Wrap Text
Reviewed Preliminary Consolidated Results
The Foschini Group Limited
Registration number: 1937/009504/06
Share codes: TFG-TFGP
ISIN codes: ZAE000148466 – ZAE000148516
Reviewed Preliminary Condensed Consolidated Results for the Year
Ended 31 March 2015
The reviewed preliminary condensed consolidated results of The
Foschini Group Limited for the year ended 31 March 2015 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
* Group turnover up 13,6% to R16,1 billion (excluding Phase Eight:
10,8%)
* Strong cash sales growth of 19,6% now representing 45,6% of TFG
turnover (including 2 months of Phase Eight: 46,9%)
* Headline earnings per share from continuing operations
(excluding once-off acquisition costs) up 9,7% to 897,9 cents
* Final distribution of scrip with a cash dividend alternative of
325,0 cents per share – a 10,9% increase
* Acquisition of international fashion retailer Phase Eight
concluded
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
March March
2015 2014
Reviewed Audited
Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 2 197,0 1 696,1
Goodwill and intangible assets 4 365,2 63,4
Participation in export partnerships 8,4 23,9
Deferred taxation asset 354,7 337,1
-------- --------
6 925,3 2 120,5
-------- --------
Current assets
Inventory (note 5) 3 813,9 2 775,9
Trade receivables – retail 6 199,9 5 796,6
Concession receivables 156,5 -
Other receivables and prepayments 624,2 465,5
Participation in export partnerships 13,2 11,9
Cash 800,4 301,3
-------- --------
11 608,1 9 351,2
-------- --------
Assets associated with disposal group
– RCS Group (note 6) - 5 631,5
-------- --------
Total assets 18 533,4 17 103,2
======== ========
EQUITY AND LIABILITIES
Equity attributable to equity holders of The
Foschini Group Limited 8 130,9 7 228,6
Non-controlling interest 2,7 861,3
-------- --------
Total equity 8 133,6 8 089,9
-------- --------
LIABILITIES
Non-current liabilities
Interest-bearing debt 3 709,5 1 584,7
Put option liability (note 13) 20,3 -
Cash-settled share incentive scheme (note 13) 0,7 -
Operating lease liability 223,1 208,2
Deferred taxation liability 345,2 42,7
Post-retirement defined benefit plan 192,6 180,4
-------- --------
4 491,4 2 016,0
-------- --------
Current liabilities
Interest-bearing debt 3 333,0 1 375,7
Trade and other payables 2 553,0 1 853,0
Operating lease liability 9,0 8,0
Taxation payable 13,4 59,4
-------- --------
5 908,4 3 296,1
-------- --------
Liabilities associated with disposal group
– RCS Group (note 6) - 3 701,2
-------- --------
Total liabilities 10 399,8 9 013,3
-------- --------
Total equity and liabilities 18 533,4 17 103,2
======== ========
CONDENSED CONSOLIDATED INCOME STATEMENT
Year Year % change
ended ended
31 March 31 March
2015 2014
Reviewed Audited
Rm Rm
Continuing operations
Revenue (note 7) 18 544,0 16 362,9
======== ========
Retail turnover 16 085,9 14 159,0 13,6%
Cost of turnover (8 484,2) (7 579,4)
-------- --------
Gross profit 7 601,7 6 579,6
Interest income (note 8) 1 367,7 1 148,1
Other revenue (note 9) 1 090,4 1 055,8
Trading expenses (note 10) (7 252,7) (6 246,6)
-------- --------
Operating profit before once-off
acquisition costs and finance
charges 2 807,1 2 536,9
Once-off acquisition costs (292,4) -
Finance costs (228,1) (161,8)
-------- --------
Profit before tax 2 286,6 2 375,1
Income tax expense (748,8) (691,5)
-------- --------
Profit from continuing operations 1 537,8 1 683,6
Discontinued operations
Profit from discontinued
operations, net of tax
– RCS Group (note 6) 86,2 321,1
Profit on disposal of discontinued
operation - RCS Group (note 6) 273,2 -
-------- --------
Profit for the year 1 897,2 2 004,7
======== ========
Attributable to:
Continuing operations 1 537,4 1 683,1
Discontinued operations 320,6 176,5
-------- --------
Equity holders of The Foschini
Group Limited 1 858,0 1 859,6 (0,1%)
Non-controlling interest 39,2 145,1
-------- --------
Profit for the year 1 897,2 2 004,7
======== ========
Earnings per ordinary share (cents)
Continuing operations (excl once-off
acquisition costs)
Basic 893,3 817,1 9,3%
Headline 897,9 818,7 9,7%
Diluted (basic) 885,7 811,5 9,1%
