Wrap Text
Reviewed Preliminary Condensed Consolidated Results for the Year Ended 31 March 2016
The Foschini Group Limited
Registration number: 1937/009504/06
Share codes: TFG
ISIN codes: ZAE000148466
Reviewed Preliminary Condensed Consolidated Results for the Year Ended
31 March 2016
These reviewed preliminary condensed consolidated results of The
Foschini Group Limited for the year ended 31 March 2016 have been
reviewed by the company’s auditors, KPMG Inc., who expressed an
unmodified review conclusion. The auditor’s report does not necessarily
report on all of the information contained in these financial results.
Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor’s engagement they should
obtain a copy of the auditor’s report together with the accompanying
financial information which is available at the company’s registered
office.
SALIENT FEATURES
- Group turnover up 31,2% to R21,1 billion (excluding Phase Eight: 11,6%)
- Strong cash sales growth of 18,4% (excluding Phase Eight) now representing 48,3% of turnover
- Total cash contribution including Phase Eight now 57,2%
- Headline earnings per share from continuing operations (excluding once-off acquisition costs) up 17,6% to 1 055,8 cents
- Final distribution of 385,0 cents per share – an 18,5% increase
- Total distribution of 691,0 cents per share – a 17,5% increase
These results were prepared by the TFG Finance and Advisory department
of The Foschini Group Limited acting under supervision of Anthony
Thunström CA(SA), CFO of The Foschini Group Limited.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated
March 2016 March 2015
Reviewed Audited
Rm Rm
ASSETS
Non-current assets
Property, plant and
equipment (note 17) 2 335,7 1 925,2
Goodwill and
intangible assets
(note 17) 5 577,8 4 637,0
Participation in
export partnerships 8,2 8,4
Deferred taxation
asset 527,2 354,7
---------- ----------
8 448,9 6 925,3
---------- ----------
Current assets
Inventory (note 4) 5 116,1 3 813,9
Trade receivables –
retail 6 695,0 6 199,9
Other receivables and
prepayments 592,9 624,2
Concession receivables 347,2 156,5
Participation in
export partnerships 6,2 13,2
Cash 888,8 800,4
---------- ----------
13 646,2 11 608,1
---------- ----------
Total assets 22 095,1 18 533,4
========== ==========
EQUITY AND LIABILITIES
Equity attributable to
equity holders of The
Foschini Group Limited 9 896,7 8 130,9
Non-controlling
interest 4,0 2,7
---------- ----------
Total equity 9 900,7 8 133,6
---------- ----------
LIABILITIES
Non-current
liabilities
Interest-bearing debt 5 026,3 3 709,5
Put option liability 48,1 20,3
Cash-settled share
incentive scheme 8,5 0,7
Operating lease
liability 238,2 223,1
Deferred taxation 435,4 345,2
liability
Post-retirement
defined benefit plan 217,3 192,6
---------- ----------
5 973,8 4 491,4
---------- ----------
Current liabilities
Interest-bearing debt 3 139,4 3 333,0
Trade and other
payables 3 046,7 2 553,0
Operating lease
liability 10,8 9,0
Taxation payable 23,7 13,4
---------- ----------
6 220,6 5 908,4
---------- ----------
Total liabilities 12 194,4 10 399,8
---------- ----------
Total equity and
liabilities 22 095,1 18 533,4
========== ==========
CONDENSED CONSOLIDATED INCOME STATEMENT
Year ended Year ended %
31 March 31 March change
2016 2015
Reviewed Audited
Rm Rm
Continuing
operations
Revenue (note 5) 23 746,4 18 544,0
========= =========
Retail turnover 21 107,5 16 085,9 31,2
Cost of turnover (10 613,1) (8 484,2)
--------- ---------
Gross profit 10 494,4 7 601,7
Interest income
(note 6) 1 533,0 1 367,7
Other income
(note 7) 1 105,9 1 090,4
Trading expenses
(note 8) (9 537,2) (7 252,7)
--------- ---------
Operating profit
before once-off
acquisition
costs and
finance costs 3 596,1 2 807,1 28,1
Once-off
acquisition
costs (65,9) (292,4)
Finance costs (509,0) (228,1)
--------- ---------
Profit before
tax 3 021,2 2 286,6
Income tax
expense (863,9) (748,8)
--------- ---------
