THE FOSCHINI GROUP LIMITED - Reviewed Preliminary Condensed Consolidated Financial Statements for the Year Ended 31 March 2018

Release Date: 24/05/2018 13:30
Code(s): TFG TFGP
 
Wrap Text
Reviewed Preliminary Condensed Consolidated Financial Statements for the Year Ended 31 March 2018

The Foschini Group Limited
Registration number: 1937/009504/06
Share codes: TFG-TFGP
ISIN codes: ZAE000148466 – ZAE000148516


Reviewed Preliminary Condensed Consolidated Financial Statements for
the Year Ended 31 March 2018


SALIENT FEATURES
* Group retail turnover up 21,4% (constant currency +23,0%) to R28,6
billion
* Gross margin improved to 52,5% (March 2017:   49,7%)
* Headline earnings excluding acquisition costs* up 9,6% (constant
currency +10,2%) to R2,5 billion
* Headline earnings per share excluding acquisition* costs up 3,4%
(constant currency +4,0%) to 1 136,5 cents
* Free cash flow up 44,8% to R1,9 billion
* Final dividend of 420,0 cents per share – a 5,0% increase
* Total dividend of 745,0 cents per share – a 3,5% increase




CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                      March        March
                                                       2018         2017
                                                   Reviewed      Audited
                                                         Rm           Rm
ASSETS
Non-current assets
Property, plant and equipment                       2 861,9       2 469,0
Goodwill and intangible assets                      7 667,2       4 675,9
Deferred taxation asset                               620,6         483,6
                                                 ----------    ----------
                                                   11 149,7       7 628,5
                                                 ----------    ----------
Current assets
Inventory (note 4)                                  6 773,6       5 511,2
Trade receivables – retail                          7 573,8       7 000,7
Other receivables and prepayments                     821,8         771,0
Concession receivables                                 296,8        246,1
Cash and cash equivalents                            1 206,1        878,5
                                                  ----------   ----------
                                                    16 672,1     14 407,5
                                                  ----------   ----------
Total assets                                        27 821,8     22 036,0
                                                  ==========   ==========

EQUITY AND LIABILITIES
Equity attributable to equity
holders of The Foschini Group
Limited (note 14)                                   13 267,8     10 515,3
Non-controlling interest                                 4,5          4,2
                                                  ----------   ----------
Total equity                                        13 272,3     10 519,5
                                                  ----------   ----------


LIABILITIES
Non-current liabilities
Interest-bearing debt                               4 825,7       4 442,2
Put option liability                                   72,7          74,7
Cash-settled share incentive
                                                           -          6,8
scheme
Operating lease liability                             335,1         255,7
Deferred taxation liability                           829,4         337,9
Post-retirement defined benefit
plan                                                   215,8        233,1
                                                  ----------   ----------
                                                     6 278,7      5 350,4
                                                  ----------    ----------
Current liabilities
Interest-bearing debt                                4 524,9      3 307,0
Trade and other payables                             3 608,2      2 751,3
Operating lease liability                               30,7         15,2
Taxation payable                                       107,0         92,6
                                                  ----------   ----------
                                                     8 270,8      6 166,1
                                                  ----------   ----------
Total liabilities                                   14 549,5     11 516,5
                                                  ----------   ----------
Total equity and liabilities                        27 821,8     22 036,0
                                                  ==========    ==========

CONDENSED CONSOLIDATED INCOME STATEMENT

                                     Year ended      Year ended
                                       31 March        31 March
                                           2018            2017
                                       Reviewed         Audited         %
                                             Rm              Rm    change
Revenue (note 5)                       31 536,5        26 413,6
                                     ==========      ==========
Retail turnover                        28 593,0        23 548,7      21,4
Cost of turnover                     (13 591,9)      (11 845,2)
                                     ----------      ----------
Gross profit                           15 001,1        11 703,5
Interest income (note 6)                1 755,8         1 736,9
Other income (note 7)                   1 187,7         1 128,0
Trading expenses (note
8)                                    (13 779,0)     (10 757,2)
                                     ----------     ----------
Operating profit before
acquisition costs and
finance costs                           4 165,6         3 811,2       9,3
Acquisition costs                        (79,4)               -
Finance costs                           (696,6)         (607,4)
                                     ----------      ----------
Profit before tax                       3 389,6         3 203,8
Income tax expense                      (953,5)         (851,3)
                                     ----------      ----------
Profit for the year                     2 436,1         2 352,5
                                     ==========      ==========
Attributable to:
Equity holders of The
Foschini Group Limited                  2 434,8         2 351,4
Non-controlling interest                    1,3             1,1
                                     ----------      ----------
Profit for the year                     2 436,1         2 352,5
                                     ==========       ==========


