Wrap Text
Unaudited interim condensed consolidated results
The Foschini Group Limited
Registration number: 1937/009504/06
Share codes: TFG-TFGP
ISIN codes: ZAE000148466 – ZAE000148516
Unaudited interim condensed consolidated results for the half-year ended
30 September 2015
The following are The Foschini Group Limited’s results for the half-year
ended 30 September 2015.
This report has not been audited or reviewed by the company’s auditors.
SALIENT FEATURES
* Group turnover up 33,6% to R9,8 billion (excluding Phase Eight:
10,8%)
* Strong cash sales growth of 15,8% (including Phase Eight: 67,4%) now
representing 46,2% of TFG turnover (including Phase Eight: 55,4%)
* Headline earnings per share from continuing operations up 16,6% to
470,2 cents
* Interim distribution of scrip with a cash dividend alternative of
306,0 cents per share – 16,3% increase
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Sept 2015 Sept 2014 March 2015
Unaudited Unaudited Audited
Rm Rm Rm
ASSETS
Non-current assets
Property, plant and
equipment 2 444,5 1 813,3 2 197,0
Goodwill and intangible
assets 5 047,3 91,9 4 365,2
Participation in export
partnerships 8,1 20,8 8,4
Deferred taxation asset 368,9 351,3 354,7
---------- ---------- ----------
7 868,8 2 277,3 6 925,3
---------- ---------- ----------
Current assets
Inventory (note 4) 4 363,2 2 846,6 3 813,9
Trade receivables –
retail 6 339,2 5 971,0 6 199,9
Other receivables and
prepayments 733,9 454,6 624,2
Concession receivables 171,4 - 156,5
Participation in export
partnerships 9,0 8,5 13,2
Cash 1 003,7 433,1 800,4
Taxation receivable 39,3 26,2 -
---------- ---------- ----------
12 659,7 9 740,0 11 608,1
---------- ---------- ----------
Total assets 20 528,5 12 017,3 18 533,4
========== ========== ==========
EQUITY AND LIABILITIES
Equity attributable to
equity holders of The
Foschini Group Limited 9 125,6 7 759,3 8 130,9
Non-controlling interest 3,2 2,5 2,7
---------- ---------- ----------
Total equity 9 128,8 7 761,8 8 133,6
---------- ---------- ----------
LIABILITIES
Non-current liabilities
Interest-bearing debt 3 897,2 1 576,8 3 709,5
Put option liability 36,8 - 20,3
Cash-settled share
incentive scheme 4,8 - 0,7
Operating lease liability 236,1 220,4 223,1
Deferred taxation 396,4 36,5 345,2
liability
Post-retirement defined
benefit plan 198,8 186,4 192,6
----------- ---------- ----------
4 770,1 2 020,1 4 491,4
----------- ---------- ----------
Current liabilities
Interest-bearing debt 3 949,9 226,6 3 333,0
Trade and other payables 2 671,2 1 999,8 2 553,0
Operating lease liability 8,5 9,0 9,0
Taxation payable - - 13,4
---------- ---------- ----------
6 629,6 2 235,4 5 908,4
---------- ---------- ----------
Total liabilities 11 399,7 4 255,5 10 399,8
---------- ---------- ----------
Total equity and
liabilities 20 528,5 12 017,3 18 533,4
========== ========== ==========
CONDENSED CONSOLIDATED INCOME STATEMENT
6 months 6 months
ended 30 ended 30 Year ended 31
Sept 2015 Sept 2014 March 2015
Unaudited Unaudited % Audited
Rm Rm change Rm
Continuing
operations
Revenue (note 5) 11 082,6 8 538,3 18 544,0
========= ========= =========
Retail turnover 9 761,2 7 305,1 33,6 16 085,9
Cost of turnover (4 972,4) (3 986,3) (8 484,2)
--------- --------- ---------
Gross profit 4 788,8 3 318,8 7 601,7
Interest income
(note 6) 732,4 663,5 1 367,7
Other revenue
(note 7) 589,0 569,7 1 090,4
Trading expenses
(note 8) (4 511,9) (3 305,0) (7 252,7)
--------- --------- ---------
Operating profit
before once-off
acquisition costs
and finance costs 1 598,3 1 247,0 28,2 2 807,1
Once-off
acquisition costs - - (292,4)
Finance costs (240,4) (85,6) (228,1)
--------- --------- ---------
Profit before tax 1 357,9 1 161,4 2 286,6
Income tax
expense (385,9) (339,8) (748,8)
--------- --------- ---------
Profit from
continuing
operations 972,0 821,6 18,3 1 537,8
Discontinued
operations
Profit from
discontinued
operations, net
of tax – RCS
Group - 86,2 86,2
Profit on
disposal of
discontinued
operations – RCS
Group - 273,2 273,2
--------- --------- ---------
Profit for the
period 972,0 1 181,0 1 897,2
========= ========= =========
Attributable to:
Continuing
operations 971,5 821,4 1 537,4
Discontinued
operations - 320,6 320,6
--------- --------- ---------
Equity holders of
The Foschini
Group Limited 971,5 1 142,0 1 858,0
Non-controlling
interest 0,5 39,0 39,2
--------- --------- ---------
Profit for the
period 972,0 1 181,0 1 897,2
========= ========= =========
Earnings per
ordinary share
(cents)
Continuing
operations (excl.
