THE FOSCHINI GROUP LIMITED - Unaudited interim condensed consolidated results for the half-year ended 30 September 2017

Release Date: 02/11/2017 13:30
Code(s): TFG TFGP
 
Wrap Text
Unaudited interim condensed consolidated results for the half-year ended 30 September 2017

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 2017



The following are The Foschini Group Limited’s results for the half-
year ended 30 September 2017.
This    report   has   not   been   audited   or   reviewed   by   the   company’s
auditors.
SALIENT FEATURES
    •   Group turnover up 9,2% (constant currency +12,6%) to R12,5
        billion, a record for the Group
    •   Gross margin expansion from 45,5% to 46,7% for TFG Africa*
    •   Headline earnings excluding acquisition costs up 5,6% (constant
        currency +7,9%)
    •   Headline earnings per share excluding acquisition costs up 1,6%
        (constant currency +3,9%) to 504,9 cents
    •   Interim dividend of 325,0 cents per share – a 1,6% increase
    •   Successful R2,5 billion Accelerated Bookbuild launched to fund
        acquisition of Retail Apparel Group
    •   Free cash flow up 58%

*   TFG Africa includes all operations on the African continent.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                          Sept        Sept      March
                                          2017        2016       2017
                                     Unaudited   Unaudited    Audited
                                            Rm          Rm         Rm
ASSETS
Non-current assets
Property, plant and equipment          2 792,3     2 380,1    2 469,0
Goodwill and intangible assets         8 236,9     4 861,4    4 675,9
Participation in export
partnerships                                 -        10,6         -
Deferred taxation asset                  683,9       519,7     483,6
                                      --------    --------   --------
                                      11 713,1     7 771,8    7 628,5
                                      --------    --------   --------
Current assets
Inventory (note 4)                     6 276,0     5 126,5    5 511,2
Trade receivables – retail             7 121,0     6 669,5    7 000,7
Other receivables and prepayments        838,8       726,3      771,0
Concession receivables                   267,9       272,8      246,1
Participation in export
partnerships                                 -         2,5         -
Cash                                     744,8       973,5     878,5
                                      --------    --------   --------
                                      15 248,5    13 771,1   14 407,5
                                      --------    --------   --------
Total assets                          26 961,6    21 542,9   22 036,0
                                      ========    ========   ========

EQUITY AND LIABILITIES
Equity attributable to equity
holders of The Foschini Group
Limited                               13 342,5     9 951,1   10 515,3
Non-controlling interest                   4,1         4,5        4,2
                                      --------    --------    --------
Total equity                          13 346,6     9 955,6    10 519,5
                                      --------    --------    --------


LIABILITIES
Non-current liabilities
Interest-bearing debt                       5 724,9     4 119,4    4 442,2
Put option liability                          113,2         40,7        74,7
Cash-settled share incentive
                                                7,3          7,2         6,8
scheme
Operating lease liability                     323,8        247,8       255,7
Deferred taxation liability                   915,5        381,5       337,9
Post-retirement defined benefit
plan                                          241,6        225,2       233,1
                                           --------     --------     --------
                                            7 326,3      5 021,8      5 350,4
                                           --------     --------     --------
Current liabilities
Interest-bearing debt                       2 821,6      3 589,0     3 307,0
Trade and other payables                    3 388,9      2 933,5     2 751,3
Operating lease liability                      18,9         11,4        15,2
Taxation payable                               59,3         31,6        92,6
                                           --------     --------     --------
                                            6 288,7      6 565,5      6 166,1
                                           --------     --------     --------
Total liabilities                          13 615,0     11 587,3     11 516,5
                                           --------     --------     --------
Total equity and liabilities               26 961,6     21 542,9     22 036,0
                                           ========     ========     ========

CONDENSED CONSOLIDATED INCOME STATEMENT

                                                                        Year
                                6 Months     6 Months               ended 31
                                ended 30     ended 30                  March
                               Sept 2017    Sept 2016          %        2017
                               Unaudited    Unaudited     change     Audited
                                      Rm           Rm                     Rm

