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TFG\TFGP - The Foschini Group Limited - Reviewed Preliminary Condensed

Release Date: 29/05/2012 14:00
Code(s): TFG TFGP
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TFGTFGP - The Foschini Group Limited - Reviewed Preliminary Condensed Consolidated Results for the Year Ended 31 March 2012 The Foschini Group Limited Registration number 1937/009504/06 Share codes: TFG-TFGP ISIN codes: ZAE000148466 - ZAE000148516 The following condensed consolidated results of The Foschini Group Limited for the year ended 31 March 2012 have been reviewed by the company`s auditors, KPMG Inc. Their unqualified review report is available for inspection at the company`s registered office. These results were prepared by the TFG Finance and Administration department of The Foschini Group Limited acting under supervision of Ronnie Stein CA(SA), CFO of The Foschini Group Limited. SALIENT FEATURES * Retail turnover up 17,0% to R11,6 billion * Headline earnings per share up 22,1% to 772,0 cents * Diluted headline earnings per share up 23,6% to 766,1 cents * Final dividend per share increased by 25,0% to 265,0 cents * Total dividend per share for the year increased by 30,0% to 455,0 cents * Continued growth in new accounts * Sustained strong financial position * Strong market share gains CONDENSED CONSOLIDATED INCOME STATEMENT 2012 2011 % Change Reviewed Audited
Rm Rm Revenue (note 5) 14 530,8 12 370,6 ======= ======= Retail turnover 11 630,5 9 936,5 17,0 Cost of turnover (note 6) (6 750,1) (5 768,1) -------- -------- Gross profit 4 880,4 4 168,4 Interest income (note 7) 1 712,1 1 486,2 Dividend income 9,9 12,1 Other revenue (note 8) 1 178,3 935,8 Trading expenses (note 9) (4 994,2) (4 301,3) -------- --------
Operating profit before finance charges 2 786,5 2 301,2 21,1 Finance cost (284,9) (250,1) -------- -------- Profit before tax 2 501,6 2 051,1 22,0 Income tax expense (809,8) (662,3) -------- -------- Profit for the year 1 691,8 1 388,8 ======== ========
Attributable to: Equity holders of The Foschini Group 1 582,1 1 301,8 21,5 Limited Non-controlling interest 109,7 87,0 --------- --------- Profit for the year 1 691,8 1 388,8 ========= ========= EARNINGS PER ORDINARY SHARE (cents) - Basic 771,0 630,4 22,3 - Headline 772,0 632,3 22,1 - Diluted (basic) 765,1 618,1 23,8 - Diluted (headline) 766,1 619,9 23,6 Weighted average ordinary shares in 205,2 206,5 (0,6) issue (millions) CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 2012 2011
Reviewed Audited Rm Rm ASSETS Non-current assets Property, plant and equipment 1 313,2 1 086,9 Goodwill and intangible assets 109,8 37,0 Staff housing loans - 0,7 RCS Group private label card receivables 465,1 320,8 RCS Group loan receivables 610,1 521,7 Participation in export partnerships 53,4 72,5 Deferred taxation asset 254,3 249,9 -------- --------
2 805,9 2 289,5 -------- -------- Current assets Inventory (note 10) 2 155,0 1 804,7 Trade receivables - retail 4 569,9 3 823,0 RCS Group private label card receivables 1 917,8 1 709,4 RCS Group loan receivables 457,5 336,7 Other receivables and prepayments 226,4 194,3 Participation in export partnerships 13,0 6,4 Preference share investment - 200,0 Cash 710,9 338,5 -------- --------
10 050,5 8 413,0 -------- -------- Total assets 12 856,4 10 702,5 ======== ========
EQUITY AND LIABILITIES Equity attributable to equity holders of The 6 293,1 5 462,9 Foschini Group Limited Non-controlling interest 571,1 485,6 ------- ------- Total equity 6 864,2 5 948,5 ------- ------- Non-current liabilities Interest-bearing debt 1 006,8 262,8 RCS Group external funding 1 140,2 491,0 Non-controlling interest loans 242,4 144,3 Operating lease liability 159,5 134,1 Deferred taxation liability 100,5 165,2 Post-retirement defined benefit plan 97,9 91,0 -------- -------- 2 747,3 1 288,4