once-off
acquisition costs
– March 2015)
Basic 471,6 402,5 17,2 893,3
Headline 470,2 403,3 16,6 897,9
Diluted (basic) 467,7 400,9 16,7 885,7
Diluted
(headline) 466,3 401,7 16,1 890,3
Total
Basic 471,6 559,6 (15,7) 909,4
Headline 470,2 426,5 10,2 780,3
Diluted (basic) 467,7 557,4 (16,1) 901,7
Diluted
(headline) 466,3 424,8 9,8 773,7
Weighted average
ordinary shares
in issue
(millions) 206,0 204,1 204,3
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months Year ended
ended 30 ended 30 31 March
Sept 2015 Sept 2014 2015
Unaudited Unaudited Audited
Rm Rm Rm
Profit for the
period 972,0 1 181,0 1 897,2
---------- ---------- ----------
Other comprehensive
income:
Items that are or may
be reclassified to
profit or loss
Movement in effective
portion of changes in
fair value of cash
flow hedges 44,3 24,2 32,9
---------- ---------- ----------
Continuing operations 44,3 32,4 41,1
Discontinued
operations - (8,2) (8,2)
----------- ---------- ----------
Foreign currency
translation reserve
movement 442,2 0,8 66,0
---------- ---------- ----------
Continuing operations 442,2 0,8 66,0
---------- ---------- ----------
Deferred tax on items
that are or may be
reclassified to profit
or loss (12,4) (6,8) (9,2)
----------- ---------- ----------
Other
comprehensive
income for the
period, net of tax 474,1 18,2 89,7
---------- ---------- ----------
Total
comprehensive
income for the
period 1 446,1 1 199,2 1 986,9
========== ========== ==========
Attributable to:
Continuing
operations 1 445,6 845,5 1 633,0
Discontinued
operations - 317,4 317,4
---------- ---------- ----------
Equity holders of
The Foschini Group
Limited 1 445,6 1 162,9 1 950,4
Non-controlling
interest 0,5 36,3 36,5
---------- ---------- ----------
Total
comprehensive
income for the
period 1 446,1 1 199,2 1 986,9
========== =========== ==========
SUPPLEMENTARY INFORMATION
Sept 2015 Sept 2014 March 2015
Unaudited Unaudited Audited
Net ordinary shares in
issue (millions) 207,0 204,1 205,4
Weighted average
ordinary shares in
issue (millions) 206,0 204,1 204,3
Tangible net asset
value per ordinary
share (cents) 1 970,2 3 756,8 1 833,3
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity
holders of
The Foschini Non-
Group controlling
Limited interest Total equity
Rm Rm Rm
Equity at 31 March 2014 -
audited 7 228,6 861,3 8 089,9
Profit for the period
Continuing operations 821,4 0,2 821,6
Discontinued operations 320,6 38,8 359,4
Other comprehensive income
Continuing operations
Movement in effective portion
of changes in fair value of
cash flow hedges 32,4 - 32,4
Foreign currency translation
reserve movements 0,8 - 0,8
Deferred tax on movement in
other comprehensive income (9,1) - (9,1)
Discontinued operations
Movement in effective portion
of changes in fair value of
cash flow hedges (4,5) (3,7) (8,2)
Deferred tax on movement in
other comprehensive income 1,3 1,0 2,3
---------- ---------- ----------
Total comprehensive income
for the period 1 162,9 36,3 1 199,2
Contributions by and
distributions to owners
Share-based payments reserve
movements 47,9 - 47,9
Dividends paid (603,7) - (603,7)
Realisation of non-
controlling interest on
disposal of discontinued
operations - (895,1) (895,1)
Realisation of reserves on
disposal of discontinued
operations 24,2 - 24,2
Proceeds from sale of shares
in terms of share incentive
schemes 35,7 - 35,7
Shares purchased in terms of
share incentive schemes (171,2) - (171,2)
Current tax on shares
purchased 11,6 - 11,6
Deferred tax on shares
purchased 23,3 - 23,3
---------- ---------- ----------
Equity at 30 September 2014 -
unaudited 7 759,3 2,5 7 761,8
========== ========== ==========
Profit for the period
Continuing operations 716,0 0,2 716,2
Other comprehensive income
Continuing operations
Movement in effective portion
of changes in fair value of
cash flow hedges 8,7 - 8,7
Foreign currency translation
reserve movements 65,2 - 65,2
Deferred tax on movement in
other comprehensive income (2,4) - (2,4)
---------- ---------- ----------
Total comprehensive income
for the period 787,5 0,2 787,7
Contributions by and
distributions to owners
Share-based payments reserve
movements 49,5 - 49,5
