Wrap Text
Reviewed Preliminary Condensed Consolidated Results for the Year Ended 31 March 2014
The Foschini Group Limited
Registration number 1937/009504/06
Share codes: TFG-TFGP
ISIN codes: ZAE000148466 – ZAE000148516
The reviewed preliminary condensed consolidated results of The
Foschini Group Limited for the year ended 31 March 2014 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 Advisory 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 9,8% to R14,2 billion
* Strong cash sales growth of 15,9% now representing 42,2% of turnover
* Diluted headline earnings per share up 6,0% to 902,7 cents
* Final dividend increased by 8,5% to 293,0 cents per share
* Sustained strong financial position
* RCS transaction concluded, subject to normal conditions precedent
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
March Restated
2014 March 2013
Reviewed Audited
Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 1 696,1 1 548,4
Goodwill and intangible assets 63,4 120,3
RCS Group card receivables - 856,4
RCS Group loan receivables - 643,7
Participation in export partnerships 23,9 30,0
Deferred taxation asset 337,1 304,7
-------- --------
2 120,5 3 503,5
-------- --------
Current assets
Inventory (note 4) 2 775,9 2 444,0
Trade receivables – retail 5 796,6 5 207,7
RCS Group card receivables - 2 250,0
RCS Group loan receivables - 460,6
Other receivables and prepayments 465,5 816,8
Participation in export partnerships 11,9 18,4
Cash 301,3 593,4
-------- --------
9 351,2 11 790,9
-------- --------
Assets associated to disposal group (note 5)
– RCS Group 5 631,5 -
-------- --------
Total assets 17 103,2 15 294,4
======== ========
EQUITY AND LIABILITIES
Equity attributable to equity holders of The
Foschini Group Limited 7 228,6 7 043,8
Non-controlling interest 861,3 705,5
------- -------
Total equity 8 089,9 7 749,3
------- -------
LIABILITIES
Non-current liabilities
Interest-bearing debt 1 584,7 1 041,9
RCS Group external funding - 1 651,1
Operating lease liability 208,2 187,5
Deferred taxation liability 42,7 65,6
Post-retirement defined benefit plan 180,4 104,5
-------- --------
2 016,0 3 050,6
-------- --------
Current liabilities
Interest-bearing debt 1 375,7 896,5
RCS Group external funding - 1 298,0
Trade and other payables 1 853,0 2 234,3
Operating lease liability 8,0 9,0
Taxation payable 59,4 56,7
-------- --------
3 296,1 4 494,5
-------- --------
Liabilities associated to disposal group
(note 5) – RCS Group 3 701,2 -
-------- --------
Total liabilities 9 013,3 7 545,1
-------- --------
Total equity and liabilities 17 103,2 15 294,4
======== ========
CONDENSED CONSOLIDATED INCOME STATEMENT
Year Restated % Change
ended year ended
31 March 31 March
2014 2013
Reviewed Audited
Rm Rm
Continuing operations
Revenue (note 6) 16 362,9 14 757,0
======= =======
Retail turnover 14 159,0 12 896,4 9,8
Cost of turnover (note 15.2) (7 579,4) (6 906,1)
-------- --------
Gross profit 6 579,6 5 990,3
Interest income (note 7) 1 148,1 997,9
Other revenue (note 8) 1 055,8 862,7
Trading expenses (note 9) (6 246,6) (5 443,6)
-------- --------
Operating profit before finance
charges 2 536,9 2 407,3
Finance costs (161,8) (108,4)
-------- --------
Profit before tax 2 375,1 2 298,9
Income tax expense (691,5) (669,1)
-------- --------
Profit from continuing operations 1 683,6 1 629,8 3,3
Discontinued operations
Profit from discontinued
operations, net of tax (note 5)
– RCS Group 321,1 296,8 8,2
-------- --------
Profit for the year 2 004,7 1 926,6 4,1
======== ========
Attributable to:
Continuing operations 1 683,1 1 629,1
Discontinued operations 176,5 162,9
-------- --------
Equity holders of The Foschini
Group Limited 1 859,6 1 792,0 3,8
Non-controlling interest 145,1 134,6
-------- --------
Profit for the year 2 004,7 1 926,6
