2005 Annual Report - JB Hi Fi

• Operating costs – the consolidated entity’s ability to consistently offer low prices and
operate profi tably is dependent on a combination of the scalability of its operations,
relatively high stock turns and low cost operating structure. It is important that the
consolidated entity maintain these drivers of profi tability.
B. Review of operations
Sales and earnings performance:
• The consolidated entity recorded a full year net profi t after tax of $20,677,000 for the twelve
months ending June 2005, up 49.8% on the previous corresponding period of $13,806,000.
• Total sales were up 53.4% to $693,943,000 and comparable store growth was 4.7%.
• Gross margin was 23.0% for the period, down 0.4%.
• EBIT was $36,984,000 and the resulting EBIT margin was 5.3%, up from 5.1% for same period
last year.
• Operating expenditure as a percentage of sales continued to improve at 17.0% for the period,
improving from 17.8% for same period last year.
• The consolidated entity opened eleven new stores during the 2005 fi nancial year, ten branded
JB Hi-Fi and one Clive Anthonys, bringing the total stores to forty eight at year end.
• JB expects to open between sixteen to seventeen stores in the 2006 fi nancial year, with twelve
stores expected to be opened before Christmas.
Material developments:
• The consolidated entity acquired 70% of the business of Queensland electrical retailer,
Clive Anthonys for $24,316,000 on 1 July 2004. Clive Anthonys retails white goods,
consumer electronics, cooking appliances and computers.
Overall returns to shareholders:
• Refer to details of dividends paid and declared by the company in the section below.
C. Details of investments for future performance
• Investments of $15,812,000 were made during the fi nancial year in capital expenditure projects.
A majority of this capital expenditure related to the eleven new stores opened during the period.
These stores are likely to contribute towards solid earnings growth in the 2006 fi nancial year.
• The consolidated entity’s investment in Clive Anthonys will provide it with exposure to the
substantial white goods, cooking, air conditioning and computer markets in the fast growing
region of South East Queensland and provide a platform to expand outside the consumer
offering of its JB Hi-Fi store formats.
D. Review of financial conditions
• The capital structure of the consolidated entity has remained stable during the period.
The increase in equity during the period related to ordinary shares issued to employees
under the Employee Share Option Plan. The consolidated entity increased its interest
bearing liabilities as a result of its investment in Clive Anthonys and its new store rollout.
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