Dividends paid (543,2) - (543,2)
Cancellation of issued shares (0,1) - (0,1)
Proceeds from sale of shares
in terms of share incentive
schemes 96,9 - 96,9
Shares purchased in terms of
share incentive schemes (4,5) - (4,5)
Increase in the fair value of
the put option liability (15,8) - (15,8)
Current tax on shares
purchased 0,5 - 0,5
Deferred tax on shares
purchased 0,8 - 0,8
========== ========== ==========
Equity at 31 March 2015 -
audited 8 130,9 2,7 8 133,6
Profit for the period
Continuing operations 971,5 0,5 972,0
Other comprehensive income
Continuing operations
Movement in effective portion
of changes in fair value of
cash flow hedges 44,3 - 44,3
Foreign currency translation
reserve movements 442,2 - 442,2
Deferred tax on movement in
other comprehensive income (12,4) - (12,4)
---------- ---------- ----------
Total comprehensive income
for the period 1 445,6 0,5 1 446,1
Contributions by and
distributions to owners
Share-based payments reserve
movements 57,7 - 57,7
Dividends paid (685,7) - (685,7)
Scrip distribution: share
capital issued and share
premium raised 336,5 - 336,5
Proceeds from sale of shares
in terms of share incentive
schemes 8,0 - 8,0
Shares purchased in terms of
share incentive schemes (191,3) - (191,3)
Increase in the fair value of
the put option liability (15,9) - (15,9)
Current tax on shares
purchased 13,3 - 13,3
Deferred tax on shares
purchased 26,5 - 26,5
---------- ---------- ----------
Equity at 30 September
2015 - unaudited 9 125,6 3,2 9 128,8
========== ========== ==========
Year
6 months 6 months ended 31
ended 30 ended 30 March
Sept 2015 Sept 2014 2015
Unaudited Unaudited Audited
Distribution per
ordinary share (cents)
Interim 306,0 263,0 263,0
Final 325,0
---------- ---------- ----------
Total 306,0 263,0 588,0
---------- ---------- ----------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
6 months 6 months Year ended
ended 30 Sept ended 30 31 March
2015 Sept 2014 2015
Unaudited Unaudited Audited
Rm Rm Rm
Cash flows from
operating activities
Operating profit before
working capital changes
(note 9) 1 876,4 1 506,0 3 047,4
Increase in working capital (648,9) (113,5) (998,4)
---------- ---------- ----------
Cash generated from
operations 1 227,5 1 392,5 2 049,0
Interest income 10,8 9,5 30,0
Finance costs (240,4) (85,6) (228,1)
Taxation paid (424,9) (419,6) (765,7)
Dividends paid (349,2) (603,7) (1 146,9)
---------- ---------- ----------
Net cash inflows (outflows)
from operating activities 223,8 293,1 (61,7)
---------- ---------- ----------
Cash flows from investing
activities
Purchase of property, plant
and equipment (411,0) (321,5) (669,8)
Acquisition of assets
through business
combinations (note 11) (15,0) - (2 576,9)
Proceeds from sale of
property, plant and
equipment 7,7 3,5 10,2
Repayment of participation
in export partnerships 4,5 6,5 14,2
Proceeds from disposal of
discontinued operations - 1 442,7 1 442,7
---------- ---------- ----------
Net cash (outflows) inflows
from investing activities (413,8) 1 131,2 (1 779,6)
---------- ---------- ----------
Cash flows from
financing activities
Shares purchased in terms of
share incentive schemes (191,3) (171,2) (175,7)
Proceeds from sale of shares
in terms of share incentive
schemes 8,0 35,7 132,6
Increase(decrease) in
interest-bearing debt 490,3 (1 157,0) 2 371,6
---------- ---------- ----------
Net cash inflows (outflows)
from financing activities 307,0 (1 292,5) 2 328,5
---------- ---------- ----------
Net increase in cash during
the period 117,0 131,8 487,2
Cash at the beginning of the
period 800,4 301,3 301,3
Effect of exchange rate
fluctuations on cash held 86,3 - 11,9
---------- ---------- ----------
Cash at the end of the period 1 003,7 433,1 800,4
========== ========== ==========
CONSOLIDATED SEGMENTAL ANALYSIS
Customer
Retail value Central
trading added and shared
divisions products Credit services Phase Eight
Unaudited Unaudite Unaudited Unaudited Unaudited
Rm d Rm Rm Rm
Rm
6 months
ended 30
September
2015
External
revenue 8 091,1 418,6 156,2 14,2 1 670,1
External
interest
income - - 721,6 10,8 -
-------- -------- -------- -------- --------
Total
revenue* 8 091,1 418,6 877,8 25,0 1 670,1
