Full Year Results Presentation 30 June 2015 · EPS based on Statutory Results (cents) 12.79c 5.68c 125.2% Final Dividend per Share (cents) 5.00c 4.00c 1.00c Return on Equity based

Full Year Results Presentation

30 June 2015

Stephen Heath (CEO)

George Saoud (CFO)

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CONTENTS

• Key Results Summary

• Operational Overview

• Financial Overview

• Sales & Gross Margin

• Cost of Doing Business (CODB)

• EBITDA

• Balance Sheet

• Property Segment

• Store Network

• FHL Group FY16 Outlook

August 2015 Fantastic Holdings Limited

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Key Results SummaryFantastic Holdings delivers record sales result

• FY15 sales revenue of $496.9M up 11% on the prior year

• Group like-for-like sales growth for FY15 were positive 12.2%, compared to prior year

negative 1.5%• Group second half comparative store sales performance for FY15 was positive 16.1%

• Fantastic Furniture delivered L4L sales growth of 8.7% for the year and 15.9% in the second half of FY15

• Plush delivered LFL sales growth of 43.4% for the year and 35.1% in the second half of FY15

• Group undelivered customer orders at 30 Jun 15 were $34.3M, FY14: $31.7M, up 8.4%

• Statutory NPAT of $13.2M and EBITDA of $26.1M

• Strong Balance Sheet with positive cash position of $36.7M• Debt balance as at 30 June 15 of $5.0M

• Final Dividend of 5.0 cents per share (fully franked)• Total dividends for the year increased by 83.3% on pcp

• Dividend payout ratio is 86.0% over the year (excluding special dividend)

August 2015 Fantastic Holdings Limited 3

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Trading Performance – (Delivered Sales) New Stores

Total sales: $496.9, +11.0%, L4L - FY15 +12.2%, L4L - 2H FY15 +16.1%

(1) Positive second half sales performance from all business units except Le Cornu

(2) Reflects sale of business in January 2015

Net three stores opened during FY15 (four opened, one closed) with 10 Dare

Gallery stores removed through sale

FF: one new store, one closed store, total stores: 73

Plush: nil change, total stores: 33

OMF: two new stores, total stores: 17

Le Cornu: nil change, total stores: 2

Ashley: one new store, total stores: 1

126 company owned stores now in operation together with two Fantastic

Furniture franchise stores

Management Initiatives Financial Management

Good progress made on key initiatives including:

• Fantastic Furniture – Stronger Customer Value Proposition (customer offer),

e-commerce platform launched, opened first store in FNQ and improved

workforce engagement

• Plush – Stronger Customer Value Proposition, reduced customer wait time,

enhanced marketing mix and improved workforce engagement

• OMF – Strengthened product mix and continued focus on expanded

footprint in NSW

• Le Cornu – Working on operational productivity, property solution and

marketing communication

• FHL Group – Asian manufacturing expansion, delivered sale of Dare

Gallery business and Dandenong property completed, Ashley Furniture

HomeStore licence agreement in progress and delivered CODB savings

Improved cash balance and net positive cash position

• Strong balance sheet with cash position of $36.7M compared to a debt

position of $5.0M

• Return on Equity of 12.0%. Total dividends of 11.00 cents per share, fully

franked – a payout of 86.0% (excluding special dividends)

Key Board Developments in FY15

• Board was strengthened with the appointment of Robyn Watts as Non-

Executive Director

• Current Director Margaret Haseltine was appointed as Deputy Chairman

during the year

Operational Overview

Management initiatives delivered positive growth and outcomes


Business Unit FY15 Headline & L4L L4L 2H

FY15 (1)

Fantastic

Furniture

Total Sales +10.0%, L4L Sales +8.7% +15.9%

Plush Total Sales +42.9%, L4L Sales +43.4% +35.1%

OMF Total Sales +15.1%, L4L Sales +6.1% +9.6%

Le Cornu Total Sales –2.7%, L4L Sales –2.7% -10.4%

Dare Gallery Total Sales –39.6% (2), L4L Sales +7.0% +8.1%

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Financial OverviewGroup performance moving in the right direction

