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
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
3,652,136 Dividend information Final dividend
Interim dividend Amount per
31.0¢ 59.0¢ 59.0¢ Record date for determining entitlements to the dividend:
interim dividend 28 August 2015
13 February 2015 Dividend payment date:
interim dividend 11 September 2015
27 February 2015 Net Tangible Assets Per Security
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
This Corporate Governance Statement has been approved by the Board and is effective as at 10 August 2015.
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
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
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.
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
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.
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.
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'
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.
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
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
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.
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
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
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
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
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
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