Earnings per ordinary
share (cents)
Total
Basic                                   1 082,6         1 108,0     (2,3)
Diluted (basic)                         1 072,3         1 098,6     (2,4)



Earnings per ordinary share (excluding acquisition costs) (cents) -
(note 10)
Headline                                 1 136,5       1 099,2       3,4
Diluted (headline)                       1 125,7       1 089,9       3,3


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                     Year ended   Year ended
                                       31 March     31 March
                                          2018          2017
                                      Reviewed       Audited
                                           Rm             Rm

Profit for the year                    2 436,1      2 352,5
                                    ----------   ----------
Other comprehensive income:
Items that will never be
reclassified to profit or loss
Actuarial gain on post-retirement
defined benefit plan                      34,2           -
Deferred tax on items that will
never be reclassified to profit
or loss                                  (9,6)           -
Items that are or may be
reclassified to profit or loss
Movement in effective portion of
changes in fair value of cash
flow hedges                               27,2        24,2
Foreign currency translation
reserve movements                      (555,7)      (793,1)
Deferred tax on items that are or
may be reclassified to profit or
loss                                     (8,6)        (6,8)
                                    ----------   ----------
Other comprehensive loss for the
year, net of tax                       (512,5)      (775,7)
                                    ----------   ----------
Total comprehensive income for
the year                               1 923,6      1 576,8
                                    ==========   ==========
Attributable to:
Equity holders of The Foschini
Group Limited                          1 922,3      1 575,7
Non-controlling interest                   1,3          1,1
                                    ----------   ----------
Total comprehensive income for
the year                               1 923,6      1 576,8
                                    ==========   ==========

                                    March 2018   March 2017
SUPPLEMENTARY INFORMATION           Reviewed        Audited

Net number of ordinary shares in
issue (millions)                         231,3       214,0
Weighted average number of
ordinary shares in issue
(millions)                               224,9       212,2
Tangible net asset value per
ordinary share (cents)                 2 421,4     2 728,7

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                          Equity
                                      holders of
                                    The Foschini          Non-
                                           Group   controlling      Total
                                         Limited      interest     equity
                                              Rm           Rm          Rm

Equity at 31 March 2016 -
audited                                 9 896,7           4,0     9 900,7
Profit for the year                     2 351,4           1,1     2 352,5
Other comprehensive income
Movement in effective portion of
changes in fair value of cash
flow hedges                                24,2             -        24,2
Foreign currency translation
reserve movements                       (793,1)             -     (793,1)
Deferred tax on movement in
other comprehensive income                (6,8)             -       (6,8)
                                       --------      --------    --------
Total comprehensive income for
the year                                1 575,7           1,1     1 576,8
Contributions by and
distributions to owners
Share-based payments reserve
movements                                 131,4             -       131,4
Dividends paid                        (1 508,1)         (0,9)    (1 509,0)
Scrip distribution: share capital
issued and share premium raised           542,9             -       542,9
Proceeds from sale of shares in
terms of share incentive schemes          151,3             -       151,3
Shares purchased in terms of
share incentive schemes                 (234,8)             -     (234,8)
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 year                     2 434,8           1,3     2 436,1
Other comprehensive income
Actuarial gain on post-retirement
defined benefit plan                       34,2             -        34,2
Movement in effective portion of
changes in fair value of cash
flow hedges                                27,2             -        27,2
Foreign currency translation
reserve movements                       (555,7)             -     (555,7)
Deferred tax on movement in
other comprehensive income               (18,2)             -      (18,2)
                                       --------      --------    --------
Total comprehensive income for          1 922,3           1,3     1 923,6
the year
Contributions by and
distributions to owners
Share-based payments reserve
movements                                 155,0            -       155,0
Dividends paid                        (1 626,2)        (1,0)    (1 627,2)
Share capital issued and share
premium raised (note 14)                2 473,0            -     2 473,0
Proceeds from sale of shares in
terms of share incentive schemes           91,7            -        91,7
Shares purchased in terms of
share incentive schemes                 (231,6)            -      (231,6)
Increase in the fair value of the
put option liability                     (31,7)            -       (31,7)
                                       --------     --------    --------
Equity at 31 March 2018 -
reviewed                               13 267,8          4,5    13 272,3
                                       ========     ========    ========

                                                Year ended   Year ended
                                                  31 March     31 March
                                                      2018         2017
                                                  Reviewed      Audited
Dividend per ordinary share
(cents)
Interim                                              325,0        320,0
Final                                                420,0        400,0
                                                ----------   ----------
Total                                                745,0        720,0
                                                ==========   ==========