Revenue (note 5)                13 972,2     12 854,9                26 413,6
                                ========     ========                ========
Retail turnover                 12 469,1     11 415,7        9,2     23 548,7
Cost of turnover               (6 109,3)    (5 756,3)               (11 845,2)
                                --------     --------                 --------
Gross profit                     6 359,8      5 659,4                11 703,5
Interest income (note 6)           883,2        862,8                 1 736,9
Other income (note 7)              619,9        576,4                 1 128,0
Trading expenses (note
8)                             (6 029,7)    (5 369,5)               (10 757,2)
                                --------     --------                 --------
Operating profit before
acquisition costs and
finance costs                    1 833,2      1 729,1         6,0     3 811,2
Aquisition costs                  (48,6)            -                       -
Finance costs                    (339,4)      (307,5)                 (607,4)
                                --------     --------                 --------
Profit before tax                1 445,2      1 421,6                  3 203,8
Income tax expense               (404,2)      (378,8)                  (851,3)
                             --------       --------                  -------
                                                                            -
Profit for the period         1 041,0        1 042,8                       2
                                                                        352,5
                             ========       ========                  ========
Attributable to:
Equity holders of The
Foschini Group Limited                             1
                              1 040,2          042,3               2 351,4
Non-controlling interest                          0,
                                  0,8              5                    1,1
                             --------       --------              --------
Profit for the period                                                  2
                              1 041,0        1 042,8                 352,5

                             ========       ========              ========


Earnings per ordinary
share (cents)
Total
Basic                              475,1       494,5      (3,9)      1 108,0
Diluted (basic)                    472,5       491,6      (3,9)      1 098,6

Earnings per ordinary
share (excluding
acquisition costs)
(cents) - (Note 10)
Headline                                                                   1
                                   504,9       496,8        1,6        099,2
Diluted (headline)                 502,1       493,9        1,7      1 089,9
Weighted average ordinary
shares in issue (million)          219,0       210,8                   212,2


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                         6 months      6 months    Year ended
                                         ended 30      ended 30            31
                                        Sept 2017     Sept 2016    March 2017
                                        Unaudited     Unaudited       Audited
                                               Rm            Rm            Rm

Profit for the period                       1 041,0     1 042,8       2 352,5
                                           --------    --------      --------
Other comprehensive income:
Items that are or may be
reclassified to profit or loss
Movement in effective portion of
changes in fair value of cash
flow hedges                                32,8      (16,6)         24,2
Foreign currency translation
reserve movements                          331,6     (604,8)     (793,1)
Deferred tax on items that are or
may be reclassified to profit or
loss                                       (9,2)         4,7      (6,8)
                                        --------    --------    --------
Other comprehensive income for
the period, net of tax                     355,2     (616,7)     (775,7)
                                        --------    --------    --------
Total comprehensive income for
the period                               1 396,2       426,1     1 576,8
                                        ========    ========    ========
Attributable to:
Equity holders of The Foschini
Group Limited                            1 395,4       425,6    1 575,7
Non-controlling interest                     0,8         0,5        1,1
                                        --------    --------    --------
Total comprehensive income for
the period                               1 396,2       426,1      1 576,8
                                        ========    ========     ========


                                       Sept 2017   Sept 2016   March 2017
Supplementary Information              Unaudited   Unaudited      Audited

Net ordinary shares in issue
(million)                                  230,6      213,4        214,0
Weighted average ordinary shares
in issue (million)                         219,0      210,8        212,2
Tangible net asset value per
ordinary share (cents)                   2 214,1    2 385,0      2 728,7


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 2016 -                9 896,7         4,0     9 900,7
audited
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
Profit for the period                1 309,1        0,6    1 309,7
Other comprehensive income
Movement in effective portion of
changes in fair value of cash
flow hedges                             40,8          -       40,8
Foreign currency translation
reserve movements                    (188,3)          -    (188,3)
Deferred tax on movement in
other comprehensive income            (11,5)          -     (11,5)
                                    --------   --------   --------
Total comprehensive income for       1 150,1        0,6    1 150,7
the period
Contributions by and
distributions to owners
Share-based payments reserve            71,2          -       71,2
movements
Dividends paid                       (693,3)      (0,9)    (694,2)
Proceeds from sale of shares in
terms of share incentive schemes        77,4          -       77,4
Shares purchased in terms of
share incentive schemes                (1,4)          -      (1,4)
Increase in the fair value of the
put option liability                  (39,8)          -     (39,8)
                                    --------   --------   --------
Equity at 31 March 2017 - audited   10 515,3        4,2   10 519,5
Profit for the period                1 040,2        0,8    1 041,0
Other comprehensive income
Movement in effective portion of
changes in fair value of cash
flow hedges                             32,8          -       32,8
Foreign currency translation
reserve movements                      331,6          -      331,6
Deferred tax on movement in
other comprehensive income            (9,2)           -        (9,2)
                                     --------    --------     --------
Total comprehensive income for
the period                              1 395,4         0,8      1 396,2
Contributions by and
distributions to owners
Share-based payments reserve
movements                                  71,9           -         71,9
Dividends paid                          (865,8)       (0,9)      (866,7)
Share capital issued and share
premium raised                          2 474,5           -      2 474,5
Proceeds from sale of shares in
terms of share incentive schemes            6,8           -          6,8
Shares purchased in terms of
share incentive schemes                 (225,6)           -      (225,6)
Increase in the fair value of the
put option liability                     (30,0)           -       (30,0)
                                       --------    --------     --------
Equity at 30 September 2017 -
unaudited                              13 342,5         4,1     13 346,6
                                       ========    ========     ========

