BILLABONGBILLABONG

Samantha MowattSamantha Mowatt

ACG2023.004ACG2023.004

Executive SummaryExecutive Summary

• Over the past year there has been an Over the past year there has been an overall increase in Billabong industries overall increase in Billabong industries with record highs in sales. This was a with record highs in sales. This was a good year for Billabong stockholders and good year for Billabong stockholders and Billabong representatives plan to make the Billabong representatives plan to make the success long-term.success long-term.

Billabong Biz : Behind the brandBillabong Biz : Behind the brand

Part A. IntroductionPart A. Introduction

• Derek O’Neill was appointed Chief Executive Officer effective Derek O’Neill was appointed Chief Executive Officer effective January 1, 2003January 1, 2003

• Home Location: 1 BillabongHome Location: 1 Billabong

Burleigh Heads QLD 4220Burleigh Heads QLD 4220

AUSTRALIAAUSTRALIA

• Year ended June 30, 2006Year ended June 30, 2006

• Billabong is a board sport-oriented business with it’s core business Billabong is a board sport-oriented business with it’s core business in the marketing, distribution, retailing, and wholesaling of in the marketing, distribution, retailing, and wholesaling of apparel, footwear, accessories, eyewear, and hard goods under apparel, footwear, accessories, eyewear, and hard goods under the Billabong, element, Von Zipper, Honolua Surf Company, the Billabong, element, Von Zipper, Honolua Surf Company, Kustom, Palmers Surf, and Nixon BrandsKustom, Palmers Surf, and Nixon Brands

• The majority of revenue generated is in Australia, North America, The majority of revenue generated is in Australia, North America, Europe, Japan, New Zealand, and South AmericaEurope, Japan, New Zealand, and South America

Audit ReportAudit Report

• PricewaterhouseCoopers Chartered PricewaterhouseCoopers Chartered AccountantsAccountants

1 Eagle Street1 Eagle Street

Brisbane QLD 4000Brisbane QLD 4000

AUSTRALIAAUSTRALIA

Stock Market InformationStock Market Information

• Most recent price of Billabong’s stock is $14.24Most recent price of Billabong’s stock is $14.24• Trading range of June 30, 2005 thru June 30, Trading range of June 30, 2005 thru June 30,

20062006• 23.5 cents per fully paid share23.5 cents per fully paid share• Above information dated October 11, 2005Above information dated October 11, 2005• In my opinion stockholders should sell shares In my opinion stockholders should sell shares

because the season is changing and even because the season is changing and even though 2006 was a successful year, Billabong’s though 2006 was a successful year, Billabong’s sales are highest during the warmer seasons.sales are highest during the warmer seasons.

Industry Situation and Industry Situation and Company PlansCompany Plans

• In the future outlook Billabong In the future outlook Billabong representatives plan to increase the representatives plan to increase the industry on a more long-term basis. industry on a more long-term basis. In addition, improvements in In addition, improvements in European, as well as, worldwide sale European, as well as, worldwide sale is also a goal.is also a goal.

Income StatementIncome Statement

• Single-step formatSingle-step format

20062006

$000$00020052005

$000$000

Gross ProfitGross Profit 212,949212,949 183,659183,659

Income from Income from operationsoperations

1,027,8321,027,832 848,430848,430

Net incomeNet income 145,659145,659 125,232125,232

There was a steady increase from 2005 to 2006

Balance SheetBalance Sheet

Assets=Assets= LiabilitiesLiabilities++

StockholderStockholders’ Equitys’ Equity

20062006 1,257,7321,257,732 545,609545,609 712,123712,123

20052005 937,938937,938 300,604300,604 637,334637,334

Total assets in 2006 increased from 2005; however, there was also a substantial increase in total liabilities

Accounting PoliciesAccounting Policies

• Executives plan to increase liabilities; Executives plan to increase liabilities; however, in the end these liabilities however, in the end these liabilities will show for further profitswill show for further profits

• In the financial statements, the In the financial statements, the issues of liabilities are definitely a issues of liabilities are definitely a concernconcern

Financial AnalysisFinancial AnalysisLiquidity RatiosLiquidity Ratios

20062006 20052005Working CapitalWorking Capital $293260.00$293260.00 $203610.00$203610.00Current RatioCurrent Ratio 2.62.6 2.52.5Receivable Receivable

TurnoverTurnover Avg. days’ sales Avg. days’ sales uncollecteduncollected

Inventory TurnoverInventory Turnover

Avg. days’ Avg. days’ inventory on handinventory on hand

Financial AnalysisFinancial AnalysisProfitability RatiosProfitability Ratios

20062006 20052005

Profit MarginProfit Margin 14.2%14.2% 14.9%14.9%

Asset Asset TurnoverTurnover

.23 times.23 times 1.32 times1.32 times

Return on Return on assetsassets

6.0%6.0% 3.2%3.2%

Return on Return on equityequity

99.6%99.6% 82.1%82.1%

Financial AnalysisFinancial AnalysisSolvency RatiosSolvency Ratios

20062006 20052005

Debt to Debt to equityequity

25.4%25.4% 21.4%21.4%

Financial AnalysisFinancial AnalysisMarket Strength RatiosMarket Strength Ratios

20062006 20052005

Price/earnings Price/earnings per shareper share

70.8 cents70.8 cents 61.0 cents61.0 cents

Dividend yieldDividend yield 70.570.5 60.960.9