-------- -------- Current liabilities Interest-bearing debt 722,1 1 246,8 RCS Group external funding 626,2 417,0 Trade and other payables 1 827,0 1 710,7 Operating lease liability 12,3 12,0 Taxation payable 57,3 79,1 -------- --------
3 244,9 3 465,6 -------- -------- Total liabilities 5 992,2 4 754,0 -------- --------
Total equity and liabilities 12 856,4 10 702,5 ======== ======== CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 2012 2011
Reviewed Audited Rm Rm Profit for the year 1 691,8 1 388,8 ---------- ---------
OTHER COMPREHENSIVE INCOME Movement in effective portion of 7,2 (0,6) changes in fair value of cash flow hedges Foreign currency translation 0,3 1,0 reserve movements Movement in insurance cell - 2,9 reserves ---------- --------- Other comprehensive income for the 7,5 3,3 year before tax Deferred tax on movement in (2,0) 0,1 effective portion of changes in fair value of cash flow hedges ---------- --------- Other comprehensive income for the 5,5 3,4 year, net of tax ---------- --------- Total comprehensive income for the 1 697,3 1 392,2 year ========== ========= Attributable to: Equity holders of The Foschini 1 587,6 1 305,2 Group Limited Non-controlling interest 109,7 87,0 ---------- --------- Total comprehensive income for the 1 697,3 1 392,2 year ========== ========= CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Equity Non-controlling Total holders of interest equity
The Foschini Group Limited Rm Rm Rm
Equity at 31 March 2010 5 058,3 427,0 5 485,3 Profit for the year 1 301,8 87,0 1 388,8 Other comprehensive income Movement in effective portion of (0,6) - (0,6) changes in fair value of cash flow hedges Foreign currency translation 1,0 - 1,0 reserve movements Movement in insurance cell 2,9 - 2,9 reserves Deferred tax on movement in 0,1 - 0,1 effective portion of changes in fair value of cash flow hedges -------- ------- -------- Total comprehensive income for 1 305,2 87,0 1 392,2 the year Contributions by and distributions to owners Share-based payments reserve 55,9 - 55,9 movements Dividends paid (637,5) (28,4) (665,9) Proceeds on delivery of shares by 134,8 - 134,8 share trust Shares purchased in terms of (453,8) - (453,8) share incentive schemes -------- ------- -------- Equity at 31 March 2011 5 462,9 485,6 5 948,5 Profit for the year 1 582,1 109,7 1 691,8 Other comprehensive income Movement in effective portion of 7,2 - 7,2 changes in fair value of cash flow hedges Foreign currency translation 0,3 - 0,3 reserve movements Deferred tax on movement in (2,0) - (2,0) effective portion of changes in fair value of cash flow hedges -------- ------- -------- Total comprehensive income for 1 587,6 109,7 1 697,3 the year Contributions by and distributions to owners Share-based payments reserve 72,2 - 72,2 movements Dividends paid (828,6) (20,4) (849,0) Sale of subsidiary - (3,8) (3,8) Proceeds on delivery of shares by 54,4 - 54,4 share trust Shares purchased in terms of (77,2) - (77,2) share incentive schemes Deferred tax on shares purchased 14,5 - 14,5 Current tax on shares purchased 7,3 - 7,3 -------- ------- -------- Equity at 31 March 2012 6 293,1 571,1 6 864,2 ======== ======= ======== 2012 2011
Reviewed Audited DIVIDEND PER ORDINARY SHARE (CENTS) Interim 190,0 138,0 Final 265,0 212,0 -------- -------- Total 455,0 350,0 ======== ======== Dividend cover 1,7 1,8 SUPPLEMENTARY INFORMATION 2012 2011 Reviewed Audited
Net ordinary shares in issue (millions) 206,4 205,3 Weighted average ordinary shares in issue 205,2 206,5 (millions) Tangible net asset value per ordinary share 2 995,8 2 642,9 (cents) CONDENSED CONSOLIDATED CASH FLOW STATEMENT 2012 2011 Reviewed Audited
Rm Rm Cash flows from operating activities Operating profit before working capital 3 180,4 2 630,3 changes (note 11) Increase in working capital (1 568,4) (824,1) ------- ------- Cash generated by operations 1 612,0 1 806,2 Interest income 16,0 16,8 Finance cost (284,9) (250,1) Taxation paid (880,9) (769,0) Dividend income 9,9 12,1 Dividends paid (849,0) (665,9) ------- ------- Net cash (outflows) inflows from operating (376,9) 150,1 activities ------- -------
