To view the PDF file, sign up for a MySharenet subscription.

THE FOSCHINI GROUP LIMITED - Reviewed Preliminary Condensed Consolidated Financial Statements for the Year Ended 31 March 2019

Release Date: 23/05/2019 13:30
Code(s): TFG TFGP     PDF:  
 
Wrap Text
Reviewed Preliminary Condensed Consolidated Financial Statements for the Year Ended 31 March 2019

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 2019


SALIENT FEATURES
  -   Group retail turnover up 19,6% to R34,1 billion
  -   Group online turnover growth of 57,2% (8,8% of Group retail
      turnover)
  -   Gross margin expansion to 53,6% (March 2018: 52,5%)
  -   Headline earnings of R2,7 billion with growth of 12,0% (excluding
      acquisition costs* +8,5%)
  -   Headline earnings per share up 9,0% to 1 187,1 cents (excluding
      acquisition costs* +5,6%)
  -   Free cash flow generated equal to 86,8% of net profit for the year
  -   Final dividend declared of 450,0 cents per share, an increase of
      7,1%
INTRODUCTION OF NEW ACCOUNTING STANDARDS - IFRS 9 AND IFRS 15

During the year, the Group adopted IFRS 9 ‘Financial Instruments’ and
IFRS 15 ‘Revenue from Contracts with Customers’. The Group adopted IFRS
9 retrospectively and elected to reflect it as an adjustment to the
Group’s opening retained earnings on 1 April 2018 and not to restate its
comparative   financial  statements.     IFRS  15   was   adopted  fully
retrospectively by the Group as at the start of the earliest period
presented in these reviewed preliminary condensed consolidated results
(‘financial results’).

Further information with regard to the impact of these changes in
accounting policies is provided in note 15 of these financial results.

COMMENTARY

PERFORMANCE OVERVIEW
The difficult trading conditions that were experienced during the first
half of our financial year across all three of our major territories,
South Africa, United Kingdom and Australia, continued into the second
half of the year. Against this backdrop, and in an environment where
the retail sector as a whole is facing significant disruption, all three
business segments produced strong turnover growth in relation to their
respective markets.

Retail turnover for the Group increased by 19,6% compared to March 2018
with turnover growth of 8,9% (ZAR) for TFG Africa, 31,3% (GBP) for TFG
London and 58,3% (AUD) for TFG Australia. Including comparable^ numbers
for Hobbs (TFG London) and RAG (TFG Australia) acquired during the
previous financial year, turnover grew by 3,5% and 14,5% respectively
for TFG London and TFG Australia. Strong comparable store turnover
growth of 5,6% was achieved for TFG Africa and 7,8% for TFG Australia.

Group cash turnover, now contributing 72% of the Group’s turnover, grew
by 25,2% while Group credit turnover grew by 7,1%, up from 6,8% at
interim. TFG Africa’s cash turnover, contributing 56,7% to the segment’s
turnover, grew strongly at 10,3% (ZAR).

The Group continued to invest significantly in its online offering to
customers which enabled pleasing growth in online turnover across all
three business segments. Online turnover, now contributing 8,8% of the
Group’s turnover, grew by 57,2% with 23 of the Group’s 29 brands now
available online.

Group gross margin expanded to 53,6% from 52,5% at March 2018. The
encouraging improvement in gross margin for TFG Africa continued into
the second half, with gross margin of 48,2% achieved for the year
compared to 47,8% at March 2018. This improvement is the result of
specific focus placed on key initiatives to improve input margin and
decrease markdowns. TFG London reported gross margin of 61,4% (March
2018:   61,9%) and TFG Australia reported gross margin of 66,0% (March
2018:   65,5%).

Headline earnings for the year grew by 12,0% to R2,7 billion. Excluding
the acquisition costs* incurred in the prior year relating to the Hobbs
and RAG acquisitions, headline earnings grew by 8,5%.          With the
additional 17,2 million shares issued in the prior year, total headline
earnings per share grew by 9,0% to 1 187,1 cents per share. Excluding
the acquisition costs*, headline earnings per share grew by 5,6%.

A final dividend of 450,0 cents per share has been declared, an increase
of 7,1%.

The Group achieved free cash flow of R2,3 billion for the year,
equivalent to 86,8% of net profit after tax. Due to the strong cash
generation of the underlying businesses, the Group further improved its
debt-to-equity ratio to 56,6%. The high levels of free cash flow
conversion and reduction in the Group’s debt-to-equity ratio are all the
more pleasing, given the extent of the Group’s ongoing investment in
both digital and physical infrastructure to ensure that it continues to
meet the expectations and needs of its customers. During the year the
Group invested R942,4 million in capital expenditure.

