Subject code and Subject Name: ACCY801: Accounting and Financial

Management

Submission Type: Online

Assignment Title: Business Report-JB-Hi-FI Limited

Family name: Zeeshan

First Name: Muhammad

Student number: 5885619

Contact Number: 0449755276

Email: zshan47@hotmail.com

1
Table of Contents

1. Introduction ..................................................................................................................... 3
2. Discussions and Analysis............................................................................................. 3
2.1 Brief Summary ....................................................................................................................... 3
2.2 Board of Directors ................................................................................................................ 4
2.3 characteristics of the Board .............................................................................................. 7
2.4 investment or financing decisions.................................................................................. 7
2.5 Australian Stock Exchange (ASX) .................................................................................... 7
2.6 The external audit ................................................................................................................ 8
2.7 ethics and ethical judgments ............................................................................................ 8
2.8 five investors of JB-Hi-FI...................................................................................................10
2.9 Ratios.......................................................................................................................................11
3. References ..................................................................................................................... 14

2
1. Introduction

The report contains brief history of JB Hi-fi with analysis of ratios of JB hi-fi.

2. Discussions and Analysis

2.1 Brief Summary

JB Hi-Fi Limited is a Public Company that is positioned number 90 out of the main 2000 organizations
in Australia. JB Hi-Fi is one the largest retailer of electronic consumer products. The company
produces most of its revenues from Store-Based Retailing in Australia and New Zealand industry. In
2016 the company added up to income of $3,955,013,000 including deals and other income. In 2016 JB
Hi-Fi Limited had 7814 workers in Australia including from all its business operations. JB Hi-Fi
Limited has more then 180 stores, which retails consumer items in Australia and New Zealand. The
company in retail industry works under the name of JB Hi-Fi and JB Hi-Fi HOME.

JB Hi-Fi offers following products

Consumer hardware
Mobile phones
Tablets
Games
GPS and Car Audio
Consoles
Computers and Tablets
Audio gear and instruments

JB Hi-Fi also own and works as an online store. JB Hi-Fi operates as electronic megastores in all over
Australia, except Tasmania, where they are marked as JB Hi-Fi HOME. The company also gives their
products to many private and open retail stores under its JB Hi-Fi Commercial branding (IBIS World).

3
2.2 Board of Directors
Name Age Since Current Education Career History Remuneration
Position

Richard 45 2015 Chief B.Comm, Richard is a Chartered Accountant with over 20 years experience in retail and A$3,054,708
Murray Executive CA, GDip finance He joined JB Hi-Fi as CFO in 2003 and took the business through the IPO

Officer & Applied process. Richard was appointed to the Board of JB Hi-Fi in June 2012 and became
Finance, CEO on 1 July 2014.
Executive
ASIA
Director

Mark 55 2017 Non- MSC, MBA He has more than 30 years retail, wholesale and logistics experience, having A$45,044
Powell Executive (Distinction), held senior positions with many well-known retailers. He served as the Chief
Director B App. Theol Executive of Warehouse Stationery Ltd., a subsidiary of Warehouse Group
from April 2009 to May 2, 2011. He served as General Manager of Group
Supply Chain at Warehouse Group since November 10, 2003. He was Chief
Executive Officer -in-Residence' at Massey Business School. He served as
General Manager of Supply Chain & Merchandise Support of Warehouse
Group since November 2007

Stephen 58 2016 Non- B.Sc. (Hons), He has more than 25 years experience in the Australian retail sector across a A$106,141
Thomas Executive M.Sc broad range of areas including Finance, Operations, Strategic Planning,

4
Goddard Director Merchandise, Stores, Logistics and Supply Chain of these 20 years, 15 years
have been spent in senior management and strategic roles in major Australian
department stores including six years at David Jones and ten years at Myer
Grace Bros. He served as the Finance Director of DJL Limited and David
Jones Limited from February 3, 2003 to April 2, 2012. Mr. Goddard joined
David Jones Limited in 1997 as an Operations Director and was responsible
for successfully overhauling its IT systems. He also served as the Chief
Financial Officer of David Jones Limited