Cash flows from investing activities Purchase of property, plant and equipment (541,1) (382,8) Acquisition of assets through business (82,5) - combinations Proceeds from sale of property, plant and 6,5 7,5 equipment Sale of subsidiary 0,1 - Redemption of preference share investment 200,0 - Repayment of participation in export 12,5 6,1 partnerships Repayment of staff housing loans 0,7 0,2 ------- -------
Net cash outflows from investing activities (403,8) (369,0) ------- ------- Cash flows from financing activities Proceeds on delivery of shares by share trust 54,4 134,8 Shares purchased in terms of share incentive (77,2) (453,8) schemes Increase (decrease) in non-controlling 98,1 (334,0) interest loans Increase in RCS Group external funding 858,4 535,9 Decrease in interest-bearing debt 219,3 390,5 ------- ------- Net cash inflows from financing activities 1 153,0 273,4 ------- ------- Net increase in cash during the year 372,3 54,5 Cash at the beginning of the year 338,5 284,0 Effect of exchange rate fluctuations on cash 0,1 - held ------- ------- Cash at the end of the year 710,9 338,5 ======= =======
NOTES The reviewed preliminary condensed consolidated results of The Foschini Group Limited for the year ended 31 March 2012 have been reviewed by the company`s auditors, KPMG Inc. Their unqualified review report is available at the company`s registered office. These results were prepared by the TFG Finance and Administration department of The Foschini Group Limited acting under supervision of Ronnie Stein CA(SA), CFO of The Foschini Group Limited. 1. These results have been prepared in accordance with the presentation and disclosure requirements of the South African Companies Act (No 71 of 2008) and IAS 34 Interim Financial Reporting, applying the group`s accounting policies, that are in line with the measurement and recognition principles of International Financial Reporting Standards (IFRS) and the AC 500 standards as issued by the Accounting Practices Board or its successor, and have been consistently applied to prior periods excepts as described in note 2. 2. During the year, the group adopted the following revised accounting standards: - IFRS 7 Financial Instruments: Disclosures (amendments resulting from May 2010 Annual Improvements to IFRSs) - IAS 1 Presentation of Financial Statements (amendments resulting from May 2010 Annual Improvements to IFRSs) - IAS 24 Related Party Disclosures (revised definition of related parties) - IAS 34 Interim Financial reporting (amendments resulting from May 2010 Annual Improvements to IFRSs) The adoption of these standards has had no significant effect 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. 4. Included in share capital are 24,0 (March 2011: 24,0) million shares which are owned by a subsidiary of the company, and 10,1 (March 2011: 11,1) million shares which are owned in terms of share incentive schemes. These have been eliminated on consolidation. 2012 2011 Reviewed Audited Rm Rm
5. Revenue Retail turnover 11 630,5 9 936,5 Interest income (refer note 7) 1 712,1 1 486,2 Dividend income 9,9 12,1 Other revenue (refer note 8) 1 178,3 935,8 -------- -------- 14 530,8 12 370,6 ======== ========
6. Cost of turnover Cost of goods sold (6 097,5) (5 239,7) Costs of purchase, conversion and other (652,6) (528,4) costs --------- --------- (6 750,1) (5 768,1) ========= ========= 7. Interest income Trade receivables - retail 853,7 705,2 Receivables - RCS Group 842,4 764,2 Sundry 16,0 16,8 -------- --------
1 712,1 1 486,2 ======== ======== 8. Other revenue Merchants` commission 36,4 30,9 Club income 297,5 253,5 Customer charges income 411,5 305,1 Insurance income 372,2 294,0 Cellular income - one2one airtime product 52,8 47,5 Sundry income 7,9 4,8 -------- -------- 1 178,3 935,8 ======== ========