At March 2019, the Group’s footprint consisted of 4 085 outlets across
32 countries. The following movements occurred in the estate portfolio
during the past year:

                    TFG Africa      TFG London        TFG          Group
                                                   Australia
                    Number of       Number of      Number of      Number of
                     outlets         outlets        outlets        outlets
New outlets             56             116             58            230
Closed outlets          77              80             22            179
Net movement           (21)             36             36             51

TFG Africa secured new and enlarged space growth of 3,7% and, in line
with our focus on capital optimisation, closures and reductions in space
of 1,8%, resulting in a net trading space increase of 1,9% compared to
March 2018. Further, TFG Africa achieved rental reversions of -12,7%
(2018: -2,5% ) and average increases of 5,8% (2018: 7,1%).

MERCHANDISE CATEGORIES
Turnover growth in the various merchandise categories was as follows:

                                              % same
                                        %      store          %
                           %     turnover   turnover   turnover   % turnover
                    turnover       growth     growth     growth       growth
                      growth         (TFG       (TFG       (TFG         (TFG
                     (Group)      Africa)    Africa)    London)   Australia)
                        ZAR*          ZAR        ZAR       GBP*         AUD*
Clothing                23,7         11,1        7,5       31,3         58,0
Jewellery                5,0          4,2        3,3                  n/a^
Cellphones               0,9          0,9         -
Homeware &
                         8,4          8,4        2,7
furniture
Cosmetics                1,0          1,0        0,2
Total turnover          19,6          8,9        5,6      31,3       58,3

* Non-comparable due to inclusion of Hobbs (TFG London) and RAG (TFG
Australia)
^ American Swiss Australia first year of trade

Product price deflation in TFG Africa averaged approximately -2,3%.

CREDIT
The retail net debtors’ book of R7,4 billion grew by 0,9% year-on-year
(March 2018: 7,8%) while the gross debtors’ book grew by 9,6% to R9,3
billion (March 2018: R8,5 billion). The muted growth in the net
debtors’ book is as a result of the impact of IFRS 9.

Net bad debt as a % of the debtors’ book at March 2019 was 10,7%, up
from 9,9% at March 2018.

BOARD UPDATES
As previously announced on SENS (dated 12 March 2018, 24 May 2018, 1
August 2018 and 8 November 2018) the following Supervisory Board
changes occurred during the past financial year:
   - Doug Murray stepped down as the Group’s CEO on 3 September 2018 and
     retired from the Group at the end of September 2018. Doug has been
     appointed as a consultant to the end of September 2019 and will be
     appointed as a non-executive director from 1 October 2019.
   - Anthony Thunstrom, previously the Group’s CFO, assumed the position
     of CEO on 3 September 2018.
   - Bongiwe Ntuli was appointed as the Group’s CFO and as an executive
     director with effect from 14 January 2019.

OUTLOOK
Our outlook for trading conditions remains subdued across all three of
the Group’s business segments with macro factors creating uncertainty
both in South Africa and the United Kingdom.

The Group is however confident that its commitment to successful
strategy execution, underpinned by the strategic focus on digital
transformation, together with the range of desirable products and
differentiated brands, will continue to grow the businesses and market
positioning in each of our countries of operation.

The Group continues to invest throughout the cycle and has authorised
capital expenditure in respect of digital transformation initiatives of
approximately R500 million over the short to medium term to support the
Group’s focus on an enhanced customer experience.
Retail trade performance for the first six weeks of the new financial
year is in line with management’s expectation.

PRO FORMA INFORMATION
Pro forma management account information for Hobbs and RAG were used in
this announcement for illustrative purposes only to provide an
indicative turnover growth for the TFG London and TFG Australia business
segments as if the acquisitions took place effective 1 April 2017. This
pro forma information, because of its nature, may not be a fair
reflection of the Group’s results of operations, 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 pro forma management account turnover numbers used were:
                              Year ended    Year ended
                              March 2018    March 2019
                                      £m            £m     % change
 TFG London as previously
 disclosed - audited               310,9         408,3         31,3
 Hobbs (April 2017 – Nov
 2017)#                             83,6
 Comparable TFG London             394,5         408,3          3,5

                              Year ended   Year ended
                              March 2018   March 2019
                                     A$m          A$m      % change
 TFG Australia as
 previously disclosed -
 audited                           312,1        494,2          58,3
 RAG (April 2017 – July
 2017)#                            119,7
 Comparable TFG Australia          431,8        494,2          14,5

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 2019. 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. 165 of 3,25% (6,5 cents per share) (gross) in respect of
the six months ending 30 September 2019 has been declared from income
reserves, payable on Monday, 23 September 2019 to holders of 6,5%
preference shares recorded in the books of the company at the close of
business on Friday, 20 September 2019. The last day to trade (“cum” the
dividend) in order to participate in the dividend will be Tuesday, 17
September 2019. The Foschini Group Limited preference shares will
commence trading “ex” the dividend from the commencement of business on
Wednesday, 18 September 2019 and the record date, as indicated, will be
Friday, 20 September 2019.