Earnings per ordinary share (cents)
Total
Basic 902,8 856,4 5,4
Headline 908,9 858,6 5,9
Diluted (basic) 896,6 849,1 5,6
Diluted (headline) 902,7 851,3 6,0
Continuing operations
Basic 817,1 778,4 5,0
Headline 818,7 780,6 4,9
Diluted (basic) 811,5 771,8 5,1
Diluted (headline) 813,1 773,9 5,1
Discontinued operations
Basic 85,7 78,0 9,9
Headline 90,2 78,0 15,6
Diluted (basic) 85,1 77,3 10,1
Diluted (headline) 89,6 77,4 15,8
Weighted average ordinary shares in
issue (millions) 206,0 209,2
CONDENSED CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Restated
year
Year ended ended 31
31 March March
2014 2013
Reviewed Audited
Rm Rm
Profit for the year 2 004,7 1 926,6
---------- ---------
Other comprehensive income:
Items that will never be reclassified to
profit or loss
Actuarial losses post-retirement defined
benefit plan (69,8) -
Items that are or may be reclassified
subsequently to profit or loss
Movement in effective portion of
changes in fair value of cash flow
hedges 40,6 9,7
--------- --------
Continuing operations 6,9 9,7
Discontinued operations 33,7 -
---------- ---------
Foreign currency translation
reserve movements (3,2) 9,4
---------- ---------
Continuing operations (5,0) 9,4
Discontinued operations 1,8 -
---------- ---------
Other comprehensive income for the
year before tax (32,4) 19,1
Deferred tax on movement in other
comprehensive income 8,2 (2,7)
---------- ---------
Other comprehensive income for the (24,2) 16,4
year, net of tax
---------- ---------
Total comprehensive income for the
year 1 980,5 1 943,0
========== =========
Attributable to:
Continuing operations 1 632,8 1 645,5
Discontinued operations 191,6 162,9
--------- ---------
Equity holders of The Foschini
Group Limited 1 824,4 1 808,4
Non-controlling interest 156,1 134,6
---------- ---------
Total comprehensive income for the
year 1 980,5 1 943,0
========== =========
SUPPLEMENTARY INFORMATION
Restated
March
March 2014 2013
Reviewed Audited
Net ordinary shares in issue
204,3 210,1
(millions)
Weighted average ordinary shares
206,0 209,2
in issue (millions)
Tangible net asset value per
3 507,2 3 322,4
ordinary share (cents)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity
holders of
The
Foschini Non-
Group controlling Total
Limited interest equity
Rm Rm Rm
Equity at 31 March 2012 6 293,1 571,1 6 864,2
Profit for the year
Continuing operations 1 629,1 0,7 1 629,8
Discontinued operations 162,9 133,9 296,8
Other comprehensive income
Continuing operations
Movement in effective portion of
changes in fair value of cash
flow hedges 9,7 - 9,7
Foreign currency translation
reserve movements 9,4 - 9,4
Deferred tax on movement in
other comprehensive income (2,7) - (2,7)
-------- ------- --------
Total comprehensive income for
the year 1 808,4 134,6 1 943,0
Contributions by and
distributions to owners
Share-based payments reserve
movements 65,8 - 65,8
Dividends paid (1 057,4) - (1 057,4)
Acquisition of non-controlling
interest without change in
control (1,7) (0,2) (1,9)
Cancellation of issued shares (0,2) - (0,2)
Repurchase of shares (129,3) - (129,3)
Proceeds on delivery of shares
by share trust 186,6 - 186,6
Shares purchased in terms of
share incentive schemes (145,5) - (145,5)
Current tax on shares purchased 8,0 - 8,0
Deferred tax on shares purchased 16,0 - 16,0
-------- ------- --------
Equity at 31 March 2013 7 043,8 705,5 7 749,3
Profit for the year
Continuing operations 1 683,1 0,5 1 683,6
Discontinued operations 176,5 144,6 321,1
Other comprehensive income
Continuing operations
Actuarial losses on post-
retirement defined benefit plan (69,8) - (69,8)
Movement in effective portion of
changes in fair value of cash
flow hedges 6,9 - 6,9
Foreign currency translation
reserve movements (5,0) - (5,0)
Deferred tax on movement in