======== ======== ======== ======== ========
External
finance
costs (189,8) (50,6)
Depreciation
and
amortisation (161,4) (52,3)
Segmental
profit (loss)
before tax 1 675,1 222,1 94,0 (716,9) 155,0
Customer
Retail value Central and
trading added shared Phase
divisions products Credit services Eight
Unaudited Unaudited Unaudited Unaudited Unaudited
Rm Rm Rm Rm Rm
6 months
ended 30
September
2014
External
revenue 7 305,1 410,5 151,8 7,4 -
External
interest
income - - 654,0 9,5 -
-------- -------- -------- -------- --------
Total revenue* 7 305,1 410,5 805,8 16,9 -
======== ======== ======== ======== ========
Inter-
segment
revenue 9,6
External
finance costs (85,6) -
Depreciation
and
amortisation (198,2) -
Segmental
profit (loss)
before tax 1 501,9 229,1 70,9 (580,2) -
Central
Retail Customer and
trading value added shared Phase
divisions products Credit services Eight
Audited Audited Audited Audited Audited
Rm Rm Rm Rm Rm
Year ended 31
March 2015
External
revenue 15 683,8 775,1 304,1 11,2 402,1
External
interest
income - - 1 337,7 30,0 -
-------- -------- -------- -------- --------
Total revenue* 15 683,8 775,1 1 641,8 41,2 402,1
======== ======== ======== ======== ========
Inter-segment
revenue 9,7
External
finance costs (209,3) (18,8)
Depreciation
and
amortisation (412,7) (15,4)
Segment
profit(loss)
before tax 3 380,9 450,9 93,6 (1 233,0) (287,7)
Total Total Total
Retail Retail Retail
September September March
2015 2014 2015
External
revenue 10 350,2 7 874,8 17 176,3
External
interest
income 732,4 663,5 1,367,7
E -------- -------- --------
Total revenue* 11 082,6 8 538,3 18 544,0
======== ======== ========
Inter-segment
revenue - 9,6 9,7
External
finance costs (240,4) (85,6) (228,1)
Depreciation
and
amortisation (213,7) (198,2) (428,1)
Segmental
profit before
tax 1 429,3 1 221,7 2 404,7
Other material
non-cash items
Foreign
exchange
transactions (1,2) 0,8 (4,8)
Share-based
payments (57,7) (47,9) (97,4)
Operating
lease
liability
adjustment (12,5) (13,2) (15,9)
-------- -------- --------
Group profit
before tax 1 357,9 1 161,4 2 286,6
Capital
expenditure 418,0 321,5 669,8
Segment assets 20 528,5 12 017,3 18 533,4
Segment
liabilities 11 399,7 4 255,5 10 399,8
* Includes retail turnover, interest income and other income.
Phase Eight was acquired on 15 January 2015 and is reflected as a
separate reportable segment as defined by the board, being the chief
operating decision-maker.
Discontinu Discontinu
ed Discontinued ed
operations operations operations
RCS Group# RCS Group# RCS Group#
6 months 6 months Year ended
ended 30 ended 30 31 March
Sept 2015 Sept 2014 2015
Unaudited Unaudited Audited
Rm Rm Rm
External
revenue - 164,5 164,5
External interest
income - 298,2 298,2
-------- -------- --------
Total
revenue* - 462,7 462,7
======== ======== ========
Inter-segment revenue - 2,7 2,7
External finance
costs - (65,0) (65,0)
Depreciation and
amortisation - (4,8) (4,8)
Segmental profit before
tax - 480,4 480,4
Capital expenditure - 4,9 4,9
Segment assets - - -
Segment liabilities - - -
# 6 months ended 30 September 2014 and year ended 31 March 2015
represents 3 months of trading prior to the disposal of RCS Group.
* Includes retail turnover, interest income and other income.
NOTES
These unaudited interim condensed consolidated results were prepared by
the TFG Finance and Advisory department of The Foschini Group Limited
acting under the supervision of Anthony Thunström CA(SA), CFO of The
Foschini Group Limited.
1. The unaudited interim condensed consolidated results for the half-
year ended 30 September 2015 are prepared in accordance with
International Financial Reporting Standards (IFRS), IAS 34 Interim
Financial Reporting, the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee and Financial Pronouncements as
issued by Financial Reporting Standards Council and the requirements of
the Companies Act No. 71 of 2008 and the JSE Listings Requirements. The
accounting policies applied in the preparation of these interim
condensed consolidated results are in terms of IFRS and consistent with
those applied in the previous annual financial statements except as
noted otherwise.