Diluted (headline) 890,3 813,1 9,5%
Total
Basic 909,4 902.8 0,7%
Diluted (basic) 901,7 896,6 0,6%
Weighted average ordinary shares in
issue (millions) 204,3 206,0
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 Year ended 31
March 2015 March 2014
Reviewed Audited
Rm Rm
Profit for the year 1 897,2 2 004,7
-------- --------
Other comprehensive income:
Items that will never be reclassified to
profit or loss
Actuarial losses post-retirement defined - (69,8)
benefit plan
Deferred tax on items that will never be
reclassified to profit or loss - 19,5
Items that are or may be reclassified to
profit or loss
Movement in effective portion of changes
in fair value of cash flow hedges 32,9 40,6
-------- --------
Continuing operations 41,1 6,9
Discontinued operations (8,2) 33,7
-------- --------
Foreign currency translation reserve 66,0 (3,2)
movements
-------- --------
Continuing operations 66,0 (5,0)
Discontinued operations - 1,8
-------- --------
Deferred tax on items that are or may be
reclassified to profit or loss (9,2) (11,3)
-------- --------
Other comprehensive income for the year,
net of tax 89,7 (24,2)
-------- --------
Total comprehensive income for the year 1 986,9 1 980,5
======== ========
Attributable to:
Continuing operations 1 633,0 1 632,8
Discontinued operations 317,4 191,6
-------- --------
Equity holders of The Foschini Group 1 950,4 1 824,4
Limited
Non-controlling interest 36,5 156,1
-------- --------
Total comprehensive income for the year 1 986,9 1 980,5
======== ========
SUPPLEMENTARY INFORMATION
March March
2015 2014
Reviewed Audited
Net ordinary shares in issue (millions) 205,4 204,3
Weighted average ordinary shares in issue
(millions) 204,3 206,0
Tangible net asset value per ordinary
share (cents) 1 833,3 3 507,2
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 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 movement 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
Profit for the year
Continuing operations 1 537,4 0,4 1 537,8
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 41,1 - 41,1
Foreign currency translation
reserve movement 66,0 - 66,0
Deferred tax on movement in
other comprehensive income (11,5) - (11,5)
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 year 1 950,4 36,5 1 986,9
Contributions by and
distributions to owners
Share-based payments reserve
movements 97,4 - 97,4
Dividends paid (1 146,9) - (1 146,9)
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
Cancellation of issued shares (0,1) - (0,1)
Proceeds from sale of shares in
terms of share incentive schemes 132,6 - 132,6
Shares purchased in terms of
share incentive schemes (175,7) - (175,7)
Increase in the fair value of
the put option liability
(15,8) - (15,8)
Current tax on shares purchased 12,1 - 12,1
Deferred tax on shares purchased 24,1 - 24,1
-------- ------- --------
Equity at 31 March 2015 8 130,9 2,7 8 133,6
======== ======= ========
Year ended Year ended
31 March 31 March
2015 2014
Reviewed Audited
Dividend per ordinary share (cents)
Interim 263,0 243,0
Final 325,0 293,0
-------- --------
Total 588,0 536,0
======== ========
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Year Year
ended 31 ended 31
March March
2015 2014
Reviewed Audited
Rm Rm
Cash flows from operating activities
Operating profit before working capital
changes (note 11) 3 047,4 3 000,6
Increase in working capital (998,4) (930,3)
------- -------
Cash generated from operations 2 049,0 2 070,3
Interest income 30,0 17,6
Finance costs (228,1) (161,8)
Taxation paid (765,7) (730,7)
Dividends paid (1 146,9) (1 067,2)
------- -------
Net cash (outflows) inflows from operating
activities (61,7) 128,2
------- -------
Cash flows from investing activities
Purchase of property, plant and equipment (669,8) (554,2)
Acquisition of assets through business
combinations (note 13) (2 576,9) -
Proceeds from sale of property, plant and
equipment 10,2 4,1
Repayment of participation in export
partnerships 14,2 12,6
Proceeds from disposal of discontinued
operations 1 442,7 -
------- -------
Net cash outflows from investing activities (1 779,6) (537,5)
------- -------