other comprehensive income 17,6 - 17,6
Discontinued operations
Movement in effective portion of
changes in fair value of cash
flow hedges 18,5 15,2 33,7
Foreign currency translation
reserve movements 1,8 - 1,8
Deferred tax on movement in
other comprehensive income (5,2) (4,2) (9,4)
-------- ------- --------
Total comprehensive income for
the year 1 824,4 156,1 1 980,5
Contributions by and
distributions to owners
Share-based payments reserve
movements 90,3 - 90,3
Dividends paid (1 066,9) (0,3) (1 067,2)
Cancellation of issued shares (0,1) - (0,1)
Repurchase of shares (600,5) - (600,5)
Proceeds on delivery of shares
by share trust 45,5 - 45,5
Shares purchased in terms of
share incentive schemes (127,5) - (127,5)
Current tax on shares purchased 6,5 - 6,5
Deferred tax on shares purchased 13,1 - 13,1
-------- ------- --------
Equity at 31 March 2014 7 228,6 861,3 8 089,9
======== ======= ========
Year ended Year ended
31 March 31 March
2014 2013
Reviewed Audited
DIVIDEND PER ORDINARY SHARE (CENTS)
Interim 243,0 236,0
Final 293,0 270,0
-------- --------
Total 536,0 506,0
======== ========
Dividend cover
1,7 1,7
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Restated
Year year
ended 31 ended 31
March March
2014 2013
Reviewed Audited
Rm Rm
Cash flows from operating activities
Operating profit before working capital
changes (note 10) 3 000,6 3 466,9
Increase in working capital (930,3) (1 695,3)
------- -------
Cash generated from operations 2 070,3 1 771,6
Interest income 17,6 22,7
Finance costs (161,8) (327,9)
Taxation paid (730,7) (808,4)
Dividends paid (1 067,2) (1 057,4)
------- -------
Net cash inflows (outflows) from operating
activities 128,2 (399,4)
------- -------
Cash flows from investing activities
Purchase of property, plant and equipment (554,2) (580,7)
Acquisition of assets through business
combinations - (19,4)
Proceeds from sale of property, plant and
equipment 4,1 8,4
Repayment of participation in export
partnerships 12,6 18,0
------- -------
Net cash outflows from investing activities (537,5) (573,7)
------- -------
Cash flows from financing activities
Proceeds on delivery of shares by share trust 45,5 186,6
Repurchase of shares (600,5) (129,3)
Shares purchased in terms of share incentive
schemes (127,5) (145,5)
Decrease in non-controlling interest loans - (242,4)
Increase in RCS Group external funding - 1 182,7
Increase in interest-bearing debt 1 022,0 209,6
------- -------
Net cash inflows from financing activities 339,5 1 061,7
------- -------
Net (decrease) increase in cash during the
year (69,8) 88,6
Cash at the beginning of the year 593,4 504,7
Cash at the beginning of the year –
discontinued operations (note 5) (222,4) -
Effect of exchange rate fluctuations on cash
held 0,1 0,1
------- -------
Cash at the end of the year – continuing
operations 301,3 593,4
======= =======
GROUP SEGMENTAL ANALYSIS
Customer Central
Retail value and
trading added shared Total
divisions products Credit services Retail
Reviewed Reviewed Reviewed Reviewed Reviewed
Year ended 31
March 2014 Rm Rm Rm Rm Rm
External
revenue # 14 159,0 763,1 287,6 5,1 15 214,8
External
interest
income - - 1 130,5 17,6 1 148,1
--------- --------- -------- -------- --------
Total revenue* 14 159,0 763,1 1 418,1 22,7 16 362,9
======== ======== ======== ======== ========
Inter-segment
revenue 53,5 53,5
External
finance costs (161,8) (161,8)
Depreciation
and
amortisation (365,5) (365,5)
======== ======== ======== ======== ========
Segmental
profit (loss)
before tax # 3 078,4 453,9 10,1 (1 052,3) 2 490,1
Other material
non-cash items
Foreign
exchange
transactions (5,0)
Share-based
payments (90,3)
Operating
lease
liability
adjustment (19,7)
-------
Group profit
before tax 2 375,1
Capital
expenditure 554,2
Segment assets 11 471,7