CONDENSED CONSOLIDATED CASH FLOW STATEMENT
                                                Year ended   Year ended
                                                  31 March     31 March
                                                      2018         2017
                                                  Reviewed      Audited
                                                        Rm           Rm
Cash flows from operating
activities
Operating profit before working
capital changes (note 9)                           5 068,8      4 488,6
Increase in working capital                        (976,3)    (1 156,5)
                                                ----------   ----------
Cash generated from operations                     4 092,5      3 332,1
Interest income                                       48,0         33,1
Finance costs                                      (696,6)      (607,4)
Taxation paid                                      (960,2)      (777,5)
Dividends paid                                   (1 627,2)      (966,1)
                                                ----------   ----------
Net cash inflows from operating                      856,5      1 014,2
activities
                                                ----------   ----------
Cash flows from investing
activities
Purchase of property, plant and
equipment and intangible assets                     (896,6)     (883,5)
Acquisition of assets through
business combinations (note 11)                   (2 898,9)      (33,8)
Acquisition of management buy-out
(note 11)                                            (41,3)          -
Proceeds from sale of property,
plant and equipment                                   40,4         32,0
Repayment of participation in
export partnerships                                      -         14,4
                                                ----------   ----------
Net cash outflows from investing
activities                                        (3 796,4)      (870,9)
                                                ----------   ----------
Cash flows from financing
activities
Shares purchased in terms of
share incentive schemes                            (231,6)       (234,8)
Proceeds on issue of share
capital (note 14)                                  2 473,0            -
Proceeds from sale of shares in
terms of share incentive schemes                      91,7        151,3
Increase in interest-bearing debt                  1 067,9         36,8
                                                 ----------   ----------
Net cash inflows (outflows) from
financing activities                               3 401,0        (46,7)
                                                 ----------   ----------
Net increase in cash during the
year                                                 461,1          96,6
Cash at the beginning of the year                    878,5         888,8
Effect of exchange rate
fluctuations on cash held                           (133,5)       (106,9)
                                                 ----------   ----------
Cash at the end of the year                         1 206,1        878,5
                                                 ==========   ==========

CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS


                   Retail        Value               Central
                  trading        added            and shared           TFG
                divisions     services     Credit   services        London
                 Reviewed     Reviewed   Reviewed   Reviewed      Reviewed
                       Rm           Rm         Rm         Rm            Rm
Year ended 31
March 2018
External         20 111,7        806,6      364,2         16,7     5 348,9
revenue
External
interest
income                  -           -    1 707,8        47,3            -
                 --------    --------   --------    --------      --------
Total revenue*   20 111,7       806,6    2 072,0        64,0       5 348,9
                 ========    ========   ========    ========      ========

External
finance costs                                        (617,1)        (66,5)
Depreciation
and
amortisation                                         (510,2)       (132,2)
Segmental
profit (loss)
before tax         3 967,6      459,7      656,1   (1 933,8)         202,1




                    Retail      Value               Central
                   trading      added            and shared         TFG
                 divisions   services     Credit   services      London
                   Audited    Audited    Audited    Audited     Audited
                        Rm         Rm         Rm         Rm          Rm
Year ended 31
March 2017
External
revenue          18 912,8      783,3       331,5       13,2     4 635,9
External
interest
income                  -           -    1 703,8        33,1          -
                 --------    --------   --------    --------   --------
Total revenue*   18 912,8       783,3    2 035,3        46,3    4 635,9
                 ========    ========   ========    ========   ========
External
finance costs                                        (526,8)     (80,6)
Depreciation
and
amortisation                                         (437,6)    (102,7)
Segmental
profit (loss)
before tax         3 802,1      444,0      571,9   (1 802,2)      345,3

                                                         TFG        TFG
                                                   Australia  Australia
                                                    31 March   31 March
                                                        2018       2017
                                                    Reviewed    Audited
                                                          Rm         Rm
External revenue                                   3 132,6            -
External interest income                               0,7            -
                                                ----------   ----------
Total revenue*                                     3 133,3            -
                                                ==========   ==========
External finance costs                              (13,0)            -
Depreciation and amortisation                      (103,1)            -

Segmental profit before tax                          253,1            -

                                                     Total        Total
                                                Year ended   Year ended
                                                  31 March     31 March
                                                      2018         2017
                                                  Reviewed      Audited
                                                        Rm           Rm

External revenue                                  29 780,7     24 676,7
External interest income                           1 755,8      1 736,9
                                                ----------   ----------
Total revenue*                                    31 536,5     26 413,6
                                                ==========   ==========
External finance costs                             (696,6)      (607,4)
Depreciation and amortisation                      (745,5)      (540,3)

Segmental profit before tax                        3 604,8      3 361,1
Reconciling items to Group profit
before tax
Foreign exchange transactions                       (13,2)        (4,0)
Share-based payments                               (155,0)      (131,4)
Operating lease liability
adjustment                                          (47,0)       (21,9)
                                                ----------   ----------
Group profit before tax                            3 389,6      3 203,8

Capital expenditure                                  896,6       883,5

* Includes retail turnover, interest income and other income.

