Wrap Text
Unaudited interim condensed consolidated results for the half-year ended 30 September 2016
The Foschini Group Limited
Registration number: 1937/009504/06
Share codes: TFG-TFGP
ISIN codes: ZAE000148466 – ZAE000148516
Unaudited interim condensed consolidated results for the half-year
ended 30 September 2016
The following are The Foschini Group Limited’s results for the half-
year ended 30 September 2016.
This report has not been audited or reviewed by the company’s
auditors.
SALIENT FEATURES
- Interim headline earnings exceed R1 billion for the first time
- TFG Group turnover up 16,9% to R11,4 billion (TFG Africa*: +9,5%)
- Headline earnings up 8,1%
- Headline earnings per share up 5,7% to 496,8 cents
- Interim dividend of 320,0 cents per share – a 4,6% increase
- Total cash component of turnover 61,4% (TFG Africa: 50,2%)
- Strong cash turnover growth of 29,5% (TFG Africa: 19,0%)
* TFG Africa includes all operations on the African continent
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated
Sept Sept March
2016 2015 2016
Unaudited Unaudited Audited
Rm Rm Rm
ASSETS
Non-current assets
Property, plant and equipment
(note 15) 2 380,1 2 055,6 2 335,7
Goodwill and intangible assets
(note 15) 4 861,4 5 436,2 5 577,8
Participation in export
partnerships 10,6 8,1 8,2
Deferred taxation asset 519,7 368,9 527,2
-------- -------- --------
7 771,8 7 868,8 8 448,9
-------- -------- --------
Current assets
Inventory (note 4) 5 126,5 4 363,2 5 116,1
Trade receivables – retail 6 669,5 6 339,2 6 695,0
Other receivables and prepayments 726,3 733,9 592,9
Concession receivables 272,8 171,4 347,2
Participation in export
partnerships 2,5 9,0 6,2
Cash 973,5 1 003,7 888,8
Taxation receivable - 39,3 -
-------- -------- --------
13 771,1 12 659,7 13 646,2
-------- -------- --------
Total assets 21 542,9 20 528,5 22 095,1
======== ======== ========
EQUITY AND LIABILITIES
Equity attributable to equity
holders of The Foschini Group
Limited 9 951,1 9 125,6 9 896,7
Non-controlling interest 4,5 3,2 4,0
-------- -------- --------
Total equity 9 955,6 9 128,8 9 900,7
-------- -------- --------
LIABILITIES
Non-current liabilities
Interest-bearing debt 4 119,4 3 897,2 5 026,3
Put option liability 40,7 36,8 48,1
Cash-settled share incentive scheme
7,2 4,8 8,5
Operating lease liability 247,8 236,1 238,2
Deferred taxation liability 381,5 396,4 435,4
Post-retirement defined benefit
plan 225,2 198,8 217,3
-------- -------- --------
5 021,8 4 770,1 5 973,8
-------- -------- --------
Current liabilities
Interest-bearing debt 3 589,0 3 949,9 3 139,4
Trade and other payables 2 933,5 2 671,2 3 046,7
Operating lease liability 11,4 8,5 10,8
Taxation payable 31,6 - 23,7
-------- -------- --------
6 565,5 6 629,6 6 220,6
-------- -------- --------
Total liabilities 11 587,3 11 399,7 12 194,4
-------- -------- --------
Total equity and liabilities 21 542,9 20 528,5 22 095,1
======== ======== ========
CONDENSED CONSOLIDATED INCOME STATEMENT
Year
6 Months 6 Months ended 31
ended 30 ended 30 March
Sept 2016 Sept 2015 % 2016
Unaudited Unaudited change Audited
Rm Rm Rm
Revenue (note 5) 12 854,9 11 082,6 23 746,4
======== ======== ========
Retail turnover 11 415,7 9 761,2 16,9 21 107,5
Cost of turnover (5 756,3) (4 972,4) (10
613,1)
-------- -------- --------
Gross profit 5 659,4 4 788,8 10 494,4
Interest income (note 6) 862,8 732,4 1 533,0
Other income (note 7) 576,4 589,0 1 105,9
Trading expenses (note (5 369,5) (4 511,9) (9 537,2)
8)
-------- -------- --------
Operating profit before
once-off acquisition
costs and finance costs 1 729,1 1 598,3 8,2 3 596,1
Once-off acquisition - - (65,9)
costs
Finance costs (307,5) (240,4) (509,0)
-------- -------- --------
Profit before tax 1 421,6 1 357,9 3 021,2