Preference shareholders should take note that share certificates may not
be dematerialised or rematerialised during the period Wednesday, 18
September 2019 to Friday, 20 September 2019, 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 23 May 2019; 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 450,0
cents per ordinary share from income reserves, for the period ended 31
March 2019, payable on Monday, 22 July 2019 to ordinary shareholders
recorded in the books of the company at the close of business on Friday,
19 July 2019. The last day to trade (“cum” the dividend) in order to
participate in the dividend will be Tuesday, 16 July 2019. The Foschini
Group Limited ordinary shares will commence trading “ex” the dividend
from the commencement of business on Wednesday, 17 July 2019 and the
record date, as indicated, will be Friday, 19 July 2019.

Ordinary shareholders should take note that share certificates may not
be dematerialised or rematerialised during the period Wednesday, 17 July
2019 to Friday, 19 July 2019, 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 360,00000 cents;
   3) The issued ordinary share capital of The Foschini Group Limited is
      236 756 814 shares at 23 May 2019; and
   4) The Foschini Group Limited’s tax reference number is
      9925/133/71/3P.
Signed on behalf of the Board.

M Lewis                A E Thunstrom
Chairman               CEO

Cape Town
23 May 2019

* Headline earnings excluding acquisition costs is defined in note 10 of
the reviewed preliminary condensed consolidated results.
^ Pro forma numbers included in the prior period base to calculate an
indicative turnover growth.
#
  The adjustment is once-off and based on management accounts. The Group
is satisfied with the quality of these management accounts which are
unaudited.


CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                    Restated*    Restated*
                                            March       March        March
                                             2019        2018         2017
                                         Reviewed     Audited      Audited
                                               Rm          Rm           Rm
ASSETS
Non-current assets
Property, plant and equipment             2 820,0      2 861,9     2 469,0
Goodwill and intangible assets            8 590,1      7 667,2     4 675,9
Deferred taxation asset                   1 045,7        663,6       515,4
                                       ----------   ----------   ----------
                                         12 455,8     11 192,7      7 660,3
                                       ----------   ----------   ----------
Current assets
Inventory (note 4)                        7 680,9      6 900,6     5 603,8
Trade receivables – retail                7 439,8      7 373,6     6 843,3
Other receivables and prepayments         1 147,6        821,8       771,0
Concession receivables                      174,3        296,8       246,1
Cash and cash equivalents                 1 111,0      1 206,1       878,5
                                       ----------   ----------   ----------
                                         17 553,6     16 598,9     14 342,7
                                       ----------   ----------   ----------
Total assets                             30 009,4     27 791,6     22 003,0
                                       ==========   ==========   ==========

EQUITY AND LIABILITIES
Equity attributable to equity
holders of The Foschini Group
Limited                                  14 307,3     13 121,5    10 396,9
Non-controlling interest                        -          4,5         4,2
                                       ----------   ----------   ----------
Total equity                             14 307,3     13 126,0     10 401,1
                                       ----------   ----------    ----------


LIABILITIES
Non-current liabilities
Interest-bearing debt                   6 017,4          4 825,7        4 442,2
Put option liability                       81,0             72,7           74,7
Cash-settled share incentive
                                             -                 -           6,8
scheme
Operating lease liability                 363,5             335,1        255,7
Deferred taxation liability               933,7             829,4        337,9
Post-retirement defined benefit
plan                                      233,8             215,8         233,1
                                     ----------        ----------    ----------
                                        7 629,4           6 278,7       5 350,4
                                     ----------        ----------    ----------
Current liabilities
Interest-bearing debt                   3 196,0           4 524,9       3 307,0
Trade and other payables                4 535,0           3 724,3       2 836,7
Operating lease liability                  22,5              30,7          15,2
Taxation payable                          319,2             107,0          92,6
                                     ----------        ----------    ----------
                                        8 072,7           8 386,9       6 251,5
                                     ----------        ----------    ----------
Total liabilities                      15 702,1          14 665,6      11 601,9
                                     ----------        ----------    ----------
Total equity and liabilities           30 009,4          27 791,6      22 003,0
                                     ==========        ==========    ==========

* Refer to note 15 for the impact of the changes in accounting policies.


CONDENSED CONSOLIDATED INCOME STATEMENT

                                                         Restated*
                                          Year ended    Year ended
                                            31 March      31 March
                                                2019          2018
                                            Reviewed       Audited            %
                                                  Rm            Rm       change

Revenue (note 5)                            37 128,2      31 463,0
                                          ==========    ==========
Retail turnover                             34 101,4      28 519,5         19,6
Cost of turnover                          (15 820,8)    (13 557,5)
                                          ----------    ----------
Gross profit                                18 280,6      14 962,0
Interest income (note
6)                                           1 764,0       1 755,8
Other income (note 7)                        1 262,8       1 187,7
Net bad debt                                 (992,8)       (837,5)
Trading expenses (note
8)                                        (15 986,8)    (12 941,5)
                                          ----------    ----------
Operating profit before
acquisition costs and
finance costs                               4 327,8       4 126,5          4,9
Acquisition costs                                 -        (79,4)
Finance costs                                (749,9)      (696,6)
                                         ----------    ----------
Profit before tax                           3 577,9       3 350,5
Income tax expense                          (939,3)       (942,3)
                                         ----------    ----------
Profit for the year                         2 638,6       2 408,2
                                         ==========    ==========
Attributable to:
Equity holders of The
Foschini Group Limited                      2 638,4       2 406,9
Non-controlling
interest                                        0,2           1,3
                                         ----------    ----------
Profit for the year                         2 638,6       2 408,2
                                         ==========    ==========


* Refer to note 15 for the impact of the changes in accounting policies.

