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Joint Lead Managers:
Goldman Sachs JBWere Pty Ltd
Macquarie Equity Capital Markets Limited
This Prospectus is dated Thursday, 18 September 2003 and
was lodged with ASIC on Thursday, 18 September 2003.
Neither ASIC nor ASX take any responsibility for the content of
this Prospectus. JB Hi-Fi will apply for admission to the official list
of ASX and quotation of the Shares on ASX within seven days
after the date of this Prospectus. No securities will be sold or
issued on the basis of this Prospectus later than 13 months after
the date of the Prospectus.
You should read this Prospectus in its entirety before deciding
to complete and lodge an Application Form. If you have any
questions you should seek professional advice from your
stockbroker, accountant or financial adviser.
The Corporations Act prohibits JB Hi-Fi from processing
applications received until after the Exposure Period. The
Exposure Period is the seven day period from the date of this
Prospectus and may be extended by ASIC by up to a further
seven days. The purpose of the Exposure Period is to enable the
Prospectus to be examined by market participants prior to the
raising of funds. That examination may result in the identification
of deficiencies in the Prospectus, in which case any application
received may need to be dealt with in accordance with section
724 of the Corporations Act. No preference will be conferred on
applications received during the exposure period.
The offer of securities under this Prospectus does not constitute
a public offer in any jurisdiction other than Australia and New
Zealand. This Prospectus does not constitute an offer to any
person to whom, or an offer in any place in which, it would be
unlawful to make such an offer. The distribution of this Prospectus
in jurisdictions outside Australia and New Zealand may be
restricted by law and persons who come into possession of
this Prospectus should seek advice on and observe any such
restrictions. Any failure to comply with such restrictions may
constitute a violation of applicable securities laws.
No distribution or sale in the United States
Neither this Prospectus nor the accompanying Application Form
may be sent to investors in the United States or otherwise
distributed in the United States. Shares may not be sold in the
United States, except that the Joint Lead Managers may sell
Shares offered under this Prospectus in the United States in
accordance with United States securities laws.
The Offer constituted by this Prospectus in electronic form is
available only to persons receiving this Prospectus in electronic
form within Australia or New Zealand.
Disclaimer
No person is authorised to give any information or make any
representation in connection with the Offer which is not contained
in this Prospectus. Any information or representation not contained
in this Prospectus may not be relied on as having been authorised
by JB Hi-Fi or the Directors.
Exposure Period
This Prospectus will be made generally available to Australian
and New Zealand residents during the Exposure Period by being
posted on the Company’s Internet site at www.jbhifi.com.au.
A paper copy of this Prospectus will be available to Australian
and New Zealand residents on request to the Registry or one
of the Joint Lead Managers and Joint Bookrunners during the
Exposure Period.
Applications under this Prospectus received during the Exposure
Period will not be processed until after the expiry of the Exposure
Period. No preference will be conferred on Applications received
during the Exposure Period.
Electronic Prospectus
This Prospectus may be viewed online at www.jbhifi.com.au.
The Prospectus is only available online to residents in Australia or
New Zealand. Persons who access the electronic version of this
Prospectus should ensure that they download and read the entire
Prospectus. A paper copy of this Prospectus is available free of
charge to any person in Australia or New Zealand by telephoning
the JB Hi-Fi Share Offer Information Line on 1300 302 417
(Australia) or +61 3 9615 5970 (New Zealand) during the period
of the Offer.
Privacy
If you apply for Shares, you will provide personal information to
the Vendor Shareholders, JB Hi-Fi and the Registry. The Vendor
Shareholders, JB Hi-Fi and the Registry collect, hold and use your
personal information in order to assess your Application, service
your needs as an investor, provide facilities and services that you
request and carry out appropriate administration.
Company and tax law requires some of the information to be
collected. If you do not provide the information requested, your
Application may not be able to be processed efficiently, or at all.
The Vendor Shareholders, JB Hi-Fi and the Registry may disclose
your personal information for purposes related to your investment
to their agents and service providers including those listed below
or as otherwise authorised under the Privacy Act 1988:
★ the Joint Lead Managers in order to assess your Application;
★ the Registry for on-going administration of the register; and
★ the printers and the mailing house for the purposes of
preparation and distribution of statements and for handling
of mail.
Under the Privacy Act 1988, you may request access to your
personal information held by (or on behalf of) JB Hi-Fi, the Vendor
Shareholders or the Registry. You can request access to your
personal information by telephoning or writing to the Vendor
Shareholders or JB Hi-Fi through the Registry as follows:
Computershare Investor Services Pty Limited:
GPO Box 2975, Melbourne, VIC 8060
1300 850 505 (toll free)
+61 3 9615 5970 (for international callers)
Definitions and abbreviations
Defined terms and abbreviations used in this Prospectus are
explained in the Glossary at the end of this document.
Financial amounts
The financial amounts in this Prospectus are expressed in
Australian dollars unless stated otherwise.
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Contents
Chairmans Letter
Investment Overview
Details of the Offer
Industry Overview
Business Profile
Board and Management
Financial Information
Risk Factors
Investigating Accountants’ Report
Report on Review of Directors’ Forecasts
Additional Information
Glossary
Application Forms
Corporate Directory
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Chairman’s Letter
18 September 2003
Dear Investor
On behalf of the Directors, I have great pleasure in offering you the opportunity to become a shareholder
in JB Hi-Fi.
The business of JB Hi-Fi was founded in 1974 as a discount retailer of hi-fi equipment and recorded
music with a single store in the Melbourne suburb of East Keilor. Since that time, the Company has
grown to 26 stores, with sites located in most Australian States.
JB Hi-Fi is now one of Australia’s largest and fastest growing home entertainment product retailers
featuring Consumer Electronics, car sound systems, Music and DVDs. The Company is positioned as a
discounter of leading brands, sold in an informal environment by knowledgeable customer oriented staff.
JB Hi-Fi operates from stand alone destination sites and shopping centre locations. The cornerstone
of the Company’s success has been, and will continue to be, its ability to consistently offer low prices.
It is able to do this through the scale of its operations, relatively high stock turns and low cost
operating structure.
The Company expects it will continue to benefit from the high growth product categories of DVD, home
theatre, wide-screen TVs and digital cameras. The maturation of the 11 stores opened in the last two
years and the planned opening of stores in new and existing markets is expected to contribute to strong
earnings growth.
Under this Prospectus 86.6 million Shares are being offered for sale by the Vendor Shareholders,
representing approximately 85% of the undiluted issued Shares of JB Hi-Fi. Based on the midpoint of the
Indicative Price Range ($1.45), approximately $125 million will be raised under the Offer. The proceeds
from the Offer, net of applicable costs, will be received by the Vendor Shareholders. Following the Offer,
interests associated with current and former management of the business will own the remaining issued
Shares (approximately 15% of the undiluted issued Shares) in JB Hi-Fi.
This Prospectus contains detailed information on JB Hi-Fi and its business, and I encourage you to read
it carefully before making your investment decision. On behalf of the Directors, I commend this
investment opportunity to you and look forward to welcoming you as a shareholder.
Yours sincerely
Patrick Elliott
Chairman
Prospectus JB Hi-Fi
1
Key dates
Retail Offer opens
Retail Offer closes
Institutional Offer opens
Institutional Offer closes
Final Price and basis of Share allocation announced
Shares expected to commence trading on ASX
(on a conditional and deferred settlement basis)
Retail and Institutional Settlement
Transfer of Shares to successful Applicants and last day of
conditional trading
Expected despatch of holding statements
Shares expected to commence trading on ASX
on a normal settlement basis
Expected date of settlement of all trades executed
on a deferred settlement basis
Wednesday, 1
5:00pm, Friday, 17
Monday, 20
6:00pm, Tuesday, 21
Wednesday, 22
October
October
October
October
October
2003
2003
2003
2003
2003
Thursday, 23 October 2003
Monday, 27 October 2003
Monday, 27 October 2003
Wednesday, 29 October 2003
Thursday, 30 October 2003
Tuesday, 4 November 2003
All times are Melbourne time. The dates and times are indicative only. JB Hi-Fi and the Vendor Shareholders reserve the right, in
consultation with the Joint Lead Managers, to vary the dates and times, which includes closing the Offer early, without notice to any
recipient of the Prospectus or any Applicant for Shares.
Retail Applicants are advised to lodge their Applications as early as possible after the Offer opens. Applications for Offer Shares will not
be accepted after the Closing Date (as varied by the Vendor Shareholders and Joint Lead Managers).
istics
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Indicative Price Range
Market capitalisation1
Pro forma enterprise value1
Earnings per share (basic)2
PE multiple1,2
Dividend per share (fully franked)2
Dividend yield (fully franked)1,2
EBITDA multiple1,2
EBIT to interest ratio2
Fixed charge cover ratio3
Pro forma net assets at 30 June 2003
Pro forma net assets per share at 30 June 2003
1
2
3
2
$1.35 to $1.55
$148.1 million
$175.3 million
12.8 cents
11.3 times
7.2 cents
5.0%
7.4 times
8.2 times
3.0 times
$38.6 million
37.8 cents
Based on the midpoint of the Indicative Price Range.
Based on 2004 forecasts.
Calculated as the sum of EBIT, Operating Lease Expense and Rent Expense divided by the sum of Interest Expense, Operating
Lease Expense and Rent Expense.
JB Hi-Fi Prospectus
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Prospectus JB Hi-Fi
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1 Investment Overview
1.1 Overview of JB Hi-Fi
The business of JB Hi-Fi was founded in 1974 as a discount retailer of hi-fi equipment and recorded
music with a single store in the Melbourne suburb of East Keilor. Since that time, the business has grown
to 26 stores, with sites located mainly in Melbourne and Brisbane. The Company has commenced a
store roll-out programme in Sydney and other major Australian cities.
JB Hi-Fi is a specialty retailer of home entertainment products, focusing on:
★ Consumer Electronics, which includes wide-screen, digital and plasma TVs, hi-fi, DVD players, home
theatres, digital still and video cameras and accessories;
★ car sound systems (audio and visual); and
★ Music and DVDs.
The Company is positioned as a retailer of leading brands, offering a broad range of products at discount
prices. JB Hi-Fi primarily operates from stand alone destination sites and shopping centre locations.
1.2 Key investment features
JB Hi-Fi has a number of attributes that the Directors believe make it a compelling investment proposition:
★ attractive growth profile, supported by:
–
focused exposure to the high growth home entertainment product market, such as DVD players
and digital still cameras, where sales in Australia grew by 87% and 151% respectively in the
12 months to 30 June 2003;
–
maturing of recently opened stores. Sales from stores opened in the 2001 financial year grew by
18.4% in the 12 months to 30 June 2003, compared to sales growth of 12.5% for stores opened
prior to 30 June 2000; and
–
continued roll-out of stores in new and existing geographic markets, new store formats (such as
Music and DVD Superstores) and shopping centre locations;
★ solid track record of growth and profitability:
–
comparative store sales growth of 14.2% (for the 15 stores opened for the full year ending
30 June 2002) in the 12 months to 30 June 2003; and
–
a compound annual growth rate of 51.6% in sales and 70.7% in EBIT for the two years to
30 June 2003;
★ experienced management team with a proven track record in high growth segments of the retail sector;
★ positive cashflows driven by stock turns greater than five times per annum and low capital investment
requirements, enabling a fully funded store roll-out programme;
★ attractive forecast dividend yield of 5% at the midpoint of the Indicative Price Range in 2004
(fully franked); and
★ sustainable competitive advantage, supported by:
–
low cost and large scale operations that are driven, in large measure, by sales per square metre of
selling space of around $25,000*;
–
discount positioning which the Directors believe provides protection from the retail economic cycle;
* Year ended 30 June 2003
4
JB Hi-Fi Prospectus
–
ability to offer leading brands in each product category through strong supplier relationships;
–
specialist image through a carefully targeted focus on home entertainment products; and
–
distinctive branding and prominent retail locations.
1.3 Business strategy
JB Hi-Fi offers one of Australia’s largest ranges of home entertainment products at discounted prices,
positioned to appeal to both enthusiasts and price sensitive customers. The Company maintains a low
cost operating model designed to underpin competitive pricing at the store level.
JB Hi-Fi’s strategic initiatives for growth include:
★ targeting high growth segments of the home entertainment market;
★ ensuring recently opened stores mature rapidly and profitably;
★ continuing to improve the efficiency and profitability of existing stores;
★ opening new stores. The Company has opened 16 new stores over the last three years, and has
plans to continue expanding with at least five new stores forecast to open in the 2004 financial year.
JB Hi-Fi has a strong store representation in the Melbourne and Brisbane markets, which it will
continue to fill out, and intends to accelerate its focussed store roll-out in Sydney, Adelaide and
Perth over the next three years; and
★ opening new format stores, such as the Music and DVD Superstores successfully established in
Perth and Adelaide.
1.4 Selected financial information
The table below is a summary of JB Hi-Fi’s historical financial information for the financial years ended
30 June 2001, 2002 and 2003 and the forecast financial information to 30 June 2004. This information
is intended as a summary only. More detailed financial information can be found in Section 6.
Sales ($’000)
EBITDA ($’000)
EBIT ($’000)
Net profit after tax ($’000)
30 June 2001
Historical pro forma
30 June 2002
Historical pro forma
30 June 2003
Historical pro forma
30 June 2004
Forecast
154,885
7,5711
5,745
248,802
13,633
11,593
355,835
18,051
16,732
457,291
23,796
21,306
13,103
1. Before significant items as detailed in Table 6.1 Statement of Financial Performance.
Prospective investors should review the financial forecasts in conjunction with the assumptions on which
the forecasts are based and the sensitivity of the financial forecasts to changes in variables.
1.5 Dividend policy
Subject to the Forecast being achieved, the Directors expect that the Company will pay fully franked
dividends totalling 7.2 cents per Share with respect to the year ending 30 June 2004. This represents
a yield of 5% based on the mid-point of the Indicative Price Range and a payout ratio of approximately
55%. This is expected to comprise an interim dividend of 3.6 cents per share and a final dividend of
3.6 cents per share.
The Directors will endeavour to provide shareholders with fully franked dividends in future years, and
the Company currently intends to maintain a dividend payout ratio of 50% to 60% of NPAT following the
Forecast Period. However, the Directors can give no assurance as to the future dividend policy, the extent
of future dividends, nor the franking status as these will depend upon the actual levels of profitability,
capital requirements and taxation position of JB Hi-Fi at the relevant time.
Prospectus JB Hi-Fi
5
1 Investment Overview continued
1.6 Risks
There are a number of factors, both specific to JB Hi-Fi and of a general nature, which may affect
the future operating and financial performance of the Company and the outcome of an investment in
JB Hi-Fi. There can be no guarantee that JB Hi-Fi will achieve its stated objectives, that forecasts will
be met or that forward looking statements will be realised.
Before deciding to invest in the Company, potential investors should read the entire Prospectus and,
in particular, should consider the assumptions underlying the prospective financial information and the
risk factors that could affect the financial performance of JB Hi-Fi. These risks are set out in Section 7
of this Prospectus.
1.7 The Offer
This Prospectus contains information on the Offer by the Vendor Shareholders for the sale of
86,592,912 Shares.
The Offer comprises:
★ A Retail Offer, open to members of the general public, MPET Unitholders, JB Hi-Fi employees and
Broker Firm Applicants with a registered address in Australia or New Zealand. Under the Retail Offer,
investors must apply for a dollar value of Shares, with a minimum amount of $2,000, and thereafter in
multiples of $100; and
★ An Institutional Offer, which is open to certain Australian and international institutional investors.
Full details of the Offer are set out in Section 2.
You should read this Prospectus in its entirety before deciding to complete and lodge an Application
Form. Potential investors are encouraged to submit their Application Forms as early as possible as the
Offer may be closed before the indicated Closing Date without prior notice.
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JB Hi-Fi Prospectus
Store locations
JB Hi-Fi has opened 16 new stores over the last three years, and has
plans to continue expanding with at least five new stores forecast to
open in the 2004 financial year.
★ Kedron
Indooroopilly
JB Hi-Fi has a strong store representation in the Melbourne and
Brisbane markets, which it will continue to fill out, and intends to
accelerate its focussed store roll-out in Sydney, Adelaide and Perth
over the next three years.
★
★
City
Capalaba
★
MacGregor
★
★
Parramatta
Northern Territory
Bankstown
★
Queensland
Western Australia
★ Brisbane
★ Gold Coast
South Australia
New South Wales
Perth ★
Newcastle ★
Sydney ★
Canberra
Adelaide
★
★
Victoria
East Keilor
★
Preston
★
Australian Capital Territory
Highpoint
Melbourne
★
★
City
★
Heidelberg
★
★
★Prahran
City (Duty Free) ★
Brighton
Tasmania
★
Ringwood
Camberwell
★
★
Nunawading
★
★
Knox
Chadstone
★
Dandenong
Frankston
Prospectus JB Hi-Fi
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JB Hi-Fi Prospectus
2 Details of the Offer
2.1 Key dates
Retail Offer opens
Retail Offer closes
Institutional Offer opens
Institutional Offer closes
Final Price and basis of Share allocation announced
Shares expected to commence trading on ASX
(on a conditional and deferred settlement basis)
Retail and Institutional Settlement
Transfer of Shares to successful Applicants and last day
of conditional trading
Expected despatch of holding statements
Shares expected to commence trading on ASX
on a normal settlement basis
Expected date of settlement of all trades executed
on a deferred settlement basis
Wednesday, 1
5:00pm, Friday, 17
Monday, 20
6:00pm, Tuesday, 21
Wednesday, 22
October
October
October
October
October
2003
2003
2003
2003
2003
Thursday, 23 October 2003
Monday, 27 October 2003
Monday, 27 October 2003
Wednesday, 29 October 2003
Thursday, 30 October 2003
Tuesday, 4 November 2003
All times are Melbourne time. The dates and times are indicative only. JB Hi-Fi and the Vendor Shareholders
reserve the right, in consultation with the Joint Lead Managers, to vary the dates and times, which includes
closing the Offer early, without notice to any recipient of the Prospectus or any Applicant for Shares.
Retail Applicants are advised to lodge their Applications as early as possible after the Offer opens.
Applications for Offer Shares will not be accepted after the Closing Date (as varied by the Vendor
Shareholders and Joint Lead Managers).
2.2 Description of the Offer
Investors are invited to apply for a total of 86,592,912 Offer Shares. All of these Shares are offered for
sale by the Vendor Shareholders and all proceeds, net of costs of the Offer, will be received by the
Vendor Shareholders. None of the proceeds of the Offer will be retained by the Company.
On completion of the Offer, the Shares offered under this Prospectus will represent approximately 85%
of the issued capital of JB Hi-Fi.
At the Indicative Price Range of $1.35 to $1.55 per Share, the gross proceeds received by the Vendor
Shareholders under the Offer would be between $117 million and $134 million.
The Application Monies are payable in full on Application. No stamp duty or brokerage is payable by
Applicants. Stamp duty payable on the sale of the Shares (if any) will be borne by the Vendor Shareholders.
All Application Monies will be held on trust for Applicants until the Shares are transferred or, if the Shares are
not transferred, until the Application Monies are returned to the Applicants.
2.3 Purpose of the Offer
The purpose of the Offer is to:
★ allow the Vendor Shareholders to realise part or all of their investments;
★ achieve listing on ASX, broaden the shareholder base and provide a liquid market for shares in JB Hi-Fi;
★ provide JB Hi-Fi with on-going access to liquid capital markets to improve capital management
flexibility; and
★ increase the flexibility of management and employee incentive schemes that will assist JB Hi-Fi in
attracting and retaining quality employees.
Prospectus JB Hi-Fi
9
2 Details of the Offer continued
The net proceeds raised from the sale of the Offer Shares will be passed to the Vendor Shareholders and
will not be received by the Company. The costs of the Offer will be borne by the Vendor Shareholders in
proportion to their respective sell down of Shares in the Offer. (See Section 10.13.)
2.4 Shareholders and Option Holders
The ownership structure of JB Hi-Fi immediately prior to and at completion of the Offer is shown in the
table below:
Pre-Offer
Interests associated with MDIL
Australian Ventures LLC
BancBoston
Interests associated with previous owners
of the business
Current management
Non-Executive Directors
New shareholders pursuant to the Offer
Total
1
2
Shares
%
60,629,280
4,727,632
20,000,000
59.4%
4.6%
19.6%
9,445,088
6,518,000
800,000
–
102,120,0002
At Completion of the Offer
Shares
%
–
–
–
0.0%
0.0%
0.0%
9.2%
8,609,088
6.4%
6,518,000
0.8%
400,0001
– 86,592,912
100.0% 102,120,0002
8.4%
6.4%
0.4%
84.8%
100.0%
Patrick Elliott intends to apply for Shares under the Offer which are not included in this figure.
Options over 2,025,000 unissued Shares will exist at the conclusion of the Offer. Details of the Options are set out in Section 10.4.
Except for 609,088 Shares held by interests associated with the previous owners of the business, all
Existing Shareholders who are retaining part or all of their shareholdings have entered into voluntary escrow
arrangements relating to the Shares they will own after the Offer. They have agreed with the Joint Lead
Managers that they will not dispose of any such Shares until the Company has reported its audited financial
results for the year ended 30 June 2004. Details of these agreements are set out in Section 10.8.