Segment
liabilities 5 312,1
Customer Central
Retail value and
trading added shared Total
divisions products Credit services Retail
Audited Audited Audited Audited Audited
Restated year
ended 31 March
2013 Rm Rm Rm Rm Rm
External
revenue # 12 896,4 670,8 186,1 5,8 13 759,1
External
interest
income - - 983,6 14,3 997,9
--------- --------- -------- -------- --------
Total revenue* 12 896,4 670,8 1 169,7 20,1 14 757,0
======== ======== ======== ======== ========
Inter-segment
revenue 56,3 56,3
External
finance costs (108,4) (108,4)
Depreciation
and
amortisation (316,6) (316,6)
======== ======== ======== ======== ========
Segmental
profit (loss)
before tax # 2 810,1 392,5 88,0 (909,5) 2 381,1
Other material
non-cash items
Foreign
exchange
transactions 8,3
Share-based
payments (65,8)
Operating
lease
liability
adjustment (24,7)
-------
Group profit
before tax 2 298,9
Capital
expenditure 567,6
Segment assets 10 309,0
Segment
liabilities 4 142,7
Discontinued Consolidated
operations – 2014
RCS Group Reviewed
2014 2014
Reviewed Reviewed
Rm Rm
External revenue # 634,5 15 849,3
External interest income 1 118,7 2 266,8
-------- --------
Total revenue* 1 753,2 18 116,1
======== ========
Inter-segment revenue 8,3 61,8
External finance costs (252,2) (414,0)
Depreciation and amortisation (17,4) (382,9)
======== ========
Segmental profit (loss) before tax # 456,9 2 947,0
Other material non-cash items
Foreign exchange transactions 1,8 (3,2)
Share-based payments - (90,3)
Operating lease liability adjustment - (19,7)
------- -------
Group profit before tax 458,7 2 833,8
Capital expenditure 22,9 577,1
Segment assets 5 631,5 17 103,2
Segment liabilities 3 701,2 9 013,3
Discontinued
operations –
RCS Group Consolidated
2013 2013
Audited Audited
Rm Rm
External revenue # 529,3 14 288,4
External interest income 998,7 1 996,6
-------- --------
Total revenue* 1 528,0 16 285,0
======== ========
Inter-segment revenue 8,0 64,3
External finance costs (219,5) (327,9)
Depreciation and amortisation (18,4) (335,0)
======== ========
Segmental profit (loss) before tax # 414,8 2 795,9
Other material non-cash items
Foreign exchange transactions - 8,3
Share-based payments - (65,8)
Operating lease liability adjustment - (24,7)
------- -------
Group profit before tax 414,8 2 713,7
Capital expenditure 17,1 584,7
Segment assets 4 985,4 15 294,4
Segment liabilities 3 402,4 7 545,1
* Includes retail turnover, interest income, dividend income and
other income.
# March 2014 reflects a change in reportable segments as defined by
the board, being the chief operating decision-maker. TFG Financial
Services have now been split to reflect credit separately from
other customer value added products. In addition mobile one2one
airtime income previously reported under central and shared
services are now reported within customer value added products. The
March 2013 comparatives have been restated accordingly.
NOTES
The reviewed preliminary condensed consolidated results of The
Foschini Group Limited for the year ended 31 March 2014 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 Advisory
department of The Foschini Group Limited acting under supervision
of Ronnie Stein CA(SA), CFO of The Foschini Group Limited.
1. The preliminary consolidated financial statements are prepared
in accordance with the group’s accounting policies, which comply
with International Financial Reporting Standards (IFRS), IAS 34
Interim Financial Reporting, Financial Reporting Guides as issued
by the Accounting Practice Committee of the South African Institute
of Chartered Accountants and disclosures required by the Companies
Act No. 71 of 2008 and the JSE Listings Requirements, and have been
consistently applied to the prior year except as described in note
2 and 15.