Earnings per ordinary
share (cents)
Total
Basic                                     1 141,7       1 070,2      6,7
Diluted (basic)                           1 131,3       1 060,0      6,7



Earnings per ordinary share (excluding acquisition costs) (cents) - (note
10)
Headline                                   1 187,1     1 124,1      5,6
Diluted (headline)                         1 176,3     1 113,4      5,6


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                   Restated*
                                                    Year ended    Year ended
                                                      31 March      31 March
                                                          2019          2018
                                                      Reviewed       Audited
                                                           Rm             Rm

Profit for the year                                    2 638,6       2 408,2
                                                    ----------    ----------
Other comprehensive income (loss):
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                                                  32,7        27,2
Foreign currency translation
reserve movements                                      935,8     (555,7)
Deferred tax on items that are or
may be reclassified to profit or
loss                                                   (8,9)        (8,6)
                                                  ----------   ----------
Other comprehensive income(loss)
for the year, net of tax                               959,6      (512,5)
                                                  ----------   ----------
Total comprehensive income for the
year                                                 3 598,2      1 895,7
                                                  ==========   ==========
Attributable to:
Equity holders of The Foschini
Group Limited                                        3 598,0      1 894,4
Non-controlling interest                                 0,2          1,3
                                                  ----------   ----------
Total comprehensive income for the
year                                                 3 598,2      1 895,7
                                                  ==========   ==========

                                                                Restated*
                                                  March 2019   March 2018
SUPPLEMENTARY INFORMATION                           Reviewed      Audited

Net number of ordinary shares in
issue (millions)                                       231,3       231,3
Weighted average number of
ordinary shares in issue
(millions)                                             231,1       224,9
Tangible net asset value per
ordinary share (cents)                               2 471,8     2 358,1

* Refer to note 15 for the impact of the changes in accounting policies.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

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

Equity at 31 March 2017 -
audited                                  10 515,3            4,2     10 519,5
IFRS 15 transition*                       (118,4)              -      (118,4)
                                         --------       --------     --------
Equity at 31 March 2017 - audited
- restated*                              10 396,9            4,2     10 401,1
Profit for the year – restated*           2 406,9            1,3      2 408,2
Other comprehensive loss
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
the year                                  1 894,4          1,3         1 895,7
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                            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 - audited
- restated*                              13 121,5         4,5        13 126,0
IFRS 9 transition*                        (517,4)           -         (517,4)
                                         --------    --------        --------
Equity at 1 April 2018 - reviewed        12 604,1         4,5        12 608,6
Profit for the year                       2 638,4         0,2         2 638,6
Other comprehensive income
Movement in effective portion of             32,7             -          32,7
changes in fair value of cash
flow hedges
Foreign currency translation
reserve movements                            935,8            -       935,8
Deferred tax on movement in
other comprehensive income                   (8,9)            -       (8,9)

                                        --------      --------     --------
Total comprehensive income for
the year                                 3 598,0            0,2      3 598,2
Contributions by and
distributions to owners
Share-based payments reserve
movements                                   87,3              -         87,3
Dividends paid                          (1 756,1)              -    (1 756,1)
Proceeds from sale of shares in
terms of share incentive schemes            46,7             -         46,7
Shares purchased in terms of
share incentive schemes                  (274,3)              -      (274,3)
Decrease in the fair value of the
put option liability                           1,6            -         1,6
Realisation on disposal of non-
controlling interest                           -         (4,7)        (4,7)
                                        --------      --------     --------
Equity at 31 March 2019 -
reviewed                                14 307,3             -     14 307,3
                                        ========      ========     ========

* Refer to note 15 for the impact of the changes in accounting policies.