2.5 Offer pricing
Maximum Retail Price
Indicative Price Range
Retail Offer Price
$1.55 per Share
$1.35 to $1.55 per Share
Lower of Final Price and Maximum Retail Price of $1.55
The Final Price will be determined by way of an institutional bookbuild and an allocation process
managed by the Joint Lead Managers. Successful Applicants in the Retail Offer will pay the lower of the
Maximum Retail Price and the Final Price (“Retail Offer Price”). Successful bidders in the Institutional Offer
will pay the Final Price.
While an Indicative Price Range of $1.35 to $1.55 per Share has been established, the Vendor
Shareholders, in consultation with the Joint Lead Managers and the Company, reserve the right to set the
Final Price above, below or within the Indicative Price Range. The Indicative Price Range may be varied
by the Vendor Shareholders in consultation with the Joint Lead Managers and the Company at any time.
The Final Price is expected to be announced on Wednesday, 22 October 2003 and will be published in
certain national and regional newspapers.
2.6 Structure of the Offer
The Offer will comprise two parts:
★ a Retail Offer, which is open to members of the general public, MPET Unitholders, JB Hi-Fi employees
and Broker Firm Applicants with a registered address in Australia or New Zealand; and
★ an Institutional Offer, which is open to certain Australian and international institutional investors.
The Vendor Shareholders and the Joint Lead Managers, in consultation with JB Hi-Fi, will determine the
allocation of Shares between the Retail Offer and the Institutional Offer.
10
JB Hi-Fi Prospectus
All Shares being offered under this Prospectus rank equally with each other and will rank equally with
Existing Shares.
The Offer will not be underwritten. The Vendor Shareholders, the Company and the Joint Lead Managers
have entered into an Offer Management Agreement in respect of the management of the Retail Offer and
the Institutional Offer. Once the Final Price has been determined, the Joint Lead Managers will be obliged
to provide settlement support in respect of successful bids in the Institutional Offer under a completion
support agreement. The Offer Management Agreement and associated completion support arrangements
set out a number of circumstances under which the Joint Lead Managers may terminate the agreement
and the completion support obligations. A summary of certain terms of the agreement and associated
completion support arrangements, including the termination provisions, is set out in Section 10.7.
2.7 How to apply for Shares in the Retail Offer
To apply for Shares under the Retail Offer you must complete the Application Form attached to this
Prospectus in accordance with the instructions on that form. Applicants are required to nominate the
Australian dollar amount they wish to invest in the Retail Offer. Applicants whose Applications are
accepted in full will receive the whole number of Offer Shares calculated by dividing the Application
Amount by the Retail Offer Price. Where the Retail Offer Price does not divide evenly into the Application
Amount, the number of Offer Shares to be allocated will be rounded down to the nearest whole number
of Offer Shares. In this circumstance, surplus Application Monies will not be returned to Applicants and
will become an asset of the Vendor Shareholders.
Applications must be for a minimum amount of $2,000. Application Amounts in excess of the minimum
amount must be in multiples of $100.
There is no maximum amount which may be applied for under the Retail Offer. However, JB Hi-Fi and
the Joint Lead Managers reserve the right to treat Applications in excess of $100,000 as part of the
Institutional Offer.
The Retail Offer is open to all members of the public who are resident in Australia or New Zealand.
However, priority will be given to MPET Unitholders and JB Hi-Fi employees over general public
Applicants. The Company and the Vendor Shareholders reserve their right, in consultation with the
Joint Lead Managers, to allocate no Shares to general public Applicants in the event of a scaleback
of Applications under the Offer.
Applications may be made, and will only be accepted, on the Application Form attached to this
Prospectus or in its paper copy form as downloaded in its entirety from www.jbhifi.com.au. The
Application Form must be accompanied by a cheque in Australian dollars drawn on an Australian branch
of an Australian bank for the value of the Shares for which application is made. All cheques must be
made payable to “JB Hi-Fi Limited – Share Offer” and crossed “not negotiable”.
Sufficient cleared funds must be held in your account as cheques returned unpaid may not be
re-presented and may result in your Application being rejected.
Completed Application Forms (except for Broker Firm Applications) and accompanying cheques must be
mailed or delivered to the Registry as set out below:
Mailing address:
Computershare Investor Services Pty Limited
GPO Box 52, Melbourne, VIC 8060
Delivery address:
Computershare Investor Services Pty Limited
Level 12, 565 Bourke Street, Melbourne VIC 3000
Regardless of the method of lodgment, all Applications must be received by the Registry no later than
5:00pm on Friday, 17 October 2003, unless the dates and times are varied by the Company and the
Vendor Shareholders, in consultation with the Joint Lead Managers.
Prospectus JB Hi-Fi
11
2 Details of the Offer continued
The Company and the Vendor s reserve their right, in consultation with the Joint Lead Managers, to close
the Offer at an earlier date or to extend the Offer at their absolute discretion without prior notice. Potential
investors are therefore encouraged to submit their Application Forms as early as possible.
It is not proposed to pay stamping fees to brokers on general public or priority Applications under
the Offer.
You should read this Prospectus in its entirety before deciding to complete and lodge an Application Form.
2.8 Broker Firm Applications
If you have received a firm allocation of Offer Shares from your broker you should obtain a copy of this
Prospectus from that broker and apply for Offer Shares using the Application Form included at the back
of that Prospectus.
Applicants who receive a firm allocation should make cheques payable to the broker from whom the firm
allocation of Offer Shares was received, or as otherwise instructed by the broker. In addition, completed
Application Forms should be returned to the broker, unless otherwise instructed by the broker.
2.9 Allocation of Shares to Retail Applicants
The Company reserves the right to allocate Offer Shares in full for any Application, to allocate any lesser
number, or to decline any Application. MPET Unitholders and employees of JB Hi-Fi will be given priority
in allocations over general public Applicants. The Company and the Vendor Shareholders reserve their
right, in consultation with the Joint Lead Managers, to allocate no Shares to general public Applicants in
the event of a scaleback of the Offer.
Where no allocation is made or the value of Offer Shares allocated is less than the value for which
application is made, subject to Section 2.7, surplus Application Monies will be returned to the Applicant
as soon as practicable. Interest will not be paid on any monies refunded and any interest earned on
Application Monies pending the allocation or refund will become an asset of the Vendor Shareholders.
After the Offer Shares are transferred, the balance of monies held in the special purpose account will be
payable to the Vendor Shareholders.
2.10 The Institutional Offer
The Vendor Shareholders and JB Hi-Fi are inviting certain Australian and international institutional investors
to bid for Offer Shares in the Institutional Offer. The Institutional Offer will be conducted using a bookbuild
process managed by the Joint Lead Managers, who will be Joint Bookrunners. Full details of how to
participate, including bidding instructions, will be provided to participants by the Joint Lead Managers.
Participants can only bid into the book for Offer Shares through the Joint Lead Managers. They may bid
for Offer Shares at specific prices or at the Final Price. Participants may bid above, within or below the
Indicative Price Range, which is $1.35 to $1.55 per Offer Share. The Indicative Price Range may be varied
at any time by the Vendor Shareholders, in consultation with JB Hi-Fi and the Joint Lead Managers.
The bookbuild period is expected to commence at 9:00am AEST on Monday, 20 October 2003 and to
end at 6:00pm AEST on Tuesday, 21 October 2003, unless these times and dates are varied by the
Vendor Shareholders and the Company in consultation with the Joint Lead Managers.
Bids may be amended or withdrawn at any time up to the close of the bookbuild period. Bids can be
accepted or rejected by the Vendor Shareholders or the Joint Lead Managers in whole or in part, without
further notice to the bidder. Acceptance of a bid will give rise to a binding contract that is conditional on
quotation of the Offer Shares on ASX. Subject to this condition being met and payment of settlement
funds by the Applicant, JB Hi-Fi expects that the Offer Shares will be transferred to successful Applicants
on Monday, 27 October 2003 (see Sections 2.11 and 10.9 for a discussion of conditional and deferred
settlement trading).
All successful institutional bidders will pay the Final Price.
12
JB Hi-Fi Prospectus
The Final Price
The bookbuild process will be used to determine the Final Price. The Final Price will be determined by
the Vendor Shareholders and the Joint Lead Managers, in consultation with JB Hi-Fi. It is expected that
the Final Price and basis of Share allocation will be determined and announced on Wednesday,
22 October 2003.
Allocation policy in the Institutional Offer
The allocation of Shares amongst bidders in the Institutional Offer will be determined by the Vendor
Shareholders and the Joint Lead Managers, in consultation with, and having regard to, the reasonable
requests of the Company. There is no assurance that any investor lodging a bid in the Institutional Offer
will be allocated any Shares or the number of Shares for which it has bid.
The initial determinant of the allocation of Shares in the Institutional Offer will be the Final Price.
Bids lodged at prices below the Final Price will not receive an allocation of Shares.
The Vendor Shareholders and the Joint Lead Managers, in consultation with the Company, will be
responsible for determining the basis for allocations under the Institutional Offer at their absolute
discretion.
2.11 ASX listing and conditional and deferred settlement trading
JB Hi-Fi will apply for admission to the official list of ASX and quotation of the Shares on ASX within
seven days after the date of this Prospectus. All contracts formed on acceptance of Applications under
the Retail Offer and bids in the Institutional Offer will be conditional on quotation of the Shares on ASX. If
the Shares are not admitted to quotation within three months after the date of this Prospectus,
Application Monies will be returned to the Applicant as soon as practicable (without interest).
It is expected that trading of the Shares on ASX will commence on a conditional and deferred settlement
basis on or about Thursday, 23 October 2003 and the Offer Shares will be transferred to successful
Applicants on Monday, 27 October 2003. Deferred settlement trading will continue until the despatch of
holding statements on or about Wednesday, 29 October 2003. It is expected that trading on a normal
settlement basis will commence on Thursday, 30 October 2003.
Details of the Final Price, Retail Offer Price and basis of Share allocations will be advertised in certain
national and regional newspapers on Thursday, 23 October 2003 or can be confirmed by calling the
JB Hi-Fi Share Offer Information Line on 1300 302 417 (Australia) or +61 3 9615 5970 (New Zealand).
Applicants are responsible for confirming their allocation before trading in Shares. Anyone who sells
Shares before receiving confirmation of their allocation does so at their own risk.
See Section 10.9 for further information in relation to the conditional and deferred settlement trading of
the Shares, and how to confirm allocations before trading Shares.
2.12 Electronic Prospectus
This Prospectus may be viewed online at www.jbhifi.com.au. Applicants using the Application Form
attached to the electronic version of this Prospectus must be located in Australia or New Zealand.
Persons who receive the electronic version of this Prospectus should ensure they download and read the
entire Prospectus. A paper copy of this Prospectus will be provided free of charge to any person who
requests a copy by contacting the Registry or the Joint Lead Managers, by mail or in person, during the
Offer Period.
Prospectus JB Hi-Fi
13
2 Details of the Offer continued
2.13 CHESS and holding statements
The Company will apply to participate in CHESS, and, in accordance with the Listing Rules and the
SCH Business Rules, will maintain an electronic issuer-sponsored sub-register and an electronic
CHESS subregister.
Following the transfer of Offer Shares to successful Applicants, shareholders will be sent an initial holding
statement that sets out the number of Shares which they have been allocated. Holding statements are
expected to be despatched on Wednesday, 29 October 2003.
This statement will also provide details of a shareholder’s identification number or, where applicable, the
security holder reference number for each of the sponsored holders.
It is the responsibility of Applicants to determine their allocation prior to trading Shares. Shareholders will
receive subsequent statements showing changes to their shareholding in JB Hi-Fi. No share certificates
will be issued.
2.14 Taxation
The Australian taxation consequences of any investment in Offer Shares will depend upon the investor’s
particular circumstances. It is an obligation of investors to make their own enquiries concerning the
taxation consequences of an investment in the Company. If you are in doubt as to the course you should
follow, you should consult your stockbroker, lawyer, accountant or other professional adviser.
2.15 Enquiries
If you require assistance to complete the Application Form or require additional copies of this
Prospectus, you should contact the JB Hi-Fi Share Offer Information Line on 1300 302 417 (Australia)
or +61 3 9615 5970 (New Zealand) or Goldman Sachs JBWere on 1800 003 355 or Macquarie on
1800 621 656.
If you are unclear in relation to any matter or are uncertain as to whether JB Hi-Fi is a suitable investment
for you, you should seek professional advice from your stockbroker, lawyer, accountant or other
professional adviser.
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3 Industry Overview
3.1 Background
JB Hi-Fi is a specialty retailer of home entertainment products, focussing on:
★ Consumer Electronics, which includes wide-screen, digital and plasma TVs, hi-fi, DVD players, home
theatres, digital still and video cameras and accessories;
★ car sound systems (audio and visual); and
★ Music and DVDs.
The markets for home entertainment products are generally characterised by:
★ strong sales growth;
★ high levels of technological innovation; and
★ a large number of retailers operating in a fragmented and competitive environment.
Sales in the Domestic Appliance and Recorded Music Retailing market in Australia were approximately
$11.2 billion for the year to 30 June 2003 . While this market includes some products not supplied by
JB Hi-Fi, such as “white goods” and non-electronic domestic appliances, the Directors believe that
Consumer Electronics products are amongst the highest growth categories in this market.
3.2 Industry growth – Consumer Electronics
Recent growth in some of JB Hi-Fi’s Consumer Electronics product categories is demonstrated in the
following table which has been compiled by GfK Marketing Services based on data supplied by the
majority of Australian retailers in the consumer electronics industry.
GfK Australian Consumer Electronics Retail Statistics
Year Ended
30 June 2002
Year Ended
30 June 2003
2002-2003
Growth
124,480
$178,104,128
$1,431
1,071,228
$935,760,571
$874
499,858
$289,255,337
$579
756,066
$212,008,959
$280
619,619
$257,058,352
$415
86,203
$76,739,525
$890
175,966
$143,470,000
$815
184,720
$247,887,849
$1,342
1,266,980
$1,134,591,683
$896
533,206
$294,603,924
$553
771,943
$212,065,902
$275
1,160,765
$336,411,641
$290
138,700
$124,203,768
$895
441,643
$281,072,000
$636
48.4%
39.2%
(6.2)%
18.3%
21.2%
2.5%
6.7%
1.8%
(4.5)%
2.1%
0.0%
(1.8)%
87.3%
30.9%
(30.1)%
60.9%
61.9%
0.6%
151.0%
95.9%
(21.9)%
Products
Camcorders and Video Cameras
Colour Televisions
Audio Home Systems*
Video Cassette Recorders
DVD Players
Receivers and Amplifiers
Digital Still Cameras
Sales in Units
Value
Average Price
Sales in Units
Value
Average Price
Sales in Units
Value
Average Price
Sales in Units
Value
Average Price
Sales in Units
Value
Average Price
Sales in Units
Value
Average Price
Sales in Units
Value
Average Price
* Incudes “all-in-one” systems and pre-packaged home theatre systems.
Source: GfK Marketing Services
16
JB Hi-Fi Prospectus
Section 4.5 of this Prospectus sets out further analysis of the markets for the Company’s other key
product categories, including Music and DVDs and car sound systems which are not included in
GfK Marketing Services’ research.
3.3 Industry drivers
The Directors believe that technological change has been, and will continue to be, the single most
important growth driver in the home entertainment product industry. Other key drivers include growth
in disposable household income, low interest rates and low inflation.
The Consumer Electronics industry has seen a series of new technologies that have helped drive
significant growth in demand over the past 25 years, such as new format TVs, the VCR, video cameras,
walkmans, discmans, CDs and DVDs. More recently, the change from analogue to digital technology has
seen a rapid increase in new products that has resulted in customers updating appliances, including
DVD and recordable DVD, digital still and video cameras, wide-screen, digital and plasma TVs and
home theatre.
An example of this trend is the uptake of DVD players in Australia with DVD unit sales increasing by 87%
over the year to 30 June 2003. Australia’s early adoption and forecast uptake of DVD technology is
displayed in the following chart.
International DVD-Video Hardware Ownership
% of Households
140%
USA
120%
UK
100%
Germany
Australia
France
80%
Spain
60%
40%
Italy
20%
0%
2000A
2001A
2002A
2003F
2004F
2005F
NB: Penetration is number of devices in use divided by the number of households and therefore includes multiple set ownership
and can exceed 100%.
Above: Includes DVD players and recorders and combination TV/Video products containing DVD player, does not include DVD game
consoles or DVD-ROM drives.
Source: Understanding & Solutions Ltd (August 2003). Periods are January - December
3.4 Competitive landscape
Given the fragmented nature of the retail industry in Australia and the focussed range of product offered
by JB Hi-Fi, there are a number of competitors in each of the Company’s product categories.
The Directors believe that key competitors include:
★ major national retailers, such as Harvey Norman, Woolworths (Big W, Dick Smith, Tandy) and Coles
Myer (Myer Grace, Kmart, Target, Megamart);
★ buying and marketing groups, such as Retravision, Betta Electrical, The Good Guys, Camera House
and Autobarn;
★ national specialty retailers, including Sanity Entertainment, Strathfield Group, HMV, Video Ezy and
Blockbuster; and
★ local specialist retailers.
Prospectus JB Hi-Fi
17
3 Industry Overview continued
3.5 Industry regulation
Like any company in Australia, JB Hi-Fi must comply with a range of statutory obligations in conducting
its business, including the Trade Practices Act 1974 (Cwlth), Corporations Act and Workplace Relations
Act 1996 (Cwlth). In addition, specific regulations that prescribe when a retailer can trade apply to
JB Hi-Fi. The regulation of retail trading hours varies greatly across Australia. In some States and
Territories retail trading hours are almost unregulated. In other States and Territories there are designated
days for late night shopping and restrictions on trading Sundays and certain public holidays. To the extent
that JB Hi-Fi operates in any State or Territory where trading hours are regulated, the Board does not
believe that these regulations currently have, or will have, a material effect on its current business
operations or expansion plans.
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Prospectus JB Hi-Fi
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4 Business Profile
4.1 Overview
JB Hi-Fi trades from stand alone destination sites and shopping centre locations, with 26 stores in
Melbourne, Brisbane, Sydney, Newcastle, Canberra, Adelaide and Perth. JB Hi-Fi is positioned as a
retailer of leading brands offering a broad range at discounted prices. Sales are forecast to grow from
$356 million for the year ended 30 June 2003 to $457 million in the year to 30 June 2004.
JB Hi-Fi’s successful business model involves four fundamental components:
★ offering a broad range of branded home entertainment products within focussed categories, creating
a specialist retail image;
★ consistently offering low prices supported by the Company’s low cost operating structure;
★ providing an informal and informative customer service atmosphere that promotes an enjoyable and
distinctive shopping experience; and
★ attracting and retaining skilled and dedicated staff.
The result is a high volume business at consistently low prices that builds exceptional customer loyalty.
Due to this, and the Company’s distinctive advertising campaigns, JB Hi-Fi has been able to build strong
brand recognition in its established markets. The Directors believe that this successful business model
provides a significant competitive advantage for JB Hi-Fi that would be difficult to replicate in the short to
medium term.
4.2 History
The business was started with a single store in East Keilor, Melbourne in 1974 and grew to 10 stores
by the time it was acquired by the Existing Shareholders in August 2000. At the time of acquisition nine
stores were located in Melbourne and one store was located in Parramatta, Sydney.
Since August 2000, the Company has opened 16 new stores in Australia, 11 of which are outside of
Victoria, as part of a significant inter-state expansion. A list of new stores, their date of opening and
JB Hi-Fi’s monthly sales is set out in the graph below.
Company sales by month and timing of new store openings
$million
60
Newcastle NSW
Highpoint VIC
Brisbane City QLD
50
Gold Coast QLD
Frankston VIC
Capalaba QLD
Canberra ACT
40
Indooroopilly QLD
Macgregor QLD
Chadstone VIC
Perth WA
Ringwood VIC
Prahran VIC
Kedron QLD
Adelaide SA
Bankstown NSW
30
20
10
Monthly sales
Trend line
Jun03
Apr03
May03
Mar03
Jan03
Feb03
Dec02
Oct02
Nov02
Sep02
Jul02
Aug02
Jun02
Apr02
May02
Mar02
Jan02
Feb02
Dec01
Oct01
Nov01
Sep01
Jul01
Aug01
Jun01
Apr01
May01
Mar01
Jan01
Feb01
Dec00
Oct00
Nov00
Sep00
Jul00
20
Aug00
0
JB Hi-Fi Prospectus
Since the appointment of the current senior management team in August 2000, there have been a
number of material enhancements to the business:
★ expansion of retail space and relocation of certain existing stores and the opening of larger sized
stores to enable growth in all product categories;
★ introduction and increased emphasis on the emerging product categories of DVD, digital still and
video cameras, wide-screen and plasma TVs and home theatre;
★ improved management information systems and processes, including the introduction of point of sale
systems and enhanced financial management software (accounting, payroll and electronic data
interface with suppliers);
★ roll-out of 16 new stores, predominantly outside Victoria;
★ establishment of shopping centre locations; and
★ establishment of Music and DVD Superstores in Adelaide and Perth.
4.3 Customer propositions
JB Hi-Fi’s product offering, which combines software (Music and DVDs) with hardware (Consumer
Electronics and car sound systems) is rare amongst its competitors, providing a distinct customer
proposition. Not only do software purchases complement hardware purchases, software builds high
volume repeat floor traffic and brand awareness. This gives high visibility to JB Hi-Fi’s hardware range
so that it becomes a logical supplier for the typically less frequent hardware purchase.