Profit from
continuing
operations 2 157,3 1 537,8 40,3
Discontinued
operations
Profit from
discontinued
operations, net
of tax – RCS
Group - 86,2
Profit on
disposal of
discontinued
operations – RCS
Group
- 273,2
--------- ---------
Profit for the
year 2 157,3 1 897,2 13,7
========= =========
Attributable to:
Continuing
operations 2 155,6 1 537,4
Discontinued
operations - 320,6
--------- ---------
Equity holders
of The Foschini
Group Limited 2 155,6 1 858,0
Non-controlling
interest 1,7 39,2
--------- ---------
Profit for the
year 2 157,3 1 897,2
========= =========
Earnings per
ordinary share
(cents)
Continuing
operations
(excluding once-
off acquisition
costs)
Basic 1 073,3 893,3 20,2
Headline 1 055,8 897,9 17,6
Diluted (basic) 1 063,4 885,7 20,1
Diluted
(headline) 1 046,0 890,3 17,5
Total
Basic 1 041,5 909,4 14,5
Headline 1 024,0 780,3 31,2
Diluted (basic) 1 031,9 901,7 14,4
Diluted
(headline) 1 014,5 773,7 31,1
Weighted average
ordinary shares
in issue
(millions) 207,0 204,3
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 Year ended 31
March 2016 March 2015
Reviewed Audited
Rm Rm
Profit for the
year 2 157,3 1 897,2
---------- ----------
Other comprehensive
income:
Items that will
never be
reclassified to
profit or loss
Actuarial losses on
post-retirement
defined benefit
plan (11,8) -
Deferred tax on
items that will
never be
reclassified to
profit or loss 3,3 -
Items that are or
may be reclassified
to profit or loss
Movement in
effective portion
of changes in fair
value of cash flow
hedges
Continuing
operations (70,3) 41,1
Discontinued
operations - (8,2)
Foreign currency
translation reserve
movement
Continuing
operations 464,0 66,0
Deferred tax on
items that are or
may be reclassified
to profit or loss 19,7 (9,2)
---------- ----------
Other
comprehensive
income for the
year, net of tax 404,9 89,7
---------- ----------
Total
comprehensive
income for the
year 2 562,2 1 986,9
========== ==========
Attributable to:
Continuing
operations 2 560,5 1 633,0
Discontinued
operations - 317,4
---------- ----------
Equity holders of
The Foschini
Group Limited 2 560,5 1 950,4
Non-controlling
interest 1,7 36,5
---------- ----------
Total
comprehensive
income for the
year 2 562,2 1 986,9
========== =========
SUPPLEMENTARY INFORMATION
Restated
March 2016 March 2015
Reviewed Audited
Net ordinary shares in
issue (millions) 209,3 205,4
Weighted average ordinary
shares in issue (millions) 207,0 204,3
Tangible net asset value
per ordinary share (cents) 2 063,5 1 701,0
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity holders
of The Non-
Foschini Group controlling
Limited interest Total equity
Rm Rm Rm
Equity at 31 March 2014 -
audited 7 228,6 861,3 8 089,9
Profit for the 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 24,1 - 24,1
purchased
---------- ---------- ----------
Equity at 31 March 2015 -
audited 8 130,9 2,7 8 133,6
========== ========== ==========
Profit for the year
Continuing operations 2 155,6 1,7 2 157,3
Other comprehensive income
Continuing operations
Actuarial losses on post-
retirement defined benefit
plan (11,8) - (11,8)
Movement in effective
portion of changes in fair
value of cash flow hedges (70,3) - (70,3)
Foreign currency
translation reserve
movement 464,0 - 464,0
Deferred tax on movement
in other comprehensive
income 23,0 - 23,0
---------- ---------- ----------
Total comprehensive income
for the year 2 560,5 1,7 2 562,2
Contributions by and
distributions to owners
Share-based payments
reserve movements 114,7 - 114,7
Dividends paid (1 327,2) (0,4) (1 327,6)
Scrip distribution: share
capital issued and share
premium raised 579,8 - 579,8
Proceeds from sale of
shares in terms of share
incentive schemes 18,1 - 18,1
Shares purchased in terms
of share incentive schemes (193,6) - (193,6)
Increase in the fair value
of the put option
liability (27,2) - (27,2)
Current tax on shares
purchased 13,6 - 13,6
Deferred tax on