2. During the period, the group adopted the following revised accounting
standards:
- Defined Benefit Plans: Employee Contributions (Amendments to IAS
19)
- Annual Improvements to IFRSs 2010-2012 Cycle – various standards
- Annual Improvements to IFRSs 2011-2013 Cycle – various standards
The adoption of these standards had no material impact on these results.
3. These financial statements incorporate the financial statements of
the company, all its subsidiaries and all entities over which it has
operational and financial control. In the prior year, the RCS Group was
treated as a discontinued operation and was disposed of on 30 June 2014.
Year
6 months ended
ended 30 6 months 31
Sept ended 30 March
2015 Sept 2014 2015
Unaudited Unaudited Audited
Rm Rm Rm
4. Inventory
Inventory at period end 4 363,2 2 846,6 3 813,9
========== ========== ==========
Inventory write-downs
included above 82,4 73,2 154,0
---------- ---------- ----------
5. Revenue
Retail turnover 9 761,2 7 305,1 16 085,9
Interest income (refer note
6) 732,4 663,5 1 367,7
Other revenue (refer note 7) 589,0 569,7 1 090,4
---------- --------- ----------
11 082,6 8 538,3 18 544,0
---------- --------- ----------
6. Interest income
Trade receivables – retail 721,6 654,0 1 337,7
Sundry 10,8 9,5 30,0
---------- ---------- ----------
732,4 663,5 1 367,7
---------- ---------- ----------
7. Other revenue
Publishing income 201,4 193,5 388,2
Collection cost recovery 156,2 151,8 304,1
Insurance income 174,5 173,6 300,3
Mobile one2one airtime
income 42,7 43,4 86,6
Sundry income 14,2 7,4 11,2
---------- ---------- ----------
589,0 569,7 1 090,4
---------- ---------- ----------
8. Trading expenses
Depreciation and
amortisation (213,7) (198,2) (428,1)
Employee costs (1 479,2) (1 056,8) (2 325,2)
Occupancy costs (963,5) (748,7) (1 585,0)
Net bad debt (506,7) (485,2) (1 023,6)
Other operating costs (1 348,8) (816,1) (1 890,8)
---------- ---------- ----------
(4 511,9) (3 305,0) (7 252,7)
---------- ---------- ----------
9. Operating profit before
working capital changes
Profit before tax 1 357,9 1 161,4 2 286,6
Finance costs 240,4 85,6 228,1
---------- ---------- ----------
Operating profit before
finance costs 1 598,3 1 247,0 2 514,7
Interest income – sundry (10,8) (9,5) (30,0)
Non-cash items
Depreciation and
Amortisation 213,7 198,2 428,1
Operating lease liability
adjustment 12,5 13,2 15,9
Share-based payments 57,7 47,9 97,4
Post-retirement defined
benefit medical aid movement 6,2 6,0 12,2
Foreign currency translation
reserve movement (1,2) 0,8 (4,8)
Cash-settled share incentive
scheme 3,7 - 0,7
Loss on disposal of
property, plant and
equipment 0,7 2,6 13,5
Profit on disposal of
property, plant and
equipment (4,4) (0,2) (0,3)
---------- ---------- ----------
1 876,4 1 506,0 3 047,4
---------- ---------- ----------
10. Reconciliation of profit for the period to headline earnings
Profit for the period
attributable to equity
holders of The Foschini Group
Limited 971,5 1 142,0 1 858,0
Adjusted for:
Profit on disposal of
property, plant and equipment (4,4) (0,2) (0,3)
Loss on disposal of property,
plant and equipment 0,7 2,6 13,5
Profit on disposal of
discontinued operations - (273,2) (273,2)
---------- ---------- ----------
Adjusted headline earnings
before tax 967,8 871,2 1 598,0
Tax on headline earnings
adjustments 0,8 (0,7) (3,8)
---------- ---------- ----------
Headline earnings 968,6 870,5 1 594,2
Once-off acquisition costs - - 292,4
Tax impact of adjustments - - (4,7)
---------- ---------- ----------
Adjusted headline earnings* 968,6 870,5 1 881,9
---------- ---------- ----------
* Adjusted headline earnings is calculated to remove the impact of the
once-off acquisition costs of the Phase Eight acquisition.