                                       6 months    6 months   Year ended
                                       ended 30    ended 30           31
                                      Sept 2017   Sept 2016   March 2017
                                      Unaudited   Unaudited      Audited
Dividend per ordinary share
(cents)
Interim                                   325,0       320,0        320,0
Final                                         -           -        400,0
                                       --------    --------     --------
Total                                     325,0       320,0        720,0
                                       ========    ========     ========


CONDENSED CONSOLIDATED CASH FLOW STATEMENT
                                       6 months    6 months   Year ended
                                       ended 30    ended 30     31 March
                                      Sept 2017   Sept 2016         2017
                                      Unaudited   Unaudited      Audited
                                             Rm          Rm           Rm
Cash flows from operating
activities
Operating profit before working
capital changes (note 9)                2 207,3     2 053,5      4 488,6
Increase in working capital              (73,8)     (268,2)    (1 156,5)
                                       --------    --------     --------
Cash generated from operations          2 133,5     1 785,3      3 332,1
Interest income                            25,8        11,6         33,1
Finance costs                           (339,4)     (307,5)      (607,4)
Taxation paid                           (492,4)     (353,3)      (777,5)
Dividends paid                           (866,7)     (271,9)      (966,1)
                                        --------    --------     --------
Net cash inflows from operating
activities                                 460,8       864,2      1 014,2
                                        --------    --------     --------
Cash flows from investing
activities
Purchase of property, plant and
equipment and intangible assets          (372,3)     (435,8)         (883,5)
Acquisition of assets through
business combinations (note 11)        (2 712,3)           -          (33,8)
Proceeds from sale of property,
plant and equipment                           5,8       5,3            32,0
Repayment of participation in
export partnerships                            -         1,3           14,4
                                        --------    --------       --------
Net cash outflows from investing
activities                             (3 078,8)     (429,2)         (870,9)
                                        --------    --------        --------
Cash flows from financing
activities
Shares purchased in terms of
share incentive schemes                  (225,6)     (233,4)         (234,8)
Proceeds from sale of shares in
terms of share incentive schemes              6,8      73,9           151,3
Increase in issued authorised
share capital                            2 474,5          -                -
Increase (decrease) in interest-
bearing debt                               238,2     (119,2)           36,8
                                        --------    --------       --------
Net cash inflows (outflows) from
financing activities                     2 493,9     (278,7)         (46,7)
                                        --------    --------       --------
Net (decrease) increase in cash
during the period                        (124,1)       156,3           96,6
Cash at the beginning of the
period                                      878,5      888,8          888,8
Effect of exchange rate
fluctuations on cash held                  (9,6)      (71,6)        (106,9)
                                        --------    --------       --------
Cash at the end of the period              744,8       973,5          878,5
                                        ========    ========       ========

CONSOLIDATED SEGMENTAL ANALYSIS


                         Retail
                        trading        Customer                 Central and
                       division     value-added                      shared
                              s        products       Credit       services
                        Unaudited      Unaudited    Unaudited       Unaudited
                               Rm            Rm          Rm            Rm
6 months ended 30
September 2017
External revenue         9 300,0         429,9        171,0          19,0
External interest
income                          -             -       857,4          25,4
                         --------      --------    --------      --------
Total revenue*            9 300,0         429,9     1 028,4          44,4
                         ========      ========    ========      ========

External finance costs                                            (296,7)
Depreciation and
amortisation                                                      (245,5)
Segmental profit
(loss) before tax         1 720,1         224,1       291,1       (892,0)