shares purchased 27,1 - 27,1
---------- ---------- ----------
Equity at 31 March
2016 - reviewed 9 896,7 4,0 9 900,7
========== ========== ==========
Year ended 31 Year ended 31
March 2016 March 2015
Reviewed Audited
Distribution per
ordinary share
(cents)
Interim 306,0 263,0
Final 385,0 325,0
---------- ----------
Total 691,0 588,0
---------- ----------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
31 March 31 March
2016 2015
Reviewed Audited
Rm Rm
Cash flows from
operating activities
Operating profit before
working capital changes
(note 9) 4 127,2 3 047,4
Increase in working
capital (1 509,4) (998,4)
---------- ----------
Cash generated from
operations 2 617,8 2 049,0
Interest income 22,3 30,0
Finance costs (509,0) (228,1)
Taxation paid (921,8) (765,7)
Dividends paid (747,8) (1 146,9)
---------- ----------
Net cash inflows
(outflows) from operating
activities 461,5 (61,7)
---------- ----------
Cash flows from investing
activities
Purchase of property,
plant and equipment and
intangible assets (901,0) (669,8)
Acquisition of assets
through business
combinations (152,4) (2 576,9)
Proceeds from sale of
property, plant and
equipment 14,6 10,2
Repayment of
participation in export
partnerships 7,2 14,2
Proceeds from disposal of
investment 1,1 -
Proceeds from disposal of
discontinued operations - 1 442,7
---------- ----------
Net cash outflows from
investing activities (1 030,5) (1 779,6)
---------- ----------
Cash flows from
financing activities
Shares purchased in terms
of share incentive schemes (193,6) (175,7)
Proceeds from sale of
shares in terms of share
incentive schemes 18,1 132,6
Increase in interest-
bearing debt 760,6 2 371,6
---------- ----------
Net cash inflows from
financing activities 585,1 2 328,5
---------- ----------
Net increase in cash
during the year 16,1 487,2
Cash at the beginning of
the year 800,4 301,3
Effect of exchange rate
fluctuations on cash held 72,3 11,9
---------- ----------
Cash at the end of the
year 888,8 800,4
========== ==========
CONSOLIDATED SEGMENTAL ANALYSIS
Retail Customer Central
trading value added and shared International
divisions products Credit services divisions**
Reviewed Reviewed Reviewed Reviewed Reviewed
Rm Rm Rm Rm Rm
Year ended
31 March
2016
External
revenue 17 504,4 778,4 312,4 15,1 3 603,1
External
interest
income - - 1 510,7 22,3 -
-------- -------- -------- -------- --------
Total
revenue* 17 504,4 778,4 1 823,1 37,4 3 603,1
======== ======== ======== ======== ========
External
finance
costs (409,5) (99,5)
Depreciation
and
amortisation (347,1) (117,6)
Segmental
profit (loss)
before tax 3 683,4 437,6 320,1 (1 531,0) 241,3
Audited Audited Audited Audited Audited
Rm Rm Rm Rm Rm
Year ended 31
March 2015
External
revenue 15 683,8 775,1 304,1 11,2 402,1
External
interest
income - - 1 337,7 30,0 -
-------- -------- -------- -------- --------
Total
revenue* 15 683,8 775,1 1 641,8 41,2 402,1
======== ======== ======== ======== ========
Inter-segment
revenue 9,7
External
finance costs (209,3) (18,8)
Depreciation
and
amortisation (412,7) (15,4)
Segmental
profit (loss)
before tax 3 380,9 450,9 93,6 (1 233,0) (287,7)
Total Total
retail retail
March 2016 March 2015
Reviewed Audited
Rm Rm
External
revenue 22 213,4 17 176,3
External
interest
income 1 533,0 1 367,7
-------- --------
Total revenue* 23 746,4 18 544,0
======== ========
Inter-segment
revenue - 9,7
External
finance costs (509,0) (228,1)
Depreciation
and
amortisation (464,7) (428,1)
---------- ----------
Segmental
profit before
tax 3 151,4 2 404,7
Other material
non-cash items
Foreign
exchange
transactions 1,4 (4,8)
Share-based
payments (114,7) (97,4)
Operating
lease
liability
adjustment (16,9) (15,9)
-------- --------
Group profit
before tax 3 021,2 2 286,6
Capital
expenditure 901,0 669,8
Segment assets 22 095,1 18 533,4
Segment
liabilities 12 194,4 10 399,8
* Includes retail turnover, interest income and other income.