2. During the year, the group adopted the following revised
accounting standards:
IFRS 7 Financial Instruments: Disclosures (offsetting financial
assets and financial liabilities)
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint arrangements
IFRS 12 Disclosure of Interest in Other Entities
IFRS 13 Fair value Measurement
IAS 1 Presentation of Financial Statements
IAS 19 Employee Benefits: Defined benefit plans
Revised IAS 28 (2011) Investments in Associates and Joint Ventures
Previously the group consolidated the cell captives in terms of SIC
12 Special Purpose Entities. In terms of IFRS 10 Consolidated
Financial Statements, the cell captives do not meet the definition
of a deemed separate entity, i.e. it is not legally ring-fenced
from the insurer and will therefore no longer be consolidated. The
cell captive arrangement with the insurer is accounted for as an
in-substance reinsurance contract issued by the group. In terms of
IFRS 4 the group therefore changed its accounting policy for the
year ended 31 March 2014 for the accounting of cell captive
arrangements. The net assets of the insurance cells are included as
part of the other receivables and prepayments and are no longer
consolidated. Refer to note 15 for more detail on this accounting
policy changes. The adoption of these standards had no material
impact on these results except as described above.
During the year, the group reassessed the estimated useful lives of
certain of its computer equipment and software assets. The impact
on these financial statements is not material.
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. For the year ended 31 March
2014, the RCS Group is treated as a discontinued operation held for
sale in terms of IFRS 5 (refer to note 5 below). The prior year
comparatives in the income statement and statement of comprehensive
income have been restated accordingly.
Restated
Year ended year ended
31 March 31 March
2014 2013
Reviewed Audited
Rm Rm
4. Inventory
Inventory at year-end 2 775,9 2 444,0
======== ========
Inventory write-downs included above 140,4 110,8
-------- --------
5. Discontinued operations (RCS Group)
As was announced on SENS on 10 April 2014, the group together with
The Standard Bank of South Africa Limited, has entered into
agreements which will result in BNP Paribas Personal Finance S.A.
becoming the 100% shareholder of the RCS Group. The group has a
55% shareholding in the RCS Group. The effective date of the
proposed transaction is expected to be on or about 31 July 2014,
subject to the fulfillment of certain conditions precedent.
Accordingly, the RCS Group has been treated as a discontinued
operation in terms of IFRS 5. The profits from the ordinary
activities of the discontinued operations for the year together
with the corresponding amounts for the prior period are presented
below.
INCOME STATEMENT
Interest income 1 118,7 998,7
Other revenue 634,5 535,6
-------- --------
Total credit income 1 753,2 1 534,3
-------- --------
Net bad debt (373,6) (269,8)
Trading expenses (668,7) (622,0)
-------- --------
Operating profit before finance charges 710,9 642,5
-------- --------
Finance costs (252,2) (227,7)
-------- --------
Profit before tax 458,7 414,8
-------- --------
Income tax expense (137,6) (118,0)
-------- --------
Profit for the year 321,1 296,8
======== ========
STATEMENT OF FINANCIAL POSITION
Assets and liabilities
Assets of disposal group
Property, plant and equipment 40,5 35,6
Goodwill and intangible assets 56,9 56,9
RCS Group card receivables 3 785,0 3 106,4
RCS Group loan receivables 960,0 1 104,3
Deferred taxation asset 15,1 27,8
Other receivables and prepayments 348,7 432,0
Cash 421,9 222,4
Tax receivable 3,4 -
-------- --------
5 631,5 4 985,4
======== ========
Liabilities of disposal group
RCS Group external funding 3 315,8 2 949,1
Deferred taxation liability - 7,1
Trade and other payables 385,4 445,8
Taxation payable - 0,4
-------- --------
3 701,2 3 402,4
======== ========
CASH FLOW STATEMENT
Net cash outflows from operating
activities – discontinued operations (144,9) (884,6)
Net cash outflows from investing
activities – discontinued operations (22,3) (16,7)
Net cash inflows from financing activities
– discontinued operations 366,7 940,3
-------- --------
199,5 39,0
======== ========
6. Revenue
Retail turnover 14 159,0 12 896,4
Interest income (refer note 7) 1 148,1 997,9
Other revenue (refer note 8) 1 055,8 862,7