Consumer Electronics and car sound systems are generally characterised as infrequent, relatively
expensive and complex purchases. Accordingly, key drivers of customer purchasing behaviour are
range, advice, price and trust. Music and DVDs are relatively simple repeat purchases. Key drivers for
these categories include range, price and convenience. JB Hi-Fi’s customer offering involves three
fundamental propositions:
(a) Broad range of branded home entertainment products with customer appeal
JB Hi-Fi offers one of Australia’s largest ranges of branded Consumer Electronics, car sound systems,
Music and DVDs at discounted prices, appealing to both enthusiasts and price sensitive customers.
Within the Music and DVD product category, JB Hi-Fi is positioned as a back catalogue retailer,
stocking one of Australia’s widest collections of both current and earlier release titles (the Company
currently stocks over 35,000 CD and 5,000 DVD titles). Customers of JB Hi-Fi may be driven by the
planned purchase of a chart music or movie title, but will often add to their purchases on impulse
from the extensive back catalogue.
While JB Hi-Fi offers a broad product range in its chosen product categories, it is rare amongst its
competitors in that it focusses almost entirely on the home entertainment market, which includes
Consumer Electronics or “brown goods”. Many of the Company’s competitors combine their brown
goods range with other products such as “white goods” (which includes fridges, dishwashers,
washing machines and microwaves), furniture, air-conditioning, kitchen appliances, computers and
home office products. JB Hi-Fi’s broad product range in specialised product categories is a feature
of its customer proposition.
(b) Consistent low price offering
JB Hi-Fi actively markets itself as a discount retailer offering customers an “every day low price”.
Customers experience this through store layouts which have a warehouse or “no frills” look and feel
that conveys a strong message of value and savings. Most stock is priced with handwritten tickets
on yellow cardboard and a large amount of stock is stacked into a relatively small space, highlighting
the bargain atmosphere within each store.
Prospectus JB Hi-Fi
21
4 Business Profile continued
(c) An informal and informative customer service atmosphere that promotes an enjoyable and
distinctive shopping experience
Customers are serviced by casually dressed staff that have been trained in a friendly selling style that
is complemented by the in-store handwritten signage and audio and visual ambience. Each staff
member specialises in a single or limited number of product categories to promote in-depth product
knowledge that is shared with customers. Narrow aisles, block stock displays and high customer
volumes create a busy bargain atmosphere.
Most JB Hi-Fi stores open from 10:00am to 9:00pm weekdays, which few of its major competitors
match, enabling customers to shop at convenient hours.
4.4 Business model
The Directors believe that JB Hi-Fi operates a unique business model in the Australian home
entertainment retailing market and that its “every day low pricing” strategy to some degree insulates the
Company from economic driven demand shocks as consumers generally tend to “trade down” in such
circumstances. A decline in economic conditions also generally leads to a switching of expenditure from
high cost life style products (e.g. new cars, overseas holidays) to in-home entertainment.
The Company’s “every day low price” strategy is supported by the Company’s low cost operations.
This is made possible by:
★ economies of scale in purchasing, advertising and support services. For example, JB Hi-Fi is a
member of NARTA, a group of larger independent stores and chains. NARTA is one of the largest
industry buying groups in Australia when measured in purchases and is a similar size to Retravision
and Harvey Norman. Being a part of this buying group allows JB Hi-Fi to obtain competitive pricing;
★ low occupancy costs underpinned by long term leases (store occupancy costs as a percentage of
sales are below industry benchmarks);
★ efficient supply chain management. All stock is delivered directly to stores by suppliers (the Company
does not maintain warehouses). Storage space is kept to a minimum, with the preference for stock to
be stored on the sales floor enabling rapid stock turns greater than five times per annum; and
★ high store productivity. JB Hi-Fi currently operates out of sites that are around 900 m2 with a selling
space of approximately 600 m2. The 21 stores opened for more than 12 months as at June 2003
achieved sales per square metre of selling space of around $25,000.
4.5 Product categories
The Company’s mix of sales by product grouping is set out in the following chart:
Year to June 2003 – Total sales $356 million
Car Sound Systems 11%
Consumer Electronics 55%
Music and DVDs 34%
22
JB Hi-Fi Prospectus
Consumer Electronics
Consumer Electronics is JB Hi-Fi’s largest product category, accounting for 55% of sales in the year to
30 June 2003.
Strong demand for home theatre systems has underpinned growth in the Consumer Electronics category.
Sales of DVD players, wide-screen and large format TVs, hi-fi and speaker systems have all grown as a
result of the attractiveness of home theatre systems. Whether it be for new release movies, televised
sport or music DVDs, home theatre has been a strong growth category for all of the major brands.
From a store merchandising perspective, the home theatre displays generate a large volume of customer
traffic and are a key store attraction.
Digital still and video cameras also fall into the Consumer Electronics category and are another major
driver of growth. Advances in technology that enable consumers to store, download and edit video
footage and photographs have made digital photography extremely popular.
Music and DVDs
Music and DVDs represented approximately 34% of sales in the year to 30 June 2003.
DVDs are the Company’s fastest growing product category. The introduction by suppliers of a large and
growing catalogue of new release and back catalogue (previous release) DVD titles has been favourably
received by the consumer. The Company stocks a growing catalogue of motion picture, animated,
documentary and TV series titles. The DVD, with its higher quality audio visual capabilities and long
lasting format, has increased consumer demand because it is viewed by consumers as a collectable,
whereas the video is not.
JB Hi-Fi’s music category includes CDs and music related DVDs. The international market for CDs has
been widely reported to be declining due to illegal copying and downloading. However, a combination of
the Company’s large investment in back catalogue music titles, growth in music DVDs, and a customer
base that largely prefers to collect music has meant the Company has been able to grow Music sales
by 7.3% on a comparable store basis for the year to 30 June 2003. As DVD player ownership has
become more prevalent, sales of music DVDs have grown considerably and are a key growth factor for
the music market.
Car sound systems
Car sound systems represented approximately 11% of sales in the 2003 financial year. Growth in this
category has been largely driven by the increasing installation of CD players and a desire by consumers
to upgrade sound systems in their vehicles. Further growth is expected to be driven by technological
improvements which allow the instalment of visual products such as DVD players and television
screens into vehicles.
Prospectus JB Hi-Fi
23
4 Business Profile continued
4.6 Strategy for growth
JB Hi-Fi’s focussed exposure to the high growth home entertainment products market is expected to
contribute to growth in sales and earnings in three ways:
★ organic growth in the Company’s established stores;
★ maturation of recently opened stores; and
★ new store openings.
The relative contribution to sales of each of these is set out below:
Company sales by store opening date
$million
500
400
New stores forecast to be opened during FY2004
New stores opened during FY2003
New stores opened during FY2002
New stores opened during FY2001
Existing stores acquired in July 2000
300
200
100
0
2001A
2002A
2003A
2004F
Organic growth in the Company’s established stores
The Directors believe that high growth products such as DVDs, wide-screen and plasma TVs, digital
cameras and home theatre systems will continue to contribute to organic store growth.
In addition, the Directors believe that advances in technology will continue to be one of the key drivers of
product growth in the home entertainment industry. Accordingly, the Company invests considerable time
and resources in evaluating new products and likely customer demand before a selective range of new
products is introduced.
When the Company considers introducing a new product category, it undertakes detailed analysis and
research into that category to determine:
★ the product’s likely rate of adoption by consumers;
★ the product’s compatibility with the Company’s existing range of product categories;
★ JB Hi-Fi’s ability to achieve market leadership in that product category through offering a broad range
at “every day low prices”; and
★ the ability to achieve a highly competitive purchasing position through relationships with new and
existing suppliers.
Optimisation of existing stores is an ongoing process. In the past, this has led to the implementation of
strategies such as the increased size of some stores, the relocation of other stores to better locations
and new store layouts and in-store merchandising to further improve floor space productivity.
24
JB Hi-Fi Prospectus
Maturity of recently opened stores
JB Hi-Fi’s progressive roll-out strategy means that, at any point in time, a number of stores will be
maturing in terms of sales and profitability. For example, currently 11 of the Company’s stores are less
than two years old and there is an emphasis on maximising the growth profile of these maturing stores.
The chart opposite demonstrates the expected sales growth of these stores over the 2004 financial year.
Independent of product category growth and new store openings, the simple maturity of recently opened
stores is expected to be a principal driver of earnings growth.
New store openings
The Company plans to continue opening at least five new stores each year for the next three years. The
selection process for each new store is based on a review of location, occupancy costs, demographics,
local competition and forecast financial performance of the new site. Stand alone destination sites must
be in high traffic locations, have good visibility, easy access and ample parking. Large regional shopping
centre sites are also considered by JB Hi-Fi where rentals, as a percentage of sales, are not significantly
higher than destination sites.
The Company’s success in diversifying from its high street and destination format into shopping centre
locations, as well as the successful establishment of Music and DVD Superstores in Perth and Adelaide,
has given the Board confidence to open new stores in whichever of these formats best suits a particular
local demographic.
With all three formats available it is expected that the Company can continue to expand at its current rate
within Australia over the Forecast Period without causing any material cannibalisation of existing store sales.
The Company’s planned expansion into new geographic markets in Australia has been modelled on its
successful launch into the Queensland market during 2001 and 2002, where six new stores were opened
over an 18 month period. This strategy reflects the benefit of leveraging a concentrated marketing effort
over a rapid roll-out of sites in a new geographic region.
The Forecast assumes five new stores will be opened during the 2004 financial year.
As at the date of this Prospectus, the Company has executed leases over three new stores located
at Osborne Park (Perth, Western Australia), Marion (Adelaide, South Australia) and Leichhardt
(Sydney, New South Wales), and has reached in principle agreements with landlords for new stores
located at Cannington (Perth, Western Australia), Modbury (Adelaide, South Australia), Kawana
(Sunshine Coast, Queensland) and Fountaingate (Melbourne, Victoria). Given the current status of new
store opportunities, JB Hi-Fi will consider opening additional new stores should the opportunity arise.
The Directors believe that the Company’s cashflow and financing facilities are sufficient to support an
expanded store roll-out programme.
JB Hi-Fi continues to build strong relationships with key landlords. The Company is currently holding
discussions with several of Australia’s largest shopping centre landlords with regard to securing new sites
in some of Australia’s leading shopping centres.
4.7 Suppliers
JB Hi-Fi sources product from over 30 suppliers. Individual suppliers vary depending on product
categories. Relationships with suppliers are strong and the Directors believe that JB Hi-Fi is not unduly
reliant on any one supplier. These relationships strengthen the Company’s competitive position.
Prospectus JB Hi-Fi
25
4 Business profile continued
The Company has agreements with all of its major suppliers and generally receives a rebate on all
purchases or upon achieving an agreed sales target.
JB Hi-Fi’s products are mainly supplied by Australian based subsidiaries of multi national companies,
however, some suppliers are local independents. JB Hi-Fi does not operate a warehouse with all product
supplied directly into its stores.
4.8 Promotional activities
There are a number of components to the Company’s marketing approach:
★ JB Hi-Fi undertakes television, radio, print media and catalogue campaigns that are well recognised
in its established markets and feature brand name, product and price. Consistent with its low cost
positioning, JB Hi-Fi spends less than 2% of sales on advertising;
★ high visibility of store locations with distinctive yellow and black signage; and
★ reliance on “word of mouth” referral from a long history of serving customers with a broad range
of branded product at every day low prices.
4.9 Information technology
The JB Hi-Fi store network operates on a point of sale system installed in 2000. The system is fully
scalable as both sales and store numbers grow and is integrated with the Company’s general ledger
system. The system is Windows based, integrates EFTPOS, and provides full in-store reporting to allow
easy access to current stock information, sell through rates, gross profit achieved and sales staff
performance. The integrated system also underpins the monthly reporting package provided to
management and the Board.
The point of sale assisted stock ordering system provides a combination of centralised and decentralised
ordering, and is achieved via the use of a secure network between the stores and head office. All orders
are placed with suppliers via the head office computer system, allowing easy tracking and reconciliation
of orders. Ordering modules allow access to past sales history, current stock on hand and any pending
orders to ensure accurate forecasting for orders. All stock is bar-coded and scanned for ease of
handling in store.
Store managers and staff receive a mix of daily and weekly reports. The reports highlight:
★ sales and gross profit performance by product category compared with budget and the previous year;
★ individual sales staff performance by sales and gross profit;
★ alerts for any low gross profit sales and low stocking levels for best sellers; and
★ inventory purchasing spend compared to budget.
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JB Hi-Fi Prospectus
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5 Board and Management
5.1 Board of Directors and senior management
Patrick Elliott
Non-Executive Chairman
Richard Uechtritz
Chief Executive Officer
Terry Smart
Operations and Finance
Director
Richard has been CEO of JB Hi-Fi
since his appointment as head of
the new executive management
team at the time the business was
acquired by the Existing
Shareholders in August 2000.
Richard is involved, on a day to day
basis, in operations, marketing,
property, merchandising, and
supplier relationships.
Terry joined JB Hi-Fi as an executive
director at the time the Business
was acquired by the Existing
Shareholders in August 2000. As
Operations and Finance Director,
Terry has developed the operational
processes that underpin JB Hi-Fi’s
management of its retail operations.
B.Comm LLB, MBA (Hons), CA
Patrick has chaired JB Hi-Fi since
the acquisition of the business by
the Existing Shareholders in August
2000. He has overseen its growth
from 10 to 26 stores over that
period.
Patrick is an executive director of
Macquarie Direct Investment
Limited, the private equity division
of Macquarie Bank Limited. Patrick
is a director of a number of MDIL’s
investee companies including
InvoCare Pty Limited, Financial
Network Services (Holdings) Pty
Limited, Space Health Clubs Pty
Limited, Can Can Lingerie Group Pty
Limited and is Deputy Chairman of
the Australian Venture Capital
Association Limited.
Richard has over 20 years
experience in the retail industry,
having been a co-founder and joint
Managing Director of Rabbit Photo.
Richard later founded Cut-Price
Photo which was purchased by
Kodak in 1991. Richard was
subsequently appointed Managing
Director of Kodak’s Australian retail
operations (Klikk Pty Ltd, trading as
Smiths Kodak Express) before
becoming a director of Kodak
(Australasia) Pty Ltd. During his
tenure, Richard implemented
Kodak’s successful expansion
strategy in the 1990s which saw
Klikk grow to more than 150 stores
throughout Australia.
Since joining JB Hi-Fi, Terry
has successfully led the
implementation of the Company’s
management information systems,
including a point of sale system, a
range of in-store reporting systems
and an electronic data interface with
the Company’s major suppliers.
Prior to joining JB Hi-Fi, Terry spent
six years working with the Australian
retail operations of Kodak (Klikk Pty
Ltd), where he held the position of
director and general manager of
operations.
Board of Direc
28
JB Hi-Fi Prospectus
Gary Levin
Non-Executive Director
Will Fraser
Non-Executive Director
B.Comm, LLB
Ph.D
Gary has over 20 years
management experience in running
private and public companies in the
retail, real estate and renewable
energy fields.
Will’s deep involvement with retail
and retail strategies at Kodak
Australasia Pty Ltd over many years
is highlighted by the successful
Kodak Express QMS program which
was introduced by his team in 1987.
Prior to his current role as Managing
Director of Environmental
Infrastructure Limited and
EarthPower Technologies Sydney
Pty Limited, he was the founder
and Managing Director of TLC Dry
Cleaners Pty Limited and a previous
joint Managing Director of Rabbit
Photo Holdings Limited.
Gary was admitted to the Bar of
New South Wales in 1978, and is
a member of the New South Wales
Bar Association. Gary was appointed
to the Board in November 2000.
Will retired in 1999 as Chairman
and Managing Director of Kodak
Australasia Pty Ltd, an appointment
that followed two years in London
as a Corporate Vice President of
Eastman Kodak and Regional
Business General Manager,
Consumer Imaging, of Europe,
Africa, India and the Middle
East Region.
Frank Garonzi
General Manager
Frank has over 30 years experience
in the consumer electronics industry.
Frank joined JB Hi-Fi in 1999 and
prior to this he was Deputy
Managing Director of TEAC
Australia. Frank’s key responsibilities
at the Company include marketing,
supplier relationships, and
supervising product buying.
Will is currently a member of the
Board of Trustees of The Baker
Foundation.
Will was appointed to the Board in
September 2003.
ctors
Prospectus JB Hi-Fi
29
5 Board and Management continued
5.2 Organisational structure
JB Hi-Fi employs approximately 1,070 staff within the stores and a further 46 staff at its head office in
Brighton, Melbourne. Approximately 27% of store staff are casual. The organisation chart is set out below:
Richard Uechtritz
CEO
Terry Smart
Operations and Finance Director
Retail
Operations
Finance
Information
Technology
Frank Garzoni
General Manager
Human
Resources
Marketing and
Advertising
Merchandising
Buying and
Supplier
Relationships
The Directors believe that the Company can roll-out its expansion strategy in the next three years without
materially increasing the number of its head office staff.
Stores operate with a store manager, a floor manager, a third-in-charge and department heads. Store
managers are highly experienced, most of whom have worked their way up from the sales floor. Sales
staff receive a base salary and a commission based on gross profit. JB Hi-Fi empowers store managers
to make many operational, buying and pricing decisions, within agreed parameters, to best meet the
demands of the local market. Store managers report to State managers.
The Directors believe that the quality, enthusiasm and energy of its staff and management are key
strengths of the Company and have contributed significantly to its success and rapid growth.
Management Team:
Top from left: Matt Linhart, Terry Smart, Derek Durrant, Mario Pantano, Nick Prestigiacomo, Richard Murray. Middle: Andrea Lund, Matt Pirzas, Piret Cantwell, Michelina
Iaccovella, Bruce Thierbach, Geoff Craig, Suji Wimalaratna. Bottom: Adam Baldwin, Richard Uechtritz, Frank Garonzi. Absent: Sandy Kuecher, Craig Caulkett.
30
JB Hi-Fi Prospectus
5.3 Corporate governance
Board of Directors and its committees
The Board is responsible for the overall corporate governance of the Company including establishing
and monitoring key performance goals. The Board has created a framework for managing the Company
including internal controls, a business risk management process and appropriate ethical standards.
To assist in the execution of its responsibilities, the Board has established a Remuneration Committee
and an Audit Committee. These committees have written mandates and operating procedures. These
require that the members of both committees be comprised of a majority of Non-Executive Directors.
Composition of the Board
The Directors of the Company in office at the date of this Prospectus are detailed in Section 5.1.
It is the Company’s intention to add a further Non-Executive Board member following the listing of the
Company on ASX should a suitably qualified candidate be available.
Remuneration Committee
The role of the Remuneration Committee is to review and make recommendations to the Board on
remuneration packages and policies related to the Non-Executive Directors, Chief Executive Officer and
senior executives and ensure that the remuneration policies and practices are consistent with the
Company’s strategic goals and human resource objectives. Independent advice will be sought
where appropriate.
Audit Committee
The role of the Audit Committee is to advise on internal controls and appropriate ethical standards for
the management of the Company. The Committee also confirms the quality and reliability of the financial
information prepared, working on behalf of the Board with the external auditors. The Committee reviews
non-audit services provided by the external auditor to confirm they are consistent with maintaining
external audit independence.
The Audit Committee provides advice to the Board and reports on the status of the business risks to
the Company through its risk management process aimed at ensuring risks are identified, assessed
and appropriately managed.
Continuous disclosure
All relevant information provided to ASX will be immediately posted onto the Company’s corporate
website, www.jbhifi.com.au in compliance with the continuous disclosure requirements of the
Corporations Act 2001 and ASX Listing Rules.
Ethical standards
The Company has a code of conduct documented in an employee handbook. This sets out the
standards as to how each employee of the Company is expected to act in their capacity as an employee
of JB Hi-Fi. On joining the Company, employees sign an acknowledgement stating that they have read
and understood the document.
Communication to shareholders
The Board of Directors aims to ensure that the shareholders are informed of all major developments
affecting the Company’s state of affairs. Information is communicated to shareholders through its annual
report, annual general meeting, half-yearly results announcements and corporate website,
www.jbhifi.com.au which has a dedicated investor relations section.
Prospectus JB Hi-Fi
31
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JB Hi-Fi Prospectus
6 Financial Information
6.1 Introduction
All information presented in this Section should be read in conjunction with the assumptions outlined in
Section 6.2, the risk factors in Section 7, the Investigating Accountants’ Report set out in Section 8 and
the Report on Review of Directors’ Forecast set out in Section 9.
JB Hi-Fi’s historical pro forma consolidated statements of financial performance for each of the years
ended 30 June 2001, 2002 and 2003, and the Directors’ forecast statement of financial performance for
the year ending 30 June 2004 are summarised in Table 6.1. For the purpose of preparing the historical
results for the year ended 30 June 2001, it has been assumed that the JB Hi-Fi business was acquired
by the Company on 1 July 2000, instead of the actual purchase date of 1 August 2000.
As disclosed in the Investigating Accountants’ Report in Section 8, the historical statements of financial
performance for the three years ended 30 June 2001, 2002 and 2003, do not include any costs
associated with operating as a publicly listed company. Additional costs associated with a listed public
company structure have been assumed for the purposes of the Directors’ Forecast for the year ending
30 June 2004. The Forecast is based on the Directors’ assessment of current economic and operating
conditions and on a number of assumptions regarding future events and actions, which, at the date at
which the Forecast was adopted, the Directors consider will take place. These events or actions may or
may not take place.