                           Retail
                          trading      Customer               Central and
                         division   value-added                    shared
                                s      products      Credit      services
                          Unaudit     Unaudited   Unaudited     Unaudited
                               ed            Rm          Rm            Rm
                               Rm
6 months ended 30
September 2016
External revenue         8 860,1         402,3        164,8           9,3
External interest
income                          -             -       851,2          11,6
                         --------      --------    --------      --------
Total revenue*            8 860,1         402,3     1 016,0          20,9
                         ========      ========    ========      ========
External finance costs                                            (259,8)
Depreciation and
amortisation                                                      (206,1)
Segmental profit
(loss) before tax         1 668,2         204,6       256,8       (870,3)



                           Retail
                          trading      Customer               Central and
                         division   value-added                    shared
                                s      products      Credit      services
                          Audited       Audited     Audited       Audited
                               Rm            Rm          Rm            Rm
Year ended 31 March
2017
External revenue              18
                           912,8         783,3        331,5          13,2
External interest
income                          -          -     1 703,8        33,1
                         --------   --------    --------    --------
Total revenue*           18 912,8      783,3     2 035,3        46,3
                         ========   ========    ========    ========

External finance costs                                       (526,8)
Depreciation and
amortisation                                                 (437,6)
Segmental profit
(loss) before tax         3 802,1      444,0       571,9   (1 802,2)


                                                     TFG         TFG
                                                  London   Australia
                                               Unaudited   Unaudited
                                                      Rm          Rm
6 months ended 30
September 2017
External revenue                                 2 272,8       896,3
External interest
income                                                 -         0,4
                                                --------    --------
Total revenue*                                   2 272,8       896,7
                                                ========    ========

External finance costs                            (38,7)       (4,0)
Depreciation and
amortisation                                      (57,5)      (28,3)
Segmental profit
(loss) before tax                                  156,1        33,5


                                                     TFG         TFG
                                                  London   Australia
                                               Unaudited   Unaudited
                                                      Rm          Rm
6 months ended 30
September 2016
External revenue                                 2 555,6           -
External interest
income                                                 -           -
                                                --------    --------
Total revenue*                                   2 555,6           -
                                                ========    ========

External finance costs                            (47,7)           -
Depreciation and                                  (55,7)           -
amortisation
Segmental profit                                   222,3           -
(loss) before tax
                                                       TFG             TFG
                                                    London       Australia
                                                   Audited         Audited
                                                        Rm              Rm
Year ended 31 March
2017
External revenue                                   4 635,9               -
External interest
income                                                   -               -
                                                  --------        --------
Total revenue*                                     4 635,9               -
                                                  ========        ========

External finance costs                              (80,6)               -
Depreciation and                                   (102,7)               -
amortisation
Segmental profit                                     345,3               -
(loss) before tax


                                 Total retail Total retail    Total retail
                                 30 Sept 2017 30 Sept 2016   31 March 2017
                                    Unaudited    Unaudited         Audited

External revenue                     13 089,0     11 992,1        24 676,7
External interest
income                                  883,2        862,8         1 736,9
                                     --------     --------        --------
Total revenue*                       13 972,2     12 854,9        26 413,6
                                     ========     ========        ========

External finance costs                (339,4)      (307,5)         (607,4)
Depreciation and
amortisation                          (331,3)      (261,8)         (540,3)
Segmental profit
before tax                            1 532,9      1 481,6         3 361,1
Other material non-cash
items
Foreign exchange
transactions                            (1,5)         10,4           (4,0)
Share-based payments                   (71,9)       (60,2)         (131,4)
Operating lease
liability adjustment                   (14,3)       (10,2)          (21,9)

Group profit before tax               1 445,2      1 421,6         3 203,8
Capital expenditure                     372,3        435,8           883,5
Segment assets                       26 961,6     21 542,9        22 036,0
Segment liabilities                  13 615,0     11 587,3        11 516,5

* Includes retail turnover, interest income and other income.
Previously named International division, comprising of the Phase Eight
and Whistles brands, has been renamed to the TFG London division.

During the current period, the Group acquired the Retail Apparel Group
(RAG) and G-Star RAW Australia franchise stores which will be reflected
in a new TFG Australia reportable segment as defined by the Operating
Board, being the chief operating decision-maker.

