities which
are recoverable from, or payable, to the taxation authority, are presented as operating cash fl ows.
(d) New accounting standards and interpretations
In the current year, the Group has adopted all of the following new and revised Standards and Interpretations issued by the
Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting
period. Their adoption has not had any material impact on the disclosures or on amounts reported in these fi nancial statements.
(i) AASB 2018-6 Amendments to Australian Accounting Standards - Defi nition of a Business
(ii) AASB 2018-7 Amendments to Australian Accounting Standards - Defi nition of Material
(iii) AASB 2019-1 Amendments to Australian Accounting Standards - References to the Conceptual Framework
96
29 SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) New accounting standards and interpretations (continued)
Software-as-a-Service (“SaaS”) arrangements
In March 2021, the IFRS Interpretations Committee (“IFRIC”) issued an agenda decision to clarify the accounting treatment for SaaS
arrangements, including the accounting for related implementation, customisation and confi guration costs.
The IFRIC clarifi ed that SaaS arrangements are service contracts that provide the Group with the right to access the cloud provider’s
software over a period of time. As a result, the underlying software the Group has the right to access is not controlled by the Group
and therefore ongoing access fees as well as costs incurred to implement, customise and confi gure the cloud provider’s software
are recognised as an expense when incurred. Costs incurred related to software controlled by the Group are capitalised and
amortised on a straight-line basis over their useful life.
Accordingly, the Group has revised its accounting policy in relation to SaaS arrangements in line with the new guidance. The effect
of this change in accounting policy resulted in the derecognition of certain capitalised software costs as a disposal in FY2021
(as refl ected in Note 11 - Plant and equipment). Given the quantum of the impact arising from the change in accounting policy, the
Group has elected not to restate its comparative fi nancial information.
All expenditure in the current fi nancial year in relation to SaaS arrangements has been assessed under the new guidance and
expensed or capitalised as appropriate.
The effects of the following Standards and Interpretations that are issued but not yet effective are not expected to
be material:
(i) AASB 2014-10 Amendments to Australian Accounting Standards: Sale or Contribution of Assets Between an Investor and its
Associate or Joint Venture (effective 1 January 2022)
(ii) AASB 2015-10 Amendments to Australian Accounting Standards - Effective Date of Amendments to AASB 10 and AASB 128
(effective 1 January 2022)
(iii) AASB 2017-5 Amendments to Australian Accounting Standards - Effective Date of Amendments to AASB 10 and AASB 128
and Editorial Corrections (effective 1 January 2022)
(iv) AASB 17 Insurance Contracts and AASB 2020-5 Amendments to Australian Accounting Standards - Insurance Contracts
(effective 1 January 2023)
(v) AASB 2020-1 Amendments to Australian Accounting Standards - Classifi cation of Liabilities as Current or Non-Current
(effective 1 January 2022)
(vi) AASB 2020-3 Amendments to Australian Accounting Standards - Annual Improvements 2018-2020 and Other Amendments
(effective 1 January 2022)
(vii) AASB 2020-8 Amendments to Australian Accounting Standards - Interest Rate Benchmark Reform - Phase 2
(effective 1 June 2021)
(viii) AASB 2021-2 Amendments to Australian Accounting Standards - Disclosure of Accounting Policies and Defi nition of
Accounting Estimates (effective 1 January 2023)
(ix) AASB 2021-3 Amendments to Australian Accounting Standards - Covid-19-Related Rent Concessions beyond 30 June 2021
(effective 1 April 2021)
30 EVENTS OCCURRING AFTER THE REPORTING PERIOD
A number of JB Hi-Fi and The Good Guys stores have been temporarily closed to customers at various times since 1 July 2021 as a
result of Covid-19 restrictions. The majority of these stores have continued to fulfi l online and Click-and-Collect orders whilst closed
to customers.
There have been no other matters or circumstances occurring subsequent to the end of the fi nancial year, that have signifi cantly
affected, or may signifi cantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group
in future fi nancial years.
97
ADDITIONAL SECURITIES EXCHANGE INFORMATION
The shareholder information set out below was applicable as at 9 August 2021.
A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Ordinary shares
Total Holders
Units
% Issued Capital
26,141
7,170,877
4,100
8,284,289
310
145
27
2,139,692
3,868,271
93,420,243
30,723
114,883,372
6.24
7.21
1.86
3.37
81.32
100.00
There were 555 holders of less than a marketable parcel of ordinary shares.
B. Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Ordinary shares
Name
1. J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
2. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3. CITICORP NOMINEES PTY LIMITED
4. BNP PARIBAS NOMINEES PTY LTD
5. NATIONAL NOMINEES LIMITED
Number held
32,490,524
31,131,401
12,204,330
5,666,251
3,260,177
6. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3,038,577
7. BNP PARIBAS NOMS PTY LTD
8. WARBONT NOMINEES PTY LTD
9. WOODROSS NOMINEES PTY LTD
10. BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
11. CITICORP NOMINEES PTY LIMITED
12. BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
13. AMP LIFE LIMITED
14. CPU SHARE PLANS PTY LIMITED
15. 3RD WAVE INVESTORS PTY LTD
16. BNP PARIBAS NOMINEES PTY LTD
17. SCCASP HOLDINGS PTY LTD
18. BUTTONWOOD NOMINEES PTY LTD
19. JEREMY AND LYNETTE KING SUPERANNUATION PTY LTD
20. BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
1,401,876
488,000
475,915
360,034
291,991
284,455
272,019
255,149
250,000
190,914
175,400
165,626
150,000
143,373
% of issued
shares
28.28
27.10
10.62
4.93
2.84
2.64
1.22
0.42
0.41
0.31
0.25
0.25
0.24
0.22
0.22
0.17
0.15
0.14
0.13
0.12
92,696,012
80.66
98
C. Substantial holders
Substantial holders in the Company are set out below:
Ordinary shares
AustralianSuper Pty Ltd
Blackrock
The Vanguard Group
Magellan Financial Group
Number
held
Voting Power
%
12,741,156
7,384,822
6,957,042
6,948,678
11.09
6.43
6.06
6.05
Number
on issue
Number
of holders
D. Unquoted equity securities
Employee share options issued under the Company’s share option plans
782,415
163
99
This page has been left intentionally blank
100
CORPORATE INFORMATION
ABN 80 093 220 136
COMPANY SECRETARY
Doug Smith
PRINCIPAL REGISTERED OFFICE IN AUSTRALIA
Podium Level
60 City Road, Southbank VIC 3006
Phone: +61 3 8530 7333
SHARE REGISTRY
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston Street, Abbotsford, Victoria, 3067, Australia
Phone: 1300 302 417 (Australia)
Phone: +61 3 9415 4136
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