Wai Foon 52 2015 Non- BS, MS, Her former senior executive roles included Operations Director for Just A$156,191
Tang Executive MBA Group and Chief Executive Officer of the Just Group sleepwear business,
Director Peter Alexander. Before joining the Just Group, Wai was General Manager
of Business Development for Pacifi c Brands. Wai was co-founder of the
Happy Lab retail confectionery concept. Wai is also a non-executive director
and member of the Audit Committee and the Risk & Compliance Committee
of Vicinity Limited, and a non-executive director of Kikki K, the Melbourne
Festival and Visit Victoria. Wais former directorships include Speciality
Fashion Group and the Melbourne Fashion Festival.

Gregory 48 2012 Chairman B.Ec (Hons) With 25 years experience Richards join JB as a board member December 2007. He A$290,000
Richards was appointed Chairman of the Board on 1 June 2012. Mr Richards is a member and
Chairman of the Remuneration Committee (appointed Chairman 1 June 2012) and
was Chairman of the Audit and Risk Management Committee from February 2010

5
 until 31 May 2012.

Beth May 56 2011 Independent B.Ec., Beth spent over 25 years in corporate finance, providing mergers and A$166,093
Laughton Non- FAICD, FCA acquisition advice and arranging equity funding for companies in a range of
Executive industries including specialty retail.
Director
She is also a member of the Board of GPT Funds Management Limited and
Chair of its Audit, Compliance & Risk Management Committee and a
member of the Defence SA Advisory Board and its Audit & Risk
Management Committee. Beth was a non-executive director and Chair of the
Audit Committee of Sydney Ferries from 2004 to 2010, a non-executive
director of Port Adelaide Maritime Corporation from 2006 to 2007, a non-
executive director and member of the Audit Committee of the ASX listed
Australand Property Group companies between May 2012 and October 2014,
and Chair of the Audit Committee and a Non-Executive Director of CRC
Care Pty Ltd from March 2012 to December 2014.

Richard 63 2011 Independent MBA, PhD He has over 30 years experience in retailing. He was co-founder of A$134,000
Anders Non- Australias two leading photo chains, Rabbit Photo and Smiths Kodak
Uechtritz Executive Express. He was also a director of Kodak (Australasia) Pty Ltd. Richard led
Director 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.

6
2.3 characteristics of the Board
If we talk abut the borad members of Jb hi-hi you will see the board is compromised of many different
members there are 7 different members in board each board member is highly educated a minimum
level of masters and some have even got phds. This shows that the board members of Jb hi-fi are highly
educated and very vast experience in their relative fields. Amoung the board members we can find the
persons with the average experience of 25 years in their respective fields there are enterprenueurs there
are CEOS ther are managers there are directors and there are the people who have successfully
launched many business ventures. The board members of JB hi-fi belongs to many different fields of
industry, wheather its auding, supply chain, retail industry or any other business sectors the board
members of jb hi-fi just fits in. There are mix culture of fields and gender which relieves a positive
impact on the investors.

2.4 investment or financing decisions

Net cash out flow on investment activities, up from 44.4 million to 52.0 million in AUD.
Investment activities comprised capital expenditure as set out next:

52.3 million AUD investments were during the financial year in capital expending projects,
an increase of 9.8 million from 42.5 million AUD during the previous financial year. Total
inventory on hand increased from 2015 by 67.6 million AUD, driven primarily by the
company`s investment in inventory for new stores, the role out of the appliances and an
increase in inventory in existing stores to support July promotional activities. This increase
was partially offset by the transition to a consignment stock model with certain supplies.
Inventory turnover was 6 times. Creditors days increase 1.8 on the previous 2015 to 40 days.
Total creditors increased by 59.3 million to 384.9 million in AUD. Financial and operating
leverage remains low and is evidence by solid fixed charges over of 3.5 times and interest
cover of 57.3 times. The company`s gearing ratio is 0.4. To gain and losses recognized on
effective portion on foreign currency loans in 2015 designed as net investment hedge.