Cash flows from financing activities
Repurchase of shares - (600,5)
Shares purchased in terms of share incentive
schemes (175,7) (127,5)
Proceeds from sale of shares in terms of
share incentive schemes 132,6 45,5
Increase in interest-bearing debt 2 371,6 1 022,0
------- -------
Net cash inflows from financing activities 2 328,5 339,5
------- -------
Net increase (decrease)in cash during the
year 487,2 (69,8)
Cash at the beginning of the year 301,3 593,4
Cash at the beginning of the year –
discontinued operations - (222,4)
Effect of exchange rate fluctuations on cash
held 11,9 0,1
------- -------
Cash at the end of the year 800,4 301,3
======= =======
CONSOLIDATED SEGMENTAL ANALYSIS
Customer Central
Retail value and
trading added shared Phase
divisions products Credit services Eight
Reviewed Reviewed Reviewed Reviewed Reviewed
Year ended 31
March 2015 Rm Rm Rm Rm Rm
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)
======== ======== ======== ======== ========
Segmental
profit (loss)
before tax 3 380,9 450,9 93,6 (1 233,0) (287,7)
Other material
non-cash items
Foreign
exchange
transactions
Share-based
payments
Operating
lease
liability
adjustment
Group profit
before tax
Capital
expenditure
Segment assets
Segment
liabilities
Customer Central
Retail value and
trading added shared Phase
divisions products Credit services Eight
Audited Audited Audited Audited Audited
Year ended 31
March 2014 Rm Rm Rm Rm Rm
External
revenue 14 159,0 763,1 287,6 5,1 -
External
interest
income - - 1 130,5 17,6 -
--------- --------- -------- -------- --------
Total revenue* 14 159,0 763,1 1 418,1 22,7 -
======== ======== ======== ======== ========
Inter-segment
revenue 53,5
External
finance costs (161,8) -
Depreciation
and
amortisation (365,5) -
======== ======== ======== ======== ========
Segmental
profit (loss)
before tax 3 078,4 453,9 10,1 (1 052,3) -
Other material
non-cash items
Foreign
exchange
transactions
Share-based
payments
Operating
lease
liability
adjustment
-------
Group profit
before tax
Capital
expenditure
Segment assets
Segment
liabilities
Total retail Total retail
2015 2014
Reviewed Audited
Rm Rm
External revenue 17 176,3 15 214,8
External interest income 1 367,7 1 148,1
-------- --------
Total revenue* 18 544,0 16 362,9
======== ========
Inter-segment revenue 9,7 53,5
External finance costs (228,1) (161,8)
Depreciation and amortisation (428,1) (365,5)
-------- --------
Segmental profit (loss) before tax 2 404,7 2 490,1
Other material non-cash items
Foreign exchange transactions (4,8) (5,0)
Share-based payments (97,4) (90,3)
Operating lease liability adjustment (15,9) (19,7)
------- -------
Group profit before tax 2 286,6 2 375,1
Capital expenditure 669,8 554,2
Segment assets 18 533,4 11 471,7
Segment liabilities 10 399,8 5 312,1
* 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.
Discontinued Discontinued
operations – operations –
RCS Group# RCS Group
2015 2014
Reviewed Audited
Rm Rm
External revenue 164,5 634,5
External interest income 298,2 1 118,7
-------- --------
Total revenue* 462,7 1 753,2
======== ========
Inter-segment revenue 2,7 8,3
External finance costs (65,0) (252,2)
Depreciation and amortisation (4,8) (17,4)
------- -------
Segmental profit before tax 480,4 456,9
Other material non-cash items
Foreign exchange transactions - 1,8
------- -------
Group profit before tax 480,4 458,7
Capital expenditure 4,9 22,9
Segment assets - 5 631,5
Segment liabilities - 3 701,2
# Year ended 31 March 2015 represents 3 months of trading prior to
the disposal of RCS Group.
NOTES
The reviewed preliminary condensed consolidated results of The
Foschini Group Limited for the year ended 31 March 2015 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 reviewed preliminary condensed consolidated results for the
year ended 31 March 2015 have been 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, Financial Pronouncements as issued by Financial
Reporting Standards Council and disclosures required by the
Companies Act No. 71 of 2008 and the JSE Listings Requirements,
and, except as mentioned in note 2 and 3, have been consistently
applied with those in the prior year.
