JB Hi Fi Annual Report - 2015.pdf - Appendix 4E For personal use only Preliminary Final Report For the year ended 30 June 2015 JB Hi-Fi Limited ACN 093

JB Hi Fi Annual Report - 2015.pdf - Appendix 4E For...

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Unformatted text preview: Appendix 4E For personal use only Preliminary Final Report For the year ended 30 June 2015 JB Hi-Fi Limited ACN 093 220 136 This preliminary final report is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.3A. JB Hi-Fi Limited For personal use only ACN 093 220 136 Reporting period Comparative period Financial year ended 30 June 2015 Financial year ended 30 June 2014 Results for announcement to the market Revenue from ordinary activities up Percentage change % 4.83% Profit from ordinary activities after tax up 6.28% to 136,511 Net profit attributable to members of JB Hi-Fi Limited up 6.35% to 136,511 to Amount $’000 3,652,136 Dividend information Final dividend Interim dividend Amount per security 31.0¢ Franked amount per security 31.0¢ 59.0¢ 59.0¢ Record date for determining entitlements to the dividend: • final dividend • interim dividend 28 August 2015 13 February 2015 Dividend payment date: • final dividend • interim dividend 11 September 2015 27 February 2015 Net Tangible Assets Per Security 2015 $ Net tangible assets per security 2014 $ 2.44 1.97 Other information This report is based on the consolidated financial statements which have been audited by Deloitte. For a brief explanation of the figures above please refer to the Announcement on the results for the year ended 30 June 2015 and the notes to the financial statements. For personal use only JB Hi-Fi Limited ACN 093 220 136 Annual report for the financial year ended 30 June 2015 Annual report For personal use only for the financial year ended 30 June 2015 Page Governance, environmental and social statements 1 Directors' report 11 Operating and financial review 16 Remuneration report 24 Auditor's independence declaration 52 Independent auditor’s report 53 Directors' declaration 55 Statement of profit or loss 56 Statement of profit or loss and other comprehensive income 57 Balance sheet 58 Statement of changes in equity 59 Statement of cash flows 60 Notes to the financial statements 61 Additional securities exchange information 98 Corporate information 100 JB Hi-Fi Limited Governance, Environmental and Social Statements GOVERNANCE, ENVIRONMENTAL AND SOCIAL STATEMENTS For personal use only JB Hi-Fi Limited (“the Company” or “JB Hi-Fi”) recognises the importance of Governance, Environmental and Social matters to our shareholders, suppliers and customers. 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). CORPORATE GOVERNANCE STATEMENT The directors and management of JB Hi-Fi are committed to ensuring that the Company’s business is conducted ethically and in accordance with high standards of corporate governance. The Board believes that JB Hi-Fi’s policies and practices comply in all material respects with the 3rd edition of the ASX Corporate Governance Council Principles and Recommendations (the “ASX Recommendations”). The Board believes that, during the 2015 financial year, it 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 10 August 2015. THE BOARD Role The primary role of the Board is to protect and enhance long-term 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 Company on behalf of shareholders. The Board’s responsibilities include the corporate governance of the Company, overseeing the business and affairs of the Company, communicating with the Company’s shareholders and the community, evaluating the performance of executives, ensuring that appropriate procedures are in place so that the Company’s business is conducted in an honest, open and ethical manner and the establishment of a formal and transparent procedure for the selection, appointment and review of directors. The Chief Executive Officer, who is accountable to the Board, is responsible for managing, directing and promoting the profitable operation and development of JB Hi-Fi. A copy of the Board Charter can be found on the Company’s website at via the “Investors” and “Governance” sections. Composition / Selection and appointment of directors 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. The Company believes that skills and experience in the areas listed below are desirable for its 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 experience Retail knowledge and expertise Operational Management expertise and experience Financial expertise and qualifications Property expertise Mergers & Acquisitions expertise and experience Governance expertise and experience Other board experience Experience in setting executive remuneration; and Risk Management expertise and experience. 1 JB Hi-Fi Limited Governance, Environmental and Social Statements For personal use only JB Hi-Fi maintains a majority of non-executive directors on its Board. The Board currently comprises six directors, being five non-executive directors, including the Chairman, and one executive director, being the Chief Executive Officer. The Company has written agreements with each director setting out the terms of his/her appointment. Apart from the Chief Executive Officer, 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 website at via the “Investors” and “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 office, are set out in the Directors’ Report. Independence JB Hi-Fi considers that each of its directors (including the Chairman) is independent with the exception of Richard Murray, the Chief Executive Officer. 