Full Year Ended Jun 15 Jun 14 Change

Sales $ (1) $496.9M $447.8M 11.0%

LFL Sales % 12.2% (1.5%) 13.7pts

Gross Profit $ $221.2M $199.2M 11.0%

Gross Margin % 44.5% 44.5% No change

Other Income $3.2M $3.7M (14.4%)

CODB $ $204.5M $194.2M 5.3%

CODB % of sales 41.1% 43.4% (2.3pts)

EBITDA $ $26.1M $20.0M 30.5%

EBIT $ $19.0M $8.8M 116.9%

Statutory NPAT $13.2M $5.9M 125.4%

Underlying NPAT $13.2M $9.1M 45.6%

Operating Cash Flow $ $24.3M $11.7M 107.4%

Store Numbers (2) 126 133 (7)

EPS based on Statutory Results (cents) 12.79c 5.68c 125.2%

Final Dividend per Share (cents) 5.00c 4.00c 1.00c

Return on Equity based on Statutory Results % 12.0% 5.5% (6.5pts)

KEY MESSAGES


• Group sales increased $49.1M to a record high of $496.9M (up 11% on pcp)

• L4L sales were up 12.2% on pcp largely due to increases in sales volume. In the

prior year Group L4L sales were negative 1.5%

• Gross profit dollar improvement of 11% reflects the strong increase in L4L sales

volumes, despite the depreciating Australian dollar

• Other income in the current year includes profit on the Sale of Dare Gallery and the

sale of the Dandenong property

• Notwithstanding a profit was booked on the sale of Dandenong, this

property made a minor contribution to the current year results

• The 5.3% increase in CODB is largely driven by

• increase in store wages

• increased costs associated with higher sales

• increase in advertising spend

• CODB as a % of sales decreased from 43.4% to 41.1% in the current year

• EBITDA includes FHL’s share of loss from China manufacturing operations of

$865K (post tax) and $1.0M (post-tax) in FHL overhead expenses to setup the

production and operations in China

• Operating cashflow increased to $24.3M mainly driven by higher profits in the

current period and improved tax receipts from prior year

(1) Total sales includes all external sales by the Group and is exclusive of GST

(2) Total number of stores is 126 excluding 2 franchise stores

Note 1: NPAT, EPS and ROE calculations for previous year exclude non-controlling interest

Note 2: All calculations have been computed based on actual numbers

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Sales & Gross MarginR

eve

nu

e (

$M

)


497

437 446 445448

Strong comparative store sales delivered in FY15

TOTAL HEADLINE SALES

Retail BrandFY15 ($M) FY14 ($M) Variance Variance

Total Total $M %

FF 340.0 308.9 31.1 10.0%

Plush 84.4 59.2 25.2 42.9%

OMF 16.7 14.5 2.2 15.1%

Le Cornu 40.4 41.6 (1.2) (2.7%)

Ashley (1) 1.1 N/A 1.1 100%

Dare Gallery (2) 14.3 23.6 (9.3) (39.6%)

Total 496.9 447.8 49.1 11.0%

L4L SALES ANALYSIS

Retail Brand FY15 FY14 %Variance

FF 8.7% (1.6%) 10.3% pts

Plush 43.4% (0.1%) 43.5% pts

OMF 6.1% 8.0% 14.9 pts

Le Cornu (2.7%) (1.0%) (1.7% pts)

Dare Gallery 7.0% (8.8%) (1.0 pts)

Total 12.2% (1.5%) 13.7% pts

KEY MESSAGES

(1) Ashley trading started in the second half of FY16

(2) Reflects sale of business in January 2015

Note 1: Total sales includes all external sales by the Group and is exclusive of GST

Note 2: All calculations have been computed based on actual numbers

Gro

ss

Ma

rgin

%

Gross Margin (%)Headline Sales ($’M)

• Group L4L sales of 12.2%, with strong growth from Fantastic Furniture and Plush. Plush reduced customer wait times in FY15

• FHL Group market share of furniture sales increased in the second half of FY15 (Source ABS)