2. During the year, the group adopted the following revised
accounting standards:
• Investment Entities (Amendments to IFRS 10 Consolidated
Financial Statements, IFRS 12 Disclosure of Interests in Other
Entities and IAS 27 Separate Financial Statements)
• Offsetting Financial Assets and Financial Liabilities
(Amendments to IAS 32 Financial Instruments: Presentation)
• Recoverable Amount Disclosure for Non-Financial Assets
(Amendment to IAS 36 Impairment of Assets)
• Novation of Derivatives and Continuation of Hedge Accounting
(Amendment to IAS 39 Financial Instruments: Recognition and
Measurement)
• IFRIC 21 Levies
The adoption of these standards had no material impact on these
results.
3. Additional accounting policies adopted due to the acquisition of
Phase Eight
During the year, the group had adopted the following accounting
policies as a result of the acquisition of Phase Eight:
• IFRS 2 Share-based payments: Cash-settled share-based options
• IAS 39: Financial Instruments: put and call option to acquire
group equity
4. 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 held for disposal in
terms of IFRS 5. The RCS Group was disposed of on 30 June 2014
(refer to note 6).
Year ended year ended
31 March 31 March
2015 2014
Reviewed Audited
Rm Rm
5. Inventory
Inventory at year-end 3 813,9 2 775,9
======== ========
Inventory write-downs included above 154,0 140,4
-------- --------
6. Discontinued operations (RCS Group)
As was announced on SENS on 10 April 2014, the group together with
The Standard Bank of South Africa Limited, entered into agreements
which resulted in BNP Paribas Personal Finance S.A. becoming the
100% shareholder of the RCS Group. Accordingly, the RCS Group was
treated as a discontinued operation in terms of IFRS 5 for the
year ended 31 March 2014. The closing date of the transaction was
6 August 2014 and the effective date was 30 June 2014. TFG’s share
of the proceeds was R1,4 billion. For the period 1 April 2014 to
30 June 2014, the RCS Group has been disclosed as a discontinued
operation, and the profit on disposal of the RCS Group has been
disclosed separately from continuing operations.
INCOME STATEMENT*
Interest income 298,2 1 118,7
Other income 164,5 634,5
-------- --------
Total credit income 462,7 1 753,2
Net bad debt (111,1) (373,6)
Operating costs (166,6) (668,7)
-------- --------
Operating profit before finance charges 185,0 710,9
Finance costs (65,0) (252,2)
-------- --------
Profit before tax 120,0 458,7
Income tax expense (33,8) (137,6)
-------- --------
Profit from discontinued operations 86,2 321,1
Profit on disposal of discontinued
operations 273,2 -
======== ========
Profit for the year 359,4 321,1
-------- --------
* Year ended 31 March 2015 represents 3 months of trading prior to
the disposal of RCS Group.
CASH FLOW STATEMENT
Net cash outflows from operating
activities – discontinued operations (45,2) (144,9)
Net cash outflows from investing
activities – discontinued operations (4,9) (22,3)
Net cash inflows from financing activities
– discontinued operations 41,4 366,7
======== ========
(8,7) 199,5
-------- --------
Earnings per share (cents)
Discontinued operations
Basic 156,9 85,7
Headline 23,2 90,2
Diluted (basic) 155,6 85,1
Diluted (headline) 23,0 89,6
7. Revenue
Retail turnover 16 085,9 14 159,0
Interest income (refer note 8) 1 367,7 1 148,1
Other revenue (refer note 9) 1 090,4 1 055,8
-------- --------
18 544,0 16 362,9
======== ========
8. Interest income
Trade receivables - retail 1 337,7 1 130,5
Sundry 30,0 17,6
-------- --------
1 367,7 1 148,1
======== ========
9. Other revenue
Publishing income 388,2 379,0
Collection cost recovery 304,1 287,6
Insurance income 300,3 299,6
Mobile one2one airtime income 86,6 84,5
Sundry income 11,2 5,1
-------- --------
1 090,4 1 055,8
======== ========
10. Trading expenses
Depreciation (428,1) (365,5)
Employee costs (2 325,2) (2 048,3)
Occupancy costs (1 585,0) (1 393,0)
Net bad debt (1 023,6) (935,5)