Income tax expense (378,8) (385,9) (863,9)
-------- -------- -------
-
Profit for the period 1 042,8 972,0 2 157,3
======== ======== ========
Attributable to:
Equity holders of The
Foschini Group Limited 1 042,3 971,5 2 155,6
Non-controlling interest 0,5 0,5 1,7
-------- -------- --------
Profit for the period 1 042,8 972,0 2 157,3
======== ======== ========
Earnings per ordinary
share (cents)
Total
Basic 494,5 471,6 4,9% 1 041,5
Headline 496,8 470,2 5,7% 1 024,0
Diluted (basic) 491,6 467,7 5,1% 1 031,9
Diluted (headline) 493,9 466,3 5,9% 1 014,5
Weighted average ordinary
shares in issue (millions) 210,8 206,0 207,0
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months Year ended
ended 30 ended 30 31 March
Sept 2016 Sept 2015 2016
Unaudited Unaudited Audited
Rm Rm Rm
Profit for the period 1 042,8 972,0 2 157,3
-------- -------- --------
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 (16,6) 44,3 (70,3)
flow hedges
Foreign currency translation
reserve movements (604,8) 442,2 464,0
Deferred tax on items that are or
may be reclassified to profit or
loss 4,7 (12,4) 19,7
-------- -------- --------
Other comprehensive income for
the period, net of tax (616,7) 474,1 404,9
-------- -------- --------
Total comprehensive income for
the period 426,1 1 446,1 2 562,2
======== ======== ========
Attributable to:
Equity holders of The Foschini
Group Limited 425,6 1 445,6 2 560,5
Non-controlling interest 0,5 0,5 1,7
-------- -------- --------
Total comprehensive income for
the period 426,1 1 446,1 2 562,2
======== ======== ========
Restated
Sept 2016 Sept 2015 March 2016
Supplementary Information Unaudited Unaudited Audited
Net ordinary shares in issue
(millions) 213,4 207,0 209,3
Weighted average ordinary shares
in issue (millions) 210,8 206,0 207,0
Tangible net asset value per
ordinary share (cents) 2 385,0 1 782,4 2 063,5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity
holders of Non-
The Foschini controllin Total
Group Limited g interest equity
Rm Rm Rm
Equity at 31 March 2015 -
audited 8 130,9 2,7 8 133,6
Profit for the period 971,5 0,5 972,0
Other comprehensive income
Movement in effective portion of
changes in fair value of cash
flow hedges 44,3 - 44,3
Foreign currency translation
reserve movements 442,2 - 442,2
Deferred tax on movement in
other comprehensive income (12,4) - (12,4)
-------- -------- --------
Total comprehensive income for
the period 1 445,6 0,5 1 446,1
Contributions by and
distributions to owners
Share-based payments reserve
movements 57,7 - 57,7
Dividends paid (685,7) - (685,7)
Scrip distribution: share capital
issued and share premium raised 336,5 - 336,5
Proceeds from sale of shares in
terms of share incentive schemes 8,0 - 8,0
Shares purchased in terms of
share incentive schemes (191,3) - (191,3)
Increase in the fair value of the
put option liability (15,9) - (15,9)
Current tax on shares purchased 13,3 - 13,3
Deferred tax on shares purchased 26,5 - 26,5
-------- -------- --------
Equity at 30 September 2015 -
unaudited 9 125,6 3,2 9 128,8
Profit for the period 1 184,1 1,2 1 185,3
Other comprehensive income
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 (114,6) - (114,6)
Foreign currency translation
reserve movements 21,8 - 21,8
Deferred tax on movement in
other comprehensive income 35,4 - 35,4
-------- -------- --------
Total comprehensive income for 1 114,9 1,2 1 116,1
the period
Contributions by and
distributions to owners
Share-based payments reserve
movements 57,0 - 57,0
Dividends paid (641,5) (0,4) (641,9)
Scrip distribution: share capital
issued and share premium raised 243,3 - 243,3
Proceeds from sale of shares in
terms of share incentive schemes 10,1 - 10,1
Shares purchased in terms of