The previously named International division, comprising of the Phase
Eight and Whistles brands, has been renamed to the TFG London segment.

During the current year, the Group acquired the Retail Apparel Group
(RAG) and certain G-Star RAW Australia franchise stores, which forms
part of the new TFG Australia reportable segment as defined by the
Operating Board, being the chief operating decision-maker.

During the current year, the Group also acquired Hobbs Fashion
Holdings Limited (Hobbs), which forms part of the TFG London
reportable segment as defined by the Operating Board, being the chief
operating decision-maker.


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The preliminary condensed consolidated financial statements for the
year ended 31 March 2018 are prepared in accordance with the framework
concepts and the   measurement and recognition requirements of
International Financial Reporting Standards (IFRS), the SAICA
Financial Reporting  Guides as issued by the Accounting Practices
Committee, Financial Pronouncements as issued  by the Financial
Reporting Standards Council, IAS 34: Interim Financial Reporting and
the requirements of the Companies Act of South Africa. The accounting
policies and methods of computation applied in the preparation of
these preliminary condensed consolidated financial statements 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
acting under supervision of Anthony Thunström CA(SA), CFO of The
Foschini Group Limited.


2.   During the year, the  Group  adopted  the relevant accounting
standards that are in issue and which have become effective. The
adoption of these standards had no material impact on the results.


3.   These condensed financial statements incorporate the financial
statements of the company, all its subsidiaries and all entities over
which it has operational and financial control.
                                                                                            
                                 Year ended    Year ended 
                                   31 March      31 March
                                       2018          2017
                                   Reviewed       Audited
                                        Rm             Rm


4. Inventory
                                   ---------    ---------
Inventory at year-end                6 773,6      5 511,2
                                  ==========   ==========
Inventory write-downs included
                                       260,2        233,0
above
                                  ----------   ----------
5. Revenue
Retail turnover                     28 593,0     23 548,7
Interest income (note 6)             1 755,8      1 736,9
Other income (note 7)                1 187,7      1 128,0
                                  ----------   ----------
                                    31 536,5     26 413,6
                                  ----------   ----------
6. Interest income
Trade receivables – retail           1 707,8      1 703,8
Sundry                                  48,0         33,1
                                  ----------   ----------
                                     1 755,8      1 736,9
                                  ----------   ----------

7. Other income
Publishing income                      412,7        400,8
Collection cost recovery               364,2        331,5
Insurance income                       313,4        289,0
Mobile one2one airtime income           80,5         93,5
Sundry income                           16,9         13,2
                                  ----------   ----------
                                     1 187,7      1 128,0
                                  ----------   ----------


8. Trading expenses
Depreciation and amortisation        (745,5)      (540,3)
Employee costs                     (4 948,0)    (3 669,8)
Occupancy costs                    (3 411,5)    (2 431,8)
Net bad debt                         (837,5)      (896,1)
Other operating costs              (3 836,5)    (3 219,2)
                                  ----------   ----------
                                  (13 779,0)   (10 757,2)
                                  ----------   ----------

9. Operating profit before
working capital changes
Profit before tax                    3 389,6      3 203,8
Finance costs                          696,6        607,4
                                  ----------   ----------
Operating profit before finance
costs                                4 086,2      3 811,2
Interest income – sundry              (48,0)       (33,1)
Non-cash items
Depreciation and amortisation          745,5        540,3
Operating lease liability
adjustment                              47,0         21,9
Share-based payments                   155,0        131,4
Post-retirement defined benefit
medical aid movement                    16,9         15,8
Foreign currency translation
reserve movements                       13,2          4,0
Cash-settled share incentive
scheme                                   0,1            -
Loss on disposal of property,
plant and equipment                     54,4         12,2
Profit on disposal of property,
plant and equipment                     (1,5)       (15,1)
                                   ----------    ----------
                                      5 068,8      4 488,6
                                   ----------    ----------