Other operating costs (1 890,8) (1 504,3)
--------- ---------
(7 252,7) (6 246,6)
======== ========
11. Operating profit before working
capital changes
Profit before tax 2 286,6 2 375,1
Finance costs 228,1 161,8
-------- --------
Operating profit before finance charges 2 514,7 2 536,9
Interest income - sundry (30,0) (17,6)
Non-cash items 562,7 481,3
-------- --------
Depreciation 428,1 365,5
Operating lease liability adjustment 15,9 19,7
Share-based payments 97,4 90,3
Post-retirement defined benefit medical
aid movement 12,2 6,1
Foreign currency translation reserve
movement (4,8) (5,0)
Cash-settled share incentive scheme 0,7 -
Loss on disposal of property, plant and
equipment 13,5 4,8
Profit on disposal of property, plant and
equipment (0,3) (0,1)
-------- --------
3 047,4 3 000,6
======== ========
12. Reconciliation of profit for the year
to headline earnings
Profit for the year attributable to equity
holders of The Foschini Group Limited 1 858,0 1 859,6
Adjusted for:
Profit on disposal of property, plant and
equipment (0,3) (0,1)
Loss on disposal of property, plant and
equipment 13,5 4,8
Profit on disposal of discontinued
operations (273,2) -
Impairment of loan receivables - 12,9
-------- --------
Adjusted headline earnings before tax 1 598,0 1 877,2
Tax on headline earnings adjustments (3,8) (4,9)
-------- --------
Headline earnings 1 594,2 1 872,3
-------- --------
Once-off acquisition costs 292,4 -
Tax impact of adjustments (4,7) -
-------- --------
Adjusted headline earnings* 1 881,9 1 872,3
======== ========
* Adjusted headline earnings is calculated to remove the impact of
the once-off acquisition costs of the Phase Eight acquisition.
Continuing Continuing
operations operations
(excl once- (incl once-
off off
acquisition acquisition
costs) costs)
Earnings per ordinary share (cents)
2015
Basic 893,3 752,5
Headline 897,9 757,1
Diluted (basic) 885,7 746,1
Diluted (headline) 890,3 750,7
2014
Basic 817,1 817,1
Headline 818,7 818,7
Diluted (basic) 811,5 811,5
Diluted (headline) 813,1 813,1
13. Acquisition of Phase Eight
On 15 January 2015, the group acquired c.85% of Poppy Holdco
Limited, which trades as Phase Eight, with the remaining c.15%
shareholding owned by management. Through put/call arrangements,
the group has the right to acquire and management the right to sell
all shares held by management in three equal tranches on the
earlier of (i) the publication of the audited accounts of the group
for each of the fourth, fifth and sixth years following completion
of the acquisition or (ii) 6 months following the fourth, fifth and
sixth year anniversaries of completion of the acquisition. As these
put/call arrangements are a consequence of the business
combination, they will be accounted for as a financial liability.
Accordingly, no non-controlling interest is recorded. In addition,
a cash-settled equity instrument was issued to the employees of the
acquired group. The cash-settled share based payments is treated in
accordance with IFRS 2.
The acquisition was funded through a combination of proceeds from
the disposal of RCS Group and South African cash resources. The
existing indebtedness of Phase Eight was refinanced through a new
UK facility of GBP80m which was raised on a non-recourse basis to
TFG.
The acquisition was fully hedged and converted using a ZAR:GBP
exchange rate of R18,29 being the relevant hedged rate. The
acquisition of Phase Eight was at an enterprise value of GBP238m
(ZAR4 353m) with an equity value of GBP159,0m (ZAR2 908,6m) after
taking into account net debt and related adjustments.
Certain fair values are provisional and subject to further review
for a period of up to one year from the acquisition date. The GBP
values have been translated at the closing exchange rate at 15
January 2015 of GBP1:R17,50. These results include 2 months of
Phase Eight trading.
TFG has measured the identifiable assets and liabilities of Phase
Eight at their acquisition-date fair values.