2.5 Australian Stock Exchange (ASX)

The phrase corporate governance describes the framework of rules, relationships, systems
and processes within and by which authority is exercised and controlled within corporations.
It encompasses the mechanisms by which companies, and those in control, are held to
account. The Principles and Recommendations are structured around, and seek to promote, 8
central principles

Lay solid foundations for management and oversight.

Act ethically and responsibly.
Safeguard integrity in corporate reporting.

7
 Make timely and balanced disclosure.
Respect the rights of security holders.
Recognize and manage risk.
Remunerate fairly and responsibly.

2.6 The external audit

The company`s financial statement are subject to an annual audit by an independent,
professional auditor who also review the company`s half yearly financial statements. The risk
management and audit committee oversees this process on behalf of the board. Deloitte
Touche Tohmatsu is the external auditor farm since 2002 to till. The audit engagement
partner is rotated every five years as the ASE rule. Information of procedure for the selection
and appointment of the external auditor and for the rotation of the external audit engagement
followed by the rules of charter of the Audit and risk Management committee via the
Australian Stock Exchange`s (ASX) Corporate Governance Council (CGC). 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 Chief Executive Officer, in consultation with the Chairman
where appropriate, is responsible for communication with the ASX. Thry work base on, 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. There have been
no contraventions of: The auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and Any applicable code of professional conduct in relation to the audit.
Total auditors remuneration and other service charge is $ 421,016. (Page 86. Annual report)

2.7 ethics and ethical judgments

The company have a proper system of compensation and gave their employees proper
sick leaves and annual leaves.
The pay scale is comparatively higher then the whole market.
The promotion is based on the working of the employees and have proper system for
that
JB Hi-Fi implements strict CSR rules and always have a follow up.
The enviourment of company is very friendly and employees and customers are
always welcomed.
Became the best Australias and New Zealands largest ranges of home entertainment,
consumer electronics products

8
 Whitewoods and small appliances at discounted prices, positioned to appeal to all
customers.
The Group is able to do this through the scale of its operations, high stock turnover
and low cost of doing business
Distinctive brand personality
Motivated, passionate, loyal and knowledgeable staff.
The busy and enjoyable working environment means that the Group continues to attract
and retain high calibre staff
High levels of customer service
The model is constantly innovating to ensure that it remains current and relevant to its
customers.
Stores located in high foot traffic precincts, which allow both convenient access for
customers and maximise impulse traffic.
High energy, engaging and entertaining retail format with constantly evolving
merchandising.
JB Hi-Fi has the ability to bring brands to life and create engagement in product
categories

9
2.8 five investors of JB-Hi-FI
Name Holding Comments

Legg Mason is a leading

global investment company
committed to helping clients

Legg Mason Asset reaches their financial goals

9,383,770 (8.20%) through long-term, actively
Management Limited
managed investment
strategies.

The fram grown into

Australias largest industry
super fund an advantage we
Australiansuper Pty Ltd 8,983,625 (7.85%) use on behalf of our members
every day.

UniSuper is the super fund

dedicated to people working
in Australia's higher
education and research sector.
With around 395,000
Unisuper Ltd 8,623,136 (7.54%)
members and over $60 billion
in net funds under
management, we're one of
Australia's largest super
funds.

In Australia, they mainly

UBS Group AG and its related
6,482,208 (5.67%) asset management and
bodies corporate
investment banking services.

Airlie Funds Management is

Airlie Funds Management Pty Ltd 5,918,853 (5.17%) limited to providing funds
management services to

10
 wholesale investors, as
defined by the Corporations
Act 2001.