** Phase Eight operating division was renamed to international
divisions. Whistles was acquired on 23 March 2016 and is reflected under
the international operating division as defined by the board being the
chief operating decision-maker.
Discontinued Discontinued
operations- operations-
RCS Group# RCS Group#
Year ended Year ended
31 March 31 March
2016 2015
Reviewed Audited
Rm Rm
External
revenue - 164,5
External interest
income - 298,2
-------- --------
Total
revenue* - 462,7
======== ========
Inter-segment revenue - 2,7
External finance
costs - (65,0)
Depreciation and
amortisation - (4,8)
Segmental profit before
tax - 480,4
Capital expenditure - 4,9
Segment assets - -
Segment liabilities - -
# Year ended 31 March 2015 represents 3 months of trading prior to the
disposal of RCS Group.
* Includes retail turnover, interest income and other income.
NOTES
Review report of the Independent Auditor’s
These reviewed preliminary condensed consolidated results of The
Foschini Group Limited for the year ended 31 March 2016 have been
reviewed by the company’s auditors, KPMG Inc., who expressed an
unmodified review conclusion. The auditor’s report does not necessarily
report on all of the information contained in these financial results.
Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor’s engagement they should
obtain a copy of the auditor’s report together with the accompanying
financial information which is available at the company’s registered
office.
1. Basis of preparation
The reviewed preliminary condensed consolidated results for the year
ended 31 March 2016 are prepared in accordance with the requirements of
the JSE Limited Listing Requirements for preliminary reports and the
requirements of the Companies Act of South Africa. The Listing
Requirements require preliminary reports to be prepared in accordance
with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (IFRS) and
the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by Financial
Reporting Standards Council and to also, as a minimum, contain the
information required by IAS 34 Interim Financial Reporting. The
accounting policies applied in the preparation of these reviewed
preliminary condensed consolidated results are in terms of IFRS and are
consistent with those applied in the previous consolidated annual
financial statements except as noted otherwise. These results were
prepared by the TFG Finance and Advisory department of The Foschini
Group Limited acting under supervision of Anthony Thunström CA(SA), CFO
of The Foschini Group Limited.
2. During the year, the group adopted the following revised accounting
standards:
• Defined Benefit Plans: Employee Contributions (Amendments to IAS
19)
• Annual Improvements to IFRSs 2010-2012 Cycle – various standards
• Annual Improvements to IFRSs 2011-2013 Cycle – various standards
The adoption of these standards had no material impact on these results.
3. These financial statements incorporate the financial statements of
the company, all its subsidiaries and all entities over which it has
operational and financial control. In the prior year, the RCS Group was
treated as a discontinued operation and was disposed of on 30 June 2014.
Year ended Year ended
31 March 31 March
2016 2015
Reviewed Audited
Rm Rm
4. Inventory
Inventory at year-end 5 116,1 3 813,9
========== ==========
Inventory write-downs
included above 174,9 154,0
---------- ----------
5. Revenue
Retail turnover 21 107,5 16 085,9
Interest income (note 6) 1 533,0 1 367,7
Other income (note 7) 1 105,9 1 090,4
--------- ----------
23 746,4 18 544,0
--------- ----------
6. Interest income
Trade receivables – retail 1 510,7 1 337,7
Sundry 22,3 30,0
---------- ----------
1 533,0 1 367,7
---------- ----------
7. Other income
Publishing income 399,4 388,2
Collection cost recovery 312,4 304,1
Insurance income 297,8 300,3
Mobile one2one airtime
income 81,2 86,6
Sundry income 15,1 11,2
---------- ----------
1 105,9 1 090,4
---------- ----------
8. Trading expenses
Depreciation and
amortisation (464,7) (428,1)
Employee costs (3 210,8) (2 325,2)
Occupancy costs (2 043,2) (1 585,0)
Net bad debt (947,7) (1 023,6)
Other operating costs (2 870,8) (1 890,8)
---------- ----------
(9 537,2) (7 252,7)
---------- ----------
9. Operating profit before
working capital changes
Profit before tax 3 021,2 2 286,6
Finance costs 509,0 228,1
---------- ----------
Operating profit before
finance charges 3 530,2 2 514,7