9. Trading expenses Depreciation (311,2) (282,3) Amortisation (0,4) (0,4) Goodwill impairment - (5,8) Employee costs: normal (1 857,4) (1 600,2) Employee costs: share-based payments (72,2) (55,9) Occupancy costs: normal (1 041,9) (912,7) Occupancy costs: operating lease liability (25,7) (9,2) adjustment Net bad debt (721,2) (632,8) Other operating costs (964,2) (802,0) --------- ---------
( 4 994,2) (4 301,3) ========= ========= 10. Inventory Merchandise 1 990,0 1 678,8 Raw materials 101,4 82,3 Goods in transit 30,2 22,5 Shopfitting stock 30,9 17,1 Consumables 2,5 4,0 -------- -------- 2 155,0 1 804,7 ======== ======== Inventory write-downs included above 94,9 92,7 -------- -------- 11. Operating profit before working capital changes Profit before tax 2 501,6 2 051,1 Finance cost 284,9 250,1 -------- -------- Operating profit before finance charges 2 786,5 2 301,2 Interest income - sundry (16,0) (16,8) Dividend income (9,9) (12,1) Non-cash items 419,8 358,0 -------- -------- Operating profit before working capital 3 180,4 2 630,3 changes ======== ======== 12. Reconciliation of profit for the year to headline earnings Profit for the year attributable to equity 1 582,1 1 301,8 holders of The Foschini Group Limited Adjusted for the after-tax effect of: Goodwill impairment - 5,8 Less: non-controlling interest - (2,6) -------- -------- Goodwill impairment - effective portion - 3,2 Profit on disposal of property, plant and (0,3) (0,2) equipment Loss on disposal of property, plant and 2,4 0,8 equipment -------- --------
Headline earnings 1 584,2 1 305,6 ======== ======== 13. CONTINGENT LIABILITIES The group has provided RCS Group with a total facility of R835,3 million (2011: R835,3 million) in respect of their domestic medium-term notes (DMTN) programme. As at 31 March, the utilised portion of this facility was R291,9 million (2011: R733,5 million), which is included in the group`s statement of financial position. The unused liquidity facility at this date was R543,4 million (2011: R101,75 million), which constitutes a contingent liability. 14. RELATED PARTIES Related party transactions similar to those disclosed in the group`s annual financial statements for the year ended 31 March 2011 took place during the year. 15. BUSINESS COMBINATIONS Jeffdee Clothing CC trading as Fabiani On 1 October 2011 the group acquired the business of Jeffdee Clothing CC trading as Fabiani as a going concern. Fabiani is a leading, premium menswear retailer in South Africa. As a result of the acquisition, the group has now gained an entry into the high wealth customer segment in menswear. Prestige Clothing CC On 1 March 2012, as part of our ongoing supply chain initiatives, the group acquired the business of Prestige Clothing CC as a going concern. Prestige Clothing is a longstanding clothing manufacturing supplier of our group. This acquisition will improve the group`s competitive advantage and enable the group to meet the increased demands for seasonal fast-fashion merchandise. G-Star As a consequence of the group`s acquisition of Fabiani, with effect from 1 April 2012, the group has acquired two G-Star franchise stores in South Africa, with the rights to roll out further stores. These stores will be managed together with the Fabiani stores. Fair value of assets acquired and liabilities assumed through these business combinations: Property, plant and equipment 10,3 - Inventory 12,2 - Trade and other payables (4,7) - -------- -------- Total identifiable net assets 17,8 - Trademark 60,0 - Goodwill 24,1 - -------- -------- Total purchase price 101,9 - ======== ========
Cashflow Business combinations occurring during the 82,5 - reporting period Business combinations effected after the 19,4 - end of the reporting period -------- -------- 101,9 - ======== ========