-------- --------
16 362,9 14 757,0
======== ========
7. Interest income
Trade receivables - retail 1 130,5 983,6
Sundry 17,6 14,3
-------- --------
1 148,1 997,9
======== ========
8. Other revenue
Publishing income 379,0 336,2
Collection cost recovery 287,6 186,1
Insurance income 299,6 267,1
Mobile one2one airtime income 84,5 67,4
Sundry income 5,1 5,9
-------- --------
1 055,8 862,7
======== ========
9. Trading expenses
Depreciation (365,5) (316,6)
Employee costs (2 048,3) (1 885,2)
Occupancy costs (1 393,0) (1 230,0)
Net bad debt (935,5) (670,8)
Other operating costs (1 504,3) (1 341,0)
--------- ---------
(6 246,6) (5 443,6)
========= =========
10. Operating profit before working
capital changes
Profit before tax 2 375,1 2 713,7
Finance costs 161,8 327,9
-------- --------
Operating profit before finance charges 2 536,9 3 041,6
Interest income - sundry (17,6) (22,7)
Non-cash items 481,3 448,0
-------- --------
Depreciation 365,5 334,8
Amortisation - 0,2
Operating lease liability adjustment 19,7 24,7
Share-based payments 90,3 65,8
Post-retirement defined benefit medical
aid movement 6,1 6,6
Foreign currency translation reserve
movement (5,0) 9,4
Loss on disposal of property, plant and
equipment 4,8 6,7
Profit on disposal of property, plant and
equipment (0,1) (0,2)
-------- --------
Operating profit before working capital
changes 3 000,6 3 466,9
======== ========
11. Reconciliation of profit for the year
to headline earnings
Profit for the year attributable to equity
holders of The Foschini Group Limited 1 859,6 1 792,0
Adjusted for:
Profit on disposal of property, plant and
equipment (0,1) (0,2)
Loss on disposal of property, plant and
equipment 4,8 6,7
Impairment of loan receivables 12,9 -
-------- --------
Adjusted headline earnings before tax 1 877,2 1 798,5
Tax on headline earnings adjustments (4,9) (1,9)
-------- --------
Headline earnings 1 872,3 1 796,6
======== ========
12. Contingent Liabilities
The Foschini Group has provided RCS Group with a total facility of
R835,3 million (March 2013: R835,3 million) in respect of their
domestic medium-term notes (DMTN) programme. As at 31 March 2014,
the utilised portion of this facility was Rnil (March 2013: Rnil).
The unused liquidity facility at this date was R835,3 million
(March 2013: R835,3 million), which constitutes a contingent
liability. This facility is only available until the effective date
of the proposed transaction referred to in note 5.
13. Related parties
Related party transactions similar to those disclosed in the
group’s annual financial statements for the year ended 31 March
2013 took place during the year. There are no significant related
party transactions which took place in the current financial year.
14. Repurchase of shares
At the annual general meeting of the company held on 2 September
2013 shareholders approved, by way of a general authority, that the
company may acquire its own shares from time to time, subject to
the memorandum of the company, the provisions of the Companies Act
and the Listings Requirements as presently constituted.
During the year, 5 385 811 ordinary shares were acquired at an
average price of R111,50 per share, whereafter the shares were
cancelled and restored to authorised share capital.
On 30 July 2013 3 335 401 shares were delisted reducing the total
shares in issue from 228 498 241 shares to 225 162 840 shares.
On 6 December 2013 a further 3 157 786 shares were delisted
reducing the total shares in issue to 222 005 054.
15. Change in accounting policies
15.1 Accounting for insurance cells
Previously the group consolidated the cell captives in terms of SIC
12 Special Purpose Entities. In terms of IFRS 10 Consolidated
Financial Statements, the cell captives do not meet the definition
of a deemed separate entity, i.e. it is not legally ring-fenced
from the insurer and will therefore no longer be consolidated. The
cell captive arrangement with the insurer is accounted for as an
in-substance reinsurance contract issued by the group. In terms of
IFRS 4 the group therefore changed its accounting policy for the
year ended 31 March 2014 for the accounting of cell captive
arrangements. The net assets of the insurance cells are included as
part of the other receivables and prepayments and are no longer
consolidated.
The change in accounting policy had no effect on basic or headline
earnings per share, or on diluted basic or diluted headline
earnings per share.