The Forecast is, by its very nature, subject to uncertainties and unexpected events, many of which are
outside the control of the Company and its Directors. Events and circumstances often do not occur as
anticipated and therefore actual results may differ from the Forecast and these differences may be
material. Accordingly, the Directors cannot and do not guarantee that the Forecast will be achieved.
Prospectus JB Hi-Fi
33
6.2 Review of historical and forecast results
Table 6.1 sets out a summary of the historical results of JB Hi-Fi for the years ended 30 June 2001,
30 June 2002 and 30 June 2003, and the Company’s forecast performance for the year ending
30 June 2004.
Table 6.1 Statement of Financial Performance
Sales
Existing Stores
New Stores(2)
Gross Profit(3)
EBITDA before significant items
EBIT before significant items
Significant Item(4)
EBIT
Interest Expense
Profit before Tax
Income Tax Expense
Profit after Tax
Total Sales Growth
Gross Margin
EBIT Margin
EBIT Growth
Store Number
Year ended
30 June 2001(1)
Actual
$’000
Year ended
30 June 2002
Actual
$’000
Year ended
30 June 2003
Actual
$’000
Year ending
30 June 2004
Forecast
$’000
154,885
–
154,885
36,322
7,571
6,811
(1,066)
5,745
248,802
–
248,802
58,341
13,633
11,593
–
11,593
355,835
–
355,835
79,934
18,051
16,732
–
16,732
n/a
23.5%
4.4%5
n/a
15
60.6%
23.4%
4.7%
70.2%5
21
43.0%
22.5%
4.7%
44.3%
26
418,725
38,566
457,291
103,983
23,796
21,306
–
21,306
2,587
18,719
5,616
13,103
28.5%
22.7%
4.7%
27.3%
31
Note 1: For the purpose of preparing the historical results for the year ended 30 June 2001, it has been assumed that the JB Hi-Fi
business was acquired by the Company on 1 July 2000, instead of the actual purchase date of 1 August 2000.
Note 2: New stores are those forecast to be opened in the year ending 30 June 2004.
Note 3: The gross profit in 2001 and 2002 has been adjusted to provide a consistent treatment of stock shrinkage in the historical
and forecast results.
Note 4: The significant item relates to redundancy and rationalisation expenses incurred after acquisition.
Note 5: Before significant items.
JB Hi-Fi has demonstrated strong growth in sales and profitability over the three years ended 30 June
2003. The Directors are forecasting further improvements in the financial performance of the Company
during the year ending 30 June 2004.
Sales
Historic sales analysis
Total sales grew from $155 million in 2001 to $356 million in 2003. This growth was achieved through
the expansion of existing store sales and by exploiting new market opportunities through additional new
store openings.
For the 12 months ended 30 June 2003 sales increased by 43% over the corresponding 12 month
period to 30 June 2002. The increase was due to the opening of five new stores in the year to 30 June
2003 and sales growth from existing stores, in particular, the ramp up of sales from stores opened in the
year to 30 June 2002.
34
JB Hi-Fi Prospectus
Forecast sales analysis
The Directors are forecasting total sales of $457 million for 2004. The sales forecast is based on an
analysis of expected monthly sales by product category at each of the Company’s stores, taking
into account actual sales and sales growth for the 12 months ended 30 June 2003 and current
market conditions.
Comparable store sales growth of 6.5% for 2004 is expected from continued growth in almost all product
categories in the year to 30 June 2004. Sales growth for the Company’s strongest growing categories of
digital cameras and DVDs is expected to remain strong, albeit less than the growth rate achieved in
2003. CD sales on a comparable store basis are expected to remain stable over the forecast period.
Sales growth in most other product categories for 2004 is forecast to remain positive, however will
decline from the growth rates experienced during the 2003 financial year.
Stores open at 30 June 2003 are forecast to contribute 92% of forecast sales for the 2004 financial year.
The remaining sales are forecast from five stores to be opened over the course of the 2004 financial year.
The new stores to be opened in the year ending 30 June 2004 will largely be in areas where JB Hi-Fi is
not currently represented, minimising any impact on the sales of existing stores.
New stores are forecast to contribute less sales than existing stores in their initial year of opening. This reflects
historical experience that it takes approximately two to three months for sales at a new store to stabilise.
Gross profit
The gross profit forecast is based on individual product category margins which are applied to the sales
forecast. The decline in gross margin of approximately 0.9% to 22.5% during the year to 30 June 2003 in
comparison to the year to 30 June 2002 was due to a combination of strong sales growth in lower
margin products and lower gross margins on certain other products.
Based on expected individual product margins and the expected sales growth rates of each product,
aggregate gross margin for the Company is forecast to increase to 22.7% in the 2004 financial year. This
is due to improved selling techniques and training provided to sales staff and the expected introduction of
interest free terms. The forecast gross margin for the 2004 financial year is consistent with recent trading.
EBIT
Historic EBIT analysis
The growth in EBIT over the three years ended 30 June 2003 reflects sales growth from new store
openings and comparable store sales growth.
Operating expenses as a percentage of sales declined in 2003. In general, salaries and wages,
occupancy and advertising expenses account for a significant portion of total operating expenses.
For the 12 months ended 30 June 2003, EBIT grew by 44.3% over the corresponding 12 month period
to 30 June 2002. The increase was due mainly to the new store roll-out programme and EBIT growth
from existing stores.
Forecast EBIT analysis
The Directors are forecasting EBIT to increase to $21.3 million in the year ending 30 June 2004. The
forecast increase in EBIT is primarily attributable to the increase in sales referred to above.
New stores take a number of months to reach maturity from an earnings perspective. This is due to start
up costs which are expensed in the year of establishment and lower initial gross margins to attract
customers and establish a store in that location. For example, the EBIT contribution from the five stores
which were opened during the 2002 year is forecast to increase from $6.4 million in the 2003 year to
$7.3 million in 2004.
Prospectus JB Hi-Fi
35
6 Financial Information continued
Seasonality
JB Hi-Fi generates approximately 52% of sales and 63% of EBIT in the first six months of the financial
year which is driven by the Christmas retail period in the November-December months.
Forecast assumptions
JB Hi-Fi has developed a business model that forecasts future performance based on historical
information, trends and plans for the Company. The Forecast has been prepared with proper care and
attention and the Directors consider all assumptions to be reasonable, when taken as a whole.
The Forecast may vary from actual results and any variation may be materially positive or negative,
because the assumptions, and therefore the Forecast, is by its very nature subject to uncertainties and
contingencies, many of which are outside the control of the Directors. Accordingly, neither the Company,
nor its Directors, can give any assurance that the Forecast will be achieved. Events and outcomes may
differ in quantum and timing from the assumptions, with material consequential impact on the Forecast.
The Forecast should be read with the assumptions and sensitivity analysis set out in this Section and other
information contained in this Prospectus.
The material assumptions made by the Directors in preparing the Forecast are as follows:
General assumptions
★ There are no material beneficial or adverse effects arising from the actions of competitors.
★ The operating and financial performance of JB Hi-Fi is influenced by a variety of general economic
and business conditions, including the Australian housing construction cycle, levels of inflation,
interest rates and exchange rates, government fiscal, monetary and regulatory policies. The Forecast
assumes that there will be no material changes in these factors over the period to 30 June 2004.
★ There is no material amendment to any material agreement relating to the Company’s business.
★ There are no changes to the statutory, legal or regulatory environment which would be detrimental
to JB Hi-Fi in any of the jurisdictions in which it operates.
★ There are no changes in current income tax legislation in Australia.
★ Accounting policies remain as disclosed in the Investigating Accountants’ Report.
★ There are no material changes in Australian Accounting Standards, Statements of Accounting
Concepts or other mandatory professional reporting requirements, being Urgent Issues Group
Consensus Views and the Corporations Law, which would have a material effect on the financial
results of JB Hi-Fi.
★ In July 2002 the Australian Financial Reporting Council announced its decision to support Australia’s
adoption of International Financial Reporting Standards (IFRS), with effect from 1 January 2005.
Under IFRS, there is no requirement to amortise identifiable intangible assets that have indefinite
useful lives. JB Hi-Fi’s brand names have not been subject to amortisation as, in the opinion of the
Directors, they have an indefinite useful life.
Specific assumptions
★ The Company issues Shares prior to listing on ASX to Existing Shareholders upon the exercise of
options as disclosed in the pro forma Statement of Financial Position, and there are no further issue
of Shares.
★ On a comparable store basis, forecast retail sales for the year ending 30 June 2004 will increase by 6.5%.
★ There will be a further five stores opened at various times during the year to 30 June 2004. Should
some of these stores not open or be delayed this would adversely impact on forecast profitability
(refer to Sensitivity analysis in Section 6.3).
36
JB Hi-Fi Prospectus
★ New store sales forecasts are lower than those assumed for existing stores, reflecting the historic
maturity profile of new stores.
★ No material change in operating costs (such as salaries and wages, occupancy, office costs) as a
percentage of sales for the year ending 30 June 2004.
★ Capital expenditure for new stores will be $0.7 million per store in the year ending 30 June 2004.
★ Gross margins will be 22.7% in the year ending 30 June 2004 in light of expected product mix and
individual product margins.
★ Forecast income tax expense has been based on the statutory company tax rate of 30%.
★ An allowance for expenditure associated with being a listed company has been made.
★ Interest on the bank debt is calculated assuming a fixed interest rate of 6.7% per annum for 50% of
the bank debt and a variable interest rate of 6.4% per annum for the remaining 50%. Interest on the
overdraft is calculated assuming a variable interest rate of 6.4% per annum.
★ A payment of $3.1 million in relation to the profit share and loan agreements relating to the Highpoint
store.
★ A payment of a fully franked special dividend of $10 million to Existing Shareholders prior to the Offer.
6.3 Sensitivity analysis
The Forecast is based on certain economic and business assumptions about future events. JB Hi-Fi’s
EBIT is sensitive in varying degrees to movements in a number of key business drivers.
The sensitivities discussed below assume no offsetting changes in other variables. In practice, JB Hi-Fi’s
management would respond to any adverse changes in one variable by taking action to minimise its
impact. The effect on EBIT presented for each sensitivity is not intended to be indicative or predictive of
the likely range of outcomes to be experienced with each sensitivity.
The following sensitivities summarise the financial effect of changes in the specified variables for the
Forecast Period:
Table 6.2
% Change
Sales
Gross Margin(1)
Each of the five store openings in FY2004 are delayed by three months.
Salaries and wages
+/- 1%
+/- 1%
+/- 1%
Impact on EBIT
2004 Forecast
($’000)
+/- 924
+/- 4,346
-1,075
+/- 477
Note 1: A 1% change in the gross margin has been calculated as a change in the gross margin from 22.7% to 23.7% or 21.7%.
The Company enters into property leases with terms varying from five to 10 years. A majority of stores
have base terms that expire after 30 June 2004.
Prospectus JB Hi-Fi
37
6 Financial Information continued
6.4 Pro forma historical statement of financial position
The pro forma historical statement of financial position for JB Hi-Fi has been prepared from the audited
statement of financial position as at 30 June 2003. Details of the statement of financial position are
included in the Investigating Accountants’ Report in Section 8 and are summarised in the table below.
Table 6.3 Pro Forma Statement of Financial Position
Actual
30 June 2003
$’000
ASSETS
Current Assets
Cash
Receivables and Prepayments
Inventories
Other
Non-Current Assets
Net Property, Plant and Equipment
Brand Name
Deferred Tax Assets
Other
Total Assets
LIABILITIES
Current Liabilities
Creditors and Accruals
Other Current Liabilities
Non-Current Liabilities
Bank Debt
Other
Total Liabilities
NET ASSETS
EQUITY
Contributed Equity
Retained Profits
TOTAL EQUITY
12,990
9,121
49,074
681
71,866
14,880
43,094
1,727
787
60,488
132,354
46,341
10,907
57,248
Pro Forma
Adjustments
$’000
(2,970)
2,500
(600)
32,000
4,644
36,644
93,892
38,462
21,900
16,562
38,462
Pro Forma
30 June 2003
$’000
10,020
9,121
49,074
681
68,896
14,880
43,094
1,727
3,287
62,988
131,884
46,341
10,307
56,648
32,000
4,644
36,644
93,292
38,592
10,130
(10,000)
32,030
6,562
38,592
The pro forma statement of financial position reflects a number of adjustments:
★ the exercise of 14.52 million options over new Shares prior to listing on ASX, raising $10.13 million;
★ the payment of $3.1 million in relation to the termination of the profit share and loan agreements
relating to the Highpoint store; and
★ the payment of a fully franked special dividend of $10 million to Existing Shareholders prior
to the Offer.
38
JB Hi-Fi Prospectus
6.5 Historical and Forecast statement of cashflows
The Directors believe that the Company will have sufficient cash reserves and cashflow to finance the
operations and forecast capital expenditure over the Forecast Period.
The following table sets out the actual cashflow for the years ended 30 June 2002 and 30 June 2003
and forecast cashflows for the year ending 30 June 2004.
Table 6.4 Historical and Forecast Statement of Cashflows
Year ended
30 June 2002
Actual
$’000
Operating Profit Before Interest and Tax
Depreciation and Amortisation of Assets
Movement in Working Capital
Net Interest Paid
Income Tax
Net Cashflow from Operating Activities
Cashflows from Investing Activities
Net Purchases of Property, Plant and Equipment
Acquisition of Store Interest
Net Cashflow from Investing Activities
Cashflows from Financing Activities
Proceeds from Issue of Equity Securities
Repayment of Borrowings
Net increase in Lease Liabilities
Payment of Dividends
Net Cashflow from Financing Activities
Net Increase/(Decrease) in Cash Held
Cash at the Beginning of the Year
Cash at the End of the Year
Year ended
30 June 2003
Actual
$’000
Year ending
30 June 2004
Forecast
$’000
11,593
2,040
(9,864)
(2,718)
(980)
71
16,732
1,319
12,698
(3,021)
(4,082)
23,646
21,306
2,490
(14,940)
(2,571)
(5,314)
971
(3,290)
(5,781)
(4,965)
(2,500)
(7,465)
10,130
(600)
1,229
(13,676)
(2,917)
(9,411)
12,990
3,579
Cashflows from Operating Activities
In the 2002 year the Company introduced a number of new product categories into stores which resulted
in an investment in working capital.
Cashflow in the year ended 30 June 2003 was positively impacted by a reduction in working capital due
to active management of inventory and creditors.
In the year to 30 June 2004 the Company is forecasting an increase in working capital which reflects the
expansion of the Company’s operations, an increase in inventory days and a reduction in creditor days.
Cashflows relating to Financing Activities
The forecast cashflow to 30 June 2004 financial year includes the exercise of options over new Shares
prior to listing ($10.1 million), the payment of dividends totalling $10 million in September 2003 to Existing
Shareholders, and the interim dividend forecast to be paid for the half year ending 31 December 2003
($3.7 million). The forecast final dividend with respect to the year ending 30 June 2004 is expected to be
paid in the following financial year.
Prospectus JB Hi-Fi
39
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JB Hi-Fi Prospectus
7 Risk Factors
7.1 General comments
There are a number of factors, both specific to JB Hi-Fi and of a general nature, which may affect
the future operating and financial performance of the Company and the outcome of an investment in
JB Hi-Fi. There can be no guarantee that JB Hi-Fi will achieve its stated objectives, that the Forecast will
be met or that forward looking statements will be realised.
This Section describes risks associated with an investment in the Company. Each of the risks set out below
could, if they eventuate, have a material adverse impact on JB Hi-Fi’s operating performance and profits.
Before deciding to invest in the Company, potential investors should read the entire Prospectus and,
in particular, should consider the assumptions underlying the prospective financial information and the
risk factors that could affect the financial performance of JB Hi-Fi.
Potential investors should specifically consider the factors contained within this Section in order to fully
appreciate the risks associated with an investment in the Company. You should carefully consider these
factors in light of your personal circumstances and seek professional advice from your accountant,
stockbroker, lawyer or other professional adviser before deciding whether to invest.
7.2 Specific risk factors
The business activities of JB Hi-Fi are subject to a number of risks that could affect JB Hi-Fi and the
industry in which it operates. These factors may substantially impact on its future performance.
The Directors believe that there are a number of specific factors that should be taken into account
before investors decide whether or not to apply for Shares. These are as follows:
Competition
The markets in which JB Hi-Fi operates are fragmented and competitive. The Company’s financial
performance or operating margins could be adversely affected if the actions of competitors or potential
competitors become more effective, or if new competitors enter the market, and JB Hi-Fi is unable to
counter these actions.
Growth in the popularity of downloading digital music via the Internet, combined with the improvement in
accessibility and the ability to do this, may adversely impact the sale of CDs in the Australian market and
reduce the Company’s gross margins and profitability.
The impact on earnings as a result of a reduction in the Company’s gross margins is set out in the
Sensitivity analysis in Section 6.3.
Leasing arrangements
The growth prospects of JB Hi-Fi are likely to result from increased contribution from existing stores and
the Company’s ability to continue to open and operate new stores on a profitable basis.
The ability to identify suitable sites and negotiate suitable leasing terms is key to these plans. Further,
management’s ability to renegotiate acceptable lease terms for existing stores where leases are due to
expire is vital to on-going profitability. The majority of leases have over two years to expiry with an
option to renew.
The Company’s increased dependence on shopping centres, particularly for its Sydney expansion, means
that the development and maintenance of strong relationships with shopping centre landlords and the
negotiation of cost effective rental arrangements will be essential for achieving profitability in these locations.
Prospectus JB Hi-Fi
41
7 Risk Factors continued
Operating costs
The Company’s ability to consistently offer low prices and operate profitably is dependent on a
combination of the scalability of its operations, relatively high stock turns and low cost operating
structure. There can be no assurance that this relatively low cost operating structure can be maintained.
Information technology
JB Hi-Fi has invested significantly in the development of management information and point of sales
systems designed to maximise the efficiency of the Company’s operations. Should these systems not
be maintained sufficiently or updated when required, or JB Hi-Fi’s disaster recovery processes not be
adequate, system failures may negatively impact on the Company’s performance.
Reliance on key personnel
JB Hi-Fi has a number of key senior management staff and is committed to providing an attractive
employment environment, conditions and prospects to assist in retaining these personnel. However, there
can be no assurance that the Company will be able to retain these key personnel.
Growth prospects
Over the past few years, the Company has achieved strong growth in sales and profitability. The growth
rates forecast in this Prospectus are dependent upon a number of factors, including appropriate product
selection, maturation of recently opened stores and the Company’s ability to open new stores on a
profitable basis. These factors are discussed in Section 4 of this Prospectus.
Should sales not meet management forecasts, the Company’s net profit is likely to be lower than the
Prospectus forecasts. Section 6.3 sets out the sensitivity of EBIT to changes in forecast sales.
The Company’s planned store roll-out programme contains a number of risks. The Company intends to
open new stores in markets where the JB Hi-Fi brand is less recognisable than in its established markets,
which may impact the success of new stores in those markets. If there is a delay in the opening of one or
more stores, or if the Company opens fewer stores than it currently plans over the Forecast Period, the
Company may not be able to meet its sales or profit forecasts for the Forecast Period. The sensitivity of
profits over the Forecast Period to a delay in the opening of stores in the 2004 financial year is set out in
the Sensitivity analysis in Section 6.3.
Product selection
JB Hi-Fi relies on its ability to assess and satisfy customers needs. Misjudgements in demand or changes
in customer preferences could result in overstocked inventory and/or lower gross margins as a result of
mark downs.
Relationship with suppliers
Any material adverse change in JB Hi-Fi’s relationship with its suppliers, or in terms of trade, could have
an adverse impact on the Company’s prospects. For example, material failure to achieve sales targets
may reduce the rebates received from suppliers, reducing the Company’s gross margins and profitability.
Rapid technological change
Rapid changes in technology are changing the products demanded by customers in the segments in
which JB Hi-Fi operates. Many of these technological changes are providing the growth opportunities
discussed in this Prospectus, but there is a risk that competitors will introduce technologies that provide
them with a competitive advantage relative to JB Hi-Fi.
42
JB Hi-Fi Prospectus
7.3 General risk factors
Share market
The Shares may trade on ASX at higher or lower prices than the Offer Price following listing. Investors
who decide to sell their Shares after listing may not receive the amount of their original investment. There
can be no guarantee that an active market in the Shares will develop.
The price at which the Shares trade on ASX may be affected by the financial performance of JB Hi-Fi and
by external factors over which the Directors and JB Hi-Fi have no control. These factors include
movements on international share markets, local interest rates and exchange rates, domestic and
international economic conditions, government taxation, market supply and demand and other legal,
regulatory or policy changes.
Dependence on general economic conditions
The operating and financial performance of JB Hi-Fi is influenced by a variety of general economic and
business conditions, including the Australian housing construction cycle, levels of consumer spending,
inflation, interest rates and exchange rates, access to debt and capital markets, government fiscal,
monetary and regulatory policies. A prolonged deterioration in general economic conditions, including an
increase in interest rates or a decrease in consumer and business demand, could be expected to have a
material adverse impact on the Company’s business or financial condition.