16. SALE OF SUBSIDIARY During the year under review, the RCS Group disposed of one of their subsidiaries, Effective Intelligence (Pty) Ltd. The disposal did not have a material effect on the consolidated results of The Foschini Group Limited. 17. COMPARATIVE FIGURES In order to provide improved disclosure in the condensed consolidated statement of financial position, a portion of the operating lease liability has been reclassified to current liabilities. This change has no impact on overall equity, net assets or profitability. The effect on the comparative statement of financial position is as follows: Movement in operating lease liability - non- - (12,0) current portion Movement in operating lease liability - current - 12,0 portion -------- --------
- - ======== ======== GROUP SEGMENTAL ANALYSIS Retail TFG Central and Total RCS Group
trading Financial shared retail divisions Services services 2012 2012 2012 2012 2012 Reviewed Reviewed Reviewed Reviewed Reviewed
Rm Rm Rm Rm Rm External 11 630,5 673,8 70,6 12 374,9 443,8 revenue# External - 853,7 10,0 863,7 848,4 interest income --------- --------- -------- -------- -------- Total revenue* 11 630,5 1 527,5 80,6 13 238,6 1 292,2 ======== ======== ======== ======== ======== Inter-segment 126,5 126,5 8,9 revenue External (105,7) (105,7) (179,2) finance cost Depreciation (295,8) (295,8) (15,8) and amortisation ======== ======== ======== ======== ======== Segmental 2 610,7 395,4 (757,3) 2 248,8 345,2 profit before tax# Other material non-cash items Foreign 5,5 - exchange transactions Share-based (72,2) - payments Operating (25,7) - lease liability adjustment ------- -------
Group profit 2 156,4 345,2 before tax Capital 525,7 21,7 expenditure Segment assets 8 998,3 3 858,1 Segment 3 350,5 2 641,7 liabilities Retail TFG Central and Total RCS Group
trading Financial shared retail divisions Services services 2011 2011 2011 2011 2011 Audited Audited Audited Audited Audited
Rm Rm Rm Rm Rm External 9 936,5 507,5 64,4 10 508,4 376,0 revenue# External - 705,2 8,9 714,1 772,1 interest income --------- --------- -------- -------- -------- Total revenue* 9 936,5 1 212,7 73,3 11 222,5 1 148,1 ======== ======== ======== ======== ======== Inter-segment 95,5 95,5 11,2 revenue External (138,7) (138,7) (111,4) finance cost Depreciation (268,7) (268,7) (14,0) and amortisation ======== ======== ======== ======== ======== Segmental 2 192,5 311,2 (664,4) 1 839,3 281,4 profit before tax Other material non-cash items Goodwill - (5,8) impairment Foreign 1,3 - exchange transactions Share-based (55,9) - payments Operating (9,2) - lease liability adjustment ------- ------- Group profit 1 775,5 275,6 before tax Capital 367,4 15,4 expenditure Segment assets 7 599,3 3 103,2 Segment 2 675,8 2 078,2 liabilities Consolidated Consolidated 2012 2011 Reviewed Audited
Rm Rm External revenue# 12 818,7 10 884,4 External interest income 1 712,1 1 486,2 -------- --------
Total revenue* 14 530,8 12 370,6 ======== ======== Inter-segment revenue 135,4 106,7 External finance cost (284,9) (250,1) Depreciation and amortisation (311,6) (282,7) ======== ======== Segmental profit before tax 2 594,0 2 120,7 Other material non-cash items Goodwill impairment - (5,8) Foreign exchange transactions 5,5 1,3 Share-based payments (72,2) (55,9) Operating lease liability adjustment (25,7) (9,2) ------- ------- Group profit before tax 2 501,6 2 051,1 Capital expenditure 547,4 382,8 Segment assets 12 856,4 10 702,5 Segment liabilities 5 992,2 4 754,0 * includes retail turnover, interest income, dividend income and other income # During 2012 the board being the chief operating decision-maker, refined the reportable segments. Amounts previously reported as part of TFG Financial Services are now reported as part of Retail Trading Divisions and Central and shared services. These amounts are not material and the 2011 comparatives have been restated accordingly. COMMENT GROUP OVERVIEW The strategic initiatives undertaken by our group have produced a good result for this year. Notwithstanding the strong comparative base, retail turnover increased by 17,0% to R11,6 billion whilst headline earnings per share