share incentive schemes (2,3) - (2,3)
Increase in the fair value of the
put option liability (11,3) - (11,3)
Current tax on shares purchased 0,3 - 0,3
Deferred tax on shares purchased 0,6 - 0,6
-------- -------- --------
Equity at 31 March 2016 - audited 9 896,7 4,0 9 900,7
Profit for the period 1 042,3 0,5 1 042,8
Other comprehensive income
Movement in effective portion of
changes in fair value of cash
flow hedges (16,6) - (16,6)
Foreign currency translation
reserve movements (604,8) - (604,8)
Deferred tax on movement in
other comprehensive income 4,7 - 4,7
-------- -------- --------
Total comprehensive income for
the period 425,6 0,5 426,1
Contributions by and
distributions to owners
Share-based payments reserve
movements 60,2 - 60,2
Dividends paid (814,8) - (814,8)
Scrip distribution: share capital
issued and share premium raised 542,9 - 542,9
Proceeds from sale of shares in
terms of share incentive schemes 73,9 - 73,9
Shares purchased in terms of
share incentive schemes (233,4) - (233,4)
-------- -------- --------
Equity at 30 September 2016 -
unaudited 9 951,1 4,5 9 955,6
======== ======== ========
6 months 6 months Year ended
ended 30 ended 30 31 March
Sept 2016 Sept 2015 2016
Unaudited Unaudited Audited
Distribution per ordinary share
(cents)
Interim 320,0 306,0 306,0
Final 385,0
-------- -------- --------
Total 320,0 306,0 691,0
======== ======== ========
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
6 months 6 months Year ended
ended 30 ended 30 31 March
Sept 2016 Sept 2015 2016
Unaudited Unaudited Audited
Rm Rm Rm
Cash flows from operating
activities
Operating profit before working
capital changes (note 9) 2 053,5 1 876,4 4 127,2
Increase in working capital (268,2) (648,9) (1 509,4)
-------- -------- --------
Cash generated from operations 1 785,3 1 227,5 2 617,8
Interest income 11,6 10,8 22,3
Finance costs (307,5) (240,4) (509,0)
Taxation paid (353,3) (424,9) (921,8)
Dividends paid (271,9) (349,2) (747,8)
-------- -------- --------
Net cash inflows from operating
activities 864,2 223,8 461,5
-------- -------- --------
Cash flows from investing
activities
Purchase of property, plant and
equipment and intangible assets (435,8) (411,0) (901,0)
Acquisition of assets through
business combinations - (15,0) (152,4)
Proceeds from sale of property,
plant and equipment 5,3 7,7 14,6
Repayment of participation in
export partnerships 1,3 4,5 7,2
Proceeds from disposal of - -
investment 1,1
-------- -------- --------
Net cash outflows from investing
activities (429,2) (413,8) (1 030,5)
-------- -------- --------
Cash flows from financing
activities
Shares purchased in terms of
share incentive schemes (233,4) (191,3) (193,6)
Proceeds from sale of shares in
terms of share incentive schemes 73,9 8,0 18,1
(Decrease) increase in interest-
bearing debt (119,2) 490,3 760,6
-------- -------- --------
Net cash (outflows) inflows from
financing activities (278,7) 307,0 585,1
-------- -------- --------
Net increase in cash during the
period 156,3 117,0 16,1
Cash at the beginning of the
period 888,8 800,4 800,4
Effect of exchange rate
fluctuations on cash held (71,6) 86,3 72,3
-------- -------- --------
Cash at the end of the period 973,5 1 003,7 888,8
======== ======== ========
CONSOLIDATED SEGMENTAL ANALYSIS
Customer
Retail value- Central Inter-
trading added and shared national
divisions products Credit services divisions
Unaudite Unaudited Unaudited Unaudited Unaudited
d Rm Rm Rm Rm
Rm
6 months ended
30 September
2016
External
revenue 8 860,1 402,3 164,8 9,3 2 555,6
External
interest
income - - 851,2 11,6 -
-------- -------- -------- -------- --------
Total revenue* 8 860,1 402,3 1 016,0 20,9 2 555,6
======== ======== ======== ======== ========