                                                     Year ended   Year ended
                                                       31 March     31 March
                                                           2019         2018
                                                       Reviewed      Audited
Dividend per ordinary share
(cents)
Interim                                                   330,0        325,0
Final                                                     450,0        420,0
                                                     ----------   ----------
Total                                                     780,0        745,0
                                                     ==========   ==========


CONDENSED CONSOLIDATED CASH FLOW STATEMENT
                                                      Restated*
                                       Year ended   Year ended
                                         31 March     31 March
                                            2019          2018
                                         Reviewed      Audited
                                            Rm           Rm
Cash flows from operating
activities
Operating profit before working
capital changes (note 9)                5 420,8      5 029,7
Increase in working capital             (743,1)      (937,2)
                                     ----------   ----------
Cash generated from operations          4 677,7      4 092,5
Interest income                            15,7         48,0
Finance costs                           (749,9)      (696,6)
Taxation paid                           (947,1)      (960,2)
Dividends paid                        (1 756,1)    (1 627,2)
                                     ----------   ----------
Net cash inflows from operating
activities                              1 240,3        856,5
                                     ----------   ----------
Cash flows from investing
activities
Purchase of property, plant and
equipment and intangible assets         (942,4)      (896,6)
Acquisition of assets through
business combinations                        -     (2 898,9)
Acquisition of management buy-out            -        (41,3)
Proceeds from sale of property,
plant and equipment and intangible
assets                                     32,3         40,4
Proceeds from disposal of business         41,7            -
                                     ----------   ----------
Net cash outflows from investing
activities                              (868,4)    (3 796,4)
                                     ----------   ----------
Cash flows from financing
activities
Shares purchased in terms of share
incentive schemes                       (274,3)     (231,6)
Proceeds on issue of share capital            -     2 473,0
Proceeds from sale of shares in
terms of share incentive schemes          46,7         91,7
(Decrease)increase in interest-
bearing debt                            (319,2)      1 067,9
                                     ----------   ----------
Net cash (outflows)inflows from
financing activities                    (546,8)      3 401,0
                                     ----------   ----------
Net (decrease) increase in cash
and cash equivalents during the
year                                   (174,9)        461,1
Cash and cash equivalents at the
beginning of the year                  1 206,1        878,5
Cash held in non-controlling
interest                                 (6,4)            -
Effect of exchange rate
fluctuations on cash held                 86,2      (133,5)
                                      ----------   ----------
Cash and cash equivalents at the
end of the year                         1 111,0      1 206,1
                                      ==========   ==========

* Refer to note 15 for the impact of the changes in accounting policies.

CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS

                       TFG
                    Africa                                  TFG
                 retail***   Credit***   TFG London   Australia        Total
                  Reviewed    Reviewed     Reviewed    Reviewed     Reviewed
                        Rm          Rm           Rm          Rm           Rm
Year ended 31
March 2019
External
revenue           22 588,6       487,6      7 345,8      4 942,2    35 364,2
External
interest
income                15,7     1 748,3            -            -     1 764,0
                  --------    --------     --------     --------    --------
Total
revenue**        22 604,3      2 235,9      7 345,8      4 942,2    37 128,2
                 ========     ========     ========     ========    ========

External
finance costs      (678,6)           -       (55,1)       (16,2)     (749,9)
Depreciation
and
amortisation       (557,9)           -      (185,0)      (101,2)     (844,1)
Segmental
profit before
tax                2 326,5       713,7        205,9        421,7     3 667,8
Reconciling
items to Group
profit before
tax
Foreign
exchange
transactions                                                            10,0
Share-based
payments                                                              (87,3)
Operating
lease
liability
adjustments                                                           (12,6)
Group profit
before tax                                                           3 577,9
                 Restated*
                       TFG
                    Africa    Restated                      TFG   Restated*
                 retail***   Credit***   TFG London   Australia       Total
                   Audited     Audited      Audited     Audited     Audited
                        Rm          Rm           Rm          Rm          Rm
Year ended 31
March 2018
External
revenue          20 861,5       364,2       5 348,9     3 132,6    29 707,2
External
interest
income                47,3     1 707,8            -         0,7     1 755,8
                  --------    --------     --------    --------    --------
Total
revenue**        20 908,8      2 072,0      5 348,9     3 133,3    31 463,0
                 ========     ========     ========    ========    ========
External
finance costs      (617,1)           -       (66,5)      (13,0)     (696,6)
Depreciation
and
amortisation       (510,2)           -      (132,2)     (103,1)     (745,5)
Segmental
profit before
tax                2 378,9       731,6        202,1       253,1     3 565,7
Reconciling
items to Group
profit before
tax
Foreign
exchange
transactions                                                         (13,2)
Share-based
payments                                                            (155,0)
Operating
lease
liability
adjustments                                                          (47,0)
Group profit
before tax                                                          3 350,5


* Refer to note 15 for the impact of the changes in accounting policies.
** Includes retail turnover, interest income and other income.
*** The chief operating decision-maker assessed the Group’s current
operating segments and concluded that the value-added services and
central and shared services segments would be allocated to TFG Africa
as this better reflects the current operating segments within the
Group. In addition, certain costs were reallocated between credit and
TFG Africa. The comparable prior years’ information has been restated
accordingly.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The preliminary condensed consolidated financial statements for the year
ended  31 March  2019  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, No.71 of 2008, as amended. 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 Bongiwe Ntuli CA(SA), CFO of The Foschini Group Limited.
2. During the year, the Group adopted the following revised accounting
standards:
- IFRS 15: Revenue from Contracts with Customers
- IFRS 9: Financial Instruments
Refer to note 15 for the impact of the changes in accounting policies.
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.
                                                       Restated*
                                      Year ended       Year ended
                                        31 March       31 March
                                            2019       2018
                                        Reviewed       Audited
                                             Rm        Rm