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. Gary Levin and James King have each been non-executive directors of the Company for over 10 years and have a deep understanding of the Company and its business. The Board has considered their independence, including in view of their length of tenure as directors of the Company. The Board is of the opinion that, notwithstanding their length of service, both Gary and James remain independent and continue to provide valuable input to the Board. The Board does not believe that either director has formed associations with management (or other stakeholders) that might interfere with, or compromise, their respective abilities to exercise independent, unfettered judgement or act in the best interests of the Company. Richard Uechtritz was Chief Executive Officer of the Company between July 2000 and May 2010 and a consultant to the Company from May 2010 to November 2013. Given the nature of the consultancy arrangements (and that Richard was not provided with remuneration for that role but was, instead, allowed to retain options granted to him whilst he was CEO) and 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 member of the audit, compliance & risk management committee of GPT Funds Management Limited, the responsible entity for the GPT Wholesale Office Fund and GPT Wholesale Shopping Centre Fund. The GPT Wholesale Shopping Centre Fund has ownership interests in 11 shopping centres in which the Company currently leases stores. The Board is of the opinion that Beth is an independent director on the basis that individual leasing arrangements at both the Company and GPT are generally determined at a managerial level rather than Board level. In addition, the Company’s internal protocols provide that Beth would be excluded from any discussion and decision making where any conflict of interest arises between Beth’s role as a director of the Company and her role as a director of GPT Funds Management Limited. Conflict of Interest If a conflict 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. Directors must keep the Board advised, on an ongoing basis, of any interests that could potentially conflict with those of the Company. Directors are required to promptly disclose to the Board interests in contracts, other directorships or offices held, possible related party transactions and any other material personal interests in a matter relating to the Company’s affairs. 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. 2 JB Hi-Fi Limited Governance, Environmental and Social Statements Access to information and independent advice Each director has the right of access to all relevant Company information and to the Company’s executives. Subject to prior consultation with the Chairman, each director may seek independent professional advice at the Company’s expense. For personal use only 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 provides the directors with briefings 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). The Company does this using both the Company’s external advisors (including the Company’s auditors and legal and remuneration advisors) and management (including the Chief Financial Officer and the Company Secretary & General Counsel). 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 firms. The Company 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 established 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 and integrity of the Company’s financial management, financial reporting and disclosure, and related non-financial reporting and disclosure practices; oversight of the independence, performance, appointment and removal of the external auditor; and review of the Company’s policies on risk oversight and management, and in discharging its responsibility to satisfy itself that an adequate and sound system of risk management and internal control has been implemented to manage the material risks affecting the Company’s business, including compliance with all applicable laws. A copy of the Audit and Risk Management Committee Charter can be found on the Company’s website at via the “Investors” and “Governance” sections. During the 2015 financial year, the Audit and Risk Management Committee comprised the following non-executive directors, all of whom were independent with relevant financial, commercial and risk management experience, including an independent chairman who is not the Chairman of the Board: • Beth Laughton: Ongoing member and Chair of Committee; • James King: Ongoing member of Committee; and • Gary Levin: Ongoing member of Committee. Details of the background and experience of each of these non-executive directors are outlined in the Directors' Report. The Audit and Risk Management Committee meets regularly. Details of the meetings held and members’ attendance during the 2015 financial 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 Committee The Board has established a Remuneration Committee. The Remuneration Committee is charged primarily with reviewing and making recommendations to the Board regarding the remuneration of executive officers and non-executive directors, and the policies for remuneration and compensation programs of the Company generally. A copy of the Remuneration Committee Charter can be found on the Company’s website at via the “Investors” and “Governance” sections. 