Acts of terrorism and outbreak of international hostilities
Acts of terrorism or an outbreak of international hostilities may adversely affect consumer confidence and
lead to a downturn in customer spending. This may adversely affect sales of the Company’s products
which could have a negative impact on the value of investing in the Company.
Prospectus JB Hi-Fi
43
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44
JB Hi-Fi Prospectus
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
505 Bourke Street
Melbourne VIC 3000
Australia
DX 111
Telephone (03) 9208 7000
Facsimile (03) 9208 7001
www.deloitte.com.au
8 Investigating Accountants’ Report
18 September 2003
The Directors
JB Hi-Fi Limited
14 Spink Street
BRIGHTON VIC 3186
Dear Sirs
Report on Historical Financial Information
Introduction
This report has been prepared for inclusion in the prospectus to be issued by JB Hi-Fi Limited (“JB Hi-Fi”
or “the Company”) to be dated on or around 18 September 2003 (“Prospectus”) relating to an offer to the
public for the sale of 86,592,912 shares at an indicative price range of $1.35 to $1.55 per share, resulting
in gross proceeds ultimately received by the Vendor Shareholders under the Offer of between $117
million and $134 million.
Background
The historical financial information pertaining to JB Hi-Fi and the entities which it controls (“the JB Hi-Fi
Group”) has been presented on a basis which is considered to be the most relevant to potential investors
and accordingly this report on historical financial information includes the results of all the entities
controlled by JB Hi-Fi at the date of this report.
The JB Hi-Fi Group comprises the following:
★ The Parent Entity:
–
JB Hi-Fi Limited (formerly JB Hi-Fi Holdings Pty Limited) – incorporated 7 June 2000
★ Its Wholly-owned Controlled Entities:
–
JB Hi-Fi Group Pty Limited – incorporated 31 May 2000
–
JB Hi-Fi (A) Pty Ltd – incorporated 24 August 2000 (dormant)
On 1 August 2000 the following transactions took place to effect the current group structure:
★ JB Hi-Fi Limited and JB Hi-Fi Group Pty Limited were existing shell companies as at 1 August 2000
with JB Hi-Fi Limited purchasing 100% of the share capital of JB Hi-Fi Group Pty Limited for $2.
★ On 1 August 2000 JB Hi-Fi Group Pty Limited acquired the business (i.e. certain assets and liabilities)
of JB Hi-Fi. The total purchase consideration was satisfied by way of an immediate cash payment,
a deferred cash payment due by 30 June 2002, and the issue of shares in JB Hi-Fi Limited.
★ JB Hi-Fi Limited acts as the holding entity with JB Hi-Fi Group Pty Limited the retail operating entity.
The historical financial information set out in the Annexure to this report comprises:
★ The pro forma consolidated Statement of Earnings Before Interest and Tax (“EBIT”) of the JB Hi-Fi
Group for year ended 30 June 2001, and the audited consolidated Statement of Earnings Before
Interest and Tax (“EBIT”) for the years ended 30 June 2002 and 30 June 2003 respectively;
★ The consolidated Statement of Earnings Before Interest and Tax for the year ended 30 June 2001 has
been restated to exclude redundancies and several one-off costs associated with the acquisition of
the JB Hi-Fi business on 1 August 2000;
★ The audited consolidated Statement of Cashflows for the year ended 30 June 2002 and the
pro forma consolidated Statement of Cashflows for the year ended 30 June 2003;
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
Prospectus JB Hi-Fi
45
8 Investigating Accountants’ Report continued
★ The audited and pro forma consolidated Statements of Financial Position of the JB Hi-Fi Group as at
30 June 2003 incorporating the assumptions detailed in note 3 in the Annexure; and
★ Notes to and forming part of this financial information.
The financial information presented in this report in respect of the year ended 30 June 2001 has been
obtained from the unaudited financial reports of the JB Hi-Fi Group for the month ended 31 July 2000
and the audited financial report for the 11 months ended 30 June 2001. The financial information for
the years ended 30 June 2002 and 30 June 2003 has been obtained from the respective audited
financial reports.
Scope
The Directors of JB Hi-Fi are responsible for the preparation of the consolidated audited and pro forma
financial information.
Deloitte Touche Tohmatsu has audited the financial statements of the JB Hi-Fi Group for the 11 months
ended 30 June 2001, for the year ended 30 June 2002 and for the year ended 30 June 2003, and our
audit reports in respect to these periods were unqualified. The financial information prior to the year
ended 30 June 2001 has not been included in this report as the nature and size of the business has
changed significantly since that time and is therefore not considered relevant to potential investors.
Our audits of the JB Hi-Fi Group were conducted in accordance with Australian Auditing Standards to
provide reasonable assurance whether the financial information referred to above is free from material
misstatement. Our audit procedures included examination, on a test basis, of evidence supporting the
amounts and other disclosures in the financial information and the examination of accounting policies and
significant accounting estimates. These procedures were undertaken to form an opinion whether, in all
material respects, the financial information was presented fairly in accordance with Australian Accounting
Standards, other mandatory professional reporting requirements (Urgent Issues Group Consensus Views)
and statutory requirements, so as to present a view which was consistent with our understanding of the
operating performance, cashflows and financial position of these entities.
Opinion
In our opinion, the historical financial information included in this report presents fairly:
★ The audited and pro forma consolidated Statements of Earnings Before Interest and Tax and the
pro forma and audited consolidated Statements of Cashflows of the entities comprising the JB Hi-Fi
Group for the periods identified; and
★ The audited and pro forma consolidated Statements of Financial Position of the JB Hi-Fi Group as
at 30 June 2003 in accordance with applicable Australian Accounting Standards and mandatory
professional reporting requirements and the accounting policies adopted by the JB Hi-Fi Group and
described in the Annexure to this report.
Subsequent Events
Subsequent to 30 June 2003 and up to the date of this report, nothing has come to our attention that
would cause us to believe material transactions or events outside the ordinary course of business of the
consolidated entity have occurred, other than the matters dealt with in this report, which would require
comment on, or adjustment to, the information contained in this report, or which would cause such
information to be misleading.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Melbourne
18 September 2003
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
46
JB Hi-Fi Prospectus
ANNEXURE – JB HI-FI GROUP HISTORICAL FINANCIAL INFORMATION
JB Hi-Fi Group
Consolidated Statement of Earnings
Before Interest and Tax (EBIT)
Notes
Sales Revenue
3
Earnings Before Interest, Tax, Depreciation and
Amortisation (including significant items detailed in note 2)
Depreciation and Amortisation
Plant and equipment, leasehold improvements
Earnings Before Interest and Tax (EBIT)
Year ended
30 June
2001
Pro forma(i)
$’000
Year ended
30 June
2002
Audited
$’000
Year ended
30 June
2003
Audited
$’000
154,885
248,802
355,835
6,459
13,633
18,051
(714)
5,745
(2,040)
11,593
(1,319)
16,732
The consolidated Statement of Earnings Before Interest and Tax should be read in conjunction with the
notes to and forming part of the financial information.
(i)
The pro forma consolidated Statement of Earnings Before Interest and Tax in respect of the year ended 30 June 2001 has been
obtained from the unaudited financial reports of the JB Hi-Fi Group for the month ended 31 July 2000 and the audited financial
report for the 11 months ended 30 June 2001.
RESTATED CONSOLIDATED STATEMENT OF EARNINGS BEFORE INTEREST AND TAX
Year ended
30 June
2001
Pro forma(ii)
$’000
Earnings Before Interest and Tax (EBIT)
Redundancy and rationalisation costs
Restated Consolidated Earnings Before Interest and Tax
(ii)
5,745
1,066
6,811
Year ended
30 June
2002
Audited
$’000
Year ended
30 June
2003
Audited
$’000
11,593
–
11,593
16,732
–
16,732
The restated consolidated Statement of Earnings Before Interest and Tax information has been adjusted to exclude redundancies
and several one off costs associated with the acquisition of the JB Hi-Fi business on 1 August 2000. This restatement has
removed the effect of these costs from the results for the year ended 30 June 2001.
No adjustments have been made to the earnings before interest and taxation to reflect public company
costs.
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
Prospectus JB Hi-Fi
47
8 Investigating Accountants’ Report continued
JB Hi-Fi Group
Pro Forma Consolidated
Statement of Financial Position
Audited
as at
30 June 2003
$’000
Adjustments
as at
30 June 2003(i)
$’000
Pro forma
as at
30 June 2003
$’000
29(a)
5
6
7
12,990
9,121
49,074
681
71,866
(2,970)
–
–
–
(2,970)
10,020
9,121
49,074
681
68,896
–
8
9
10
11
6
14,880
43,094
1,727
781
60,488
132,354
–
–
–
–
2,500
2,500
470
6
14,880
43,094
1,727
3,281
62,988
131,884
12
13
14
15
48,340
3,289
2,081
3,538
57,248
–
(600)
–
–
(600)
48,340
2,689
2,081
3,538
56,648
16
17
18
34,588
1,387
669
36,644
93,892
38,462
–
–
–
–
(600)
130
34,588
1,387
669
36,644
93,292
38,592
20
22
21,900
16,562
38,462
10,130
(10,000)
130
32,030
6,562
38,592
Notes
CURRENT ASSETS
Cash assets
Receivables
Inventories
Other
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other non-current financial assets
Plant and equipment
Intangible assets
Deferred tax assets
Other
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Payables
Interest-bearing liabilities
Current tax liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Interest-bearing liabilities
Deferred tax liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Retained profits
TOTAL EQUITY
(i)
Assumptions underlying the adjustments have been detailed in note 2.
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
48
JB Hi-Fi Prospectus
JB Hi-Fi Group
Pro Forma Consolidated
Statement of Cashflows
Notes
Cashflows From Operating Activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other costs of finance paid
Income tax paid
Net cash provided by operating activities
Cashflows From Investing Activities
Payment for investment in shares
Proceeds on sale of plant and equipment
Payments for plant and equipment
Amounts advanced to related parties
Net cash (used in) investing activities
Cashflows From Financing Activities
Proceeds from issues of equity securities
Payment for debt issue costs
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Dividends paid to members of the parent entity
Net cash provided by/(used in) financing activities
Net (decrease)/increase in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
(i)
29(c)
29(a)
Year ended
30 June 2002
Audited
$’000
Year ended
30 June 2003
Pro forma(ii)
$’000
273,409
(269,640)
–
(2,718)
(980)
71
353,628
(322,879)
316
(3,337)
(4,082)
23,646
–
–
(3,290)
–
(3,290)
(6)
478
(6,253)
–
(5,781)
2,993
–
13,601
(2,000)
(1,181)
–
13,413
10,194
(9,632)
562
10,130
(3,846)
32,000
(35,772)
(919)
(10,000)
(8,407)
9,458
562
10,020
The pro forma consolidated Statement of Cashflows for the year ended 30 June 2003 is based on the audited balances per the
annual financial statements adjusted for the transactions detailed in Note 2.
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
Prospectus JB Hi-Fi
49
8 Investigating Accountants’ Report continued
NOTE 1 – NOTES TO AND FORMING PART OF THE PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION
Summary of Significant Accounting Policies
Financial Reporting Framework
The audited and pro forma financial information has been prepared in accordance with the recognition
and measurement principles of applicable Accounting Standards and Urgent Issues Group Consensus
Views, and the specific accounting policies detailed below and in Note 2. The disclosure requirements of
applicable Accounting Standards and UIG views have only been applied as considered necessary.
The financial report has been prepared on the basis of historical cost and, except where stated, does not
take into account changing money values or current valuations of non-current assets. Cost is based on
the fair values of the consideration given in exchange for assets.
Compilation of Pro Forma Consolidated Financial Information
The audited and pro forma consolidated financial information includes the consolidation of the financial
statements of JB Hi-Fi Limited, JB Hi-Fi Group Pty Limited, and JB Hi-Fi (A) Pty Ltd (collectively
“the JB Hi-Fi Group”).
Adjustments have been made in the preparation of the pro forma consolidated Statement of Earnings
Before Interest and Tax as disclosed in the Annexure. In addition, the pro forma financial information
includes the pro forma consolidated Statement of Financial Position and the pro forma consolidated
Statement of Cashflows of the JB Hi-Fi Group as at and for the year ended 30 June 2003 reflecting
transactions, as discussed in Note 2, as if they had occurred at that date.
Significant Accounting Policies
Accounting policies are selected and applied in a manner which ensures that the resultant financial
information satisfies the concepts of relevance and reliability, thereby, ensuring that the substance of
the underlying transactions and other events is reported.
The following significant accounting policies have been adopted in the preparation and presentation of
the financial report:
(a) Principles of Consolidation
The consolidated financial statements are prepared by combining the financial statements of all the
entities that comprise the consolidated entity, being the Company (the parent entity) and its controlled
entities as defined in Accounting Standard AASB 1024 “Consolidated Accounts” A list of controlled
entities appears in Note 25 to the financial statements.
The consolidated financial statements include the information and results of each controlled entity from
the date on which the Company obtains control and until such time as the Company ceases to control
such entity.
In preparing the financial statements, all intercompany balances and transactions, and unrealised profits
arising within the consolidated entity are eliminated in full.
(b) Income Tax
Tax-effect accounting procedures are adopted whereby income tax expense is calculated on pre-tax
accounting profits after adjustments for permanent differences. The tax-effect timing differences, which
occur when items are included or allowed for income tax purposes in a period different to that for
accounting, is shown at current taxation rates in the deferred tax assets or liabilities, as applicable.
Tax Consolidation
Legislation to allow groups, comprising a parent entity and its Australia resident wholly-owned entities, to
elect to consolidate and be treated as a single entity for income tax purposes was substantively enacted
on 21 October 2002. This legislation, which includes both mandatory and elective elements, is applicable
to the Company. The impact of the mandatory elements of the tax consolidation system, in existing
deferred tax balances of the consolidated entity and parent entity has not been reflected in the financial
statements.
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
50
JB Hi-Fi Prospectus
NOTE 1 – NOTES TO AND FORMING PART OF THE PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION continued
At the date of this report the Directors have not assessed the financial effect, if any, the legislation may
have on the Company and the consolidated entity and, accordingly, the Directors have not made a
decision whether or not to elect to be taxed as a single entity. The financial effect of the implementation
of the tax consolidation system on the consolidated entity has been recognised in the financial
statements.
(c) Acquisitions of Assets
Assets acquired are recorded at the cost of acquisition, being the purchase consideration determined as
at the date of acquisition plus cost incidental to the acquisition.
In the event that settlement of all or part of the cash consideration given in the acquisition of an asset is
deferred, the fair value of the purchase consideration is determined by discounting the amounts payable
in the future to their present value as at the date of acquisition.
(d) Inventories
Inventories are valued at the lower of cost and net realisable value. Inventory is valued using the average
cost method.
(e) Receivables
Trade receivables and other receivables are recorded at amounts due, less any allowance for doubtful
debts.
(f) Recoverable Amount of Non-Current Assets
Non-Current assets are written down to recoverable amount where the carrying value of any non-current
asset exceeds recoverable amount. In determining the recoverable amount of non-current assets, the
expected net cashflows have not been discounted to their present value.
(g) Interest-Bearing Liabilities
Bills of exchange are recorded at an amount equal to the net proceeds received, with the premium or
discount amortised over the period until maturity. Interest expense is recognised on an effective yield
basis.
Bank loans and other loans are recorded at an amount equal to the net proceeds received. Interest
expense is recognised on an accrual basis.
Ancillary costs incurred in connection with the arrangement of borrowings are deferred and amortised
over the period of the borrowing.
(h) Investments
Investments in controlled entities are recorded at cost. Interest revenue is recognised on an accrual basis.
(i) Derivative Financial Instruments
The consolidated entity enters into derivative financial instruments to manage its exposure to interest rate
risk, including interest rate swap.
Gains and losses on interest rate swaps are included in the determination of interest expense.
(j) Employee Benefits
Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long
service leave, and sick leave when it is probable that settlement will be required and they are capable of
being measured reliably.
Provisions made in respect of wages and salaries, annual leave, sick leave, and other employee
entitlements expected to be settled within 12 months, are measured at their nominal values using the
remuneration rate expected to apply at the time of settlement.
Provisions made in respect of long service leave which are not expected to be settled within the next
12 months are measured at their present value of the estimated future cashflows to be made by the
consolidated entity in respect of services provided by employees up to reporting date.
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
Prospectus JB Hi-Fi
51
8 Investigating Accountants’ Report continued
NOTE 1 – NOTES TO AND FORMING PART OF THE PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION continued
(k) Accounts Payable
Trade payables and other accounts payable are recognised when the consolidated entity becomes
obliged to make future payments from the purchase of goods and services.
(l) Depreciation
Depreciation is provided on property, plant and equipment. Depreciation is calculated on a straight line
method so as to write off the net cost or revalued amount of each asset over its expected useful life.
Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever
is shorter, using the straight line method. The following estimated useful lives are used in the calculation
of depreciation:
★ Leasehold improvements
2 – 10 years
★ Plant and equipment
4 – 12 years
★ Equipment under finance lease
2 – 10 years
(m) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST),
except:
★ where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as
part of the acquisition of an asset or as part of an item of expense; or
★ for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables.
Cashflows are included in the statement of cashflows on a gross basis. The GST component of
cashflows arising from investing and financing activities which is recoverable from, or payable to, the
taxation authority is classified as operating cashflows.
(n) Revenue Recognition
Sales of goods and disposal of assets – Revenue from the sale of goods and the disposal of assets is
recognised when the consolidated entity has passed control of the goods or other assets to the buyer.
(o) Leased Assets
Leased assets classified as finance leases are recognised as assets. The amount initially brought to
account is the present value from the minimum lease payments.
A finance lease is one that effectively transfers from the lessor to the lessee substantially all the risks and
benefits incidental to ownership of the leased property. Finance leased assets are amortised using the
straight line method over the useful life of the asset. Finance lease payments are allocated between
interest expense and reduction of lease liability over the term of the lease. The interest expense is
determined by applying the interest rate implicit in the lease to the outstanding lease liability at the
beginning of each lease payment period.
Operating lease payments are recognised as an expense on a basis which reflects the pattern in which
economic benefits from the leased assets are consumed.
Surplus Leased Space
In the event that premises leased by the consolidated entity pursuant to a non-cancellable operating
lease are identified as surplus to the needs of the consolidated entity, a liability and expense are
recognised equal to the present value of the total expected outlay relating to the surplus space as
specified under the lease agreement.
Lease Incentives
In the event that lease incentives are received to enter into non-cancellable operating leases, such
incentives are recognised as a liability. Lease payments are allocated between rental expense, reduction
of the liability and, where appropriate, interest expense over the term of the lease.
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
52
JB Hi-Fi Prospectus
NOTE 1 – NOTES TO AND FORMING PART OF THE PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION continued
(p) Brand Names
The Company’s brand names are recorded at the cost of acquisition. The Directors gave due
consideration to the technical and commercial life of the brand names to determine their useful life. In the
opinion of the Directors, the brand names do not have a finite useful life and, accordingly, they have not
been subject to amortisation.
The Directors regularly review the carrying amount of the brand names to ensure their carrying value does
not exceed their recoverable amount.
(q) Financial Instruments Issued by the Group
Debt and Equity Instruments
Debt and equity instruments are classified as either liabilities or as equity in accordance with the
substance of the contractual arrangement.
Transaction Costs on the Issue of Equity Instruments
Transaction costs arising on the issue of equity instruments are recognised directly in equity as a
reduction of the proceeds of the equity instruments to which the costs relate. Transaction costs are the
costs that are incurred directly in connection with the issue of those equity instruments and which would
not have been incurred had those instruments not been issued.
Interest and Dividends
Interest and dividends are classified as expenses or as distributions of profit consistent with the
statement of financial position classification of the related debt or equity instruments or component parts
of compound instruments.
(q) Provisions
Provisions are recognised when the consolidated entity has a present obligation, the future sacrifice of
economic benefits is probable, and the amount of the provision can be measured reliably.
When some or all of the economic benefits required to settle a provision are expected to be recovered
from a third party, the receivable is recognised as an asset if it is probable that recovery will be received
and the amount of the receivable can be measured reliably.
The amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at reporting date, taking into account the risks and uncertainties surrounding the
obligation. Where a provision is measured using the cashflows estimated to settle the present obligation,
its carrying amount is the present value of those cashflows.
Dividends
A provision is recognised for dividends when they have been declared, determined or publicly
recommended by the Directors.
NOTE 2 – ASSUMPTIONS IN COMPILING THE PRO FORMA CONSOLIDATED STATEMENT
OF FINANCIAL POSITION AND STATEMENT OF CASHFLOWS
The Pro Forma Consolidated Statement of Financial Position and Statement of Cashflows as at and for
the year ended 30 June 2003 reflects the following transactions as if those transactions had taken place
as at 30 June 2003:
(i) Exercise of 3.63 million options (14.12 million options following the 4 for 1 share split as outlined in
note 20) over new shares prior to listing on the Australian Stock Exchange, raising $10.13 million;
(ii) Repayment of $0.6 million in loans;
(iii) Payment of $2.5 million for the acquisition of the remaining management rights in relation to the profit
share of the Highpoint store which will be amortised over a period of 20 years; and
(iv) Payment of a $10 million fully franked dividend to Existing Shareholders.
