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1 JBHi-FiLimited MacquarieAustralia Conference May2013

2 Agenda 1. Sales 2. Gross margin 3. Cost of doing business 4. Trading outlook 5. Growth opportunities 6. Commercial 7. Online 8. Digital 9. JB HI-FI HOME trial 10. The JB model 11. Maintaining the JB model 12. Customer engagement 13. Investment checklist Terry Smart CEO

3 1.Sales Sales maintaining momentum! HY13 Sales Growth Jan - Apr '13 YTD (Apr '13) Total 1 Comps. Total 1 Comps. Total 1 Comps. Australia 2.8% (3.4%) 11.0% 3.3% 5.4% (1.2%) New Zealand (NZD) (6.0%) (5.6%) (5.0%) (5.0%) (5.6%) (5.4%) Total 2.3% (3.5%) 10.3% 3.0% 4.9% (1.3%) The Company has continued to see good sales momentum in Australia in the second half of FY13. While showing recent signs of improvement, the NZ market remains patchy. 1 excludes Clive Anthonys 3

4 2.GrossMargin Gross Margin it remains a competitive environment We continue to see an improvement in gross profit percentage over the previous corresponding period. Market is still very competitive although we are not currently experiencing the level of unsustainable discounting seen in the previous corresponding period. 4

5 3.Cos tofd oingb usin e s s Cost of Doing Business Maintaining the focus! Our low cost of doing business (CODB) enables us to operate at healthy profit margins notwithstanding competitor activity. This is driven by high sales per square metre and an obsession with not letting waste and inefficiency creep into our cost structure. As expected, CODB will grow at a greater rate in the second half due to a combination of the new stores opened in the first half (11 new stores in HY13) and our ongoing investment in customer service to support sales growth. 3 separate award wage increases within the past 3 years impacting CODB by approximately 25 bps per annum. Increasing scale continues to deliver cost reductions which can assist in offsetting higher wages cost. Lowest CODB of listed retailers in Australia. 5

6 4.TradingOutlook Trading Outlook Sales momentum continues! At the end of FY13 the Company will have 177 stores (Australia: 164, NZ: 13), of which 176 will be JB Hi-Fi stores. We have completed our rollout of 13 new JB Hi- Fi stores for FY13, all located in Australia. The Company expects sales in FY13 to be circa $3.3 billion, an increase of 5.5% over the prior year. Gross margin in the second half 2013 has improved on the pcp however the market is expected to remain competitive. While we have seen good sales momentum in the half to date, we still remain cautious on the outlook. The Company expects NPAT for FY13 to be in the range of $112.0m to $116.0m. 6

7 4.T R A DI NGO UT L O OK- C at e g o rie s Evolution continues to drive growth TV Smart TV, big screen, OLED, Ultra HD. Telco New handsets, Samsung S4, HTC ONE, potential new iphone. Computer continued growth in tablets, ereaders, Google Chromebooks, new form factor notebooks. Camera Sports cams, Wifi enabled, mirrorless, DSLRs. Audio Wifi & Bluetooth enabled, NFC, Streaming music systems. Accessories Continued growth in headphones and device accessories. Games New consoles from both Sony and Microsoft (expected in the first half of FY14). New gaming g titles driven by new console features. 7

8 5.GrowthOpportunities Growth will come from multiple areas New stores Solid pipeline of properties. Will continue our disciplined approach to selecting new stores. Major shopping districts. i t High foot traffic locations. Existing store and category sales growth Many categories still have above average growth opportunities. Convenient and easily accessible locations with high foot traffic generates impulse sales. Market share gains Continued growth in market share, both in store and online. Commercial and Insurance Significant opportunities to grow both these divisions over the next 2 to 3 years. 8

9 5.GrowthOpportunities... Growth will come from multiple areas Online JB HI-FI HOME website launched. New JB Hi-Fi website currently under construction. Digital NOW Music growing. NOW ebooks launched add on to devices. NOW Video service nearing completion. 9

10 6.Commercial Commercial Significant growth opportunity! JB Hi-Fi has continued to see strong growth in Commercial, while off a small base revenue has grown 50% YTD. We have doubled our sales staff in Australia and NZ in the last 12 months including staff joining us from the Commercial divisions of DSE, WOW S&S, the Good Guys and DJ s. The Commercial market is large and we consider the potential sales opportunity for JB Hi-Fi at circa $500m. In March we launched a B2B Telco offer (fixed line, mobility and data). One of our key strategic planks is aimed at providing an integrated offer (product and services) to Enterprise and Education clients across Australia. 10