The provisional values are presented below:
Rm £m
Non-current assets 1 814,2 103,7
-------- --------
Property, plant and equipment 276,6 15,8
Intangible assets 1 537,6 87,9
-------- --------
Current assets 858,8 49,0
-------- --------
Inventory 274,7 15,7
Other receivables and prepayments 216,9 12,4
Tax receivable 35,5 2,0
Cash 331,7 18,9
-------- --------
Non-current liabilities 1 970,6 112,6
-------- --------
Interest-bearing debt 1 658,8 94.8
Deferred tax 307,5 17,6
Put option liability 4,3 0,2
-------- --------
Current liabilities 409,6 23,4
-------- --------
Trade and other payables 375,1 21,4
Provisions 34,5 2,0
-------- --------
Total identifiable net assets at fair value 292,8 16,7
Goodwill arising from acquisition 2 615,8 142,3
-------- --------
Purchase consideration 2 908,6 159,0
-------- --------
Purchase consideration transferred 2 783,3 159,0
Cost of hedging instrument 125,3 -
-------- --------
Cash and cash equivalents acquired (331,7) (18,9)
-------- --------
Cash outflow on acquisition 2 576,9 140,1
======== ========
Goodwill of GBP 142,3 million (R2,6 billion) and the Phase Eight
brand amounting to GBP 87,9 million (R1,5 billion) have been
recognised as intangible assets at acquisition. Goodwill represents
the value paid in excess of the provisional fair value of the net
assets. This consists largely of the value assigned to the unique
operating business model and future growth prospects. Once-off
acquisition costs related to the acquisition of R292,4 million have
been expensed in the current period. For the purposes of
comparability, headline earnings per share from continuing
operations excluding these once-off acquisition costs has been
calculated.
14. Related parties
Related party transactions similar to those disclosed in the
group’s annual financial statements for the year ended 31 March
2014 took place during the year. There are no significant related
party transactions which took place in the current year except as
mentioned in note 15.
15. Repurchase of shares
At the annual general meeting of the company held on 1 September
2014 shareholders approved a specific repurchase of 11 million
ordinary shares held by a wholly-owned subsidiary.
The specific repurchase was implemented on 19 September 2014 at an
average price of R117,39 per share, whereafter the shares were
cancelled and restored to authorised share capital. On 21 October
2014 11 million shares were delisted reducing the total shares in
issue from 222 005 054 shares to 211 005 054 shares.
16. 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. There are no level 1 or level 3 financial
instruments within the group and there were no transfers between
levels during the year.
17. Events after the reporting date
No further significant events took place between the end of the
financial year and the date these preliminary consolidated results
were authorised for issue.
COMMENT
BACKGROUND
As was announced on SENS on 16 January 2015, the group acquired a
c.85% holding in Phase Eight. Phase Eight is a UK based
international women’s clothing and accessories retailer trading out
of 444 outlets across the UK and Ireland as well as 17 other
international markets. For this financial year, 2 months of Phase
Eight trading (February and March 2015) has been included in these
results. Accordingly, to assist analysis, where relevant, we
reflect the TFG position excluding Phase Eight as well as the
combined position including the impact of the acquisition.
In addition, the results of RCS Group for the three month period
(April, May and June 2014) are included as profit from discontinued
operations. As reported in our interim results, the transaction in
relation to TFG’s 55% interest in the RCS Group was completed with
an effective date of 30 June 2014. TFG’s share of the transaction
proceeds was R1,4 billion.
GROUP OVERVIEW
The group produced a solid result for the year with combined retail
sales growth of 13,6%. Excluding the impact of Phase Eight, the
group achieved retail sales growth of 10,8% with comparable sales
growth of 5,5%.
We continued to benefit from strong cash sales growth in the second
half of the year with total cash sales growth for the year of 19,6%
(combined 26,3%), reflecting the ongoing appeal of our merchandise
to our customers. Our credit turnover growth was stronger during
the second half of the year at 6,1% improving from 2,5% in the
first half. Full year credit turnover growth was 4,3%. Whilst we
are pleased with the early signs of improvement in the credit
cycle, we continue to apply strict credit risk management practices
appropriate for this cycle.
The group’s gross margin in all categories remained consistent with
the prior year.
Whilst expenses remain well controlled growing at 12,6% (excluding
Phase Eight), we are concerned at the significant increase in
crime-related losses experienced this year. In addition, the
impact of load shedding on our business is also of concern to us.
During the year, the lost turnover as a result of load shedding is
estimated to be R71 million (approximately 1% impact) since
December 2014.
Headline earnings per share from continuing operations, excluding
the once-off acquisition costs incurred in relation to Phase Eight,
increased by 9,7% to 897,9 cents per share from 818,7 cents per
share in the previous year.
As described more fully below, the final distribution will be in
the form of a scrip with a cash dividend alternative of 325,0 cents
per share – an increase of 10,9%. Accordingly the dividend in
respect of the full year amounts to 588,0 cents per share, an
increase of 9,7% reflecting the growth in the underlying continuing
operations.
