THE FOSCHINI GROUP LIMITED - Statement by the CEO at the Annual General Meeting

Statement by the CEO at the Annual General Meeting

THE FOSCHINI GROUP LTD
Reg. No.: 1937/009504/06
Code : TFG - TFGP
ISIN : ZAE000148466 – ZAE000148516


STATEMENT BY THE CEO
At TFG’s 78th Annual General Meeting held today, CEO Doug Murray
updated the meeting as follows:


RESULTS FOR 2015
The 2015 financial year was characterised by two key strategic
actions being the disposal of the RCS Group during June 2014 as
well as the acquisition of Phase Eight during January 2015.   As the
results of Phase Eight were only included for two months of our
financial year, the numbers that I will now refer to are stated
excluding the impact of Phase Eight.


The group produced a solid result for the year in a difficult
trading environment, particularly in the credit side of our
business.


Credit sales growth at 4,3% were curtailed by the continued
implementation of appropriate credit risk measures.   Cash sales
continued to grow strongly at 19,6% reflecting the ongoing
strategic focus in this area as well as the desirability of our
merchandise and the quality of the retail experience offered in our
stores. Our total retail turnover increased by 10,8% with
comparable sales growth of 5,5%.   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.   Our final distribution, in the form of a scrip
with a cash dividend alternative, increased by 10,9% to 325,0 cents
per share with a total distribution for the year of 588,0 cents per
share – an increase of 9,7% reflecting the growth in the underlying
operations.
PROSPECTS FOR THE 2016 FINANCIAL YEAR
I would now like to comment briefly on the group’s prospects for
2016.
  • While 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.
  • In line with our strategy for long-term growth we will
     continue to open new stores and anticipate increasing trading
     space by approximately 6% in sub-Saharan Africa in the current
     year.   In addition, we are planning to open in excess of 100
     Phase Eight outlets internationally.    We have also continued
     our e-commerce roll-out with the launch of Totalsports,
     Sportscene and Duesouth in June 2015.
  • Total sales growth for the first five months of this financial
     year is 33,1% including Phase Eight.    Turnover excluding Phase
     Eight, grew by 9,7% over the previous period with same store
     sales growth of 4,3%.   Credit sales growth at 5,8% continues
     to grow at similar levels to last year’s second half and is in
     line with management’s expectations, given our commitment to
     the continued implementation of strict credit risk measures.
     Cash sales growth remains strong at 14,8%.
  • Turnover for the last 2 months of July and August has shown a
     stronger trend with growth of 11,3%.
  • Phase Eight is in the process of being fully integrated into
     our business processes and is meeting all strategic objectives
     set for the year thus far.   Their turnover for this period is
     in line with management’s expectations.
  • Our retail debtors’ book continues to perform within
     management’s expectations.
  • Credit compliance remains a key focus area particularly in
     light of ongoing developments in credit legislation.   We
     continue to engage constructively with the regulators and
     significant effort has been invested in ensuring compliance
     with the Affordability Regulations which will shortly come
     into effect.
  • Load shedding remains a concern as does crime related losses
     which continue to escalate. We continue to investigate and put
     in place initiatives to best control these costs.
  • In order to curb the impact of electricity tariff increases
     which are in excess of CPI, effort continues to be invested in
     various initiatives aimed at improving our electricity
     consumption.
  • We are pleased with the early signs of improvement in the
     credit cycle and continued strong cash sales growth and
     believe the group is well positioned to deliver a satisfactory
     result for this year. As always, the second half of the year
     is heavily dependent on Christmas trading, which will largely
     determine the performance of the group in the second half.


ACKNOWLEDGMENTS
Once more on behalf of my fellow board members and myself I thank
all our dedicated staff for their hard work and continued excellent
performance during the year.


Cape Town
1 September 2015


SPONSOR:
UBS South Africa (Pty) Ltd

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