11 6.Commercial... Commercial Significant growth opportunity! On 17 Feb 2013, we acquired 51% in Network Neighborhood, a Victorian based Education IT Services business: The business has 160 technicians providing IT support services to 400 schools in Victoria. In addition, it provides services to a number of corporate clients; In FY13 on an annualised basis the business will turnover $25m and have an EBIT of $2m; and We anticipate acquiring the remaining shareholding from the owner in FY15. The acquisition of Network Neighborhood provides JB Commercial with a strong service offer in both Education and Enterprise. 11

12 7. O n lin e Goal is a Seamless customer experience Online and Mobile sites give customers a choice on how they wish to shop with JB Hi-Fi. Hi Fi In 1HY13, online sales grew 40.3% on the pcp to $37.2m or 2.0% of sales. Unique visitations grew 30.9% over the previous year1 to an average of 1 million per week. New JB Hi-Fi site under construction will improve the customer experience. i Soft launch of JB HI-FI HOME categories Rolling 12 months to 31 December 2012

13 8.Digital JB HI-FI NOW Platform continues to develop and allows us to stay engaged g with our customers after the physical purchase has been made. We need to stay ahead of our customers needs (i.e. as customers evolve, so do we). NOW Music continues to grow with approximately 15 million tracks available and over 22,000 paid subscribers to the service. NOW Books launched on 22 April 2013 Natural al add on to our significant e-reader, tablet and PC sales. Part of Home Entertainment categories. Growing market. 250,000 books and growing. 13

14 9.J BHI-FIHOMEt ria l JB HI-FI HOME trial Leveraging the power of the brand! Home categories circa $4 billion market opportunity. These categories are becoming fast becoming a technology and fashion story. On 28 November 2012, we announced the trial of the JB HI-FI HOME concept, with our four existing colocated JB Hi-Fi and Clive Anthonys stores merging under the one new brand, JB HI-FI HOME. Early sales results have been encouraging, with good growth from appliance categories, and are ahead of internal expectations. ti 14 Note: screen shot taken from the JB Hi-Fi website on 29 April 2013 (prices current as at that date).

15 9.JBHI-FIHometrial... JB HI-FI HOME trial Leveraging the power of the brand! The new concept appears to have been positively accepted by our customers, with no negative impact on the traditional JB Hi-Fi categories. The two previously flagged Queensland stores and one additional store in NSW have been converted to JB HI-FI HOME as part of our trial. Home appliance category is a big opportunity but preserving the brand is more important. t We will continue to review and refine our offer over the next 6 months. 15 Note: screen shot taken from the JB Hi-Fi website on 29 April 2013 (prices current as at that date).

16 10.TheJBModel Unique and engaging model! Unique model, high energy, engaging and entertaining retail format (ranked 10 th in Interbrand s Most valuable Australian Retail Brands 2013 listing). High level of loyalty and trust from customers (i.e. 3 rd in the 2013 Corporate Reputation Index released by AMR and the Reputation Institute). Operate in high foot traffic locations. High sales per square metre. Relatively low market share gives us more scope to expand and grow. Low cost of doing business. New growth opportunities in Digital, Commercial and HOME. Good opportunity to expand online sales. 16

17 1 1.M ain tainingt H EJ BMODE L Maintaining the model - Constant evolution Its vital we remain focused on evolving the model to maintain the energy and entertainment factor. Constantly working to ensure that we maintain our appeal as a destination to browse, explore and discover. Obsession with maintaining engagement with customers. To achieve this, our in-store merchandising constantly evolves. 17

18 12.CustomerEngagement It s not about Bricks vs. Online

19 12.CustomerEngagement... It s about a seamless Customer Experience

20 13.InvestmentChecklist Unique and relevant brand (a consumer destination). Low cost of doing business (scale advantages). Flexible business model history of category growth and development. Diversity of product categories. New store, online and digital opportunities. Experienced management team. High return on invested capital. Shareholder return focused through proactive capital management and dividend policies. 20

21 Appendix Store movements during FY13 1 Geographic breakdown 1 FY12 FY13 1 Opened Rebrand Closed Total Australia JB HI-FI - Tier (7) JB HI-FI - Tier (3) 20 JB HI-FI HOME (3) 163 Clive Anthonys 2 - (1) (4) 164 New Zealand JB HI-FI - Tier JB HI-FI - Tier TOTAL (4) JB HI-FI store type: 47 Tier (7) Tier (3) 24 HOME (3) Store format: Shopping centres Other (4) (4) as at 3 May 2013 NZ

22 Thank You