10. Reconciliation of profit for
the year to headline earnings
Profit for the year attributable
to equity holders of The Foschini
Group Limited                       2 434,8         2 351,4
Adjusted for:
Profit on disposal of property,
plant and equipment                  (1,5)            (15,1)
Loss on disposal of property,
plant and equipment                   54,4             12,2
                                  ----------      ----------
Headline earnings before tax        2 487,7          2 348,5
Tax on headline earnings
                                     (11,0)           (15,7)
adjustments
                                  ----------       ----------
Headline earnings                   2 476,7           2 332,8
Acquisition costs                      79,4                 -
                                  ----------        ----------
Headline earnings excluding
                                    2 556,1          2 332,8
acquisition costs*
                                  ----------        ----------


                                        Year            Year
                                    ended 31        ended 31
                                       March           March
                                        2018            2017           %
                                    Reviewed         Audited      change
Earnings per ordinary share
(cents)
Total
Basic                                1 082,6         1 108,0     (2,3)
Headline                             1 101,2         1 099,2      0,2
Diluted (basic)                      1 072,3         1 098,6     (2,4)
Diluted (headline)                   1 090,7         1 089,9      0,1

Total (excluding acquisition
costs)*
Basic                                1 117,9         1 108,0      0,9
Headline                             1 136,5         1 099,2      3,4
Diluted (basic)                      1 107,2         1 098,6      0,8
Diluted (headline)                   1 125,7         1 089,9      3,3


* Headline earnings excluding acquisition costs is calculated to
remove the impact of the acquisition costs of RAG, G-Star RAW and
Hobbs acquisitions as well as the management buy-out.

This   pro  forma   financial  information   has  been   prepared  for
illustrative purposes only to provide information on the headline
earnings excluding acquisition costs per share. Because of its nature,
the pro forma financial information may not be a fair reflection of
the Group’s results of operation, financial position, changes in
equity or cash flows. There are no events subsequent to the reporting
date which require adjustment to the pro forma information. The
directors are responsible for compiling the pro forma financial
information in accordance with the JSE Limited Listings Requirements
and in compliance with the SAICA Guide on Pro Forma Financial
Information. The underlying information used in the preparation of the
pro forma financial information has been prepared using the accounting
policies in place for the year ended 31 March 2018. The pro forma
information should be read in conjunction with the unmodified Deloitte
& Touche independent reporting accountants’ report thereon, which is
available for inspection at the company’s registered offices, at no
charge, during normal business hours.

11. Acquisition during the year
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). An
intangible asset and goodwill of AUD0,6 million (R6,0 million) and
AUD6,3 million (R64,4 million) was recognised at acquisition
respectively.

Retail Apparel Group (RAG)

The Group has acquired 100% of the share capital and voting rights of
the Retail Apparel Group Pty Ltd (RAG) effective from 24 July 2017.
RAG is a leading speciality menswear retailer in the Australian
market. The purchase price 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 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 eight
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:

                                                  Reviewed    Reviewed
                                                        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
prepayment
Cash and cash equivalents                            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 on acquisition                        2 570,5       251,9

Goodwill of AUD124,7 million (R1,3 billion) and the RAG brands of
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 eight-
month trading post acquisition amounted to R2 936,8 million and R223,9
million respectively. Acquisition costs related to the acquisition of
R53,4 million have been expensed in the current year.
Hobbs Fashion Holdings Limited (Hobbs)

The Group acquired 100% of the share capital and voting rights of
Hobbs Fashion Holdings Limited (Hobbs) effective from 25 November
2017. Hobbs is an affordable luxury women's clothing, footwear and
accessories brand in the UK market and a growing presence
internationally as well. The total implied purchase price was GBP24,3
million. The Group has obtained 100% control of Hobbs and is exposed
to variable returns from its involvement with Hobbs.

The acquisition of Hobbs was at an enterprise value of GBP24,3 million
(R449,9 million) with an equity value of GBP15,0 million (R278,1
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 GBP values have been translated at the closing exchange
rate at 25 November 2017 of GBP1:R18,55. These results include four
months of Hobbs trading.

TFG has measured the identifiable assets and liabilities of Hobbs at
their acquisition-date fair values.

The provisional at-acquisition values are presented below:

                                                  Reviewed    Reviewed
                                                        Rm        GBPm

Non-current assets                                   365,8        19,7
Property, plant and equipment                        173,8         9,4
Intangible assets                                    178,2         9,6
Deferred taxation asset                               13,8         0,7
Current assets                                       647,2        34,9
Inventory                                            402,5        21,7
Other receivables and
                                                      77,0         4,2
prepayment
Concession receivables                                76,2         4,1
Cash and cash equivalents                             91,5         4,9
Non-current liabilities                              202,1        10,9
Interest-bearing debt                                171,8         9,3
Deferred taxation liability                           30,3         1,6
Current liabilities                                  592,0        31,9
Trade and other payables                             584,4        31,5
Taxation payable                                       7,6         0,4

Total identifiable net assets
                                                     218,9        11,8
at fair value
Goodwill arising from
                                                      59,2         3,2
acquisition
Purchase consideration                               278,1        15,0
Cash and cash equivalents
                                                    (91,5)       (4,9)
acquired
Cash outflow on acquisition                          186,6        10,1


Goodwill of GBP3,2 million (R59,2 million) and the Hobbs brand of
GBP9,6 million (R178,2 million) 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 four-
month trading post acquisition amounted to R833,5 million and R33,7
million respectively. Acquisition costs related to the acquisition of
R9,0 million have been expensed in the current year.