• The Group is looking to manage foreign currency exposure by selectively raising prices on certain goods and monitoring impacts, driving further cost savings and

development of products (new/existing)

350

400

450

500

FY 11 FY 12 FY 13 FY 14 FY 15

30.0

35.0

40.0

45.0

50.0

FY 11 FY 12 FY 13 FY 14 FY 15

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Cost of Doing BusinessCost control maintained with increase in sales

KEY MESSAGES

• 41.1% represents the lowest CODB/sales ratio in the last five years

• Key drivers for the increase of $10.3M in CODB were:

• increases in store wages in Fantastic Furniture

• increased advertising, and

• increased costs associated with higher sales and additional stores

• Property expenses were largely flat year on year due to the CODB rent reduction program which successfully negotiated longer lease tenures over approximately

1/3 of the property portfolio, at reduced rents

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Sales ($M) 436.7 445.8 445.2 447.8 496.9

CODB ($M) 183.1 187.0 191.2 194.2 204.5

CODB / Sales (%) 41.9 42.0 42.9 43.4 41.1

Store Numbers 122 129 133 133 126


37.0%

38.0%

39.0%

40.0%

41.0%

42.0%

43.0%

44.0%

130.0

150.0

170.0

190.0

210.0

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

CO

DB

/S

ale

s

CO

DB

$M

CODB $M CODB/Sales

CODB to Sales AnalysisCODB to Sales Analysis

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EBITDA EBITDA in FY15 was $26.1M

KEY MESSAGES

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Sales ($M) 436.7 445.8 445.2 447.8 496.9

EBITDA($M) 33.9 36.7 25.5 20.0 26.1

EBITDA / Sales (%) 7.8 8.2 5.7 4.5 5.2


• EBITDA increased by 30.5% to $26.1M driven by:

• Strong turnaround performance in Plush compared to pcp

• Favourable improvements in sales volume and price contributed $33.8M, across the Group

• FX impact of $13.9M in FY15. Strategy being implemented to manage depreciation of the Australian Dollar

• China operations loss of $0.9M was equity accounted

33.8

13.9

12.1

0.80.9

26.1

FY15Other IncomeShare of JV

Loss (China)

Increase

in CODB*

Depreciating

AUD

Margin Mix

(Price/Volume)

FY14

20.0

EBITDA

(FY2014-FY2015, $M)

* CODB excludes depreciation and amortisation charges

EBITDA to Sales Analysis

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Balance Sheet

Balance sheet remains strong with cash position of $36.7M at June 2015

KEY MESSAGES

As at Jun 15($M) Jun 14($M) Mvt($M) Mvt (%)

Cash 36.7 21.1 15.6 73.8%

Inventory 90.5 81.3 9.2 11.4%

Investment Properties 3.7 24.4 (20.7) (84.8%)

Fixed Assets 27.1 30.3 (3.2) (10.4%)

Intangibles 7.8 8.1 (0.3) (3.7%)

Interest Bearing Loans 5.0 15.0 (10.0) (67.0%)

Net Assets 109.9 110.6 (0.7) (0.6)%

Net Cash (post debt) 31.7 6.1 25.6 NA

• Cash of $36.7M includes net proceeds on sale of the Dare Gallery business and Dandenong property

• Increase in inventory reflects higher sales volumes with higher undelivered customer orders at year end

• Reduction in Investment Properties reflects the sale of Dandenong property

• Total debt of $5M as at 30 June 2015 after debt repayment of $10M for Dandenong property during the financial year 2015


As at Jun 15 (%) Jun 14 (%) Mvt (%)

Return on Equity 12.0% 5.5% 6.5 pts

All calculations have been based on actual numbers

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* Property EBIT includes intersegment revenues and includes gain on sale of Dandenong property

Property Segment

Year Ended Jun 15 Jun 14 Change $M

Property EBIT* $0.6M $2.2M ($1.6M)

FHL plans to further capitalise on developing opportunities in the property segment


• Property segment EBIT primarily comprises leasing income and sales of FHL owned properties