Interest income – sundry (22,3) (30,0)
Non-cash items
Depreciation and
Amortisation 464,7 428,1
Operating lease liability
adjustment 16,9 15,9
Share-based payments 114,7 97,4
Post-retirement defined
benefit medical aid movement 12,9 12,2
Foreign currency translation 1,4 (4,8)
reserve movement
Cash-settled share incentive
scheme 7,7 0,7
Profit on disposal of
investment (1,1) -
Loss on disposal of
property, plant and
equipment 7,1 13,5
Profit on disposal of
property, plant and
equipment (5,0) (0,3)
---------- ----------
4 127,2 3 047,4
---------- ----------
10. Reconciliation of profit for the year to headline earnings
Profit for the year
attributable to equity
holders of The Foschini Group
Limited 2 155,6 1 858,0
Adjusted for:
Profit on disposal of
property, plant and equipment (5,0) (0,3)
Loss on disposal of property,
plant and equipment 7,1 13,5
Profit on disposal of
investment (1,1) -
Profit on disposal of
discontinued operations - (273,2)
---------- ----------
Adjusted headline earnings
before tax 2 156,6 1 598,0
Tax on headline earnings
adjustments (37,3) (3,8)
---------- ----------
Headline earnings 2 119,3 1 594,2
Once-off acquisition costs 65,9 292,4
Tax impact of adjustments - (4,7)
---------- ----------
Adjusted headline earnings* 2 185,2 1 881,9
---------- ----------
* Adjusted headline earnings is calculated to remove the impact of the
once-off acquisition costs of the current year Whistles acquisition and
the prior year Phase Eight acquisition.
Earnings per ordinary
share (cents)
Year ended Year ended
31 March 31 March
2016 2015
Continuing
operations (excl.
once-off
acquisition
costs)
Basic 1 073,3 893,3
Headline 1 055,8 897,9
Diluted (basic) 1 063,4 885,7
Diluted
(headline) 1 046,0 890,3
Total
Basic 1 041,5 909,4
Headline 1 024,0 780,3
Diluted (basic) 1 031,9 901,7
Diluted
(headline) 1 014,5 773,7
Discontinued
operations
Basic - 156,9
Headline - 23,2
Diluted (basic) - 155,6
Diluted (headline) - 23,0
11. Acquisitions during the year
11.1 Colette acquisition
With effect from 2 August 2015, the group acquired six Colette franchise
stores in South Africa. These stores will be managed within the Foschini
division.
Fair value of assets and liabilities assumed through this business
combination:
Rm
Property, plant and equipment 7,0
Inventory 2,0
Total identifiable assets 9,0
Trade and other payables (0,2)
Total identifiable net assets 8,8
Intangible asset 6,2
Total purchase price 15,0
11.2 Whistles acquisition
On 23 March 2016, the group acquired 100% of Whistles Holdings Limited,
which trade as Whistles.
The acquisition was funded through cash resources. The acquisition of
Whistles was at an enterprise value of GBP8,8 million (ZAR191,1 million)
with an equity value of GBP4,6 million (ZAR100,8 million) after taking
into account net debt. The acquisition was converted using a ZAR:GBP
exchange rate of R21,78 being the relevant transaction date.
TFG has measured the identifiable assets and liabilities of Whistles at
their acquisition-date fair values.
The provisional values are presented below:
Rm £m
Non-current assets
Property, plant and equipment 116,2 5,3
Deferred tax 7,4 0,3
Intangible assets 35,9 1,7
---------- ----------
159,5 7,3
---------- ----------
Current assets
Inventory 157,8 7,2
Other receivables and
prepayments 116,2 5,3
---------- ----------
274,0 12,5
---------- ----------
Non-current liabilities
Deferred tax 6,5 0,3
---------- ----------
6,5 0,3
---------- ----------
Current liabilities
Interest-bearing debt 90,4 4,1
Trade and other payables 199,2 9,1
Cash 36,6 1,7
---------- ----------
326,2 14,9
---------- ----------
---------- ----------
Total identifiable net assets at
fair value 100,8 4,6
Goodwill arising from
acquisition - -
---------- ----------
Purchase consideration 100,8 4,6
Cash and cash equivalents
acquired 36,6 1,7
---------- ----------
Cash outflow on acquisition 137,4 6,3
========== ==========
No goodwill has arisen from the acquisition and the Whistles brand
amounting to GBP1,7 million (R35,9 million) has been recognised as an
intangible asset at acquisition. Once-off acquisition costs of R65,9
million related to the acquisition have been expensed in the current
year. For the purpose of comparability, headline earnings per share from
continuing operations excluding these once-off acquisition costs has
been calculated. No profit and loss has been included within the group’s
results in the current financial year.