Acquisition of the remaining c.15% shareholding owned by TFG Brands
(London) Limited management

In the current year, the Group accelerated the put/call arrangement to
acquire the remaining shares owned by management in TFG Brands
(London) Limited. The Group acquired the remaining c.15% shareholding
owned by management on 15 December 2017 for GBP2,4 million (R41,3
million). After the transaction, the Group owns 100% of the share
capital in TFG Brands (London) Limited. Total acquisition costs
amounted to R17,0 million.

12. 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 2017.

13. Subsequent events
The directors have declared a gross final ordinary dividend of 420,0
cents per ordinary share from income reserves, for the period ended 31
March 2018. No further significant events took place between the year
ended 31 March 2018 and date of issue of this report.

14. Changes 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. Total transaction costs
relating to the share issue amounted to R27,0 million.


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


16. Changes in directors
There were no changes in directors during the current year.

17. Auditor’s review report
These condensed consolidated financial statements of The Foschini
Group Limited for the year ended 31 March 2018 have been reviewed by
the company’s auditors, Deloitte & Touche, who expressed an unmodified
review conclusion. A copy of the review report is available for
inspection at the company’s registered office.

The auditor's report does not necessarily report on all of the
information contained in this announcement. 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 that report
together with the accompanying financial information from the
commpany's registered office.

Any reference to future outlook or prospects included in this
announcement has not been reviewed or reported on by the company’s
auditors.

COMMENTARY

INTRODUCTION
Given the increasing international 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 Phase
      Eight, Whistles and Hobbs.
   - “TFG Australia” – refers to the consolidated performance of Retail
      Apparel Group (RAG) and G-Star Australia.
   - “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,
eight months’ trading of RAG has been included in these results.
In addition, and as was announced on SENS on 7 November 2017, the
Group acquired, through its United Kingdom subsidiary TFG Brands
(London) Limited, the entire issued share capital of Hobbs.   The
effective date of the acquisition was 25 November 2017 and four
months’ trading of Hobbs has been included in these results.

The Group accelerated the put/call arrangement to acquire the
remaining c.15% shareholding owned by management in TFG Brands
(London) Limited. The transaction was effective 15 December 2017.

PERFORMANCE OVERVIEW
The Group performed strongly in the second half of the financial year,
notwithstanding the difficult political and economic conditions
currently experienced in both South Africa and the United Kingdom.

Total Group retail turnover growth for the year of 21,4% (constant
currency 23,0%) was achieved, with growth of 6,3% (ZAR) in TFG Africa,
23,5% (GBP) in TFG London and the balance coming from TFG Australia.
Excluding Hobbs, TFG London turnover grew by 4,2% (GBP). Comparable
store turnover growth of 2,2% was achieved in TFG Africa.

         Turnover growth                 FY     FY      FY
                                       2018   2018    2018
                                         H1     H2   total
TFG Africa (ZAR)                       5,0%   7,6%    6,3%
TFG London (GBP)     –     excluding   4,1%   4,4%    4,2%
Hobbs acquisition

Group cash turnover growth of 31,9% was achieved for the year with
growth of 7,3% (ZAR) in TFG Africa. This growth achieved in TFG Africa
is pleasing, considering the high base in the prior year of 14,1%
turnover growth.     The balance of Group cash turnover growth was
achieved through TFG London, driven mostly by online channels, and TFG
Australia.   Online turnover now contributes 33% (GBP) of TFG London
turnover.       Total cash turnover as a percentage of total Group
turnover was 65,9% for the year (March 2017: 60,7%).

Group credit turnover growth at 5,3% was driven in part by the growth
in the active account base. This growth was in line with expectation
as the negative impact of the Affordability Regulations is now in the
base.   We are pleased about the recent court ruling which set aside
the Affordability Regulations with regard to submission of proof of
income.

An improved Group gross margin of 52,5% was achieved for the year, up
from 49,7% at March 2017. In TFG Africa, gross margin improved across
all merchandise categories with the exception of cosmetics.      Total
gross margin for TFG Africa was 47,8% compared to 46,4% at March 2017.
TFG London’s gross margin was 61,9% (March 2017:    63,0%), driven by
difficult trading conditions and increased online sales.           TFG
Australia achieved a gross margin of 65,5%.