We continued to grow trading space by opening 195 stores for the
full year in South Africa and the rest of Africa, whilst 26 were
closed. At the year-end, TFG excluding Phase Eight was trading out
of 2 280 stores, an increase in trading area of 6,7%.
In November 2014 TFG launched its online trading platform with two
of its brands, TFG Mobile and @home. Their performance to date has
been encouraging and in line with management’s expectations.
MERCHANDISE CATEGORIES
Turnover growths in the various merchandise categories are as
follows:
% same % combined
store turnover
% turnover turnover growth
growth growth (including
(excluding (excluding Phase
Phase Phase Eight)
Eight) Eight)
Clothing 10,2% 4,6% 14,4%
Jewellery 5,7% 1,2% 5,7%
Cellphones 19,2% 14,8% 19,2%
Homewares & furniture 12,9% 7,4% 12,9%
Cosmetics 10,1% 6,3% 10,1%
Total same store turnover (excluding Phase Eight) grew by 5,5%
whilst product inflation averaged approximately 7%.
CASH SALES
During the year, we continued to focus strategically on driving our
cash turnover through inter alia diversification of our product
categories, broader LSM appeal and our Rewards program. Our cash
reward customers now total 3,6 million. This, together with the
desirability of our merchandise, resulted in continued strong cash
sales growth which increased from 15,9% last year to 19,6% this
year in our TFG stores excluding Phase Eight. Total cash sales
growth including Phase Eight was at 26,3%. Cash sales for TFG
excluding Phase Eight as a percentage of its total sales increased
to 45,6% from 42,2% in the previous year whilst cash sales for the
group including Phase Eight as a percentage of total sales
increased to 46,9%. On an annualised basis, cash sales as a
percentage of total sales for the group including Phase Eight would
have increased to approximately 54%.
CREDIT
Credit turnover growth was stronger in the second half at 6,1%
which resulted in full year credit turnover growth of 4,3%, up from
2,5% at the half year. Credit sales were curtailed by the
continued implementation of appropriate credit risk measures. In
addition, the postal strike had a negative short term impact on
collections.
The retail debtors’ book of R6,2 billion, has increased by 7,0%.
The growth in net bad debt reduced to 9,4% from 39,5% in the
previous year. Net bad debt as a percentage of closing debtors’
book increased to 13,6% from 12,4% at the previous year-end,
increasing from 12,9% at the half-year, very much within
management’s expectations. The retail debtors’ book is adequately
provisioned at 13,6%, up from 12,3% at the previous year-end.
BALANCE SHEET OPTIMISATION
Post the Phase Eight acquisition, it is our intention to bring our
debt equity ratio (currently 76,8% on a consolidated basis with
recourse gearing of 56,6%) closer to our medium term target of
40%. Accordingly it is proposed that a scrip distribution with a
cash dividend alternative will be offered to shareholders in the
short term with the intention of 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 148 stores across 7 countries in
the rest of Africa. These stores traded well during the year with
turnover growth of 23,9% and same store turnover growth of 12,2%.
Expansion into the rest of Africa continues to be one of our
strategic objectives with a target of 375 stores by 2020. At this
point in time, Phase Eight has no stores in Africa.
INTERNATIONAL EXPANSION
The acquisition of Phase Eight gives TFG an entry into global
markets allowing us to expand our international footprint. TFG
including Phase Eight now trades through 2 724 outlets in 27
countries.
MANAGEMENT AND BOARD CHANGES
As was announced on SENS on 10 November 2014, Ronnie Stein, chief
financial officer of the group will be retiring at the end of June
2015 after 19 years service. As indicated Anthony Thunström was
appointed as chief financial officer elect on 1 February 2015 and
will assume the position of chief financial officer on Ronnie’s
retirement on 1 July 2015.
Ronnie has made an outstanding contribution to the group. Under
his financial stewardship the group has annually produced
outstanding results whilst maintaining a strong balance sheet.
Ronnie has been instrumental in the strategic evolution of our
group, most recently playing a key role in the acquisition of Phase
Eight.
Peter Meiring, Group Director: TFG Financial Services will also be
retiring at the end of June 2015 after 32 years service. Peter has
held various positions in the group during his career, most
recently heading up our credit business. In this role he has ably
managed our group’s single largest asset being our debtors’ book.
Peter was a key player in building the success of the RCS Group
over many years and was also instrumental in its recent successful
disposal.