NOTES


1. The unaudited interim condensed consolidated results for the half-year
ended 30 September 2017 are prepared in accordance with the requirements
of       the   Companies         Act   of   South    Africa,          and   in   accordance      with   and
containing           the     information       required          by     IAS34:     Interim      Financial
Reporting, as well as the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee and Financial Pronouncements as issued
by Financial Reporting Standards Council. The accounting policies applied
in       the   preparation        of   these   unaudited         interim      condensed    consolidated
results        are    in    terms      of   International        Financial       Reporting      Standards
(“IFRS”)        and        are    consistent     with       those       applied     in    the    previous
consolidated annual financial statements except as noted in note 2. 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:
     •    Disclosure Initiative (Amendments to IAS7)
     •    Annual Improvements to IFRS 2014-2016 Cycle
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
                                     ended      ended    Year ended 31
                                   30 Sept     30 Sept    March 2017
                                      2017        2016
                                 Unaudited   Unaudited     Audited
                                        Rm          Rm          Rm


4. Inventory
Inventory at period end            6 276,0     5 126,5     5 511,2
                                  ========    ========    ========
Inventory write-downs included
                                                  91,4       233,0
above                                113,9
                                  --------    --------    --------
5. Revenue
Retail turnover                   12 469,1    11 415,7    23 548,7
Interest income (note 6)             883,2       862,8     1 736,9
Other income (note 7)                619,9       576,4     1 128,0
                                  --------    --------    --------
                                  13 972,2    12 854,9    26 413,6
                                  --------    --------    --------
6. Interest income
Trade receivables – retail           857,4       851,2     1 703,8
Sundry                                25,8        11,6        33,1
                                  --------    --------    --------
                                     883,2       862,8     1 736,9
                                  --------    --------    --------

7. Other income
Publishing income                    208,3       196,1       400,8
Collection cost recovery             171,0       164,8       331,5
Insurance income                     181,0       162,3       289,0
Mobile one2one airtime income         40,6        43,9        93,5
Sundry income                         19,0         9,3        13,2
                                  --------    --------    --------
                                     619,9       576,4     1 128,0
                                  --------    --------    --------


8. Trading expenses
Depreciation and amortisation      (331,3)     (261,8)      (540,3)
Employee costs                   (2 062,4)   (1 799,9)    (3 669,8)
Occupancy costs                  (1 461,1)   (1 171,5)    (2 431,8)
Net bad debt                       (464,6)     (485,6)      (896,1)
Other operating costs            (1 710,3)   (1 650,7)    (3 219,2)
                                  --------    --------     --------
                                 (6 029,7)   (5 369,5)   (10 757,2)
                                  --------    --------     --------

9. Operating profit before
working capital changes
Profit before tax                        1 445,2       1 421,6        3 203,8
Finance costs                              339,4         307,5         607,4
                                        --------      --------        --------
Operating profit before finance
costs                                    1 784,6       1 729,1         3 811,2
Interest income – sundry                  (25,8)        (11,6)          (33,1)
Non-cash items
Depreciation and amortisation              331,3         261,8           540,3
Operating lease liability
adjustment                                  14,3          10,2            21,9
Share-based payments                        71,9          60,2           131,4
Post-retirement defined benefit
medical aid movement                            8,5         7,9           15,8
Foreign currency translation
reserve movements                               1,5     (10,4)             4,0
Loss on disposal of property,
plant and equipment                         21,4            6,5           12,2
Profit on disposal of property,
plant and equipment                        (0,4)         (0,2)          (15,1)
                                        --------      --------        --------
                                         2 207,3       2 053,5         4 488,6
                                        --------      --------        --------

10. Reconciliation of profit for
the period to headline earnings
Profit for the period
attributable to equity holders of
The Foschini Group Limited               1 040,2       1 042,3         2 351,4
Adjusted for:
Profit on disposal of property,
plant and equipment                        (0,4)         (0,2)          (15,1)
Loss on disposal of property,
plant and equipment                         21,4           6,5            12,2
                                        --------      --------        --------
Headline earnings before tax             1 061,2       1 048,6         2 348,5
Tax on headline earnings
                                                                        (15,7)
adjustments                                (4,3)         (1,5)
                                        --------      --------        --------
Headline earnings                        1 056,9       1 047,1         2 332,8
Acquisition costs                           48,6             -               -
                                        --------      --------        --------
Adjusted headline earnings*              1 105,5       1 047,1         2 332,8
                                        --------      --------        --------

* Adjusted headline earnings is calculated to remove the impact of the
acquisition costs of the RAG & G-Star RAW franchise rights acquisition.