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
Prospectus JB Hi-Fi
53
8 Investigating Accountants’ Report continued
Year ended
30 June 2001
Pro forma
$’000
Year ended
30 June 2002
Audited
$’000
Year ended
30 June 2003
Audited
$’000
NOTE 3 – OPERATING PROFIT FROM ORDINARY ACTIVITIES
The operating profit from ordinary activities before income tax includes the following items of revenue and
expense:
(a) Operating Revenue
Sales revenue
154,885
248,802
355,835
Interest revenue – other entities
–
52
316
154,885
248,854
356,151
(b) Non-operating Revenue
Proceeds from the sale of plant and equipment
–
–
478
154,885
248,854
356,629
(c) Expenses
Cost of sales
118,563
189,469
275,901
Interest:
Other related parties
–
321
1,087
Other entities
2,094
2,144
1,812
Finance lease charges
68
310
438
2,162
2,775
3,337
One-off costs associated with refinancing of debt facilities
–
–
1,086
2,162
2,775
4,423
Net bad and doubtful debts arising from:
– Other entities
367
651
300
Depreciation and amortisation of non-current assets:
– Plant and equipment
630
1,732
950
– Leasehold improvements
84
308
369
714
2,040
1,319
Inventory:
– Write downs
308
142
1,542
Operating lease rental expense – minimum
lease payments
1,743
3,145
4,649
NOTE 4 – INCOME TAX
(a) The prima facie income tax expense on pre-tax
accounting profit reconciles to the income tax expense
in the accounts as follows:
Profit from ordinary activities
Income tax expense calculated at 30% (34% for 2001)
of operating profit
Permanent differences:
Non-allowable deductions
Income Tax Expense Attributable to Operating Profit
Adjusted Franking account balance (tax paid basis)
Pro forma
30 June 2001
$’000
Audited
30 June 2002
$’000
Audited
30 June 2003
$’000
3,583
8,818
12,309
1,218
2,645
3,693
143
1,075
3
2,648
23
3,716
Pro forma
30 June 2001
$’000
Audited
30 June 2002
$’000
Pro forma
30 June 2003
$’000
–
2,286
1,672
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
54
JB Hi-Fi Prospectus
Audited
30 June 2003
$’000
NOTE 5 – CURRENT RECEIVABLES
Trade receivables
Provision for doubtful debts
Other receivables
Provision for doubtful debts
NOTE 6 – CURRENT INVENTORIES
Finished Goods
At cost
Provision for write down
NOTE 7 – OTHER CURRENT ASSETS
Prepayments
Plant and
Equipment
$’000
Plant
and Equipment
– hire purchase
$’000
Leasehold
Improvements
$’000
NOTE 8 – PLANT AND EQUIPMENT
Cost
Balance at 1 July 2002
9,519
1,263
Additions
3,069
2,278
Disposals
(377)
(73)
Balance at 30 June 2003
12,211
3,468
Accumulated Depreciation/Amortisation
Balance at 1 July 2002
(2,010)
(278)
Depreciation expense
(900)
(130)
Disposals
84
23
Balance at 30 June 2003
(2,691)
(405)
Net Book Value Audited
At 30 June 2002
7,644
965
At 30 June 2003
9,520
3,063
Net Book Value Pro Forma
At 30 June 2003
9,520
3,063
Aggregate depreciation allocated during the year is recognised as an
the pro forma consolidated financial information.
NOTE 9 – INTANGIBLES
Brand names – At cost
NOTE 10 – DEFERRED TAX ASSETS
Future income tax benefits attributable to:
Timing differences
Pro forma
30 June 2003
$’000
785
(37)
748
9,002
(629)
8,373
9,121
785
(37)
748
9,002
(629)
8,373
9,121
49,890
(816)
49,074
49,890
(816)
49,074
681
681
Leasehold
Improvements
– hire purchase
$’000
Total
$’000
1,557
701
–
2,258
715
205
–
920
13,054
6,253
(450)
18,857
(331)
(274)
–
(699)
(146)
(15)
–
(182)
(2,765)
(1,319)
107
(3,977)
1,132
1,559
548
738
10,289
14,880
1,559
738
14,880
expense and disclosed in Note 3 to
Audited
30 June 2003
$’000
Pro forma
30 June 2003
$’000
43,094
43,094
1,727
1,727
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
Prospectus JB Hi-Fi
55
8 Investigating Accountants’ Report continued
NOTE 11 – OTHER NON-CURRENT ASSETS
Deferred costs
NOTE 12 – CURRENT PAYABLES
Unsecured:
Trade payables
Other creditors and accruals
Goods and Services Tax (GST) payable
NOTE 13 – CURRENT INTEREST-BEARING LIABILITES
Unsecured:
Loan – other entity
Secured:
Hire purchase lease liabilities(i)
(i)
Audited
30 June 2003
$’000
Pro forma
30 June 2003
$’000
781
3,281
43,735
2,606
254
48,340
43,735
2,606
254
48,340
600
–
2,689
3,289
2,689
2,689
Secured by the assets leased, the current market value for which exceeds the value of the hire purchase lease liability.
NOTE 14 – CURRENT TAX LIABILITIES
Income tax payable
2,081
2,081
NOTE 15 – CURRENT PROVISIONS
Employee entitlements
3,538
3,538
32,000
2,588
34,588
32,000
2,588
34,588
NOTE 16 – NON-CURRENT INTEREST-BEARING LIABILITIES
Secured:
Bank loan(i)
Hire purchase lease liability(ii)
(i)
(ii)
Secured by a fixed and floating charge over the consolidated entity’s assets, the current market value of which exceeds the value
of the loan.
Secured by the assets leased, the current market value for which exceeds the value of the hire purchase lease liability.
NOTE 17 – DEFERRED TAX LIABILITES
Deferred income tax
NOTE 18 – NON-CURRENT PROVISIONS
Employee entitlements
NOTE 19 – EMPLOYEE ENTITLEMENTS
The aggregate employee entitlement liability recognised and
included in the accounts is as follows:
Provision for employee entitlements:
– Current (Note 15)
– Non-Current (Note 18)
Number of employees at end of financial period
1,387
1,387
669
669
3,538
669
4,207
3,538
669
4,207
No.
No.
822
822
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
56
JB Hi-Fi Prospectus
Audited
30 June 2003
$’000
NOTE 20 – CONTRIBUTED EQUITY
21,900,000 fully paid ordinary shares
25,530,000 fully paid ordinary shares (Pro forma)
Pro forma
30 June 2003
$’000
21,900
32,030
2003
No
’000
Fully Paid Ordinary Shares
Audited balance at 30 June 2003
21,900
Exercise of options (note 2)
3,630
Pro forma balance at 30 June 2003
25,530
Fully Paid Ordinary Share Capital
Fully paid ordinary Shares carry one vote per Share and carry the right to dividends.
$’000
21,900
10,130
32,030
On 15 September 2003, a share split occurred resulting in Existing Shareholders receiving four shares for
every one share held. This share split had the effect of increasing the total number of shares on issue
from 25.53 million to 102.12 million.
Audited
2003
No.
NOTE 21 – SHARE OPTIONS
The consolidated entity has an ownership-based
remuneration scheme for executives and employees.
Share Option Plan – Pre 4 to 1 Share Split
Balance at beginning of financial year(i)
Granted during the financial year(ii)
Balance at end of financial year(iii)
(i)
3,890,000
60,000
3,950,000
Balance at the Beginning of the Financial Year 2003
Options – Series
(1) Issued August 2000
(2) Issued February 2002
(3) Issued March 2002
Expiry/Exercise
Date
Exercise Price
$
1.00
February 2002
March 2002
Five years from
date of issue
As above
As above
2.00
3.17
No.
Grant Date
Expiry/Exercise
Date
Exercise Price
$
60,000
October 2002
Five years from
date of issue
5.00
No.
Grant Date
630,000
August 2000
260,000
3,000,000
3,890,000
Share options carry no rights to dividends and no voting rights.
(ii)
Granted During the Financial Year
Options – Series
(4) Issued October 2002
Share options carry no rights to dividends and no voting rights.
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
Prospectus JB Hi-Fi
57
8 Investigating Accountants’ Report continued
NOTE 21 – SHARE OPTIONS continued
(iii) Balance at End of Financial Year
Options – Series
(1) Issued August 2000(*)
(2) Issued February 2002(*)
(3) Issued March 2002(*)
(4) Issued October 2002(*)
No.
Grant Date
630,000
August 2000
260,000
3,000,000
60,000
February 2002
March 2002
October 2002
Expiry/Exercise
Date
Exercise Price
$
Five years from
date of issue
As above
As above
As above
1.00
2.00
3.17
5.00
3,950,000
Share options carry no rights to dividends and no voting rights.
(*)
In accordance with the terms of the executive share scheme, one third of each option vests on each of the second, third
and fourth anniversary of the issue date.
On 15 September 2003, the following transactions occurred to affect the number of options on issue:
1.
3.63 million options were exercised, raising $10.13 million. This had the effect of reducing the total options issued from
3.95 million to 0.32 million.
2.
An additional 186,250 options were issued to executives, increasing the number of options on issue from 0.32 million
to 0.51 million.
Audited
30 June 2003
$’000
NOTE 22 – RETAINED PROFITS
Balance at beginning of financial period
Net profit
Dividends provided for or paid (Note 23)
Balance at end of financial period
7,969
8,593
–
16,562
Pro forma
30 June 2003
$’000
7,969
8,593
(10,000)
6,562
30 June 2003 Pro forma
Cents
Total
per Share
$’000
NOTE 23 – DIVIDENDS
Recognised Amounts
Fully Paid Ordinary Shares
Final dividend – franked to 30%
NOTE 24 – COMMITMENTS
(a) Hire Purchase Liabilities
Hire purchase leases principally relate to motor vehicles and store
fit out expenditure with lease terms of between three and five years.
The consolidated entity has the option to purchase the equipment
for a nominal amount at the conclusion of the lease arrangements.
Not later than one year
Later than one year and not later than five years
Minimum lease payments(*)
Less finance charges
Present value of minimum lease payments
Included in financial statements as follows:
Current Interest-Bearing Liabilities (Note 13)
Non-Current Interest-Bearing Liabilities (Note 16)
(*)
45.66
10,000
Audited
30 June 2003
$’000
Pro forma
30 June 2003
$’000
2,995
2,728
5,723
(446)
5,277
2,995
2,728
5,723
(446)
5,277
2,689
2,588
5,277
2,689
2,588
5,277
Minimum future lease payments include the aggregate of all the lease payments and any guaranteed residual.
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
58
JB Hi-Fi Prospectus
Audited
30 June 2003
$’000
Pro forma
30 June 2003
$’000
NOTE 24 – COMMITMENTS continued
(b) Non-Cancellable Operating Leases
Operating leases relate to stores with lease terms of between two to 10 years,
with, in some cases an option to extend. All operating lease contracts contain
market review clauses in the event that the consolidated entity exercises its option
to renew. The consolidated entity does not have a right to purchase the leased
asset at the expiry of the lease period.
Future operating lease rentals not provided for in the financial statements
and payable:
Not later than one year
6,119
Later than one year and not later than five years
15,163
Later than five years
9,257
30,539
6,119
15,163
9,257
30,539
Country of
Incorporation
NOTE 25 – DETAILS OF CONTROLLED ENTITIES
Parent Entity
JB Hi-Fi Limited
Controlled Entities
JB Hi-Fi Group Pty Ltd
JB Hi-Fi (A) Pty Ltd (dormant)
Ownership
Interest
%
Australia
Australia
Australia
100
100
NOTE 26 – SEGMENT INFORMATION
The consolidated entity operates in the Hi-Fi and audio-visual equipment retail industry including CD and
DVD players, televisions, stereos and other related equipment, and operates only in Australia.
NOTE 27 – REMUNERATION OF DIRECTORS
The Directors of JB Hi-Fi Limited at the date of this report were:
Richard A Uechtritz, Executive Director
Terry D Smart, Executive Director
Patrick F Elliott, Non-Executive Director
Hugh Toll, Non-Executive Director
Gary Levin, Non-Executive Director
Macdonnell Roehm, Non-Executive Director
The aggregate of income paid or payable, or otherwise made
available, in respect of the financial year, to all Directors of each
entity in the consolidated entity, directly or indirectly, by the
entities in which they are Directors or by any related party
Year ended
30 June 2001
Pro forma
$
Year ended
30 June 2002
Audited
$
Year ended
30 June 2003
Audited
$
815,592
824,689
857,858
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
Prospectus JB Hi-Fi
59
8 Investigating Accountants’ Report continued
NOTE 27 – REMUNERATION OF DIRECTORS continued
The number of Directors of the Company whose total income
falls within each successive $10,000 band of income:
$0 – $9,999
$10,000 – $19,999
$20,000 – $29,999
$240,000 – $249,999
$250,000 – $259,999
$260,000 – $269,999
$530,000 – $539,999
Year ended
30 June 2001
Pro forma
No.
Year ended
30 June 2002
Audited
No.
Year ended
30 June 2003
Audited
No.
2
2
–
–
1
–
1
2
–
2
1
–
–
1
2
–
2
–
–
1
1
NOTE 28 – RELATED PARTY DISCLOSURES
(a) Equity Interests in Related Parties
Equity Interests In Controlled Entities
Details of the percentage of ordinary Shares held in controlled entities are disclosed in Note 25 to the
financial statements.
(b) Directors’ Remuneration
Details of Directors’ remuneration are disclosed in Note 27 to the financial statements.
(c) Directors’ Equity Holdings
Ordinary Shares
No Shares were issued during the financial year to Directors and their Director-related parties.
Audited
Ordinary Shares
fully paid
No.
Held as at reporting date by Directors and their Director-related entities in:
JB Hi-Fi Limited
– Patrick F Elliott
–
– Terry D Smart
200,000
– Hugh E Toll
–
– Richard A Uechtritz
785,000
– Gary Levin
100,000
– Macdonell Roehm
179,523
1,479,523
(i)
(ii)
Audited
Options(i)
No.
–
215,000
–
215,000
100,000
100,000
630,000
Audited
Options(ii)
No.
–
34,500
–
180,000
–
–
214,500
Options expire on June 2005. Each option issued entitles the option holder to purchase one ordinary Share at $1.
Options expire March 2007. Each option issued entitles the option holder to purchase one ordinary Share at $3.17.
Macquarie Investment Trust 111A, a trust associated with Mr P Elliott and Mr H Toll, held 6,413,652 fully
paid $1.00 ordinary shares in JB Hi-Fi Limited as at 30 June 2003 being a 29.29% holding in the
Company. Macquarie Investment Trust 111B, a trust associated with Mr P Elliott and Mr H Toll, held
6,455,476 fully paid $1.00 ordinary shares in JB Hi-Fi Limited as at 30 June 2003 being a 29.48%
holding in the Company.
(d) Other Transactions with Directors
During the year ended 30 June 2003 Macquarie Direct Investment Limited a firm associated with
Mr P Elliott and Mr H Toll provided consulting services to the Company totalling $46,037 on normal
commercial terms and conditions. During the year ended 30 June 2003, in conjunction with the Group’s
refinancing of borrowing facilities, JB Hi-Fi repaid $7,627,306 in respect of the Mezzanine Debt Facility
to Bond Street Investments Limited, a firm associated with Mr P Elliott and Mr H Toll and repaid
$715,000 in loans to Mr R Uechtritz and Mr T Smart in relation to the same facility.
Details of interest expense in respect of transactions with Director-related entities are disclosed in Note 3.
(e) Controlling Entities
The parent entity in the consolidated entity and ultimate parent entity is JB Hi-Fi Limited.
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
60
JB Hi-Fi Prospectus
Year ended
30 June 2002
Audited
$’000
Year ended
30 June 2003
Pro forma
$’000
562
–
562
10,020
–
10,020
10,000
–
24,000
537
–
–
3,000
3,000
40,537
–
–
32,000
1,231
–
–
5,473
–
38,704
–
8,500
–
963
3,000
–
3,700
–
16,163
–
15,000
–
–
–
1,500
3,527
–
20,027
6,170
2,040
345
1,322
8,593
1,319
(293)
(74)
(3,339)
(13,984)
612
–
(2,206)
(6,182)
(401)
566
6,129
734
42
71
21,369
793
161
23,646
NOTE 29 – NOTES TO THE STATEMENT OF CASHFLOWS
(a) Reconciliation of Cash
For the purposes of the statement of cashflows, cash includes cash
on hand and in banks and investments in money market instruments,
net of outstanding bank overdrafts. Cash at the end of the financial year
as shown in the statement of cashflows is reconciled to the related items
in the balance sheet as follows:
Cash
Bank overdraft
(b) Financing Facilities
(i) Amount Used
Mezzanine debt facility
Bank overdraft
Senior debt
Indemnity guarantees
Multi option transaction facility
Other bank guarantees
Lease facility
Other loans
(ii) Amount Unused
Mezzanine debt facility
Bank overdraft
Senior debt
Indemnity guarantees
Multi option transaction facility
Other bank guarantees
Lease facility
Other loans
(c) Reconciliation of Profit From Ordinary Activities After
Related Income Tax to Net Cashflows From Operating Activities
Net profit from ordinary activities after related income tax
Depreciation
Increase/(decrease) in deferred tax balances
Increase/(decrease) in current tax liability
Changes in net assets and liabilities, net of effects from
acquisition and disposal of businesses:
(Increase)/decrease in assets:
current receivables
current inventories
other current assets
other non-current assets
Increase/(decrease) in liabilities:
current payables
current provisions
non-current provisions
Net cash from/(used in) operating activities
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
Prospectus JB Hi-Fi
61
8 Investigating Accountants’ Report continued
NOTE 30 – FINANCIAL INSTRUMENTS
(a) Significant Accounting Policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition,
the basis of measurement and the basis on which revenues and expenses are recognised, in respect of
each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial
statements.
(b) Interest Rate Risk
The following table details the consolidated entity’s exposure to interest rate risk as at 30 June 2003:
2003
Financial Assets
Cash
Trade receivables
Non-trade receivables
Financial Liabilities
Trade payables
Other payables
Bank loans
Hire Purchase lease
liabilities
Employee entitlements
Average
Interest
Rate
%
Variable
Interest
Rate
$’000
Fixed Interest Rate Maturity
Less than
One to five
More than
one Year
Years
five Years
$’000
$’000
$’000
Non–
Interest
Bearing
$’000
Total
Pro forma
$’000
6
–
–
10,020
–
–
10,020
–
–
–
–
–
–
–
–
–
–
–
–
–
748
8,373
9,121
10,020
748
8,373
19,141
–
–
5
–
–
–
–
–
–
–
–
32,000
–
–
–
43,735
2,860
–
43,735
2,860
32,000
7 – 12.85
–
–
–
–
2,689
–
2,689
2,588
–
34,588
–
–
–
–
4,207
50,802
5,277
4,207
88,079
(c) Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the consolidated entity. The consolidated entity has adopted the policy of only dealing
with creditworthy counterparties and obtaining sufficient collateral or other security where appropriate, as
a means of mitigating the risk of financial loss from defaults. The consolidated entity measures credit risk
on a fair value basis.
The consolidated entity does not have any significant credit risk exposure to any single counterparty or
any group of counterparties having similar characteristics.
The carrying amount of financial assets recorded in the financial statements, net of any provisions for
losses, represents the consolidated entity’s maximum exposure to credit risk without taking account of
the value of any collateral or other security obtained.
(d) Net Fair Value
The carrying amount of financial assets and financial liabilities recorded in the financial statements
represents their respective net fair values, determined in accordance with the accounting policies
disclosed in Note 1 to the financial statements.
NOTE 31 – ADDITIONAL COMPANY INFORMATION
Principal Place of Business and Registered Office
JB Hi-Fi Limited is a public company, incorporated and operating in Australia.
14 Spink Street
Brighton, Victoria 3186
Australia
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
62
JB Hi-Fi Prospectus
w
e
i
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e
R
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o
t
r
o
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9. R
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Prospectus JB Hi-Fi
63
Deloitte Corporate Finance Pty Ltd
A.B.N. 19 003 833 127
505 Bourke Street
GPO Box 78B
Melbourne VIC 3001 Australia
DX 111
Telephone (03) 9208 7000
Facsimile (03) 9208 7001
www.deloitte.com.au
9 Report on Review of Directors’ Forecast
18 September 2003
The Directors
JB Hi-Fi Limited
14 Spink Street
Brighton VIC 3186
Dear Sirs
Review of Directors’ Financial Forecast
Introduction
This report has been prepared for inclusion in a Prospectus to be issued by JB Hi-Fi Limited (“JB Hi-Fi”
or “the Company”) in respect of the offer of 86,592,912 Shares at an Indicative Price Range of $1.35 to
$1.55 each. Deloitte Corporate Finance Pty Ltd is wholly owned by Deloitte Touche Tohmatsu and holds
the appropriate dealer’s licence for the issue of this report.
References to the Company and other terminology used in this report have the same meaning as defined
in the Glossary.
The Directors are solely responsible for the preparation and presentation of the financial forecast of the
Company for the year ending 30 June 2004 as set out in Section 6.1 of the Prospectus (“the Forecast”) and
the information contained therein, including the assumptions on which it is based.
Scope of Report
This report has been prepared having regard to the guidance set out in AGS 1062 “Reporting in
Connection with Proposed Fundraising”, PS 170 “Prospective Financial Information” and AUS 804
“The Audit of Prospective Financial Information”.
We have reviewed the Forecast in Section 6 together with the assumptions on the Forecast in order
to give a statement thereon to the Directors of the Company.