External
finance costs (259,8) (47,7)
Depreciation
and
amortisation (206,1) (55,7)
Segmental
profit (loss)
before tax 1 668,2 204,6 256,8 (870,3) 222,3
Customer
Retail value- Central Inter-
trading added and shared national
divisions products Credit services divisions
Unaudite Unaudited Unaudited Unaudited Unaudited
d Rm Rm Rm Rm
Rm
6 months ended
30 September
2015
External
revenue 8 091,1 418,6 156,2 14,2 1 670,1
External
interest
income - - 721,6 10,8 -
-------- -------- -------- -------- --------
Total revenue* 8 091,1 418,6 877,8 25,0 1 670,1
======== ======== ======== ======== ========
External (189,8) (50,6)
finance costs
Depreciation
and
amortisation (161,4) (52,3)
Segmental
profit (loss)
before tax 1 675,1 222,1 94,0 (716,9) 155,0
Customer
Retail value- Central Inter-
trading added and shared national
divisions products Credit services divisions
Audited Audited Audited Audited Audited
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
6 months 6 months Year ended
ended 30 ended 30 31 March
Sept 2016 Sept 2015 2016
Unaudited Unaudited Audited
Rm Rm Rm
External revenue 11 992,1 10 350,2 22 213,4
External interest income 862,8 732,4 1 533,0
-------- -------- --------
Total revenue* 12 854,9 11 082,6 23 746,4
======== ======== ========
External finance costs (307,5) (240,4) (509,0)
Depreciation and amortisation (261,8) (213,7) (464,7)
Segmental profit before tax 1 481,6 1 429,3 3 151,4
Other material non-cash items
Foreign exchange transactions 10,4 (1,2) 1,4
Share-based payments (60,2) (57,7) (114,7)
Operating lease liability
adjustment (10,2) (12,5) (16,9)
-------- -------- --------
Group profit before tax 1 421,6 1 357,9 3 021,2
Capital expenditure 435,8 418,0 901,0
Segment assets 21 542,9 20 528,5 22 095,1
Segment liabilities 11 587,3 11 399,7 12 194,4
* Includes retail turnover, interest income and other income.
NOTES
1. Basis of preparation
The unaudited interim condensed consolidated results for the half-year
ended 30 September 2016 are prepared in accordance with 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
unaudited interim 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 period, the group adopted the following revised
accounting standards:
- Annual Improvements to IFRSs 2012-2014 Cycle – various standards
- Disclosure Initiative (Amendments to IAS1)
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.
6 months 6 months Year
ended ended ended 31
30 Sept 30 Sept March
2016 2015 2016
Unaudited Unaudited Audited
Rm Rm Rm
4. Inventory
Inventory at period end 5 126,5 4 363,2 5 116,1
======== ======== ========
Inventory write-downs included
82,4 174,9
above 91,4
-------- -------- --------
5. Revenue
Retail turnover 11 415,7 9 761,2 21 107,5
Interest income (note 6) 862,8 732,4 1 533,0
Other income (note 7) 576,4 589,0 1 105,9
-------- -------- --------
12 854,9 11 082,6 23 746,4
-------- -------- --------
6. Interest income
Trade receivables – retail 851,2 721,6 1 510,7
Sundry 11,6 10,8 22,3
-------- -------- --------
862,8 732,4 1 533,0
-------- -------- --------
7. Other income
Publishing income 196,1 201,4 399,4
Collection cost recovery 164,8 156,2 312,4
Insurance income 162,3 174,5 297,8
Mobile one2one airtime income 43,9 42,7 81,2
Sundry income 9,3 14,2 15,1
-------- -------- --------
576,4 589,0 1 105,9
-------- -------- --------
8. Trading expenses
Depreciation and amortisation (261,8) (213,7) (464,7)
Employee costs (1 799,9) (1 479,2) (3 210,8)
Occupancy costs (1 171,5) (963,5) (2 043,2)
Net bad debt (485,6) (506,7) (947,7)
Other operating costs (1 650,7) (1 348,8) (2 870,8)
-------- -------- --------
(5 369,5) (4 511,9) (9 537,2)
-------- -------- --------
9. Operating profit before