Total Group trading expenses increased by 28,1% over the previous year
with growth of 8,8% in TFG Africa. The balance of the increase is as
a result of the non-comparable inclusions of TFG Australia, as well as
Hobbs in TFG London. Focus on cost control will continue, building on
the pleasing results already achieved from the various cost saving
initiatives within the Group.

Strong growth of 9,6% (constant currency +10,2%) was achieved for the
year in headline earnings excluding acquisition costs*.      Headline
earnings per share for the year, excluding acquisition costs*,
increased by 3,4% (constant currency +4,0%) to 1 136,5 cents per
share, up from 1 099,2 cents per share in the previous year.

A final cash dividend of 420,0 cents per share has been declared, an
increase of 5,0%.     Accordingly, the total dividend for the year
amounts to 745,0 cents per share, an increase of 3,5%.

The Group opened 281 outlets during the year, 146 in TFG Africa, 91 in
TFG London and 44 in TFG Australia. As a result of the specific focus
placed on underperforming outlets as part of the Group’s capital
allocation model, an increased number of 177 outlets were closed
during the year (TFG Africa:     83, TFG London:   83, TFG Australia:
11). This, in addition to the 602 outlets acquired as part of the TFG
Australia and Hobbs acquisitions, brings the total number of outlets
at March 2018 to 4 034 in 32 countries.      Net trading space in our
African operations increased by 3,5% since March 2017.

In line with the Group’s strategy, our e-commerce roll-out continued
during the year with the launch of @homelivingspace and Exact in the
first half of the year, and Foschini and SODA Bloc in the second half
of the year. The Group now has a total of 20 brands trading online,
with turnover from online trading growing to 6,5% of total turnover
(March 2017:   5,4%).  E-commerce remains a key strategic focus area
for the Group.

MERCHANDISE CATEGORIES
Turnover growth 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                   28,8          9,4        4,8       23,5
Jewellery                   0,6          0,6      (1,7)
Cellphones                (0,2)        (0,2)      (3,2)
Homeware & furniture        0,1          0,1      (2,3)
Cosmetics                 (2,4)         (2,4)     (3,8)
Total turnover             21,4          6,3        2,2      23,5

#Includes non-comparable TFG Australia
## Includes non-comparable Hobbs

Product price deflation in TFG Africa averaged approximately 3,5%.

CREDIT
The retail debtors’ book of R7,6 billion, grew by 8,2% compared to
March 2017. Net bad debt decreased by 6,5% (March 2017: -5,4%) as
strong recoveries growth was maintained at 10,6% (March 2017: +18,7%).

Net bad debt as a percentage of the debtors’ book at March 2018 was
10,0%, down from 11,3% at March 2017. The book continues to be
adequately provisioned at 9,5%, down from 11,8% at the previous year-
end. Preparatory work for the implementation of IFRS 9 is well
advanced.

TFG AUSTRALIA
TFG Australia’s turnover, gross margin, EBITDA and operating margin
has been ahead of management’s expectation. This strong performance
is despite the pressure on consumer spend and increased competitive
behaviour experienced in the Australian market.

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.

The Group’s free cash flow increased by 44,8% for the year to R1,9
billion at March 2018, 77,2% of net profit. Total debt to equity for
the Group improved to 61,4% from 65,3% at March 2017.

MANAGEMENT AND BOARD UPDATES
As was announced on SENS on 12 March 2018, Doug Murray will step down
as CEO of the Group on 3 September 2018 after 33 years’ service, 11 of
which were as CEO. Doug will retire from the Group at the end of
September 2018. Given his wealth of knowledge and experience in the
international retail sector in general and TFG in particular, the
Board has decided to appoint Doug as a consultant to the end of
September 2019 and as a non-executive director from 1 October 2019.
The board expresses its immense gratitude for the significant
contribution made by Doug during his tenure and looks forward to his
continued involvement with the Group.

As indicated, Anthony Thunström, currently the CFO of the Group,
became the CEO Designate on 12 March 2018 and will assume the position
of CEO on 3 September 2018. The process to recruit a CFO is currently
underway.
OUTLOOK
The domestic and global economic and political uncertainty referred to
at our half-year results, continued into the second half of our
financial year. In South Africa, the outlook, while still cautious,
has improved with the inauguration of President Ramaphosa in February
2018. In the United Kingdom, the uncertainty relating to the outcome
of Brexit negotiations remains and this, amongst other factors,
continues to impact consumer and business confidence.