Earnings per ordinary
share (cents)
Year
6 months 6 months ended 31
ended 30 ended 30 % March
Sept 2015 Sept 2014 change 2015
Continuing
operations (excl.
once-off
acquisition
costs)
Basic 471,6 402,5 17,2 893,3
Headline 470,2 403,3 16,6 897,9
Diluted (basic) 467,7 400,9 16,7 885,7
Diluted
(headline) 466,3 401,7 16,1 890,3
Total
Basic 471,6 559,6 (15,7) 909,4
Headline 470,2 426,5 10,2 780,3
Diluted (basic) 467,7 557,4 (16,1) 901,7
Diluted
(headline) 466,3 424,8 9,8 773,7
Discontinued
operations
Basic - 157,1 156,9
Headline - 23,2 23,2
Diluted (basic) - 156,5 155,6
Diluted (headline) - 23,1 23,0
11. Acquisitions for the period
Colette acquisition
With effect from 2 August 2015, the group acquired six Colette franchise
stores in South Africa. These stores will be managed within the Foschini
division.
Fair value of assets and liabilities assumed through this business
combination:
Rm
Property, plant and equipment 7,0
Inventory 2,0
Total identifiable assets 9,0
Trade and other payables (0,2)
Total identifiable net assets 8,8
Intangible asset/goodwill 6,2
Total purchase price 15,0
12. Related parties
Related party transactions similar to those disclosed in the group’s
annual financial statements for the year ended 31 March 2015 took place
during the period. There are no significant related party transactions
which took place in the current period.
13. Fair value
The carrying value less impairment provision of trade receivables and
payables are assumed to approximate their fair values due to the short-
term nature. The group only has level 2 financial instruments. There
are no level 1 or level 3 financial instruments within the group and
there were no transfers between levels during the period.
14. Subsequent events
No further significant events took place between the period ending 30
September 2015 and date of issue of this report.
15. Changes to directors
- On 28 May 2015, Mr Lewis was appointed as deputy chairman and as
chairman on 19 June 2015.
- Mr D M Nurek resigned from the board on 19 June 2015.
- Mr P S Meiring retired at the end of June 2015 and resigned from
the board.
- Mr R Stein retired as an executive director at the end of June 2015
and remains on the board in a non-executive capacity.
- On 1 July 2015, Mr A Thunström was appointed as CFO and as an
executive director.
- On 5 November 2015, Mr G Davin was appointed as an independent non-
executive director.
16. Change in estimate
Property, plant and equipment
During the period as required by IAS 16, the group reassessed the
useful lives of its property, plant and equipment. The group
determined that certain asset categories had generally longer useful
lives than was being used for depreciation purposes. In the current
period management revised certain useful lives of shopfittings
assets from 5 years to 7 years, effective 1 April 2015.
The change in estimate results in a (decrease) increase in the
depreciation expense for the current and future periods as disclosed
below:
(Decrease) (Decrease)
increase in increase in
depreciation depreciation
for the year for the 6
Financial ended 31 months ended
year March 30 September
2016 (115,2) (64,4)
2017 (69,6) (41,2)
2018 (12,7) (13,5)
2019 37,6 12,3
2020 75,0 33,1
2021 64,9 38,3
2022 20,0 16,4
COMMENT
GROUP OVERVIEW
The group produced a good result for the period with total retail sales
growth of 33,6%. Excluding the impact of Phase Eight, the group achieved
retail sales growth of 10,8% with comparable sales growth of 5,3%.
Whilst we continued to benefit from strong cash sales growth of 15,8%
(67,4% including Phase Eight), we are pleased with the improvement in
credit turnover growth to 6,8% from 2,5% in the corresponding period.
The group’s overall gross margin improved as a result of the higher
Phase Eight clothing margin. The margin in all other categories
remained consistent with the prior period.
Our expenses remain well controlled growing at 10,6% (excluding Phase
Eight). Including Phase Eight, our expenses have grown at 36,5%.
We are pleased with the performance of Phase Eight to date and the
progress made with the integration of the business. The business is
trading in line with our expectations and has achieved the strategic
targets set for this period.
Headline earnings per share from continuing operations increased by
16,6% to 470,2 cents per share from 403,3 cents per share in the
previous period.
The interim distribution, in the form of a scrip with a cash dividend
alternative, increased by 16,3% to 306,0 cents per share, reflecting the
growth in the underlying continuing operations.
We continued to grow trading space by opening 120 stores during the
period in South Africa and the rest of Africa, whilst 10 were closed.
Internationally we opened 81 outlets whilst 2 were closed. At the end of
the period, TFG was trading out of 2 390 stores in Africa, an increase
in trading area of 7,1% since September 2014. In total, TFG is now
trading out of 2 913 outlets internationally.
MERCHANDISE CATEGORIES
Turnover growths in the various merchandise categories are as follows:
% combined % same
turnover store
growth % turnover turnover
(including growth growth
Phase (excluding (excluding
Eight) Phase Phase
Eight) Eight)
Clothing 46,6% 12,5% 6,6%
Jewellery 6,3% 6,3% 2,6%
Cellphones 1,6% 1,6% (2,5%)
Homewares & furniture 13,1% 13,1% 5,6%
Cosmetics 10,2% 10,2% 7,4%
Total same store turnover grew by 5,3% whilst product inflation averaged
approximately 7%.