working capital changes
Profit before tax 1 421,6 1 357,9 3 021,2
Finance costs 307,5 240,4 509,0
-------- -------- --------
Operating profit before finance
costs 1 729,1 1 598,3 3 530,2
Interest income – sundry (11,6) (10,8) (22,3)
Non-cash items
Depreciation and amortisation 261,8 213,7 464,7
Operating lease liability
adjustment 10,2 12,5 16,9
Share-based payments 60,2 57,7 114,7
Post-retirement defined benefit
medical aid movement 7,9 6,2 12,9
Foreign currency translation
reserve movements (10,4) (1,2) 1,4
Cash-settled share incentive
scheme - 3,7 7,7
Profit on disposal of investment - - (1,1)
Loss on disposal of property,
plant and equipment 6,5 0,7 7,1
Profit on disposal of property,
plant and equipment (0,2) (4,4) (5,0)
-------- -------- --------
2 053,5 1 876,4 4 127,2
-------- -------- --------
10. Reconciliation of profit for
the period to headline earnings
Profit for the period
attributable to equity holders of
The Foschini Group Limited 1 042,3 971,5 2 155,6
Adjusted for:
Profit on disposal of property,
plant and equipment (0,2) (4,4) (5,0)
Loss on disposal of property,
plant and equipment 6,5 0,7 7,1
Profit on disposal of investment - - (1,1)
-------- -------- --------
Adjusted headline earnings before
967,8 2 156,6
tax 1 048,6
Tax on headline earnings
0,8 (37,3)
adjustments (1,5)
-------- -------- --------
Headline earnings 1 047,1 968,6 2 119,3
Once-off acquisition costs - - 65,9
-------- -------- --------
Adjusted headline earnings* 1 047,1 968,6 2 185,2
-------- -------- --------
* Adjusted headline earnings is calculated to remove the impact of the
once-off acquisition costs of the prior year’s Whistles acquisition.
Year
6 months 6 months ended
ended ended 31
30 Sept 30 Sept % March
2016 2015 change 2016
Earnings per ordinary share
(cents)
Total (excluding once-off
acquisition costs)
Basic 494,5 471,6 4,9 1 073,3
Headline 496,8 470,2 5,7 1 055,8
Diluted (basic) 491,6 467,7 5,1 1 063,4
Diluted (headline) 493,9 466,3 5,9 1 046,0
Total
Basic 494,5 471,6 4,9 1 041,5
Headline 496,8 470,2 5,7 1 024,0
Diluted (basic) 491,6 467,7 5,1 1 031,9
Diluted (headline) 493,9 466,3 5,9 1 014,5
11. Related parties
The group entered into related party transactions in the ordinary
course of business, the substance of which are similar to those
disclosed in the group’s annual financial statements for the year
ended 31 March 2016.
12. 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 period.
13. Subsequent events
No further significant events took place between the period ending 30
September 2016 and date of issue of this report.
14. Changes in directors
There were no changes in directors during the current period.
15. Reclassification of property, plant and equipment to goodwill and
intangible assets (in line with the year ended 31 March 2016).
During the year ended 31 March 2016, the group reclassified software
previously accounted for under property, plant and equipment 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:
30 Sept
30 Sept 2015
30 Sept 2015 2015
As reported Adjustment As restated
Rm Rm Rm
Property, plant and equipment 2 444,5 (388,9) 2 055,6
Goodwill and intangible
388,9 5 436,2
assets 5 047,3
COMMENTARY
INTRODUCTION
Given our expansion both in Africa and internationally we will be using the
naming conventions defined below to assist our stakeholders in
understanding the Group’s activities:
• “The TFG Group” or “the Group” – refers to the consolidated
performance of TFG Limited and all its subsidiaries
• “TFG Africa” – refers to all operations on the African continent
• “TFG International” – refers to all operations outside the African
continent
In the commentary below, numbers quoted refer to the Group unless otherwise
specified.