While the recent court ruling with regard to the Affordability
Regulations signals an improved outlook for the credit environment
within South Africa, caution is required regarding future regulatory
developments in this sector.

Our continued commitment to our strategic pillars of customer,
leadership, profit and growth together with our diversification across
cash and credit turnover, our portfolio of brands, geographies and
sales channels, will support the Group’s future resilience and
success. In particular, our focus on existing strategic initiatives –
superior customer experiences, cost control, working capital
management and capital optimisation – will continue in the year ahead,
with additional focus on strategic investment by the Group in digital
transformation.

Retail turnover for the first seven weeks of the new financial year
has been ahead of management’s expectation within TFG Australia and
TFG London. In TFG Africa, volatile trading was experienced during
this period largely driven by the move of Easter, a shift in school
holidays and the introduction of the VAT increase. Despite these
factors, TFG Africa turnover is in line with management’s expectation.

PRO FORMA CONSTANT CURRENCY INFORMATION
Pro forma constant currency information has been disclosed in this
announcement due to the volatile nature of currency fluctuations
during the year, in order to illustrate the impact of GBP on the
Group’s foreign operating segments using the corresponding prior year
average rate. For certain key metrics (Group turnover, headline
earnings excluding acquisition costs and headline earnings per share
excluding acquisition costs), TFG London’s results were translated at
the corresponding prior year average rate of R18.41:1GBP, compared to
a current year average of R17.20:1GBP.

The directors are responsible for compiling the pro forma constant
currency financial information in accordance with the JSE Limited
Listings Requirements and in compliance with the SAICA Guide on Pro
Forma Financial Information. The pro forma constant currency
information has been presented to illustrate the impact of changes in
currency rates on the Group's results and may not fairly present the
Group's financial position, changes in equity, results of operations
or cash flows. The underlying information used in the preparation of
the pro forma financial information has been prepared using the
accounting policies in place for the year ended 31 March 2018. The pro
forma information should be read in conjunction with the unmodified
Deloitte & Touche independent reporting accountants’ report thereon,
which is available for inspection at the company’s registered offices,
at no charge, during normal business hours.

PREFERENCE DIVIDEND ANNOUNCEMENT
Dividend no. 163 of 3,25% (6,5 cents per share) (gross) in respect of
the six months ending 30 September 2018 has been declared from income
reserves, payable on Tuesday, 25 September 2018 to holders of 6,5%
preference shares recorded in the books of the company at the close of
business on Friday, 21 September 2018. The last day to trade (“cum”
the dividend) in order to participate in the dividend will be Tuesday,
18 September 2018. The Foschini Group Limited preference shares will
commence trading “ex” the dividend from the commencement of business
on Wednesday, 19 September 2018 and the record date, as indicated,
will be Friday, 21 September 2018.

Preference shareholders should take note that share certificates may
not be dematerialised or rematerialised during the period Wednesday,
19 September 2018 to Friday, 21 September 2018, both dates inclusive.

In terms of paragraph 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 24 May 2018; and
   4) The Foschini Group Limited’s tax reference number is
      9925/133/71/3P.

FINAL ORDINARY DIVIDEND ANNOUNCEMENT
The directors have declared a gross final ordinary dividend of 420,0
cents per ordinary share from income reserves, for the period ended 31
March 2018, payable on Monday, 23 July 2018 to ordinary shareholders
recorded in the books of the company at the close of business on
Friday, 20 July 2018. The last day to trade (“cum” the dividend) in
order to participate in the dividend will be Tuesday, 17 July 2018.
The Foschini Group Limited ordinary shares will commence trading “ex”
the dividend from the commencement of business on Wednesday, 18 July
2018 and the record date, as indicated, will be Friday, 20 July 2018.

Ordinary shareholders should take note that share certificates may not
be dematerialised or rematerialised during the period Wednesday, 18
July 2018 to Friday, 20 July 2018, both dates inclusive.

In terms of paragraph 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 336,00000 cents;
  3) The issued ordinary share capital of The Foschini Group Limited
     is 236 756 814 shares at 24 May 2018; 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
24 May 2018

Non-executive Directors:
M Lewis (Chairman), Prof F Abrahams, S E Abrahams, G H Davin, D
Friedland, B L M Makgabo-Fiskerstrand, E Oblowitz, N V Simamane, R
Stein
Executive Directors:
A D Murray, A E Thunström
Company Secretary:
D van Rooyen
Registered office:
Stanley Lewis Centre, 340 Voortrekker Road, Parow East, 7500, South
Africa
Transfer secretaries:
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196,
South Africa
Sponsor:
UBS South Africa Proprietary Limited

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

Date: 24/05/2018 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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