Our review of the Forecast has been conducted in accordance with AUS 902 “Review of Financial
Reports” applicable to review engagements. Our review consisted primarily of enquiry, comparison, and
analytical review procedures including discussions with management and Directors of the Company of
the factors considered in determining their assumptions. Our procedures included examination, on a test
basis, of evidence supporting the assumptions, amounts and other disclosures in the Forecast and the
evaluation of accounting policies used in the Forecast.
These procedures have been undertaken in order to state whether anything has come to our attention,
which causes us to believe that:
(i) the Directors’ best-estimate assumptions do not provide reasonable grounds for the preparation of
the Forecast;
(ii) in all material respects, the Forecast is not properly compiled on the basis of the Directors’
best-estimate assumptions, consistent with the accounting policies adopted and used by the
Company and in accordance with applicable Australian Accounting Standards and mandatory
professional reporting requirements; and
(iii) the Directors’ Forecast is not based on reasonable grounds.
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
64
JB Hi-Fi Prospectus
Our review is substantially less in scope than an audit examination conducted in accordance with
Australian Auditing Standards and provides less assurance than an audit. In addition, prospective
financial information, such as the Forecast, relates to events and actions that have not yet occurred and
may not occur. While evidence may be available to support the assumptions on which the Forecast is
based, those assumptions are generally future-orientated and therefore speculative in nature. Accordingly,
actual financial performance may vary from the prospective financial information presented in the
Prospectus and such variations may be material.
Directors’ Financial Forecast
The Forecast has been prepared by management and adopted by the Directors in order to provide
prospective investors with a guide to the potential financial performance of the Company for the year
ending 30 June 2004. There is a considerable degree of subjective judgement involved in estimating
assumptions and preparing forecasts. The underlying assumptions are also subject to uncertainties and
contingencies which are often outside the control of the Company. The Directors’ Forecast has been
prepared using assumptions summarised in the Prospectus which are based on best-estimate
assumptions relating to future events that management expect to occur and actions that management
expect to take.
The sensitivity analysis set out in Section 6.3 of the Prospectus demonstrates the impacts on the forecast
financial performance of changes in key assumptions. The prospective financial information is therefore
only indicative of the financial performance which may be achievable.
Prospective investors should be aware of the material risks and uncertainties relating to an investment in
the Company, which are detailed in the Prospectus, and the inherent uncertainty relating to the
prospective financial information.
Statement
Based on our review of the Forecast, nothing has come to our attention which causes us to believe that:
(i) the Directors’ best-estimate assumptions, as set out in the Prospectus, do not provide reasonable
grounds for the preparation of the Forecast;
(ii) the Forecast is not properly compiled on the basis of the Directors’ best-estimate assumptions,
consistent with the accounting policies adopted and used by the Company and in accordance with
applicable Australian Accounting Standards and mandatory professional reporting requirements; and
(iii) the Directors’ Forecast is not based on reasonable grounds.
Actual financial performance is likely to be different from the Forecast since anticipated events frequently
do not occur as expected and the variations may be material. Accordingly, we express no opinion as to
whether the Forecast will be achieved.
We disclaim any responsibility for any reliance on this statement or on the Forecast to which it relates for
any other purpose than that for which it was prepared.
Yours faithfully
Deloitte Corporate Finance Pty Ltd
Grant Hyde
Director
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants’ Scheme under the Professional Standards
Act 1994 (NSW).
Prospectus JB Hi-Fi
65
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JB Hi-Fi Prospectus
10 Additional Information
10.1 Incorporation of JB Hi-Fi
JB Hi-Fi was incorporated in Australia and registered in New South Wales on 7 June 2000 under the
name JB Hi-Fi Holdings Pty Limited. On 4 November 2002, JB Hi-Fi converted to a public company
and on 7 February 2003 changed its name to JB Hi-Fi Limited.
10.2 Company balance date
The statutory accounts of JB Hi-Fi are prepared for the period ending 30 June annually.
10.3 Constitution of JB Hi-Fi
A summary of the rights attaching to the Shares and certain provisions of the Constitution are set out
below. This summary is not intended to be exhaustive and must be read subject to the full text of the
Constitution.
General
The Shares will be the only shares currently on issue in the capital of JB Hi-Fi. All Shares are of the same
class and rank equally in all respects.
Non-residents of Australia may hold and vote ordinary shares, subject to compliance with the
Constitution, the Corporations Act and the Foreign Acquisitions and Takeovers Act 1975 (Cwlth).
The Constitution is subject to the Listing Rules in all respects at any time that JB Hi-Fi is listed on ASX.
Voting rights
Subject to any special rights or restrictions currently attached to any class or classes of shares in
JB Hi-Fi, at a general meeting every shareholder present in person or by proxy, representative or attorney
has one vote on a show of hands and one vote for each fully paid share held on a poll.
Voting at any meeting of shareholders is by a show of hands unless a poll is demanded (either before
the vote is taken, or before or immediately after the declaration of the result of the show of hands).
The quorum required for a meeting of shareholders is two members present in person or by proxy and
representing members entitled to vote at the meeting.
General meeting and notices
Each holder of Shares will be entitled to receive notice of and to attend and vote at, general meetings of
JB Hi-Fi and to receive all notices, accounts and other documents required to be sent to shareholders
under the Constitution, the Corporations Act or the Listing Rules.
Under the Corporations Act, a notice must currently be provided to the holders of Shares not less than
28 days in advance of the meeting.
Dividends
Subject to the rights of holders of shares issued with any special or preferential rights (as at the
completion of the Offer, there will be none), the profits of JB Hi-Fi which the Directors may from time to
time determine to distribute by way of dividend are divisible amongst the shareholders in proportion to
the Shares held by them respectively and will be paid in proportion to the amounts paid, or credited as
paid, on the issue price of those Shares.
Prospectus JB Hi-Fi
67
10 Additional Information continued
Variation of class rights
Subject to the Corporations Act, whenever the capital of JB Hi-Fi is divided into different classes of
shares, the rights attached to any class of share may be altered with the sanction of a special resolution
passed at a separate general meeting of the holders of the shares of that class or with the written
consent of the holders of at least three-quarters of the shares of that class on issue.
Further issues of shares and options
The allotment and issue of shares is under the control of the Directors, and subject to any restrictions
on the allotment of shares imposed by the Constitution, the Corporations Act or the Listing Rules, the
Directors may allot or otherwise dispose of shares on such terms and conditions as they see fit.
In addition, the Board has the power to grant to any person an option over shares and during such time
and for such consideration as it determines.
Pre-emptive rights
Holders of Shares do not have any pre-emptive rights under the Constitution. Under the Listing Rules,
certain restrictions apply to a listed company offering its ordinary shares otherwise than pro rata among
shareholders.
Winding up
Subject to the rights of holders of shares issued with any special or preferential rights (as at the
completion of the Offer, there will be none), if JB Hi-Fi is wound up, the liquidator may with the authority
of a special resolution divide among the members in kind the whole or any part of the assets of JB Hi-Fi
and for such purpose may set such value as he or she deems fair on any property and may determine
how the division shall be carried out as between members or classes of members.
Small holdings
Subject to the Listing Rules, JB Hi-Fi may sell the Shares of a member who holds less than a marketable
parcel of Shares.
Buy-backs
Subject to applicable laws, in particular the Corporations Act and the Listing Rules, JB Hi-Fi may buy
back shares on such terms and conditions as may from time to time be determined by the Board.
Transfer of Shares
Holders of Shares may transfer them electronically by a proper transfer effected in accordance with the
SCH Business Rules, the Corporations Act and the Listing Rules or by an instrument in writing in any
usual or common form that the Directors approve. JB Hi-Fi will not issue share certificates to
shareholders.
Holding locks
The Directors:
★ may, if the Listing Rules permit JB Hi-Fi to do so; and
★ must, if the Listing Rules require JB Hi-Fi to do so (or if the transfer is in breach of the Listing Rules or
any restriction agreement between JB Hi-Fi and any holder of Shares under the Listing Rules),
request SCH to apply a holding lock to prevent a transfer of Shares through CHESS or decline to register
any transfer of Shares.
Shareholding statements
Following allocation, JB Hi-Fi will provide shareholders with a shareholder statement which sets out the
number of Shares allocated to each shareholder under this Prospectus. If applicable, this notice will also
advise shareholders of their Holder Identification Number and Sponsoring Issuer Number.
68
JB Hi-Fi Prospectus
Shareholders will receive an explanation of sale and purchase procedures under CHESS with their
shareholder statement. If the shareholding changes within the month, the shareholder will receive a
statement at the end of that month. Shareholders may also request statements at any other time,
although JB Hi-Fi may charge an administrative fee.
Directors
The Board is responsible for the overall corporate governance of JB Hi-Fi, including establishing its
strategic direction, establishing goals for management and monitoring the achievement of these goals.
The Board must comprise a minimum of three Directors. Shareholders may vary the number by resolution
in general meeting.
The Constitution provides that at each annual general meeting, one-third of the Directors (or if the
number of Directors is not a multiple of three, then the number nearest one-third), any other Director
who has held office for three years or more and any Director who has been appointed by the Directors
in the preceding year must retire from office. The chief executive officer is exempted from retirement by
rotation. A retiring Director is eligible for re-election.
Questions arising at a meeting of Directors will be decided by a majority vote. The chairman of the
meeting has a casting vote in the event that there is an equality of votes.
10.4 JB Hi-Fi Limited Executive Share Option Plan
The Company approved an Executive Share Option Plan in January 2002. Currently, 2,025,000 options
are on issue under this share option plan to senior employees and management of the Company. The
majority (1,040,000) of these options were issued on 7 February 2002, a further 240,000 options were
issued on 22 October 2002 and the remaining 745,000 options were issued on 15 September 2003.
Summary of options issued to management and senior employees
Plan under which
Options Issued
Date of Grant
Term/
Expiration Date
No. of Options
on Issue
Exercise
Price
1,040,000
$0.50
240,000
160,000
585,000
$1.25
$1.25
$1.45
JB Hi-Fi 2002
Executive Share
Option Plan
February 2002
five years from
date of issue
(subject to
terms of plan)
As above
As above
As above
October 2002
September 2003
September 2003
As above
As above
As above
Total
Prospectus JB Hi-Fi
Vesting
One third on
each of second,
third and fourth
anniversary of issue
date (subject to
terms of plan)
As above
As above
As above, however
vesting is also
subject to the
Company achieving
after tax profits in
excess of the
Prospectus
Forecast, and that
subsequent years
results are not less
than the 2004
forecast results
2,025,000
69
10 Additional information continued
Option issue
The Board may offer options to executives of the Company. The Board will determine the eligibility of
persons and their entitlement and the consideration payable for the options.
Each option is to subscribe for one fully paid ordinary share in the Company. When issued, the share will
rank equally with other ordinary shares of the Company.
Exercise of options
As set out in the table above, provided that an optionholder is an employee of or engaged by the
Company, one-third of the options held by that optionholder will vest in and become capable of exercise
on each of the second, third and fourth anniversaries of the issue date of the options or such other date
as the Board may determine.
Lapse of options
Options lapse on the earlier of:
★ expiry of five years from the date of issue; or
★ where an option has not vested and become exercisable, the date upon which the optionholder
ceases to be employed or engaged by the Company; and
★ where an option has vested and become exercisable, 30 days from the date upon which the
optionholder ceases to be employed or engaged by the Company.
Assignment of options
Options may not be assigned. However, options may be exercised by the estate of a deceased
optionholder as follows:
★ options which were not vested in and exercisable by the optionholder at the date of death are
deemed to expire on the date of the optionholder’s death; and
★ options which were vested in and exercisable by the optionholder at the date of death are deemed
to expire 90 days from the date of the optionholder’s death.
Exercise price
The exercise price per share for the options on issue under the Plan is:
★ $0.50 with respect to the 1,040,000 options issued in February 2002;
★ $1.25 with respect to the 240,000 options issued in October 2002 and 160,000 of the options issued
in September 2003; and
★ $1.45 with respect to the remaining 585,000 options issued in September 2003.
Allotment
Unless the Company elects to refund the exercise price, as discussed below, the Company must issue
Shares corresponding to the options exercised within 10 days of the date of the exercise notice.
Refund
Within seven days of exercise of an option, the Board may refund the exercise price and pay to the
optionholder an amount equal to the difference between the market value of the shares as at the date
of exercise and the exercise price.
Rights issues
Options which have not vested in and those options which have vested in but have not been exercised
by an optionholder do not carry the right to participate in any new issues of securities by the Company.
Capital reconstruction
The Plan provides that certain appropriate adjustments be made to the number and exercise price of the
options if certain reconstruction of issued capital events occur prior to the exercise of an option.
70
JB Hi-Fi Prospectus
10.5 Financing arrangements
The on-going funding requirements of the group are provided by Westpac under the terms of the Facility
Agreement. The key features of the facilities available to JB Hi-Fi are as follows:
Facility
Amount
Term and Type
Facility A – Cash advance facility (fully drawn)
$32.0 million
Facility B – Lease and hire purchase facility (partly drawn)
$9.0 million
Facility C – Multi-option working capital facility
(including overdraft and cash advance)
$15.0 million
Facility D – Performance guarantee facility
$1.5 million
three year term
interest only
maturing
June 2006*
variable rate
three year term
varying rates
one year term
at call
variable rate
one year term
at call
Total
$57.5 million
*
Loan amortises at $1.6 million per half year where gearing ratio (Total Debt (excluding Facility C)/EBIT) is greater than 2.50 times.
These facilities are provided on a secured basis. Financial covenants are provided under these facilities
with respect to maintenance of fixed charge cover ratios, leverage ratios, and minimum consolidated net
worth, as is customary for facilities of this nature.
The Facility Agreement also contains standard conditions precedent to initial drawing, undertakings,
representations, warranties, review events and events of default as is customary for facilities of this nature.
JB Hi-Fi has entered into hedging arrangements with respect to its interest rate exposure.
10.6 Related party loan agreements
Under the terms of the Related Party Loan Agreements, JB Hi-Fi has agreed to provide bridging finance
of $10.13 million to the following Existing Shareholders: Bond Street Investments, AVLLC, MacDonell
Roehm, Roseville, Shawville, Richard Uechtritz, Terry Smart and Gary Levin. The proceeds of these loans
have been used to fund these shareholders’ exercise of certain JB Hi-Fi options and purchase of Shares.
Under the terms of the Related Party Loan Agreements, these shareholders are required to repay the
outstanding amounts owing to the Company from the proceeds they receive on the sale of their Shares
in the Offer. All Related Party Loans will be repaid at the completion of the Offer.
10.7 Offer Management Agreement
On 18 September 2003, MDIL, JB Hi-Fi and the Joint Lead Managers entered into the Offer Management
Agreement. Under the agreement, the Joint Lead Managers agreed to manage the Offer, including the
bookbuild process and the allocation process.
Subject to the termination of the agreement by the Joint Lead Managers by reason of the termination
events described below (Termination Events) and conditional on the successful completion of the
bookbuild process, the Joint Lead Managers agree to enter into a completion support agreement on
the date of allocation of the Offer Shares.
Prospectus JB Hi-Fi
71
10 Additional information continued
MDIL must pay the Joint Lead Managers a fee of 2.5% of the Final Price per Share issued or transferred
in connection with the Offer, on the date of such issue or transfer, subject to limited exclusions. MDIL
agrees to pay the Joint Lead Managers an incentive fee of up to 0.5% of the Final Price per Share issued
or transferred in connection with the Offer 60 days after settlement of the Offer as set out in Section 2.1.
The incentive fee is payable at the absolute discretion of MDIL having regard to among other things, the
quality of execution of the Offer. The Joint Lead Managers must pay any commissions and fees due to
any co-managers and brokers appointed by them. MDIL must pay, or reimburse the Joint Lead
Managers for, the reasonable costs, charges and expenses of and incidental to the Offer.
Under the Offer Management Agreement, the Company and MDIL give certain representations,
warranties and undertakings. The Company’s undertakings include that it will not, during the period
following the date of the agreement until 180 days after the Settlement date, allot or agree to allot, or
indicate that it may or will allot any equity securities or securities that convert into equity (other than in
connection with the Offer, an employee share plan, a dividend reinvestment plan or a bonus share plan)
without the consent of the Joint Lead Managers.
Subject to certain exclusions relating to, among other things, fraud, recklessness, wilful misconduct and
negligence, the Company and the Vendor Shareholders unconditionally and irrevocably undertake to
keep the Joint Lead Managers and certain affiliated parties indemnified from losses suffered in connection
with the Offer.
Each Joint Lead Manager may terminate the Offer Management Agreement by notice to MDIL and
JB Hi-Fi at any time after a Lead Manager becomes aware of the happening of any one or more of the
Termination Events set out below (although, in the case of the Termination Events marked with an
asterisk, a Lead Manager may not terminate the agreement unless it has reasonable bona fide grounds to
believe that the event has or is likely to have a material adverse effect on the success or settlement of the
Offer or the event would give rise to a material liability of the Joint Lead Managers under any law or
regulation):
The Joint Lead Managers may Terminate by notice to the Company at any time after the Joint Lead
Managers or either of them become aware of the happening of any one or more of the following events:
(a) (disclosures in prospectus) a statement contained in the Prospectus is misleading or deceptive
(Including, without limitation, misleading representations within the meaning of section 728(2)), or a
matter is omitted from the Prospectus (having regard to the provisions of sections 710, 711 and 716);
or
(b) (disclosures in Due Diligence Report)* the Due Diligence Report or any other information supplied by
or on behalf of the Company or the Selling Shareholder to Joint Lead Managers in relation to the
Group, or the Offer is misleading or deceptive; or
(c) (adverse change)* any adverse change occurs in the assets, liabilities, financial position or
performance, profits, losses or prospects of the Company or the Group (in so far as the position in
relation to an entity in the Group affects the overall position of the Company), including any adverse
change in the assets, liabilities, financial position or performance, profits, losses or prospects of the
Group from those respectively disclosed in the Prospectus or the Public Information; or
(d) (Insolvency Event) an Insolvency Event occurs with respect to the Selling Shareholder, the Company
or a Related Body Corporate of the Selling Shareholder or the Company; or
(e) (new circumstance)* there occurs a new circumstance that has arisen since the Prospectus was
lodged that would have been required to be included in the Prospectus if it had arisen before the
Prospectus was lodged in relation to the Company or any entity in the Group (other than an issue
permitted under clause 8.1 (“Undertakings by the Company and the Selling Shareholder”)), within the
meaning of section 719; or
72
JB Hi-Fi Prospectus
(f) (hostilities)* hostilities not presently existing commence (whether war has been declared or not) or a
major act of terrorism or escalation in existing hostilities occurs (whether war has been declared or
not) involving any one or more of Australia, New Zealand, the United States of America, Japan,
Russia or the People’s Republic of China; or
(g) (market fall) the S&P/ASX200 Index of ASX falls by an amount that is 10% or more of the level as at
the close of trading on the date of this agreement, and remains at or below that level for a period of
two consecutive Business Days or until the end of the Retail Offer Closing Date; or
(h) (change of law) there is introduced or there is a public announcement of a proposal to introduce, into
the Parliament of Australia or any State of Australia a new law, or the Reserve Bank of Australia, or
any Commonwealth or State authority, adopts or announces a proposal to adopt a new policy (other
than a law or policy which has been announced before the date of this agreement), any of which
does or is likely to prohibit or regulate the Offer, capital issues or stock markets or materially adversely
affect the taxation treatment of the Offer Securities; or
(i) (change in management)* a change in senior management of the Board of Directors of the Company
occurs; or
(j) (indictable offence) a Director of the Company or the Selling Shareholder is charged with an indictable
offence; or
(k) (compliance with regulatory requirements)* a contravention by the Selling Shareholder, the Company
or any entity in the Group of the Corporations Act, its constitution, or any of the Listing Rules; or
(l) (Prospectus to comply) the Prospectus or any aspect of the Offer does not comply with the
Corporations Act, the Listing Rules or any other applicable law or regulation; or
(m) (Listing approvals) approval is refused or approval is not granted which is unconditional or conditional
only on customary listing conditions which would not, in the reasonable opinion of the Joint Lead
Managers, have a material adverse effect on the success of the Offer to:
(i) the Company’s admission to the official list of ASX, or
(ii) the official quotation of all of the Offer Securities on ASX,
on or before the Listing Approval Date, or if granted, the approval is subsequently withdrawn, qualified
or withheld; or
(n) (notifications) any of the following:
(i) ASIC applies for an order under section 1324B in relation to the Prospectus and the application is
not dismissed or withdrawn before the Closing Date;
(ii) ASIC gives notice of intention to hold a hearing in relation to the Prospectus under section 739(2)
or makes an interim order under section 739(3);
(iii) an application is made by ASIC for an order under Part 9.5 in relation to the Prospectus or ASIC
commences any investigation or hearing under Part 3 of the Australian Securities and Investments
Commission Act 2001 (Cwlth) in relation to the Prospectus;
(iv) any person gives a notice under section 733(3) or any person who has previously consented to
the inclusion of its name in the Prospectus (or any Supplementary Prospectus) or to be named in
the Prospectus withdraws that consent; or
(v) any person gives a notice under section 730 in relation to the Prospectus; or
(o) (withdrawal) the Selling Shareholder withdraws the Prospectus or the Offer; or
Prospectus JB Hi-Fi
73
10 Additional information continued
(p) (default)* a default by the Company or the Selling Shareholder in the performance of any of its
obligations under this agreement occurs; or
(q) (warranties)* a warranty contained in this agreement on the part of the Company or the Selling
Shareholder is not true or correct.