PERFORMANCE OVERVIEW
The Group produced a satisfactory result for the period with retail
turnover growth of 16,9%. This growth was achieved despite the backdrop of
a difficult trading environment, particularly in South Africa. Turnover
from TFG Africa grew by 9,5% with comparable sales growth of 2,1%.
Cash turnover growth for the period was strong at 29,5% (TFG Africa:
19,0%). Our credit turnover however has been severely impacted by the
reduction in new account openings as a result of the Affordability
Regulations and grew by only 1,4%.
Gross margin for the period remained broadly consistent in all merchandise
categories. The Group achieved a gross margin of 49,6% (Sept 2015: 49,1%)
for the period whilst a margin of 45,5% (Sept 2015: 46,1%) was achieved in
TFG Africa. As anticipated, the TFG Africa margin was impacted by The FIX
which had a lower gross margin for clothing due to the impact of its
transition from Fashion Express, which is progressing according to plan. In
addition, the TFG Africa gross margin mix was impacted by strong cellular
sales (+20,3%) which historically trades at a lower margin.
Total trading expenses increased by 19,0% (TFG Africa: 9,6%) over the
previous period, largely due to the acquisition of Whistles whose
turnaround is progressing in line with management’s expectations. Although
cost control is a key focus area, we continue our investment in future
growth. We are however concerned about the continued acceleration in
crime-related losses in South Africa. To manage this risk we have invested
in various, costly forensic capabilities and have also embarked on the
roll-out of a revised and enhanced security strategy.
Headline earnings per share increased by 5,7% to 496,8 cents per share for
the period, up from 470,2 cents per share in the previous period.
An interim cash dividend of 320,0 cents per share has been declared, an
increase of 4,6%.
The Group opened 129 outlets during the period, 83 of which were in Africa
and 46 internationally. As part of our capital optimization project,
specific focus was placed on loss making outlets which resulted in 33
closures during the period. This brings the total number of outlets at end
September to 3 221 in 34 countries. Trading space in our African
operations increased by 5,3% since September 2015.
Our e-commerce roll-out continued during the period with the launch of
Foschini cosmetics and our Markham and Fabiani brands, adding to our
existing seven brands already online. Turnover from our online trading
continues to grow above expectation for both our local and international
brands.
MERCHANDISE CATEGORIES
Turnover growths in the various merchandise categories are as follows:
% turnover % same store
growth % turnover turnover
(TFG growth (TFG growth (TFG
Group) Africa) Africa)
Clothing 19,6% 9,6% 1,6%
Jewellery 4,0% 4,0% 0,3%
Cellphones 20,3% 20,3% 15,2%
Homeware & furniture 7,3% 7,3% (4,6%)
Cosmetics 3,0% 3,0% (0,8%)
Total same store turnover (TFG Africa) grew by 2,1% whilst product
inflation averaged approximately 9%.
CREDIT
The retail debtors’ book of R6,7 billion, had zero growth compared to March
2016 due to the impact of the Affordability Regulations on our credit
turnover as well as the number of active accounts. We estimate the
negative impact on credit turnover to be in the region of R310 million for
this period.
Strong prior year recoveries have assisted a 4,2% reduction in net bad
debt. As a consequence of the slowdown in the growth of the debtors’ book,
net bad debt as a percentage of closing debtors’ book was 14,0% (September
2015: 14,0%), up from 13,4% at March 2016. The retail debtors’ book is
adequately provisioned at 13,0%, down from 13,2% at the previous year-end
and 13,9% at the end of September 2015.
BALANCE SHEET STRUCTURE
Our recourse debt to equity ratio at September 2016 improved to 53,2% from
55,6% at March 2016 with total debt to equity improving to 67,6% from 73,5%
at March 2016.
AFRICA EXPANSION
During the period, 9 outlets were opened in African countries other than
South Africa which includes our first TFG store, Sterns, in Kenya which
opened in The Junction mall in Nairobi during September. This brings the
total number of outlets to 185 across seven countries in the rest of
Africa.
These outlets traded well with turnover growth of 17,7% during the period
and 6,0% comparable store turnover growth. All the African countries
achieved positive comparable store turnover growth for the period.