The effect of the change is as follows:
As As AS
reported 31 March restated
31 March 2012 31 March
2012 Adjustment 2012
Rm Rm Rm
Other receivables and
prepayments 226,4 140,4 366,8
Cash 710,9 (206,2) 504,7
Trade and other payables (1 827,0) 35,3 (1 791,7)
Taxation payable (57,3) 30,5 (26,8)
As As As
reported 31 March restated
31 March 2013 31 March
2013 Adjustment 2013
Rm Rm Rm
Other receivables and
prepayments 594,3 222,5 816,8
Cash 908,1 (314,7) 593,4
Trade and other payables (2 282,5) 48,2 (2 234,3)
Taxation payable (100,7) 44,0 (56,7)
15.2 Cost of turnover
During the year under review, the group refined its calculation of
cost of turnover to only include those costs directly related to
the cost of merchandise. Certain costs (promotional and related)
previously included in cost of turnover have now been included in
trading expenses. This change was done for easier comparison with
others in the industry. Accordingly, the gross profit previously
reported at March 2013 changes from 41.9% to 46.4% on the new
basis. This change in accounting policy had no effect on basic or
headline earnings per share, or on diluted basic or diluted
headline earnings per share. There is also no impact on the
statement of financial position.
The effect of the change is as follows:
As As As
reported 31 March restated
31 March 2013 31 March
2013* Adjustment 2013
Rm Rm Rm
Cost of turnover 7 492,3 (586,2) 6 906,1
Trading expenses 4 857,4 586,2 5 443,6
* The 31 March 2013 reported figures exclude the RCS Group
15.3 IAS 19 Employee Benefits: Defined benefits plan
During the year under review, the group adopted IAS 19 Employee
Benefits: Defined benefits plan. The group has adopted the standard
retrospectively and all actuarial gains and losses which would have
been recognised through profit and loss have been recognised
through other comprehensive income. The group raised a R69,8
million actuarial loss in the current financial year. The change
had no effect on the prior years as there were no actuarial gains
or losses recognised through profit and loss.
16. Changes to directors
The following changes took place during the current year and up to
the date of these preliminary consolidated financial statements.
W V Cuba Resigned 1 June 2013
D Friedland Appointed 14 November 2013
17. Post-balance sheet events
No further significant events took place between the end of the
financial year and the date these preliminary consolidated
financial statements were authorised for issue.
COMMENT
GROUP OVERVIEW
The group produced a solid result for the year in a difficult
trading environment characterised by the extremely challenging
credit market.
Enhanced credit risk management practices constrained credit
turnover growth to 5,7%. Cash sales were however buoyant growing by
15,9%. Total retail turnover increased by 9,8% to R14,2 billion
whilst total headline earnings per share increased by 5,9% to 908,9
cents. Diluted headline earnings per share increased by 6,0% to
902,7 cents. The group’s gross margin in all categories was
maintained whilst the operating margin from continuing operations
for the year reduced from 18,7% to 17,9%, primarily due to credit
market conditions.
During the year the group refined the definition of gross profit to
include only those costs directly related to the cost of
merchandise sold to facilitate more meaningful retail industry
comparison. The prior year has been restated (refer note 15.2 of
the condensed consolidated results).
As was announced on SENS on 10 April 2014, the group together with
The Standard Bank of South Africa Limited, entered into agreements
which will result in BNP Paribas Personal Finance S.A. becoming the
100% shareholder of the RCS Group. The effective date of the
proposed transaction is expected to be on or about 31 July 2014,
subject to the fulfillment of certain conditions precedent.
Accordingly, the RCS Group has been treated as a discontinued
operation in terms of IFRS 5.
The final dividend has been increased by 8,5% to 293,0 cents per
share. Accordingly the dividend declared in respect of the full
year amounts to 536,0 cents per share, an increase of 5,9%, in line
with HEPS growth.
The group continued to grow trading space by opening 165 stores for
the full year whilst 33 were closed. At the year-end, the group was
trading out of 2 111 stores, an increase in trading area of 6,1%.
MERCHANDISE CATEGORIES
Turnover growths in the various merchandise categories are as
follows:
% same store
% turnover turnover
growth growth
Clothing 9,5 3,4
Jewellery 6,0 2,0
Cellphones 13,7 7,3
Homewares and furniture 13,6 9,7
Cosmetics 8,9 4,9
Total same store turnover grew by 4,2% whilst product inflation
averaged approximately 7%.