4. Inventory

Inventory at year-end                    7 680,9      6 900,6
                                     ==========     ==========
Inventory write-downs included
                                          316,7       260,2
above
                                     ----------   ----------
5. Revenue
Retail turnover                        34 101,4   28 519,5
Interest income (note 6)                1 764,0    1 755,8
Other income (note 7)                   1 262,8    1 187,7
                                     ---------- ----------
                                       37 128,2   31 463,0
                                     ---------- ----------
6. Interest income
Trade receivables – retail              1 748,3      1 707,8
Sundry                                     15,7         48,0
                                     ----------   ----------
                                        1 764,0      1 755,8
                                     ----------   ----------

7. Other income
Value-added services                      754,6        806,6
Collection cost recovery                  487,6        364,2
Sundry income                              20,6         16,9
                                     ----------   ----------
                                        1 262,8      1 187,7
                                     ----------   ----------


8. Trading expenses
Depreciation and amortisation           (844,1)      (745,5)
Employee costs                        (6 181,0)    (4 948,0)
Occupancy costs                       (4 141,6)    (3 411,5)
Other operating costs                 (4 820,1)    (3 836,5)
                                     ----------   ----------
                                     (15 986,8)     12 941,5
                                     ----------   ----------

9. Operating profit before working
capital changes
Profit before tax                       3 577,9      3 350,5
Finance costs                             749,9        696,6
                                     ----------   ----------
Operating profit before finance
costs                                   4 327,8     4 047,1
Interest income – sundry                 (15,7)      (48,0)
Non-cash items
Depreciation and amortisation             844,1       745,5
Operating lease liability
adjustments                                12,6        47,0
Share-based payments                       87,3       155,0
Post-retirement defined benefit
medical aid movement                       18,0        16,9
Employee related provisions                21,0           -
Foreign currency translation
reserve movements                         (10,0)        13,2
Cash-settled share incentive
scheme                                      -            0,1
Profit on disposal of non-
controlling interest                       (1,4)           -
Loss on disposal of business                23,8           -
Loss on disposal of property,
plant and equipment and intangible
assets                                      123,4       54,4
Profit on disposal of property,
plant and equipment and intangible
assets                                      (10,1)      (1,5)
                                          ----------   ----------
                                            5 420,8    5 029,7
                                          ----------   ----------

10. Reconciliation of profit for
the year to headline earnings
Profit for the year attributable
to equity holders of The Foschini
Group Limited                                  2 638,4      2 406,9
Adjusted for:
Profit on disposal of non-
controlling interest                             (1,4)           -
Loss on disposal of business                      23,8           -
Loss on disposal of property,
plant and equipment and intangible
assets                                           123,4        54,4
Profit on disposal of property,
plant and equipment and intangible
assets                                          (10,1)           (1,5)
                                            ----------      ----------
Headline earnings before tax                   2 774,1         2 459,8
Tax on headline earnings
                                                (30,7)          (11,0)
adjustments
                                            ----------      ----------
Headline earnings                              2 743,4         2 448,8
Acquisition costs                                    -            79,4
                                            ----------      ----------
Headline earnings excluding
                                               2 743,4         2 528,2
acquisition costs**
                                            ----------      ----------


                                                   Restated*
                                                        Year
                                     Year ended     ended 31
                                       31 March        March
                                           2019         2018        %
                                       Reviewed      Audited   change
Earnings per ordinary share
(cents)
Total
Basic                                 1   141,7   1   070,2     6,7
Headline                              1   187,1   1   088,8     9,0
Diluted (basic)                       1   131,3   1   060,0     6,7
Diluted (headline)                    1   176,3   1   078,4     9,1

Total (excluding acquisition
costs)**
Basic                                 1   141,7   1   105,5     3,3
Headline                              1   187,1   1   124,1     5,6
Diluted (basic)                       1   131,3   1   094,9     3,3
Diluted (headline)                    1   176,3   1   113,4     5,6


* Refer to note 15 for the impact of the changes in accounting policies.
** Headline earnings excluding acquisition costs is calculated to remove
the impact of the prior years’ acquisition costs of the RAG, G-star Raw
and Hobbs acquisitions as well as the TFG London 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 dated 23 May 2018, which is
available for inspection at the company’s registered offices, at no
charge, during normal business hours.

11. Related parties
The Group entered into related party transactions in the ordinary course
of business, the substance of which are similar to those disclosed in
the Group’s annual financial statements for the year ended 31 March
2018.