CREDIT
Credit turnover growth was encouraging at 6,8% up from 2,5% in the
corresponding period. The stronger growth rate follows improvements
both in our customers’ buying position and also in average sales value.
Whilst we are seeing an improvement in the credit health of our
consumers, we continue to implement appropriate credit risk measures.
We will consider revising these should this positive trend be sustained.
The retail debtors’ book of R6,3 billion has increased by 2,3%. The
growth in net bad debt reduced to 4,4% from 9,9% in the corresponding
period last year. Net bad debt as a percentage of the closing debtors’
book increased to 14,0% from 12,9% at the end of the corresponding
period, and 13,6% at the end of the previous year, partly as a result of
the slow growth in the book. This result is an improvement on
management’s expectation. The retail debtors’ book is adequately
provisioned at 13,9%, up from 13,6% at the previous year-end.
BALANCE SHEET OPTIMISATION
Post the acquisition of Phase Eight, it has been our intention to bring
our recourse debt-to-equity ratio (currently 56,2%) closer to our
medium term target of 40%. Accordingly, as was previously advised, it
is proposed that a further scrip distribution with a cash dividend
alternative will be offered to shareholders in the short term with the
intention of cumulatively increasing equity by approximately R1 billion
over time. This will ensure that the group is well positioned to take
advantage of future growth opportunities.
AFRICA EXPANSION
The group currently trades out of 164 stores across 7 countries in the
rest of Africa. These stores, with the exception of Namibia, traded
well during the period with turnover growth of 27,1% and same store
turnover growth of 9,0%. Including Namibia, total turnover growth in
the rest of Africa was 14,6%. Expansion into the rest of Africa
continues to be one of our strategic objectives with a target of
approximately 330 stores by 2021.
PROSPECTS
We expect the South African economic environment to remain challenging.
We are however encouraged by the current level of credit turnover growth
although mindful of the potential significant impact of the
Affordability Regulations on the opening of new accounts. Our current
good cash sales growth is expected to continue reflecting the ongoing
desirability of our merchandise and is particularly encouraging given
the high base of comparison.
Our previously reported strategic objectives around Customer,
Leadership, Profit and Growth remain appropriate and will continue. In
line with our strategy for long-term growth, we anticipate opening in
excess of 70 new stores in sub-Saharan Africa during the second half of
the financial year. In addition, we are planning to open in excess of 35
Phase Eight outlets internationally.
Total retail turnover growth for the first six weeks of the second half
was at stronger levels to the first half growing by 34,6%. Excluding
Phase Eight, the turnover growth was 11,9%. Phase Eight is trading in
line with management’s expectations. As always, our second half is
heavily dependent on festive season trading which will largely determine
the performance of the group for this period.
PREFERENCE DIVIDEND ANNOUNCEMENT
Dividend no. 158 of 3,25% (6,5 cents per share) (gross) in respect of
the six months ending 31 March 2016 has been declared from income
reserves, payable on Tuesday, 22 March 2016 to holders of 6,5%
preference shares recorded in the books of the company at the close of
business on Friday, 18 March 2016.
The last day to trade (“cum” the dividend) in order to participate in
the dividend will be Friday, 11 March 2016. The Foschini Group Limited
preference shares will commence trading “ex” the dividend from the
commencement of business on Monday, 14 March 2016 and the record date,
as indicated, will be Friday, 18 March 2016.
Preference shareholders should take note that share certificates may not
be dematerialised or rematerialised during the period Monday, 14 March
2016 to Friday, 18 March 2016, both dates inclusive.
In terms of section 11.17 of the JSE Listings Requirements, the
following additional information is disclosed:
1) Local dividend tax rate is 15%;
2) The withholding tax, if applicable at the rate of 15%, will result
in a net cash dividend per share of 5,52500 cents;
3) The issued preference share capital of The Foschini Group Limited
is 200 000 shares at 12 November 2015; and
4) The Foschini Group Limited’s tax reference number is
9925/133/71/3P.
DECLARATION OF AN ORDINARY SHARE SCRIP DISTRIBUTION WITH CASH DIVIDEND
ALTERNATIVE
Introduction
In order to enable shareholders to further participate in the growth of
TFG, shareholders are advised that the board has declared an interim
distribution for the half-year ended 30 September 2015, by way of the
issue of fully paid ordinary shares of 1,25 cents each as a scrip
distribution payable to ordinary shareholders recorded in the register
on the record date, being Friday 15 January 2016 (scrip distribution).