increased by 22,1% to 772,0 cents. Diluted headline earnings per share increased by 23,6% to 766,1 cents. In line with our strategy of driving top line growth, buying efficiencies achieved during the year were once again passed on to our customers resulting in the gross margin being the same as the previous year. The group`s operating margin for the year increased to 24,0% from 23,2%, moving closer to our medium-term target of 25%. The final dividend has been increased by 25,0% to 265,0 cents per share. In declaring this dividend, the STC saving which the company will make due to the abolition of STC, has been passed through to shareholders. Accordingly, the dividend declared in respect of the full year amounts to 455,0 cents per share, an increase of 30,0%. Supporting our strategy of investing for the longer term, the group continued to grow trading space in the second half by opening a further 79 stores. 150 stores were opened in the full year whilst 20 were closed. At the year-end the group was trading out of 1 857 stores, with an increase in trading area of 7,7% compared to the previous year. MERCHANDISE CATEGORIES Total sales have grown by 17,0% over the previous year with growths in the various merchandise categories as follows: - Clothing 18,3% - Jewellery 7,9% - Cosmetics 10,3% - Homewares and furniture 18,0% - Cellphones 23,9% All merchandise categories continued to perform well with strong gains in market share in all categories. TRADING DIVISIONS Retail turnover and growths in the various trading divisions were as follows: Number of stores Retail turnover % change Rm @home 88 801,8 18,0 Exact 215 1 118,1 19,9 Foschini division 516 4 254,3 14,3 Jewellery division 395 1 334,4 9,2 Markham division 266 1 991,1 21,7 TFG Sports division 377 2 130,8 21,8 -------- -------- -------- Total 1 857 11 630,5 17,0 -------- -------- --------
Same store turnover grew by 10,6% whilst product inflation averaged approximately 6% for the year. Cash sales as a percentage of total sales increased to 39,0% from 38,5%. @home increased its store base by 5 stores and is now trading out of 88 stores, 14 of which are the larger @homelivingspace stores. Turnover grew by 18,0% with same store turnover growth of 13,5%. Over the last two years greater focus has been placed on merchandise efficiencies with excellent results. Exact increased its store base by 7 stores and is now trading out of 215 stores. Clothing turnover increased by 21,8% with clothing same store turnover growth of 18,0%. The focus on clothing price points continues to be very successful. Cellphone turnover increased by 10,8% with total same store turnover increasing by 16,4%. The Foschini division comprising Foschini, Donna-Claire, Fashion Express, Luella and Charles & Keith, increased its store base by 32 stores and is now trading out of 516 stores. Clothing turnover grew by 15,6% with clothing same store turnover growth of 10,0%. Cosmetics same store turnover grew by 5,6%. Same store turnover of cellphones increased by 9,8%, whilst total same store turnover increased by 8,9%. The Jewellery division comprising American Swiss Jewellers, Sterns and Matrix increased its store base by 14 stores and is now trading out of 395 stores. Jewellery merchandise turnover grew by 8,5% whilst cellphone turnover increased by 13,9%. Jewellery same store turnover grew by 3,0% and total same store turnover increased by 4,1%. The Markham division including Fabiani increased its store base by 19 stores and is now trading out of 266 stores. Clothing turnover growth was 22,1% whilst cellphone turnover increased by 19,1%. Clothing same store turnover grew by 15,5% whilst cellphone same store turnover increased by 14,3%. Total same store turnover increased by 15,4%. TFG Sports division, trading as Totalsports, Sportscene and Duesouth, increased its store base by 53 stores and is now trading out of 377 stores. Clothing turnover growth was 17,6%, notwithstanding