10.8 Escrow arrangements
On or about the date of this Prospectus, each of Richard Uechtritz, Terry Smart, Gary Levin, Roseville
and Shawville entered into an Escrow Deed with the Joint Lead Managers to provide for an escrow
arrangement between the Joint Lead Managers and these Existing Shareholders under which they have
agreed with the Joint Lead Managers not to dispose of any Shares held by them after completion of the
Offer until the audited results for the year ended 30 June 2004 are reported, unless otherwise agreed
with the Joint Lead Managers.
10.9 Conditional and deferred settlement trading
It is expected that trading of Shares on ASX will commence on a conditional and deferred settlement
basis on or about Thursday, 23 October 2003. Deferred settlement trading will continue until the
despatch of holding statements on or about Wednesday, 29 October 2003.
The contracts formed on acceptance of Applications under the Retail Offer and bids under the
Institutional Offer will be conditional on quotation of the Offer Shares on ASX. Trades on ASX during
conditional trading of Offer Shares will be conditional on transfer of the Offer Shares from the Vendor
Shareholders. Conditional trading will continue until JB Hi-Fi has advised ASX that a transfer of the
Offer Shares has occurred, which is expected to be on Monday, 27 October 2003.
The Offer Management Agreement and its attached completion support agreement includes certain
conditions to settlement and rights of termination in certain circumstances. See Section 10.7 for a
discussion of the Offer Management Agreement and completion support agreement.
If notice of the transfer of the Offer Shares is not given by JB Hi-Fi to ASX within 14 days after the
quotation of the Shares on ASX, the condition will be taken not to have been satisfied, in which case the
Offer will be withdrawn, the contracts formed on acceptance of Applications under the Retail Offer and
bids under the Institutional Offer will be terminated. In these circumstances, all purchases and sales made
through ASX participating organisations during the conditional period will be cancelled and of no effect.
In the event that the condition is not satisfied and the Offer is withdrawn, all Application Monies received
in respect of the Offer will be refunded. No interest will be paid on any Application Monies which are
refunded.
After the satisfaction of the condition set out above, there will be a period of deferred settlement trading
until the despatch of holding statements, which are expected to be despatched on Wednesday,
29 October 2003. You are responsible for confirming your allocation of Shares before trading in the Shares.
If you sell Shares before receiving confirmation of your allocation, you do so at your own risk.
To assist you in determining your allocation of Shares prior to receipt of your holding statement, JB Hi-Fi
will advertise the basis of allocation in certain newspapers circulated nationally on Thursday, 23 October
2003. From that date, you may also call the JB Hi-Fi Share Offer Information Line during business hours
on 1300 302 417 (Australia) or +61 3 9615 5970 (New Zealand) to seek information in relation to your
allocation.
JB Hi-Fi, the Joint Lead Managers and the Vendor Shareholders disclaim all liability whether in negligence
or otherwise to anyone who trades shares before receiving their holding statement, whether on the basis
of a confirmation of allocation provided by the Company or otherwise.
74
JB Hi-Fi Prospectus
10.10 Directors’ interests
Under the terms of an agreement entered into on 20 July 2001 between MDIA, MDIB, BancBoston,
AVLLC, MacDonell Roehm (“Shareholders”) and Richard Uechtritz and Terry Smart, the Shareholders
granted options to Richard Uechtritz and Terry Smart over certain of the Shareholders’ shares in JB Hi-Fi.
The Shareholders have cancelled the options and have paid or agreed to pay Richard Uechtritz
$3.44 million and Terry Smart $1.075 million in consideration for the cancellation of these options.
Except as set out in this Prospectus:
★ no Director or proposed Director of JB Hi-Fi has, or has had in the two years before lodgement of this
Prospectus with ASIC, an interest in the formation or promotion of JB Hi-Fi or the Offer, or any
property acquired or proposed to be acquired by JB Hi-Fi in connection with its formation or
promotion or the Offer; and
★ no amount has been paid or agreed to be paid, and no benefit has been given or agreed to be given,
to any Director or proposed Director of JB Hi-Fi, either to induce him to become, or to qualify him as,
a Director, or otherwise for services rendered by him in connection with the promotion or formation of
JB Hi-Fi, or in the Offer.
10.11 Shareholdings and option holdings of Directors
Directors are not required under the Constitution to hold any shares in JB Hi-Fi.
Except as set out below, as at the date of this Prospectus no Director is the beneficial owner of any
shares or options in JB Hi-Fi. However, the Directors and their related companies may acquire Shares
pursuant to the Offer. Patrick Elliott intends to make an Application for Shares under the Offer.
Director
Patrick Elliott
Will Fraser
Gary Levin
Terry Smart
Richard Uechtritz
TOTAL
Shares
Options
–
–
400,000
1,798,000
4,720,000
6,918,000
–
–
–
240,000
345,000
585,000
10.12 Non-Executive Directors’ fees
The Constitution provides that the Non-Executive Directors are entitled to be paid Directors’ fees in
aggregate up to a maximum of $250,000 per annum or such other maximum amount determined
from time to time by JB Hi-Fi in a general meeting. This remuneration is to be divided among the
non-executive Directors in such proportion as the Board determines. Directors are entitled to be
reimbursed for all reasonable costs and expenses including time charges incurred by them in the
performance of their duties as Directors.
10.13 Interests of persons named in the Prospectus
Except as set out below:
★ neither of the Joint Lead Managers nor any person named in the Prospectus as performing a function
in a professional, advisory or other capacity in connection with the preparation or distribution of the
Prospectus has, or has had in the two years before lodgement of the Prospectus with ASIC, an
interest in the formation or promotion of JB Hi-Fi or the Offer, or any property acquired or proposed
to be acquired by JB Hi-Fi in connection with its formation or promotion of the Offer;
Prospectus JB Hi-Fi
75
10 Additional information continued
★ no amount has been paid or agreed to be paid and no benefit has been given or agreed to be given
to any person named in the Prospectus as performing a function in a professional, advisory or other
capacity in connection with the preparation or distribution of the Prospectus or the Joint Lead
Managers, in connection with the formation or promotion of JB Hi-Fi or the Offer;
★ Mallesons Stephen Jaques has acted as Australian legal adviser to the Offer, has performed work in
relation to due diligence enquiries and advised JB Hi-Fi generally in relation to the matter. The Vendor
Shareholders have paid or agreed to pay approximately $420,000 in relation to these services, to the
date of this Prospectus. Further amounts may be paid to Mallesons in accordance with its normal
time based charges;
★ Quigg Partners has acted as New Zealand legal advisor to the Offer and has advised JB Hi-Fi
generally in respect of New Zealand legal aspects of the Offer. The Vendor Shareholders have paid or
agreed to pay approximately $15,340 in relation to these services, to the date of this Prospectus;
★ Deloitte Touche Tohmatsu has acted as accountant to the Offer, has prepared an Investigating
Accountant’s Report included in this Prospectus and has performed work in relation to due diligence
enquiries. The Vendor Shareholders have paid or agreed to pay Deloitte Touche Tohmatsu
approximately $235,000 in relation to these services, to the date of this Prospectus;
★ Deloitte Corporate Finance Pty Ltd has prepared the Report on Directors’ Forecasts included in
this Prospectus and has also performed work in relation to due diligence enquiries. The Vendor
Shareholders have paid or agreed to pay Deloitte Corporate Finance Pty Ltd for these services, the
fees for which are included in the figure quoted above; and
★ Goldman Sachs JBWere and Macquarie have acted as Joint Lead Managers to the Offer. The amount
which JB Hi-Fi has agreed to pay each of them is set out in Section 10.7; and
★ The Vendor Shareholders have each agreed to pay MDIL a management fee of 0.5% of the total
proceeds raised from the sale of their Offer Shares.
10.14 Electronic Prospectus
This Prospectus is available in electronic form at www.jbhifi.com.au. The Offer constituted by this
Prospectus in electronic form is available only to persons receiving this Prospectus in electronic form
within Australia or New Zealand. A paper copy of this Prospectus is available free of charge by calling
Computershare on 1300 302 417 (Australia) or +61 3 9615 5970 (New Zealand), Goldman Sachs
JBWere on 1800 003 355, or Macquarie on 1800 621 656. Applications for Shares may only be made in
the Application Form attached to this Prospectus on a paper copy form. The Corporations Act prohibits
any person from passing the Application Form on to another person unless it is attached to a hard copy
of this Prospectus or the complete and unaltered electronic version of this Prospectus.
10.15 Consents
Goldman Sachs JBWere and Macquarie have given, and have not before the lodgement of this
Prospectus with ASIC, withdrawn their consent to being named in this Prospectus as Joint Lead
Managers to the Offer under this Prospectus. Goldman Sachs JBWere and Macquarie have made no
statement included in this Prospectus or on which a statement made in the Prospectus is based.
Goldman Sachs JBWere and Macquarie Equities have given, and have not before the lodgment of this
Prospectus with ASIC, withdrawn their consent to being named in this Prospectus as Brokers to the Offer
under this Prospectus. Goldman Sachs JBWere and Macquarie Equities have made no statement
included in this Prospectus or on which a statement in the Prospectus is based.
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JB Hi-Fi Prospectus
Mallesons Stephen Jaques has given, and has not before lodgement of this Prospectus with ASIC,
withdrawn its consent to being named in this Prospectus as Australian solicitors to the Offer. Mallesons
Stephen Jaques has made no statement included in this Prospectus or on which a statement made in
the Prospectus is based.
Quigg Partners has given, and has not before lodgement of this Prospectus with ASIC, withdrawn its
consent to being named in this Prospectus as New Zealand solicitors to the Offer. Quigg Partners has
made no statement included in this Prospectus or on which a statement made in this Prospectus
is based.
Computershare Investor Services Pty Limited has given, and has not before lodgement of this Prospectus
with ASIC, withdrawn its consent to be named as the Registry to the Offer. Computershare Investor
Services Pty Limited has made no statement included in this Prospectus or on which a statement made
in the Prospectus is based.
Deloitte Touche Tohmatsu has given, and has not before lodgement of this Prospectus with ASIC,
withdrawn its consent to the inclusion of its Investigating Accountant’s Report in Section 8 in the form
and context in which it is included. Except with respect to its Investigating Accountant’s Report contained
in the Prospectus, Deloitte Touche Tohmatsu has made no statement included in this Prospectus or on
which a statement made in the Prospectus is based.
Deloitte Corporate Finance Pty Ltd has given, and has not before lodgement of this Prospectus with
ASIC, withdrawn its consent to the inclusion of its Report on Directors’ Forecast in Section 9 in the form
and context in which it is included. Except with respect to its Report on Directors’ Forecast contained in
the Prospectus, Deloitte Corporate Finance Pty Ltd has made no statement included in this Prospectus
or on which a statement made in the Prospectus is based.
GfK Marketing Services has given and has not, before lodgment of this Prospectus with ASIC, withdrawn
its written consent to the inclusion of the statements in Sections 1 and 3 of this Prospectus which are
based on statements made by it in the form and context in which the statements are included.
Understanding & Solutions has given and has not, before lodgment of this Prospectus with ASIC,
withdrawn its written consent to the inclusion of the statements in Section 3 of this Prospectus which are
based on statements made by it in the form and context in which the statements are included.
10.16 Expenses of the Offer
The total estimated costs of the Offer, including advisory, legal, accounting, tax, listing and administrative
fees, as well as printing, advertising and other expenses are currently estimated to be approximately
$5.3 million and will, except for ASX listing and Registry fees, be paid by the Vendor Shareholders.
10.17 ASX admission and quotation
JB Hi-Fi will apply to ASX for admission to the Official List and quotation of the Shares on the exchange
operated by ASX within seven days after the date of this Prospectus.
10.18 Governing law
This Prospectus and the contracts that arise from the acceptance of the Applications and bids made
under the Institutional Offer are governed by the laws applicable in Victoria and each Applicant and
bidder under the Institutional Offer submits to the exclusive jurisdiction of the courts of Victoria.
Prospectus JB Hi-Fi
77
10.19 Documents available for inspection
A copy of the following documents will be available for inspection free of charge between 9:00am and
5:00pm AEST, Monday to Friday, at JB Hi-Fi’s registered office during the Offer:
★ The Investigating Accountant’s Report.
★ Audited financial statements, containing statements of financial performance and cashflows for
the years ended 2002 and 2003 and Statement of Financial Position as at 30 June 2002 and
30 June 2003.
★ The JB Hi-Fi Executive Share Option Plan referred to in Section 10.4.
★ The Constitution.
10.20 Expiry date
No Shares will be offered on the basis of this Prospectus later than 13 months after the date of this
Prospectus.
10.21 Consents to lodgement
Each Director of JB Hi-Fi and each Director of MDIL has consented to the lodgement of this Prospectus
with ASIC as required by section 720 of the Corporations Act.
Dated: Thursday, 18 September 2003
78
JB Hi-Fi Prospectus
Glossar y
Prospectus JB Hi-Fi
79
Glossary
AEST
means Australian Eastern Standard Time.
Applicant
means a person who submits an Application Form.
Application
means an offer by the Vendor Shareholders to purchase Offer Shares
subject to the terms and conditions set out in this Prospectus.
Application Amount
means the amount of money that accompanies an Application Form.
Application Form
means an application form attached to or accompanying this
Prospectus.
Application Monies
means the monies payable in connection with an Application, being the
Offer Price multiplied by the number of Shares applied for.
ASIC
means the Australian Securities & Investments Commission.
ASX
means the Australian Stock Exchange Limited (ABN 98 008 624 691).
AVLLC or Australian
Ventures LLC
means Australian Ventures LLC, a limited liability company incorporated
in Delaware, United States.
BancBoston
means BancBoston Investments Inc of 100 Federal Street, Boston,
Massachusetts 02110.
Board, Board of Directors
or Directors
means the board of directors of JB Hi-Fi.
Bond Street Investments
means Bond Street Investments Pty Ltd (ACN 008 606 924).
Broker Firm Applicants
means persons offered a firm allocation of Shares by a Joint Lead
Manager under the Retail Offer.
Brokers
means Goldman Sachs JBWere and Macquarie Equities.
CD
means compact disc.
CHESS
means Clearing House Electronic Subregister System, operated in
accordance with the Corporations Act.
Closing Date
means the date on which the Retail Offer closes, being 5:00pm on
Friday, 17 October 2003 unless the Vendor Shareholders and Joint Lead
Managers jointly agree to vary that date.
Company
means JB Hi-Fi.
Constitution
means the constitution of JB Hi-Fi as amended from time to time.
Consumer Electronics
means televisions (including wide-screen, digital and plasma TVs), hi-fi’s,
speakers, portable sound systems, home theatre systems, DVD and CD
players, digital video and still cameras and accessories.
Corporations Act
means the Corporations Act 2001 (Cwlth).
DVD
means digital video disc.
EBIT
means earnings before interest and tax.
EBITA
means earnings before interest, tax and amortisation.
EBITDA
means earnings before interest, tax, depreciation and amortisation.
Executive Share Option Plan means the JB Hi-Fi Executive Share Option Plan approved by the
or the Plan
Company in January 2002.
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JB Hi-Fi Prospectus
Existing Shareholders
means the shareholders of JB Hi-Fi as at the date of this Prospectus, being
Bond Street Investments, BancBoston, Gary Levin, MacDonell Roehm,
Terry Smart, Richard Uechtritz, AVLLC, Roseville, Shawville, Jeremy Bouris,
Michelle Bouris, Bouris Superannuation Fund, Jadeside Pty Ltd
(ACN 006 659 016) (as trustee for the RJ Bouris Family Trust), David Rodd,
Rodd Superannuation Fund, Fullfield Pty Ltd (ACN 006 679 483) (as trustee
for the Rodd Family Trust), MDIA and MDIB.
Exposure Period
means the waiting period specified in section 727(3) of the Corporations
Act, being a minimum period of seven days after the date of lodgement
of this Prospectus with ASIC, during which an Application must not be
accepted. ASIC may extend the period to no more that 14 days after the
date of lodgement.
Final Price
means the final price for the Offer Shares determined in accordance with
the terms set out in Section 2.6.
Forecast Period
means the period from 1 July 2003 until 30 June 2004.
Forecast
means the Directors’ financial forecast for the Company for the year
ending 30 June 2004 as set out in this Prospectus.
GfK Marketing Services
means GfK Marketing Services Australia Pty Ltd (ABN 90 056 061 495).
Goldman Sachs JBWere
means Goldman Sachs JBWere Pty Ltd (ABN 21 006 797 897).
Indicative Price Range
means $1.35 to $1.55 per Share.
Institutional Offer
means the invitation to institutional investors under this Prospectus, the
New Zealand Investment Statement, as described in Section 2.10.
JB Hi-Fi
means JB Hi-Fi Limited (ABN 80 093 220 136) and includes references
to its subsidiaries where the context requires.
Joint Bookrunners
means Goldman Sachs JBWere and Macquarie.
Joint Lead Managers
means Goldman Sachs JBWere and Macquarie.
Listing Rules
means the Listing Rules of ASX.
Macquarie
means Macquarie Equity Capital Markets Limited (ABN 60 001 374 572).
Macquarie Equities
means Macquarie Equities Limited (ABN 41 002 574 923).
Maximum Retail Price
means $1.55 per Share.
MDIA
means Macquarie Direct Investment A Limited (ABN 42 084 828 473).
MDIB
means Macquarie Direct Investment B Limited (ABN 34 084 828 437).
MDIL
means Macquarie Direct Investment Limited (ABN 61 008 607 083).
MPET Unitholders
means unitholders in the Macquarie Private Equity Trust and the
Macquarie Private Equity Trust II.
Music
means recorded music in CD or DVD format.
NARTA
means the National Associated Retail Traders of Australia.
NPAT
means the net profit after tax.
Offer
means the offer of Shares under this Prospectus.
Offer Management Agreement means the offer management agreement entered into between
Goldman Sachs JBWere, Macquarie, MDIL and JB Hi-Fi,
dated 18 September 2003.
Prospectus JB Hi-Fi
81
82
Offer Period
means the period during which the Offer is open for receipt of
Applications, being 1 October 2003 to 17 October 2003 in respect of
the Retail Offer and 20 October 2003 to 21 October 2003 in respect of
the Institutional Offer, unless varied by the Vendor Shareholders and
Joint Lead Managers.
Offer Shares
means some or all of the 86,592,912 Shares offered for sale by the
Vendor Shareholders under the Offer described in this Prospectus.
Prospectus
means this document (including the electronic form of this Prospectus),
and any supplementary or replacement Prospectus in relation to this
document.
Registry
means Computershare Investor Services Pty Limited
(ABN 48 078 279 277).
Related Party Loan
Agreements
means the loan agreements entered into between JB Hi-Fi and each of
the following Vendor Shareholders: Bond Street Investments, AVLLC,
MacDonell Roehm, Roseville, Shawville, Richard Uechtritz, Terry Smart
and Gary Levin.
Retail Offer
means the invitation to retail investors under this Prospectus, as
described in Section 2.6.
Retail Offer Price
means the lower of the Final Price and the Maximum Retail Price
of $1.55.
Roseville
means Roseville Estate Pty Ltd (ABN 53 088 101 204).
SCH
has the meaning given in the SCH Business Rules.
SCH Business Rules
mean the Securities Clearing House Business Rules.
Share
means a fully paid ordinary share in the capital of JB Hi-Fi.
Shawville
means Shawville Pty Ltd (ACN 093 578 888).
Understanding & Solutions
means Understanding & Solutions Ltd of High Street South, Dunstable,
Bedfordshire, United Kingdom.
Vendor Shareholders
means BancBoston, MDIA, MDIB, Bond Street Investments, AVLLC,
Roseville, Shawville, MacDonell Roehm, Jr and Gary Levin.
Westpac
means Westpac Banking Corporation.
$
means Australian dollars unless specified otherwise.
JB Hi-Fi Prospectus
Directory
Directors
Patrick Elliott (Chairman)
Richard Uechtritz (CEO)
Terry Smart
Gary Levin
Will Fraser
Company Secretary
Richard Murray
Registered Office
14 Spink Street
Brighton VIC 3186
Tel: (03) 8530 7333
Joint Lead Managers and Joint Bookrunners
Goldman Sachs JBWere Pty Ltd
Level 16
101 Collins Street
Melbourne VIC 3000
Macquarie Equity Capital Markets Limited
Level 23
101 Collins Street
Melbourne VIC 3000
Solicitors to the Offer – Australia
Mallesons Stephen Jaques
Level 28
525 Collins Street
Melbourne VIC 3000
Auditor
Deloitte Touche Tohmatsu
505 Bourke Street
Melbourne VIC 3000
Investigating Accountants
Deloitte Touche Tohmatsu
505 Bourke Street
Melbourne VIC 3000
Share Registry
Computershare Investor Services Pty Limited
Level 12
565 Bourke Street
Melbourne VIC 3000
Brokers to the Offer
Goldman Sachs JBWere Pty Ltd
Level 16
101 Collins Street
Melbourne VIC 3000
Macquarie Equities Limited
Level 23
101 Collins Street
Melbourne VIC 3000
Solicitors to the Offer – New Zealand
Quigg Partners
Level 7
28 Brandon Street
Wellington
New Zealand
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