                                                 6 months
                                     6 months       ended                 Year
                                        ended     30 Sept             ended 31
                                      30 Sept        2016                March
                                         2017    Unaudite         %       2017
                                    Unaudited           d    change    Audited
Earnings per ordinary share
(cents)
Total (excluding acquisition
costs)
Basic                                497,3     494,5     0,6      1   108,0
Headline                             504,9     496,8     1,6      1   099,2
Diluted (basic)                      494,5     491,6     0,6      1   098,6
Diluted (headline)                   502,1     493,9     1,7      1   089,9

Total
Basic                                475,1     494,5   (3,9)      1   108,0
Headline                             482,7     496,8   (2,8)      1   099,2
Diluted (basic)                      472,5     491,6   (3,9)      1   098,6
Diluted (headline)                   480,0     493,9   (2,8)      1   089,9

11. Acquisitions for the period

G-Star RAW franchise stores
With effect from 3 April 2017, the Group acquired 14 G-Star RAW franchise
stores in Australia for AUD13,9 million (R141,8 million).

Retail Apparel Group (RAG)

The Group has acquired 100% of the share capital of Retail Apparel Group
Pty Ltd (RAG) effective from 24 July 2017. RAG is a leading speciality
menswear retailer in the Australian market.      The purchase has been
capped at the lower of 7 times RAG’s audited normalised EBITDA, for the
year ending June 2017, and AUD302,5 million which was adjusted for
normalised working capital and net debt at acquisition.    The Group has
obtained 100% control of RAG and is exposed to variable returns from its
involvement with RAG. The Group has the ability to use its power through
potential voting rights over RAG to affect the amount of returns earned
by RAG.

The acquisition of RAG was at an enterprise value of AUD293,9 million
(R3 000,2 million) with an equity value of AUD263,2 million (R2 685,5
million) 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 at-acquisition
AUD values have been translated at the closing exchange rate at 24 July
2017 of AUD1:R10,21. These results include two months of RAG trading.

TFG has measured the identifiable assets and liabilities of RAG at their
acquisition-date fair values.
The provisional at-acquisition values are presented below:


                                                        Rm             AUDm
Non-current assets                                 2 217,8            217,4
Property, plant and equipment                        251,7             24,7
Intangible assets                                  1 781,8             174,6
Deferred taxation asset                              184,3             18,1
Current assets                                       751,7             73,6
Inventory                                            619,5             60,7
Other receivables and
                                                      17,2               1,6
prepayments
Cash                                                 115,0              11,3
Non-current liabilities                            1 001,2              98,1
Interest-bearing debt                                416,4              40,8
Operating lease liability                             55,2               5,4
Deferred taxation liability                          529,6              51,9
Current liabilities                                  555,0              54,4
Trade and other payables                             519,2              50,9
Taxation payable                                      35,8               3,5

Total identifiable net assets
                                                   1 413,3          138,5
at fair value
Goodwill arising from
                                                   1 272,2          124,7
acquisition
Purchase consideration                             2 685,5          263,2
Cash and cash equivalents
                                                   (115,0)         (11,3)
acquired
Cash outflow acquisition                           2 570,5          251,9

Goodwill of AUD124,7 million (R1,3 billion) and the RAG brands amounting
to AUD173,0 million (R1,8 billion) has 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. Retail turnover and profit and loss for the two-month
trading post acquisition amounted to R792,8 million and R57,8
respectively. Acquisition costs related to the acquisition of R48,6
million have been expensed in the current period.


12. Related parties
During the period, 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 2017.

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 period.

14. Subsequent events
No further significant events took place between the period ending 30
September 2017 and date of issue of this report.

15. Change in authorised Share Capital

On 4 August 2017, the Group made an application to the JSE for a listing
of 17 241 380 ordinary shares at an issue price of R145,00 per ordinary
share for a total consideration of R2,5 billion.        The shares were
allotted and issued as a result of an Accelerated Bookbuild offering
that was launched and concluded after close of market on 31 July 2017.
On 4 August 2017, the total shares in issue increased from 219 515 434
shares to 236 756 814 shares.

16. Changes to auditors

In October 2017, the Group appointed Deloitte & Touche as their external
auditors for the year ending 31 March 2018.

17. Changes in directors
There were no changes in directors during the current period.

COMMENTARY

 INTRODUCTION

 Given the increasing global footprint of TFG, we will use the naming
 conventions defined below to assist our stakeholders in understanding the
 Group’s activities:
    • “TFG” 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 London” – refers to the consolidated performance of Dress Holdco
       A Limited and all its subsidiaries including the Phase Eight and
       Whistles’ brands
    • “TFG Australia” – refers to the consolidated performance of TFG
       Retailers Proprietary Limited and all its subsidiaries including the
       Retail Apparel Group (RAG) and G-Star Australia brands
    • “TFG International” – refers to all operations outside the African
       continent and includes both TFG London and TFG Australia

 In the commentary below,    numbers   quoted   refer   to   the   Group   unless
 otherwise specified.