the 2010 FIFA World CupTrade Mark inflated base. During the year, this division continued introducing cellphones into its product offering with positive results. Clothing same store turnover grew by 6,8% whilst total same store growth was 10,8%. Excluding the base effect of the World Cup months of May and June last year, same store clothing growth was 12,2%. TFG Financial Services` retail debtors` book, which amounts to R4,6 billion, increased by 19,5% during the year, reflecting the impact of good account growth, increased credit sales and the increase in the number of 12-month accounts. New accounts have been sourced in the main from in-store account openings, where there is an inherently greater risk of bad debt than from established accounts. Having regard to the increase in unsecured lending and the growth in new accounts, bad debt as a percentage of closing debtors` book was within management expectations, increasing to 9,4% from 9,2% in the previous year. RCS GROUP The RCS Group is an operationally independent consumer finance business that provides a broad range of financial services under its own brand in South Africa, Namibia and Botswana. It is structured into two operating business units, namely transactional finance and fixed term finance. The transactional finance business comprises the RCS general-purpose card and other private label card programmes, whilst the fixed term finance business comprises RCS personal loans. Despite interest margin compression arising from the interest-capping formula under the National Credit Act, the RCS Group performed well during the year with net profit before tax increasing by 25,3% to R345,2 million. Net bad debt further improved with a reduction of 13,9% compared to the previous year. Its debtors` book of R3,4 billion increased by 19,5% during the year as its advances to customers increased. Its domestic medium-term note (DMTN) programme continues to be successfully implemented with R1,9 billion of funding being raised in a mixture of long- and short term paper. At the year-end the RCS Group had surplus funding of approximately R1 billion which is available to support its future growth. Our group`s shareholding in RCS Group is 55% with the balance being held by The Standard Bank of South Africa Limited. As mentioned in our 2011 Integrated Annual Report, it remains our intention to list RCS at some point in the future. NEW ACQUISITIONS Effective from 1 October 2011, our group acquired the luxury menswear brand Fabiani which gave our group an entry into the high end customer segment where we previously did not operate. Fabiani currently trades out of 7 stores and has great potential for expansion. As a consequence of the group`s acquisition of Fabiani, with effect from 1 April 2012, the group has acquired the two G-Star franchise stores in South Africa, with the rights to roll out further stores. With effect from 1 March 2012, the group has acquired its long standing clothing manufacturing supplier, Prestige Clothing as part of the group`s ongoing supply chain initiatives. This will improve the group`s competitive advantage and enable the group to meet the increased demands for seasonal fast-fashion merchandise. During the year our group entered into a franchise agreement with an exciting international footwear and accessory brand, Charles & Keith. AFRICA EXPANSION The group currently trades out of 87 stores outside of South Africa, with 58 in Namibia, 11 in Botswana, 12 in Zambia, 2 in Lesotho and 4 in Swaziland. Over the next two years a further 39 stores are planned to be opened in the countries where we already operate as well as Mozambique and Nigeria. PROSPECTS Whilst there has been a softening in turnover since January of this year, retail turnover for the first eight weeks of the new financial year has been satisfactory, though some caution is warranted given the impact of fuel and utility increases on our customers, as