3 JB Hi-Fi Limited Governance, Environmental and Social Statements For personal use only During the 2015 financial year, the Remuneration Committee comprised the following directors, each of whom are considered by the Company to be independent: • Greg Richards: Ongoing member and Chair of Committee; • Gary Levin: Ongoing member of Committee; and • James King: Ongoing member of Committee. The Remuneration Committee meets as required. Details of the meetings held and members’ attendance during the 2015 financial year are listed in the Directors’ Report. Directors who are not members of the Remuneration Committee may attend a Remuneration Committee meeting at the invitation of the Chairman when considered appropriate. Nominations Committee The Board has decided not to establish a Nominations Committee. Rather the Board itself is responsible for: • • • • • Board succession planning and ensuring that the Board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively (including the process for recruiting new directors); induction programs for new directors; establishing formal and transparent procedures for the selection and appointment of new directors to the Board; selecting, appointing and regularly evaluating the performance of, and planning for the succession of, the Chief Executive Officer; and developing and instituting internal procedures for evaluating Board performance and the performance of individual directors and Board Committees. A copy of the Board Charter and the Board Composition & Succession Policy can be found on the Company’s website at via the “Investors” and “Governance” sections. 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 JB Hi-Fi acknowledges the need for directors, executives and employees to observe the highest ethical standards of corporate behaviour. JB Hi-Fi has adopted a Code of Conduct to provide directors, executives and employees with guidance on what the Company deems to be acceptable behaviour. The key elements of the Code are: As a company: (a) respecting every employee’s dignity, rights and freedoms; (b) providing a working environment that is safe, challenging and rewarding; (c) recognising the achievements of each of our employees; (d) respecting customers’, suppliers’ and employees’ personal and sensitive information; (e) reinforcing JB Hi-Fi’s commitment to the highest standards in business and professional ethics; and (f) obeying the law. As employees: (a) treating customers, the public and fellow employees with honesty, courtesy and respect; (b) respecting and safeguarding the property of customers, JB Hi-Fi and fellow workers; (c) maintaining confidentiality of all customers’, JB Hi-Fi’s and other parties’ information gained through our work; (d) performing our duties, as best we can, taking into account our skills, experience, qualifications and position; (e) doing our jobs in a safe, responsible and effective manner; (f) ensuring our personal business and financial interests do not conflict with our duty to JB Hi-Fi; (g) working within JB Hi-Fi’s policies and rules; and (h) obeying the law. The Company has developed appropriate policies and guidelines to assist employees in applying the Code in practice. A copy of the Code of Conduct can be found on the Company’s website at via the “Investors” and “Governance” sections. 4 JB Hi-Fi Limited Governance, Environmental and Social Statements DIVERSITY For personal use only JB Hi-Fi 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 Company has a Diversity Policy which is available on the Company’s website at via the “Investors” and “Governance” sections. The Diversity Policy states that JB Hi-Fi appreciates that the different perspectives arising from diversity encourage an innovative, responsive, productive and competitive business and create value for our customers and shareholders. JB Hi-Fi’s objective is that Board appointments, employment and advancement decisions are based on merit, qualifications and competence, and that employment opportunities shall not be influenced, affected or limited by discrimination. JB Hi-Fi believes that no barrier should therefore exist that prevents this from occurring. Gender diversity As at 30 June 2015 the proportion of women engaged by JB Hi-Fi was as follows: • Board: 17% being 1 of 6 directors (2014: 14%) • Senior Management/Executive (excluding the executive director/CEO): 8% being 2 of 24 employees (2014: 4%). For these purposes, Senior Management/Executive means: - the 4 executives listed on page 26 of this Report who were employed on 30 June 2015, excluding the executive director; and - the 19 next most senior managers of the Company, each of whom reports to one of these executives or the executive director. • Group: 39% being 2,883 of 7,320 employees (2014: 39%). In March 2012 the Board set measurable objectives in relation to gender diversity. These diversity objectives and progress towards achieving them are set out in the table below: Objective set in March 2012 June 2015 June 2014 June 2013 June 2012 To improve the percentage of female to male commissioned store sales staff over each of the next 3 years 22% 21% 21% 21% To improve the percentage of female to male store managers over the next 3 years 10% 10% 11% 11% To improve the percentage of female to male regional/area managers over the next 3 years 9% 0% 0% 0% To increase the percentage of female senior managers over the n...
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