12. Related parties
Related party transactions similar to those disclosed in the group’s
annual financial statements for the year ended 31 March 2015 took place
during the year. There are no significant related party transactions
which took place in the current year.
13. Fair value
The carrying value less impairment provision of trade receivables and
payables are assumed to approximate their fair values due to the short-
term nature. The group only has level 2 financial instruments. There are
no level 1 or level 3 financial instruments within the group and there
were no transfers between levels during the year.
14. Subsequent events
No further significant events took place between the year ended 31 March
2016 and date of issue of this report.
15. Changes in directors
• Mr M Lewis was appointed as deputy chairman on 28 May 2015 and as
chairman on 19 June 2015.
• Mr D M Nurek resigned from the board on 19 June 2015.
• Mr P S Meiring retired at the end of June 2015 and resigned from
the board.
• Mr R Stein retired as an executive director at the end of June 2015
and remains on the board in a non-executive capacity.
• On 1 July 2015, Mr A Thunström was appointed as CFO and as an
executive director.
• On 5 November 2015, Mr G Davin was appointed as an independent non-
executive director.
16. Change in estimate
Property, plant and equipment
During the year as required by IAS 16, the group reassessed the useful
lives of its property, plant and equipment. The group determined that
certain asset categories had generally longer useful lives than was
being used for depreciation purposes. In the current year, management
revised certain useful lives of shopfittings assets from 5 years to 7
years in accordance with IAS 8, effective 1 April 2015.
The change in estimate results in a (decrease) increase in the
depreciation expense for the current and future years as disclosed
below:
(Decrease)
increase in
depreciation
for the Year
ended 31
Financial year March
2016 (115,2)
2017 (69,6)
2018 (12,7)
2019 37,6
2020 75,0
2021 64,9
2022 20,0
17. Reclassification of property, plant and equipment to goodwill and
intangible assets
The group previously accounted for software under property, plant and
equipment. In order to provide more detailed disclosure, software in
property, plant and equipment with a net book value of R271,8 million
(2015) and R226,5 million (2014) has subsequently been reclassified to
goodwill and intangible assets.
The reclassification 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:
31 March 31 March 31 March
2014 2014 2014
As reported Adjustment As restated
Property, plant and
equipment 1 696,1 (226,5) 1 469,6
Goodwill and
intangible assets 63,4 226,5 289,9
31 March 31 March 31 March
2015 2015 2015
As reported Adjustment As restated
Property, plant and
equipment 2 197,0 (271,8) 1 925,2
Goodwill and
intangible assets 4 365,2 271,8 4 637,0
COMMENT
GROUP OVERVIEW
The group produced a good result for the year with total retail sales
growth of 31,2%. Excluding the impact of Phase Eight, the group achieved
retail sales growth of 11,6% with comparable sales growth of 5,7%.
Cash sales growth was stronger in the second half of the year resulting
in full year cash sales growth of 18,4% (including Phase Eight: 59,8%).
Although credit sales growth was slightly slower in the second half, we
are nevertheless pleased with full year credit sales growth of 5,9%, up
from 4,3% for the previous year.
The group’s overall gross margin has improved from 47,3% to 49,7% mainly
as a result of the higher Phase Eight clothing margin. The margin in
all other product categories remained consistent with the prior year.
The continued focus on cost control has resulted in our expenses
increasing by 9,4% for the year, excluding Phase Eight. Including Phase
Eight, expenses have increased by 31,5%. We remain committed to
ensuring that our costs are well controlled whilst maintaining our
investment in future growth.
Phase Eight has met our expectations and all our strategic targets that
we set for the year and good progress has been made with the integration
of this business.