The board expresses its immense gratitude for the significant
contributions made by both Ronnie and Peter during their tenure.
In addition to these executive changes, the board is pleased to
announce that Michael Lewis, an independent non-executive director
of our group since 1989 has been appointed deputy chairman
effective immediately.
Furthermore, we are delighted to announce that Ronnie Stein will
remain on the board as a non-executive director following his
retirement.
PROSPECTS
Whilst early signs of improvement are evident in the credit side of
our business, we nevertheless expect the credit cycle and the South
African economic environment to remain challenging. We are
concerned around the potential ongoing impact that load shedding is
likely to have on our business. However, we anticipate continuing
to benefit from good cash sales growth.
Our previously reported strategic objectives around supply chain,
customer relationship management, Africa expansion, omni-channel
and leadership remain appropriate and will continue. In line with
our strategy for long-term growth, we anticipate opening in excess
of 160 new stores in sub-Saharan Africa in the year ahead which
will increase trading space by approximately 6%. In addition, we
are planning to open in excess of 100 Phase Eight outlets
internationally. We will continue the e-commerce roll-out with the
launch of our Totalsports, Sportscene and Duesouth brands this
year.
Excluding Phase Eight, the growth for the first 6 weeks of the
current financial year is at similar levels to the previous year
with the past 2 weeks being at lower levels due to the unseasonally
warm weather. Phase Eight is trading ahead of last year and within
management expectations.
PREFERENCE DIVIDEND ANNOUNCEMENT
Dividend no. 157 of 3,25% (6,5 cents per share) (gross) in respect
of the six months ending 30 September 2015 has been declared from
income reserves, payable on Monday, 21 September 2015 to holders of
6,5% preference shares recorded in the books of the company at the
close of business on Friday, 18 September 2015.
The last day to trade (“cum” the dividend) in order to participate
in the dividend will be Friday, 11 September 2015. The Foschini
Group Limited preference shares will commence trading “ex” the
dividend from the commencement of business on Monday, 14 September
2015 and the record date, as indicated, will be Friday, 18
September 2015.
Preference shareholders should take note that share certificates
may not be dematerialised or rematerialised during the period
Monday, 14 September 2015 to Friday, 18 September 2015, 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 28 May 2015; and
5) 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
a final distribution for the year ended 31 March 2015, by way of
the issue of fully paid ordinary shares of 1,25 cents each as a
capitalisation issue or scrip distribution payable to ordinary
shareholders recorded in the register on the record date, being
Friday 17 July 2015 (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 325,0
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 17 July 2015 (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 276.25000 cents per ordinary share will
apply to shareholders liable for the local 15% dividend withholding
tax and 325.00000 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
28 May 2015 is 211 005 054 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 325,0 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 25 June 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 19
June 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
Circular and form of election posted to Friday 19 June
ordinary shareholders 2015
Finalisation date: Announcement of Friday 26
ratio applicable to the scrip June 2015
distribution, based on the 5 day VWAP
ending on Thursday, 25 June 2015,
released on SENS by 11:00 on
Last day to trade in order to be Friday 10
eligible for the scrip July 2015
distribution/cash dividend alternative
(“CUM” scrip distribution/cash dividend
alternative)
Ordinary shares trade “EX” the scrip Monday 13
distribution/cash dividend alternative July 2015
Listing of maximum possible number of Monday 13
new ordinary shares that could be July 2015
issued in terms of the scrip
distribution
Last day to elect the cash dividend Friday 17 July
alternative instead of the scrip 2015
distribution by 12h00
Record date in respect of the scrip Friday 17 July
distribution/cash dividend alternative 2015
Ordinary share certificates and Monday 20
dividend cheques posted and Central July 2015
Securities Depository Participant
(CSDP)/broker accounts credited/updated
(payment date)
Maximum number of new ordinary shares Wednesday 23
listed adjusted to reflect the actual July 2015
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. Any changes
will be released on SENS and published in the South African press.
Ordinary share certificates may not be dematerialised or
rematerialised, nor may transfers between registers take place
between Monday 13 July 2015 and Friday 17 July 2015, 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 20 July 2015.
------------------------------------------------------------------
Signed on behalf of the Board.
D M Nurek, Chairman A D Murray, CEO
Cape Town
28 May 2015
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
Visit our website at http://www.tfglimited.co.za
Sponsor:
UBS South Africa Proprietary Limited
Date: 28/05/2015 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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