As an alternative to receiving a scrip distribution, ordinary
shareholders will be entitled, in respect of all or part of their
shareholding, to elect to receive a gross cash dividend of 306,0 cents
per ordinary share in lieu of the scrip distribution, which will be paid
only to those ordinary shareholders who elect to receive the cash
dividend, in respect of all or part of their shareholding, on or before
12:00 on 15 January 2016 (the cash dividend alternative).
Shareholders not electing to receive the cash dividend alternative in
respect of all or part of their shareholding will, by default, be issued
with fully paid ordinary shares in terms of the scrip distribution.
The cash dividend alternative will be paid out of income reserves. A
net cash dividend of 260,10000 cents per ordinary share will apply to
shareholders liable for the local 15% dividend withholding tax and
306,00000 cents per ordinary share for shareholders exempt from the
dividend tax. The new ordinary shares will, pursuant to the scrip
distribution, be issued as a capitalisation of part of the share premium
account. The issued ordinary share capital as at 12 November 2015 is
213 171 190 ordinary shares. The company’s income tax reference number
is 9925/133/71/3P.
Terms of the scrip distribution
The number of new ordinary shares to which ordinary shareholders
participating in the scrip distribution will become entitled will be
determined in the ratio that 306,0 cents multiplied by a factor of 1,05
bears to the volume-weighted average price (VWAP) of the ordinary shares
on the JSE during the 5-day trading period ending on 17 December 2015.
Fractions
Trading in the STRATE environment does not permit fractions and
fractional entitlements. Where an ordinary shareholder’s entitlement to
new ordinary shares results in a fraction of a new ordinary share, such
fraction of a new ordinary share will be rounded up to the nearest whole
number where the fraction is greater than or equal to 0,5 and rounded
down to the nearest whole number where the fraction is less than 0,5.
Circular and salient dates
A circular relating to the scrip distribution and the cash dividend
alternative will be posted to ordinary shareholders on or about 2
December 2015.
In accordance with the provisions of STRATE, the electronic settlement
and custody system used by the JSE, the relevant dates for the scrip
distribution/cash dividend alternative are as follows:
EVENT DATE IN
2015/2016
Circular and form of election posted to Wednesday, 2
December 2015
ordinary shareholders
Finalisation date: Announcement of Friday, 18
December 2015
ratio applicable to the scrip
distribution, based on the five-day
VWAP ending on Thursday, 17 December
2015, released on SENS by 11h00 on
Last day to trade in order to be Friday, 8
January 2016
eligible for the scrip
distribution/cash dividend alternative
(“CUM” scrip distribution/cash dividend
alternative)
Ordinary shares trade “EX” the scrip Monday, 11
January 2016
distribution/cash dividend alternative
Listing of maximum possible number of Monday, 11
January 2016
new ordinary shares that could be
issued in terms of the scrip
distribution
Last day to elect the cash dividend Friday, 15
January 2016
alternative instead of the scrip
distribution by 12h00
Record date in respect of the scrip Friday, 15
January 2016
distribution/cash dividend alternative
Ordinary share certificates and Monday, 18
January 2016
dividend cheques posted and Central
Securities Depository posted and
Central Securities Depository
Participant (CSDP)/broker accounts
credited/updated (payment date)
Maximum number of new ordinary shares Wednesday, 20
January 2016
listed adjusted to reflect the actual
number of new ordinary shares issued on
or about
All times provided in this announcement are South African local time.
The above dates and times are subject to change. If applicable, any
changes will be released on SENS.
Ordinary share certificates may not be dematerialised or rematerialised,
nor may transfers between registers take place between Monday, 11
January 2016 and Friday, 15 January 2016, both days inclusive.
Payment of the cash dividend alternative
To the extent elected by ordinary shareholders, the cash dividend
alternative is declared in South African currency. Where applicable,
dividends in respect of certificated ordinary shares will be transferred
electronically to ordinary shareholders’ bank accounts on the payment
date. Ordinary shareholders who hold dematerialised shares will have
their accounts at their CSDP or broker credited/updated on Monday, 18
January 2016.
-----------------------------------------------------------------------
Signed on behalf of the Board.
M Lewis A D Murray
Chairman CEO
Cape Town
12 November 2015
Non-executive directors:
M Lewis (Chairman), Prof. F Abrahams, S E Abrahams, G Davin, D
Friedland, B L M Makgabo-Fiskerstrand, E Oblowitz, N V Simamane, R Stein
Executive directors:
A D Murray, A Thunström
Acting company secretary:
C Malan
Registered office:
Stanley Lewis Centre, 340 Voortrekker Road, Parow East, 7500
Transfer secretaries:
Computershare Investor Services Proprietary Limited, Ground Floor, 70
Marshall Street, Johannesburg, 2001
Sponsor:
UBS South Africa Proprietary Limited
Visit our website at http://www.tfglimited.co.za
Date: 12/11/2015 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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