As was announced on SENS on 24 March 2016, we have, through Phase Eight,
acquired all the issued share capital of Whistles, a British
contemporary fashion brand for men and women. Whistles currently trades
out of 121 outlets in the UK and internationally both through standalone
stores as well as concessions in departmental stores such as Harrods and
Bloomingdales as well as online. As the acquisition was at the end of
our financial year, these results do not include any trading relating to
Whistles for this financial year. However, Whistles’ at-acquisition
balance sheet has been consolidated as at 31 March 2016.
Headline earnings per share from continuing operations, excluding the
once-off acquisition costs incurred in relation to the acquisition of
Whistles in the current year and Phase Eight in the prior year,
increased by 17,6% to 1 055,8 cents per share from 897,9 cents per share
in the previous year.
A final scrip distribution with a cash alternative of 385,0 cents per
share has been declared representing an increase of 18,5%. Accordingly,
the total distribution for the year amounts to 691,0 cents per share, an
increase of 17,5%, reflecting the growth in the underlying continuing
operations.
In line with our growth strategy, we opened 209 stores for the full year
in South Africa and the rest of Africa, whilst 27 were closed. At the
year-end, TFG excluding Phase Eight was trading out of 2 462 stores, an
increase in trading area of 6,6%. Phase Eight opened 108 outlets during
the year whilst 10 were closed, and at the year-end, Whistles was
trading out of 121 outlets.
We continued our e-Commerce roll-out during the year with the three
Sports division brands; Totalsports, Duesouth and Sportscene, launching
their online selling. This has proved to be successful with results
ahead of expectation.
MERCHANDISE CATEGORIES
Turnover growths in the various merchandise categories are as follows:
% same % turnover
store growth
% turnover turnover (including
growth growth Phase
(excluding (excluding Eight)
Phase Phase
Eight) Eight)
Clothing 13,0% 6,9% 41,8%
Jewellery 7,0% 3,4% 7,0%
Cellphones 7,4% 3,5% 7,4%
Homewares & furniture 11,7% 3,1% 11,7%
Cosmetics 9,2% 6,6% 9,2%
Total same store turnover (excluding Phase Eight) grew by 5,7% whilst
product inflation averaged approximately 8%.
CREDIT
Credit turnover growth slowed in the second half to 5,1% from 6,8% in
the first half, resulting in full year credit turnover growth of 5,9%,
up from 4,3% at the previous year-end.
The retail debtors’ book of R6,7 billion, has increased by 8,0%. Net
bad debt reduced by 7,4% compared to an increase of 9,4% in the previous
year, following our continuing investment in credit analytics and other
capabilities. Net bad debt as a percentage of closing debtors’ book
reduced to 13,4% from 13,6% at the previous year-end, and from 14,0% at
the half-year, well within management’s expectations. The retail
debtors’ book is adequately provisioned at 13,2%, down from 13,6% at the
previous year-end.
BALANCE SHEET OPTIMISATION
As stated post the acquisition of Phase Eight, it remains our intention
to bring our recourse debt-to-equity ratio from its current level of
55,6%, closer to our medium term target of 40%. Accordingly, one
further and final scrip distribution with a cash dividend alternative
has been declared.
Going forward, given our growth and expansion prospects, the group
intends to increase its dividend cover to approximately 1,6 times.
AFRICA EXPANSION
The group currently trades out of 176 stores across 6 countries in the
rest of Africa. These stores, with the exception of Namibia (which
continues to be negatively impacted by the weak commodity cycle
affecting the Angolan economy), traded well during the year with
turnover growth of 31,6% and same store turnover growth of 14,6%.
Including Namibia, total turnover growth in the rest of Africa is 16,6%.
Expanding our footprint in the rest of Africa remains a group objective
in line with our growth strategy.
OUTLOOK
The outlook for both the global and domestic economy remains challenging
and uncertain. We remain concerned about the impact of the introduction
of the Affordability Regulations on our ability to open new accounts.
This is unfortunate as many credit worthy customers are now prevented
from obtaining access to credit. This will no doubt put pressure on our
credit sales. However, we anticipate continuing strong cash sales
growth.
Our previously reported strategic objectives around growth, profit,
customer and leadership remain appropriate and will continue. In line
with our strategy for long-term growth, we anticipate opening in excess
of 150 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 50 Phase Eight and 20 Whistles outlets
internationally. We will continue the omni-channel roll-out with the
online launch of Foschini cosmetics, @home furniture and our Markham and
Fabiani brands this year.