CASH SALES
Cash sales were buoyant with growth of 15,9% and as a percentage of
total sales has increased to 42,2% from 40,0% in the previous year.
CREDIT
The credit market remained difficult with increased delinquencies.
Enhanced credit risk management practices continued to be
implemented during the year which curtailed credit turnover growth
to 5,7%. No relaxation of these practices is expected until there
is clear evidence that the credit cycle has turned.
The retail debtors’ book of R5,8 billion, has increased by 11,3%.
Net bad debt as a percentage of closing debtors’ book increased to
12,4% from 10,5% at the previous year-end, moving from 11,4% at the
half year. This is within management’s expectations. The retail
debtors’ book is adequately provisioned at 12,3%, up from 10,4% at
the previous year-end.
AFRICA EXPANSION
The group currently trades out of 120 stores outside of South
Africa. These stores traded well during the year with turnover
growth of 26,0% and same store turnover growth of 15,0%. In the
next five years our African expansion will accelerate and we plan
to be trading out of approximately 300 stores by 2018.
PROSPECTS
We expect trading conditions in the credit side of our business to
remain challenging, whilst we anticipate we will continue to
benefit from strong cash sales growth.
Our ongoing strategy for growth in cash sales, supported by our
rewards program, is resulting in a more equitable split between
cash and credit turnover. Together with our ongoing retail brand
strategy of targeting diversification across our merchandise
categories, as well as broadening our LSM appeal, we are well
positioned for the future. Any improvement in the credit cycle will
also benefit the group.
Our strategic objectives around supply chain, customer relationship
management (CRM) and Africa expansion will continue. In line with
our strategy for long-term growth, we will be opening in excess of
180 new stores in the year ahead which will increase trading space
by approximately 7%. We will launch our online trading platform
towards the end of this year using a phased approach across all our
retail brands.
For the first 8 weeks of the current financial year, total retail
turnover grew by 10,2%, with cash sales growth of 22%.
PREFERENCE DIVIDEND ANNOUNCEMENT
Dividend no. 155 of 3,25% (6,5 cents per share) (gross) in respect
of the six months ending 30 September 2014 has been declared from
income reserves, payable on Monday, 22 September 2014 to holders of
6,5% preference shares recorded in the books of the company at the
close of business on Friday, 19 September 2014.
The last day to trade (“cum” the dividend) in order to participate
in the dividend will be Friday, 12 September 2014. The Foschini
Group Limited preference shares will commence trading “ex” the
dividend from the commencement of business on Monday, 15 September
2014 and the record date, as indicated, will be Friday, 19
September 2014.
Preference shareholders should take note that share certificates
may not be dematerialised or rematerialised during the period
Monday, 15 September 2014 to Friday, 19 September 2014, 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) 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 2014; 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
293,0 cents per ordinary share from income reserves, for the period
ended 31 March 2014, payable on Monday, 7 July 2014 to ordinary
shareholders recorded in the books of the company at the close of
business on Friday, 4 July 2014.
The last day to trade (“cum” the dividend) in order to participate
in the dividend will be Friday, 27 June 2014. The Foschini Group
Limited ordinary shares will commence trading “ex” the dividend
from the commencement of business on Monday, 30 June 2014 and the
record date, as indicated, will be Friday, 4 July 2014.
Ordinary shareholders should take note that share certificates may
not be dematerialised or rematerialised during the period Monday,
30 June 2014 to Friday, 4 July 2014, 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) 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 249,05000 cents
4) The issued gross ordinary share capital of The Foschini Group
Limited is 222 005 054 shares at 29 May 2014; 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
Cape Town
29 May 2014
Non-executive directors:
D M Nurek (Chairman), Prof F Abrahams, S E Abrahams, M Lewis, E
Oblowitz, N V Simamane, B L M Makgabo-Fiskerstrand, D Friedland
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 Proprietary Limited, Ground Floor,
70 Marshall Street, Johannesburg, 2001
Sponsor:
UBS South Africa Proprietary Limited
Visit our website at http://www.tfg.co.za/
Date: 29/05/2014 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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