• Completion of Dandenong property sale took place on 20 February 2015

• FHL owns two properties as at June 2015: Newcastle (NSW) and Rockhampton (QLD). Total book value of properties

owned is $6.8M reflected as $3.7M in Investment Property and $3.1M reflected in Property, Plant and Equipment

• Fantastic Furniture to occupy the Rockhampton building and start trading in FY16

Newcastle Rockhampton (Fantastic Furniture to occupy premises in FY16)

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• Overall, the Group opened 4 new stores, closed 1 and sold the Dare Gallery business which comprised of 10 stores during the year

- Fantastic Furniture opened 1 store; Townsville (QLD) and closed the Stanmore (NSW)

- OMF opened 2 new stores (Belrose and Carringbah in NSW)

- First Ashley Furniture HomeStore opened in Gepps Cross (SA)

• No store movements in Plush and Le Cornu

• On 26 July 2015, Fantastic Furniture closed the Aspley store

Store Network

NSW VIC QLD WA OTHER TOTAL

FF 30 18 12 6 7 73

Plush 13 12 4 4 33

OMF 16 - - - 1 17

Le Cornu - - - - 2 2

Ashley - - - - 1 1

Total 59 30 16 6 15 126

Network of Company Owned Stores

(as at 30 June 2015)

Well established store network with national coverage

Number of Company Owned Stores (as at 30 June 2015)

KEY MESSAGES


33

15

7373737169

33333229

171515

14

10109

8

2

222

21

126

FY 2015FY 2014

133133

FY 2013FY 2012

129

122

FY 2011

Le Cornu

Dare

OMF

Plush

FF

Ashley (Trial store)

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FHL Group FY16 Outlook

Strong end to FY15, good start to FY16 but FX impact will remain challenging

• Encouraging start to FY16 with YTD sales for July representing L4L growth of 12.8% and total sales growth of 9.9%

• Strategy being implemented to manage depreciation of the Australian Dollar

• Fantastic Furniture’s growth platform will include:

• increasing margin via supply chain consolidation and managing prices to deliver better returns

• new stores planned for Far North Queensland

• further investment in its e-commerce platform to drive sales growth

• refresh of existing showrooms

• Plush will continue expansion with its successful simplified business model

• new stores planned for second half of FY16

• continuing focus on improving its product offering and in-store customer experience

• refresh of existing showrooms

• OMF will continue to grow in FY16

• further store expansion planned in NSW

• focus on product development providing an expanded customer offer

• Identified changes are being implemented in the Le Cornu business to deliver stronger returns in FY16

• The Group will continue to focus on the development of its Asian manufacturing operationsAugust 2015 Fantastic Holdings Limited 12

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Questions & Answers


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Disclaimer

• Information in these presentations relating to the price at which relevant investments have been bought or sold in the past or the

yield on such investments cannot be relied upon as a guide to the future performance of such investments

• These presentations do not constitute an offering or recommendation to purchase securities or otherwise constitute an invitation or

inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Fantastic Holdings

Limited group (the “Group”)

• The information in these presentations does not take into account the potential and current individual investment objectives or the

financial situation of investors. Before making or varying any investment in securities in the Group, all investors should consider the

appropriateness of that investment in light of their individual investment objectives and financial situation and should seek their own

independent professional advice

• The presentations contain forward-looking statements which are subject to risks and uncertainties because they relate to future

events, many of which are outside the control of, and are unknown to, Fantastic Holdings Limited. These risks and uncertainties

may cause actual results to differ from any expected future events or events referred to in the forward looking statements. Fantastic

Holdings Limited disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements

in these materials to reflect any change in expectations in relation to any forward looking statements or any change in events,

conditions or circumstances on which any such statement is based

• No representation, warranty or assurance (express or implied) is given or made in relation to any forward looking statement by any

person (including Fantastic Holdings Limited). In particular, no representation, warranty or assurance (express or implied) is given

in relation to any underlying assumption or that any forward looking statement will be achieved


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Documents

Full Year Results Presentation 30 June 2015 · EPS based on Statutory Results (cents) 12.79c 5.68c 125.2% Final Dividend per Share (cents) 5.00c 4.00c 1.00c Return on Equity based