 BACKGROUND
 As was announced on SENS on 25 May 2017, with a further update on 14 July
 2017, the Group acquired, through a wholly-owned subsidiary, the entire
 issued ordinary and preference share capital of RAG. The effective date
 of the acquisition was 24 July 2017 and as a result, two months’ trading
 of RAG has been included in these results.

 In addition, the Group acquired 14 G-Star RAW franchise stores in
 Australia with effect from 3 April 2017 and as such six months’ trading
 has been included in these results.
PERFORMANCE OVERVIEW

The Group performed satisfactorily against a backdrop of difficult
political and economic conditions in both South Africa and the United
Kingdom, two of the three major economies in which we trade, and against a
strong base in the corresponding period.

Total Group retail turnover growth of 9,2% (constant currency 12,6%)   was
achieved, with growth of 5,0% (ZAR) in TFG Africa and 4,1% (GBP) in    TFG
London with the balance coming from TFG Australia. This growth          is
pleasing, coming off a high base of 16,9% turnover growth in           the
corresponding prior period. Comparable store turnover growth of 1,0%   was
achieved in TFG Africa.

Group cash turnover grew by 11,1% for the period with growth of 3,8% (ZAR)
in TFG Africa and 4,1% (GBP) in TFG London with the balance coming from
TFG Australia. The low cash turnover growth in TFG Africa was due to the
challenging trading environment as well as the high base of 19,0% growth
achieved in the corresponding prior period. Turnover growth in TFG London
was driven by online channels, which now accounts for 28,3% of their total
turnover, as consumers shop less in high streets in favour of e-commerce
channels.   Total cash turnover now contributes 62,5% to total Group
turnover (Sept 2016: 61,4%).

Group credit turnover growth at 6,2% was stronger than the growth in the
corresponding period of 1,4%. This was in line with expectation, as the
negative impact of the Affordability Regulations is now in the base.

Group gross margin for the period improved to 51,0% from 49,6% at
September 2016.     In TFG Africa, gross margin improved across all
merchandise categories with the exception of cosmetics.       Total gross
margin for TFG Africa was 46,7% compared to 45,5% at September 2016. TFG
London’s gross margin was 63,6% (Sept 2016: 63,9%).

Total Group trading expenses increased by 12,3% over the previous period
with growth of 6,8% in TFG Africa, 7,5% in TFG London and the balance as a
result of the inclusion of TFG Australia.       Whilst our focus on cost
control continues, we are pleased with the resulting improvement in
expense growth that our cost saving initiatives have delivered thus far.

Headline earnings excluding acquisition costs grew by 5,6% (constant
currency +7,9%) for the period to R1,1 billion.   Headline earnings per
share excluding acquisition costs increased by 1,6% (constant currency
+3,9%) to 504,9 cents per share for the period, up from 496,8 cents per
share in the previous period.

An interim cash dividend of 325,0 cents per share has been declared, an
increase of 1,6% (Sept 2016: 320,0 cents per share).

The Group opened 144 outlets during the period, 74 in TFG Africa, 46 in
TFG London and 24 in TFG Australia.    In line with our focus on capital
allocation, specific focus was placed on underperforming outlets which
resulted in 77 closures during the period (TFG Africa: 30, TFG London:
39, TFG Australia:   8). This brings the total number of outlets at end
September to 3 809 in 32 countries.     Net trading space in our African
operations increased by 2,5% since September 2016.
Our e-commerce roll-out continued    during the period with the launch of
@homelivingspace and Exact.    The   Group now has a total of 17 brands
trading online, with turnover from   online trading growing to 6% of total
turnover. E-commerce remains a key   strategic focus area for the Group.

MERCHANDISE CATEGORIES

Turnover growths in the various merchandise categories are as follows:

                                                         % same
                                                  %       store          %
                                           turnover    turnover   turnover
                                    %        growth      growth     growth
                             turnover          (TFG        (TFG       (TFG
                               growth       Africa)     Africa)    London)
                              (Group)           ZAR         ZAR        GBP
Clothing                        12,3%          7,4%        2,8%       4,1%
Jewellery                      (1,0)%        (1,0)%      (2,5)%
Cellphones                       1,5%          1,5%      (1,1)%
Homeware & furniture           (0,8)%        (0,8)%      (4,5)%
Cosmetics                      (1,9)%        (1,9)%      (3,9)%

TFG Africa same store turnover grew by 1,0% whilst product deflation
averaged approximately 0,7%.