Excluding Phase Eight and Whistles, the turnover growth for the first 7
weeks of the current financial year is at similar levels to last year
and broadly in line with management’s expectations. Both Phase Eight and
Whistles are trading ahead of last year and within management’s
expectations.
DECLARATION OF AN ORDINARY SHARE SCRIP DISTRIBUTION WITH CASH DIVIDEND
ALTERNATIVE
Introduction
Shareholders are advised that the board has declared a final
distribution for the year ended 31 March 2016, by way of the issue of
fully paid ordinary shares of 1,25 cents each as a scrip distribution
payable to ordinary shareholders recorded in the register on the record
date, being Friday 22 July 2016 (scrip distribution).
As an alternative to receiving a scrip distribution, ordinary
shareholders will be entitled, in respect of all or part of their
shareholding, to elect to receive a gross cash dividend of 385,0 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 22 July 2016 (the cash dividend alternative).
Shareholders not electing to receive the cash dividend alternative in
respect of all or part of their shareholding will, by default, be issued
with fully paid ordinary shares in terms of the scrip distribution.
The cash dividend alternative will be paid out of income reserves. A
net cash dividend of 327,25000 cents per ordinary share will apply to
shareholders liable for the local 15% dividend withholding tax and
385,00000 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 26 May 2016 is
215 350 885 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 385,0 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 8 July 2016.
Fractions
Where the application of the ratio gives rise to a fraction of a new
ordinary share, such fraction will be rounded down to the nearest whole
number, resulting in the allocation of whole ordinary shares and a cash
payment of a fraction.
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 11 July
2016.
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 2016
Circular and form of election posted to Monday 11 July
ordinary shareholders 2016
Finalisation date: Announcement of ratio Monday, 11 July
applicable to the scrip distribution, based on 2016
the 5 day VWAP ending on Friday, 8 July 2016,
released on SENS by 11h00 on
Last day to trade in order to be eligible for Tuesday, 19 July
the scrip distribution/cash dividend 2016
alternative (“CUM” scrip distribution/cash
dividend alternative)
Ordinary shares trade “EX” the scrip Wednesday, 20
distribution/cash dividend alternative July 2016
Listing of maximum possible number of new Wednesday, 20
ordinary shares that could be issued in terms July 2016
of the scrip distribution
Last day to elect the cash dividend Friday, 22 July
alternative instead of the scrip distribution 2016
by 12h00
Record date in respect of the scrip Friday, 22 July
distribution/cash dividend alternative 2016
Ordinary share certificates and dividend Monday, 25 July
cheques posted and Central Securities 2016
Depository posted and Central Securities
Depository Participant (CSDP)/broker accounts
credited/updated (payment date)
Maximum number of new ordinary shares listed Wednesday 27
adjusted to reflect the actual number of new July 2016
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.
Ordinary share certificates may not be dematerialised or rematerialised,
nor may transfers between registers take place between 20 July 2016 and
22 July 2016, both days inclusive.
Payment of the cash dividend alternative
To the extent elected by ordinary shareholders, the cash dividend
alternative is declared in South African currency. Where applicable,
dividends in respect of certificated ordinary shares will be transferred
electronically to ordinary shareholders’ bank accounts on the payment
date. Ordinary shareholders who hold dematerialised shares will have
their accounts at their CSDP or broker credited/updated on Monday 25
July 2016.
Signed on behalf of the Board.
------------------------------------------------------------------------
M Lewis A D Murray
Chairman CEO
Cape Town
26 May 2016
Cape Town
Non-executive directors:
M Lewis (Chairman), Prof. F Abrahams, S E Abrahams, G Davin, D
Friedland, B L M Makgabo-Fiskerstrand, E Oblowitz, N V Simamane, R Stein
Executive directors:
A D Murray, A Thunström
Company secretary:
D van Rooyen
Registered office:
Stanley Lewis Centre, 340 Voortrekker Road, Parow East, 7500
Transfer secretaries:
Computershare Investor Services Proprietary Limited, Ground Floor, 70
Marshall Street, Johannesburg, 2001
Sponsor:
UBS South Africa Proprietary Limited
Visit our website at http://www.tfglimited.co.za
Date: 26/05/2016 02:57:00 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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