| Wed 5 Sep 2007, 16:07 | | FOS / FOSP - Foschini - Results Of AGM And Statement By The Chairman At The AGM |
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FOS FOSP
FOS
FOS / FOSP - Foschini - Results Of AGM And Statement By The Chairman At The AGM
Foschini Ltd
Registration number 1937/009504/06
Share codes: FOS-FOSP
ISIN codes: ZAE000031019 - ZAE000031027
STATEMENT BY THE CHAIRMAN
At Foschini`s 70th Annual General Meeting held earlier to-day, Chairman Eliot
Osrin updated the meeting as follows:
RESULTS FOR 2007
As appears from our published accounts, the year ended March 2007 was another
good year for our group, with an 18,5% growth in comparable headline earnings
per share, which follows compounded growth in the past five years of 56%.
The year saw many highlights, some of which are as follows:
* Record turnover of R7,2 billion, an increase of 14,6% over the previous
comparable year.
* Profit before tax up 19,8% to R1,78 billion, 22,8% for the comparable 52
weeks.
* Operating margin increased to 26,1% which is the highest ever achieved.
* Comparable headline earnings per share increased by 18,5% to 534,2 cents per
share.
* Total dividend for the year increased by 22,7% to 270,0 cents per share.
* Return on average equity of 32,5%.
The retail sector in South Africa experienced unprecedented growth in the last
five years, with consumer spending being extremely strong and growing at a far
faster rate than the economy as a whole.
Against this background, our group`s retail turnover grew to in excess of R7
billion, an increase of 14,6% over the previous comparable year and is well on
the way to reaching the R10 billion mark. Our pre-tax profit of R1,78 billion
is one of the highest in our sector.
Having regard to our very strong balance sheet and cash flow, we reduced our
dividend cover this year from 2,1 to 2,0 times resulting in the total dividend
for the year being increased by 22,7% to 270,0 cents per share.
Our group`s return on average equity is very healthy at 32,5%, which is indeed
impressive by world standards. Group gearing remains relatively low at 18,8%,
which is below the group`s medium-term target of 25%.
TRADING DIVISIONS
All our divisions performed well, once again substantially above our product
inflation of approximately 4%, the exception being our Foschini division which
suffered stock shortages during the period August to November. I can say with
confidence that all our stores are excellent in regard to their appearance and
layout, systems, merchandise offering and customer service. Our staff is at the
heart of our success and I am pleased to report that the calibre of our staff
continues to improve year-on-year.
As mentioned more fully in our published accounts, the buoyant trading
conditions experienced in the first half of the financial year continued into
the second half, albeit at lower growth levels.
Our gross margins were marginally down on the previous year, primarily as a
result of a change in the sales mix, with cellphones and cosmetics growing at a
higher rate than our other products.
FINANCIAL SERVICES - RCS GROUP
Our RCS financial services division comprising RCS Personal Finance and RCS
Cards continued to show strong growth, growing its pre-tax profit by 27,5%.
As from 1 April 2007, our group`s shareholding in this division is now at 55%,
with the remainder being held by the Standard Bank of South Africa Limited.
PROSPECTS FOR THE 2008 FINANCIAL YEAR
I would now like to comment briefly on the group`s prospects for 2008.
*In our latest annual report, I indicated in my Chairman`s Report that " we are
of the view that next year will be one of the most difficult that the group has
experienced for many years, but we do believe that this will be short-lived and
that the economy will once again continue its upward momentum in the build-up to
the Soccer World Cup in 2010".
Interest rates have increased six times since June 2006, which together with
petrol price hikes and the National Credit Act that became effective on 1 June
2007, have dampened the economy and made life more difficult for the average
South African consumer.
*Trading conditions for the first 5 months of this financial year have been
challenging, particularly since the introduction of the National Credit Act on
the 1st of June, which has impacted sales. Total sales have grown by 8,5% over
the previous period, with growth in the different merchandise categories being
as follows:
- Clothing: 7,9%
- Jewellery: 10,7%
- Cosmetics: 16,4%
- Homewares: 10,5%
- Cell phones: 4,4%
*As a result of the above, we have reduced our sales targets for the remainder
of the year as well as implemented cost savings across all our divisions. In
the absence of unforeseen circumstances during the remainder of the year, we
nevertheless expect to be able to produce another year of satisfactory earnings
growth.
CEO
As you are all aware this is Dennis Polak`s last AGM as CEO of our group as he
will be retiring from this position at the end of this year. Dennis will have
spent 39 years with the group, the last ten as CEO. He has been an outstanding
CEO and under his leadership, the company has not only annually produced
outstanding results increasing earnings per share from 82,7 cents in 1998 to
534,2 cents in 2007, but it has considerably increased the number of divisions
which constitute the group by adding Exact, Fashion Express, Totalsports, Due
South, @home, Luella and RCS financial services to the group`s offerings.
Firstly on behalf of everyone, I thank Dennis for his huge contribution to the
company, and secondly, I am delighted that Dennis will be remaining on as a non-
executive director of the group.
Doug Murray has been appointed as Group CEO designate to succeed Dennis from
January next year. Doug has been with the group for 22 years, the past eight as
retail director with all divisions other than the Foschini division, reporting
directly to him.
Doug and Dennis have already begun adjusting their roles to accommodate a
seamless change in leadership on 1 January 2008 and I am confident that Doug
will steer the group to new heights in the future.
ACKNOWLEDGMENTS
Once more, on behalf of my fellow board members and myself, I thank all our
dedicated staff for their continued excellent performance during the year.
RESULTS OF ANNUAL GENERAL MEETING
Shareholders are advised that, at the annual general meeting of shareholders of
Foschini Ltd, which was held earlier to-day, all resolutions, with the exception
of ordinary resolution number 8, as proposed in the notice of the annual general
meeting were approved by the requisite majority of members. Ordinary resolution
number 8 was withdrawn.
The special resolution will be lodged for registration with the Registrar of
Companies.
Cape Town
5 September 2007
SPONSOR:
UBS South Africa (Pty) Ltd
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