12. Subsequent events
The directors have declared a gross final ordinary dividend of 450,0
cents per ordinary share from income reserves, for the period ended 31
March 2019. No further significant events took place between the year
ended 31 March 2019 and date of issue of this report.
13. Changes to directors
 During the year, the following changes took place:
- Doug Murray stepped down as CEO on 3 September 2018 and retired from
the Group at the end of September 2018.
- Anthony Thunström, previously the CFO of the Group, assumed the
position of CEO on 3 September 2018.
- Bongiwe Ntuli was appointed as CFO and executive director of the Group
with effect from 14 January 2019.

14. Disposal during the year
G-Star RAW franchise stores

The assets of the G-Star RAW franchise stores in Australia were disposed
of effective 6 December 2018 for a purchase consideration of AUD11,1
million (R111,2 million). The purchase consideration will be repaid over
a 3 year period. In the current year, AUD3,8 million (R38,2 million) of
the purchase consideration was received. The impairment raised amounted
to AUD2,4 million (R23,8 million).

15.  Change in accounting policies
15.1 IFRS 15: Revenue from Contracts with Customers

During the current year, the Group has adopted IFRS 15. This standard
applies specific rules whereby the timing of cash payments specified in
a contract are different to the transfer of control of the related goods
to the customer, thus changing when the related revenue is recognised.

IFRS 15 Revenue from Contracts with Customers replaces IAS 18 Revenue
and IAS 11 Construction Contracts. It is a single, comprehensive revenue
recognition model for all contracts with customers and has the objective
of achieving greater consistency in the recognition and presentation of
revenue.

In terms of the new standard, revenue is recognised based on the
satisfaction of performance obligations, which occurs when control of
goods transfers to a customer.

The Group previously accounted for lay-by revenue on the initiation of
the contract. With the adoption of IFRS 15, the Group now accounts for
the revenue once the contract is concluded and risks and rewards have
been transferred to the customer. Upon receipt of final payment from the
customer, control of the goods will transfer to the customer and the
sale will be concluded. On conclusion, the full revenue will be
recognised by the Group at this point in time.

The Group has adopted this standard fully retrospectively as at the
start of the earliest period presented, as is permitted in the
transitional arrangements. The change in accounting policy has therefore
resulted in a restatement of the comparative figures on the statement of
financial position, income statement, statement of changes in equity and
cash flow statement.

Refer to the details below for a summary of the effect of this change in
the IFRS 15 accounting policy.

                                                                Restated
                                        31 March                31 March
                                            2017                    2017
                                         Audited    IFRS 15      Audited
                                              Rm         Rm           Rm
Consolidated statement of financial
position
Non-current assets
Deferred taxation asset                    483,6       31,8        515,4

Current assets
Inventory                                5 511,2       92,6      5 603,8
Trade receivables - retail               7 000,7    (157,4)      6 843,3

Equity
Total equity                            10 519,5    (118,4)     10 401,1

Current liabilities
Trade and other payables                 2 751,3       85,4      2 836,7

                                                                Restated
                                        31 March                31 March
                                            2018                    2018
                                         Audited    IFRS 15      Audited
                                              Rm         Rm           Rm
Consolidated statement of financial
position
Non-current assets
Deferred taxation asset                    620,6       43,0        663,6


Current assets
Inventory                                6 773,6      127,0      6 900,6
Trade receivables - retail               7 573,8    (200,2)      7 373,6

Equity
Total equity                            13 272,3    (146,3)     13 126,0

Current liabilities
Trade and other payables                 3 608,2      116,1      3 724,3

Consolidated income statement
Retail turnover                         28 593,0    (73,5)     28 519,5
Cost of turnover                      (13 591,9)      34,4   (13 557,5)
Income tax expense                       (953,5)      11,2      (942,3)

Consolidated cash flow statement
Operating cash flows before working
capital changes                          5 068,8    (39,1)      5 029,7
Increase in working capital              (976,3)      39,1      (937,2)


15.2 IFRS 9: Financial Instruments

IFRS 9: Financial Instruments (IFRS 9) was issued in July 2014 and has
replaced IAS 39: Financial Instruments: Recognition and Measurement
(IAS 39). The standard is effective from 1 January 2018 and was
implemented by the Group from 1 April 2018. This standard incorporates
amendments to the classification and measurement of financial
instruments, hedge accounting guidance and the accounting requirements
for the impairment of financial assets measured at amortised cost and
fair value through other comprehensive income (OCI).

Adoption of IFRS 9
As permitted by IFRS 9, the Group has elected not to restate its
comparative financial statements. IFRS 9 has been retrospectively
adopted on 1 April 2018 with an adjustment to the Group’s opening 1
April 2018 retained earnings. Comparability will therefore not be
achieved due to the fact that the comparative financial information
has been prepared in accordance with IAS 39: Financial Instruments:
Recognition and Measurement (IAS 39).

 Classification and measurement
 IFRS 9 requires all financial assets to be classified and measured on
 the basis of the Group’s business model for managing the financial
 assets and the contractual cash flow characteristics of the financial
 assets. Management have assessed the business models which apply to
 the financial assets held by the Group and the financial instruments
 have been classified into the appropriate IFRS 9 categories.