CREDIT

The retail debtors’ book of R7,1 billion, grew by 1,7% compared to March
2017 and by 6,8% compared to September 2016.   Net bad debt decreased by
4,3% as strong recoveries growth was maintained at 13,3% (Sept 2016:
29,0%).

At September 2017, net bad debt as a percentage of the closing debtors’
book was 10,9%, down from 11,3% at March 2017 and 12,1% at September 2016.
The book continues to be adequately provisioned at 11,0%, down from 11,8%
at the previous year-end and 13,0% at the end of September 2016.

BALANCE SHEET STRUCTURE

A R2,5 billion Accelerated Bookbuild was successfully launched on 31 July
2017 to fund the acquisition of RAG. As a result, 17 241 380 ordinary
shares were issued at R145 per share, a 0,9% premium to the 30-day VWAP of
R143,68 as at the close of trade on 31 July 2017.

At September 2017, the Group’s total debt to equity improved to 58,5% from
65,3% at March 2017. TFG Africa’s recourse debt to equity ratio improved
to 46,0% from 53,6% at March 2017.

TFG AUSTRALIA

RAG’s trading for the two months’ since acquisition has been ahead of
management’s expectation. Clear strategic objectives and KPIs have been
set and are on track to be met by year-end.
G-Star trading for the past six months was impacted by stock availability
which has now largely been resolved.

OUTLOOK

The uncertainty within the domestic and global economy continues and this
has been further exacerbated by political issues which, particularly in
South Africa, have had a negative impact on consumer and business
confidence.

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, initiated legal
action against the National Credit Regulator (NCR) and Department of Trade
and Industry (dti) and we await the ruling from the court case which was
heard in August of this year.

The Group, along with other corporates who belong to Business Leadership
South Africa (BLSA), has committed itself to the contract that BLSA
announced with South Africa. This contract highlights six key areas that
business believes will drive opportunity and inclusive growth across the
country whilst driving the eradication of corruption.

Despite the political and 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 and will continue our initiatives in respect
of working capital management and capital optimisation in the second half
of the year.

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
at similar levels to the first half.

PREFERENCE DIVIDEND ANNOUNCEMENT

Dividend no. 162 of 3,25% (6,5 cents per share) (gross) in respect of the
six months ending 31 March 2018 has been declared from income reserves,
payable on Monday, 19 March 2018 to holders of 6,5% preference shares
recorded in the books of the company at the close of business on
Friday, 16 March 2018. The last day to trade (“cum” the dividend) in order
to participate in the dividend will be Tuesday, 13 March 2018. The
Foschini Group Limited preference shares will commence trading “ex” the
dividend from the commencement of business on Wednesday, 14 March 2018 and
the record date, as indicated, will be Friday, 16 March 2018.

Preference shareholders should take note that share certificates may not
be dematerialised or rematerialised during the period Wednesday, 14 March
2018 to Friday, 16 March 2018, 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 20%;
  2) The withholding tax, if applicable at the rate of 20%, will result
     in a net cash dividend per share of 5,20000 cents;
  3) The issued preference share capital of The Foschini Group Limited is
     200 000 shares at 2 November 2017; 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 325,0
cents per ordinary share from income reserves, for the period ended 30
September 2017, payable on Monday, 8 January 2018 to ordinary shareholders
recorded in the books of the company at the close of business on Friday, 5
January 2018. The last day to trade (“cum” the dividend) in order to
participate in the dividend will be Tuesday, 2 January 2018. The Foschini
Group Limited ordinary shares will commence trading “ex” the dividend from
the commencement of business on Wednesday, 3 January 2018 and the record
date, as indicated, will be Friday, 5 January 2018.

Ordinary shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Wednesday, 3 January
2018 to Friday, 5 January 2018, 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 20%;
   2) The withholding tax, if applicable at the rate of 20%, will result
      in a net cash dividend per share of 260,00000 cents;
   3) The issued ordinary share capital of The Foschini Group Limited is
      236 756 814 shares at 2 November 2017; 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
2 November 2017


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
 Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196
 Sponsor:
 UBS South Africa Proprietary Limited

Visit our website at http://www.tfglimited.co.za

Date: 02/11/2017 01:30:00 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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