well as the very strong comparative base. In line with our strategy of investing for long-term growth, we will continue to open new stores in certain of our formats. We anticipate opening in excess of 140 new stores in the year ahead which will increase trading space by approximately 6%. PREFERENCE DIVIDEND ANNOUNCEMENT Dividend no. 151 of 3,25% (6,5 cents per share) (gross) in respect of the six months ending 30 September 2012 has been declared from income reserves, payable on Tuesday, 25 September 2012 to holders of 6,5% preference shares recorded in the books of the company at the close of business on Friday, 21 September 2012. The last day to trade ("cum" the dividend) in order to participate in the dividend will be Friday, 14 September 2012. The Foschini Group Limited preference shares will commence trading "ex" the dividend from the commencement of business on Monday, 17 September 2012 and the record date, as indicated, will be Friday, 21 September 2012. Preference shareholders should take note that share certificates may not be dematerialised or rematerialised during the period Monday, 17 September 2012 to Friday, 21 September 2012, both dates inclusive. In terms of the new Dividends Tax effective 1 April 2012, and the amendments to section 11.17 of the JSE Listings Requirements, the following additional information is disclosed: 1) Local dividend tax rate is 15%; 2) No STC credits were utilised in determining the net dividend; 3) The withholding tax, if applicable at the rate of 15%, will result in a net cash dividend per share of 5,52500 cents; 4) The issued preference share capital of The Foschini Group Limited is 200 000 shares at 29 May 2012; and 5) The Foschini Group Limited`s tax reference number is 9925/133/71/3P. FINAL ORDINARY DIVIDEND ANNOUNCEMENT The directors have declared a gross final ordinary dividend of 265,0 cents per ordinary share from income reserves, for the period ended 31 March 2012, payable on Monday, 9 July 2012 to ordinary shareholders recorded in the books of the company at the close of business on Friday, 6 July 2012. The last day to trade ("cum" the dividend) in order to participate in the dividend will be Friday, 29 June 2012. The Foschini Group Limited ordinary shares will commence trading "ex" the dividend from the commencement of business on Monday, 2 July 2012 and the record date, as indicated, will be Friday, 6 July 2012. Ordinary shareholders should take note that share certificates may not be dematerialised or rematerialised during the period Monday, 2 July 2012 to Friday, 6 July 2012, both dates inclusive. In terms of the new Dividends Tax effective 1 April 2012, and the amendments to section 11.17 of the JSE Listings Requirements, the following additional information is disclosed: 1) Local dividend tax rate is 15%; 2) No STC credits were utilised in determining the net dividend; 3) The withholding tax, if applicable at the rate of 15%, will result in a net cash dividend per share of 225,25000 cents; 4) The issued gross ordinary share capital of The Foschini Group Limited is 240 498 241 shares at 29 May 2012; and 5) The Foschini Group Limited`s tax reference number is 9925/133/71/3P. ------------------------------------------------------------------ Signed on behalf of the Board D M Nurek, Chairman A D Murray, CEO 29 May 2012 Non-executive directors: D M Nurek (Chairman), Prof F Abrahams, S E Abrahams, W V Cuba, M Lewis, E Oblowitz, N V Simamane Executive directors: A D Murray, R Stein, P S Meiring Company secretary: D Sheard Registered office: Stanley Lewis Centre, 340 Voortrekker Road, Parow East, 7500 Transfer secretaries: Computershare Investor Services (Pty) Ltd, Ground Floor, 70 Marshall Street, Johannesburg, 2001 Sponsor: UBS South Africa (Pty) Ltd Visit our website at http://www.tfg.co.za/ Date: 29/05/2012 14:00:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. 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