2.9 Ratios
PAT/LAT 124.5 94

Current Assests 0.8 1.5

Current Liabilities 15.4 14.3

Serial Formulas 2017 2016

Numbers

1 Ratios Capital Turnover Revenue/ 9.1032 47.04

Capital
Employed

2 Profitability PAT/LAT Margin PAT or 0.0284 0.025138

Ratio LAT/Revenue

Gross Profit Ratio Gross Profit/ 28.0617 23.13205

Sales*100

PAT/LAT PAT or 0.25867 1.18239

LAT/Capital
Employeed

3 Liquidity Ratio Current Ratio Current 1.32084 1.572068

Assets/
Current
Liabilities

Quick Ratio Quick Assests 0.35087 0.34915

/ Current
Liabilities

4 Leverage Ratio Long Term Debit Long Term 1.15888 1.372796

Ratio Debt / Equity

11
5 Efficiency ratio Expenses / 1.00326 0.826095
Revenues

6 Market Value 172 153.8

(EPS)

Notes 2017 2016

$m $m

Cash flows from operating activites

Receipts from customer 6,205.5 4,355.7

Payments to suppliers and employees (5,908.8) (4,101.2)

Interest and bill discounts received 1.7 0.5

Interest and other finance costs paid (9.3) (3.7)

Income tax paid (96.5) (66.2)

Net Cash inflow from operating 16 190.5 185.1

activites

Cash flows from Investing activities

Payment for business combination, net 25 (836.6) -

of cash acquired

Payment for Plants and Equipment 10 (49.1) (52.3)

Proceeds from sale of plant and 0.2 0.3

quipment

Net Cash (outflow) from Investing (885.5) (52.0)

activities

Cash flows from financing activities

Proceeds from issues of share 18 395.9 6.0

12
Proceeds of borrowings 450.0 (30.0)

Payments for debt issue costs (1.7) (0.1)

Payments for shares bought back - (13.2)

Shares Issue Costs (9.2) -

Dividends paid to owners for (119.1) (93.2)

Company

Net Cash inflow (outflow) from 715.9 (130.5)

financing activites

Net increase in cash and cash 21.0 2.6

equivalents

Cash and Cash equivalents at the 51.9 49.1

beginning of the financial year

Effects of exchange rate changes on (0.1) 0.2

cash and cash equivalents

Cash and cash equivalents at end of 72.8 51.9

year

13
3. References

Report https://www.jbhifi.com.au/Documents/2016%20JB%20Hi
Fi%20Annual%20Report_ASX.pdf
Invester 1 https://www.unisuper.com.au/about-us/who-we-are
http://www.leggmason.com.au/en/about/
https://www.australiansuper.com/about-us
http://airliefm.com.au/Home.aspx
https://www.ubs.com/au/en.html
https://www.jbhifi.com.au/Documents/Company%20Announcement%20-
%202016%20Full%20Year%20Results.pdf
https://www.investsmart.com.au/shares/asx-jbh/jb-hi-fi-limited
https://www.reuters.com/finance/stocks/overview/JBH.AX
Murrey https://www.ibisworld.com.au/australian-company-research-
reports/retail-trade/jb-hi-fi-limited-company.html
Company about https://www.jbhifi.com.au/General/Corporate/Consumer-
Matters/About-Us/
Company profile
http://www.reuters.com/finance/stocks/companyProfile/JBH.AX
Board https://www.jbhifi.com.au/General/Corporate/Shareholder-
Matters/Board/
Executive https://www.jbhifi.com.au/General/Corporate/Shareholder-
Matters/Executive/
Richard ceo https://www.bloomberg.com/profiles/people/5949283-richard-
anders-uechtritz
Company finance http://quotes.wsj.com/AU/XASX/JBH/company-people
Board http://www.reuters.com/finance/stocks/company-officers/JBH.AX
Pricciplelaws http://www.asx.com.au/documents/asx-compliance/cgc-
principles-and-recommendations-3rd-edn.pdf
Asx govnt auditor
http://www.asx.com.au/asxpdf/20150810/pdf/430dbn81q68j74.pdf
Stock ex https://www.investsmart.com.au/shares/asx-jbh/jb-hi-fi-limited
Investors https://www.jbhifi.com.au/General/Corporate/Shareholder-
Matters/Investor-Presentations/
Investor https://www.jbhifi.com.au/General/Corporate/Shareholder-Matters/

14