Trade receivables – retail, other receivables and prepayments and
concession receivables satisfy the conditions for classification at
amortised cost and hence there is no change to the classification and
measurement of these assets. There has been no change to the
classification of the Group’s financial liabilities which are
classified and measured at amortised cost.

Measurement of ECLs
Impairments in terms of IFRS 9 are determined based on an expected
credit loss (ECL) model, as opposed to an incurred loss model applied
in terms of IAS 39. The ECL model applies to all financial assets
measured at amortised cost. The measurement of ECLs reflects a
probability-weighted outcome, the time value of money and the best
forward-looking information available to the Group. The Group measures
ECL using probability of write-off, exposure at write-off, timing of
when write-off is likely to occur and loss given write-off. These
components are multiplied together and adjusted for the likelihood of
write-off. For variable rate financial instruments, the ECL is
discounted using the current effective interest rate applicable to the
financial asset. For fixed rate financial instruments, the ECL is
discounted using the original effective interest rate applicable to
the financial asset.

The Group has adopted the simplified approach which recognises lifetime
expected credit losses regardless of stage classification. Trade
receivables – retail account customer balances can move in both
directions through the stages of the impairment model.

At each reporting date the Group assesses whether financial assets
carried at amortised cost are credit-impaired and therefore classified
as stage 3. A financial asset is credit-impaired when one or more
events that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred. The Group’s definition of
credit-impaired is aligned to our internal definition of default. IFRS
9 does not define default. The Group has adopted the rebuttable
presumption that default is evident where a Trade receivables – retail
account customer is in arrears for more than 90 days based on
contractual payment requirements.

When a financial asset is classified as stage 3 impaired, interest
income is calculated on the impaired value (gross carrying amount less
impairment allowance) based on the original effective interest rate.
The contractual interest income on the gross carrying amount of the
financial asset is suspended and is only recognised in interest income
when the financial asset is reclassified out of stage 3.

No provision is made and held against Trade receivables – retail
unutilised facilities based on the fact that the facility does not meet
the definition of a loan commitment, given that the Group can refuse or
limit future purchases at any point.

Forward-looking information
The calculation of the ECL incorporates forward-looking information
that can be sourced without undue cost or effort and which is deemed
to be reasonable and supportable. This forward-looking view includes:
 • Information based on expected future macro-economic conditions;
 • Potential impacts based on industry specific challenges, including
 but not limited to potential legislative changes; and
• Expert management judgement.

Significant judgement and estimates are applied in the process         of
incorporating forward-looking information into the ECL calculation.

The   following   approach  is   followed   to  assess forward-looking
information via a formally mandated governance committee. This
entails:
 • Use of third party economic reports and forecasts;
 • Upside and downside scenarios based on alternative macro-economic
 conditions which will be compared to our base scenario and will be
 probability-weighted based on our best estimate of their relative
 likelihood; and
 • A governance process to approve the probability-weighting and
 scenarios used.

Write-off policy
The Group writes off its trade receivables when it has no reasonable
expectations of recovering the trade receivable in its entirety, or
a portion thereof. The Group utilises both an in-house collection
department and external collection specialists in an effort to
recover outstanding amounts. Trade receivables are written off where
the Trade receivables – retail account customer has not made a
qualifying payment for 6 months.

Presentation of impairment
Loss allowances for financial assets measured at amortised cost are
deducted from the gross carrying amount of the assets, and the
amortised cost is presented on the face of the statement of
financial position.

Impact on the financial statements
The following table sets out the impact of the changes in accounting
policies and retrospective adjustments made for each individual line
item affected on the financial statements for IFRS 15 and the
retrospective impact of IFRS 9 recognised in the opening statement of
financial position on 1 April 2018. IFRS 9 was adopted without
restating comparative information and the impact is not reflected in
the restated comparatives.

                                            Restated
                     31 March               31 March             1 April
                         2018                   2018                2018
                      Audited    IFRS 15*    Audited   IFRS 9   Reviewed
                           Rm          Rm         Rm       Rm         Rm
Consolidated
statement of
financial position
Non-current assets
Deferred taxation       620,6       43,0      663,6     176,0      839,6
asset

Current assets
Trade receivables -
retail                    7 573,8   (200,2)    7 373,6   (542,5)   6 831,1
Concession
receivables                 296,8         -      296,8   (150,9)     145,9

Equity
Total equity             13 272,3   (146,3)   13 126,0   (517,4)   12 608,6

* Refer to note 15.1 for the impact of the IFRS 15 change in accounting
policy.

16.     Auditor's review report

The condensed consolidated financial statements have been reviewed by
the company’s auditors, Deloitte & Touche. They have issued an
unmodified review conclusion on the condensed consolidated financial
statements. 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 company'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.

Non-executive Directors:
M Lewis (Chairman),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 E Thunström, B Ntuli
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: 23/05/2019 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.

Email this JSE Sens Item to a Friend.

Share This Story