Expanding our footprint in the rest of Africa remains a Group objective.
The Group opened 74 outlets in South Africa during the period.
INTERNATIONAL EXPANSION
Our international division performed to expectation for the period. Phase
Eight traded well with turnover growth of 11,6% in GBP. Whistles has
already generated a positive EBITDA profit due to the strategies that have
been implemented since acquisition. Earnings growth of 48% in GBP was
achieved for the international division for the period. Both Phase Eight
and Whistles are on track to meet the budget that was set for the year.
OUTLOOK
Uncertainty continues to cloud the outlook for both the domestic as well as
the global economy.
As previously mentioned, the Affordability Regulations have had and will
continue to have a negative impact on the Group’s credit turnover. The
Group, together with two other major listed retailers, has initiated legal
action against the National Credit Regulator (NCR) and Department of Trade
and Industry (dti) in connection with the Affordability Regulations.
As a listed company that currently employs over 20 000 people, the Group is
strongly supportive of the recently announced “CEO Initiative Pledge”. The
Pledge stands against corruption and policy uncertainty which are having a
negative impact on the South African economy.
The continuing uncertainty regarding the potential impact of Brexit on both
the UK and European economies remains.
Despite the economic outlook, we believe that continued commitment to our
strategic objectives around growth, profit, customer and leadership
development will support our efforts to achieve a reasonable result for the
full year. We plan to open in excess of 100 new outlets in the second half
of the year, 90 of which will be in Africa with the balance being
international. Further strategic initiatives planned for the second half
of the year include working capital management and capital optimisation
projects.
As always, the Group is heavily dependent on Christmas trading which will
largely determine our performance for the full year.
Total retail turnover growth for the first 5 weeks of the second half is
13,3% with turnover growth of 12,2% in Africa.
PREFERENCE DIVIDEND ANNOUNCEMENT
Dividend no. 160 of 3,25% (6,5 cents per share) (gross) in respect of the
six months ending 31 March 2017 has been declared from income reserves,
payable on Monday, 20 March 2017 to holders of 6,5% preference shares
recorded in the books of the company at the close of business on
Friday, 17 March 2017. The last day to trade (“cum” the dividend) in order
to participate in the dividend will be Tuesday, 14 March 2017. The Foschini
Group Limited preference shares will commence trading “ex” the dividend
from the commencement of business on Wednesday, 15 March 2017 and the
record date, as indicated, will be Friday, 17 March 2017.
Preference shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Wednesday, 15 March 2017
to Friday, 17 March 2017, 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) The withholding tax, if applicable at the rate of 15%,will result in
a net cash dividend per share of 5,52500 cents;
3) The issued preference share capital of The Foschini Group Limited is
200 000 shares at 10 November 2016; and
4) The Foschini Group Limited’s tax reference number is 9925/133/71/3P.
INTERIM ORDINARY DIVIDEND ANNOUNCEMENT
The directors have declared a gross interim ordinary dividend of 320,0
cents per ordinary share from income reserves, for the period ended 30
September 2016, payable on Monday, 9 January 2017 to ordinary shareholders
recorded in the books of the company at the close of business on Friday, 6
January 2017. The last day to trade (“cum” the dividend) in order to
participate in the dividend will be Tuesday, 3 January 2017. The Foschini
Group Limited ordinary shares will commence trading “ex” the dividend from
the commencement of business on Wednesday, 4 January 2017 and the record
date, as indicated, will be Friday, 6 January 2017.
Ordinary shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Wednesday, 4 January
2017 to Friday, 6 January 2017, 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) The withholding tax, if applicable at the rate of 15%, will result in
a net cash dividend per share of 272,00000 cents;
3) The issued ordinary share capital of The Foschini Group Limited is
219 515 434 shares at 10 November 2016; and
4) The Foschini Group Limited’s tax reference number is 9925/133/71/3P.
Signed on behalf of the Board.
M Lewis A D Murray
Chairman CEO
Cape Town
10 November 2016
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
Visit our website at http://www.tfglimited.co.za
Sponsor:
UBS South Africa Proprietary Limited
Date: 10/11/2016 01:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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