|
FOS FOSP
FOS
FOS / FOSP - Foschini - Reviewed Unaudited Provisional Results for the Year
Ended 31 March 2008 and dividend declaration
Foschini Ltd
Registration number 1937/009504/06
Share codes: FOS-FOSP
ISIN codes: ZAE000031019 - ZAE000031027
The following consolidated results of Foschini Limited for the year ended 31
March 2008 have been reviewed by the company`s auditors, KPMG Inc. Their
unqualified review report is available for inspection at the company`s
registered office.
HIGHLIGHTS
* Retail turnover up 6,1% to R7,7 billion
* Profit after tax up 1,2% to R1,2 billion
* Operating margin at 24,8%
* Headline earnings per share up 2,4% to 547,0 cents per share
* Diluted headline earnings per share up 4,5% to 538,0 cents per share
* Final dividend maintained at 170,0 cents per share
* Total dividend for the year increased by 6,7% to 288,0 cents per share
* Good performance from our retail debtors` book
* Sustained strong balance sheet
CONSOLIDATED INCOME STATEMENT
2008 2007 % Change
Reviewed Audited
Rm Rm
Revenue (note 4) 9 253,6 8 527,8 8,5
======= ======= =======
Retail turnover 7 668,7 7 230,0 6,1
Cost of turnover (4 479,2) (4 195,1)
-------- --------
Gross profit 3 189,5 3 034,9
Interest received (note 5) 1 056,4 877,4
Dividends received 17,2 22,8
Net trading expenses (note 6) (2 357,6) (2 048,1)
-------- --------
Operating profit before finance 1 905,5 1 887,0 1,0
charges
Interest paid (120,1) (104,7)
Income from associate 0,9 -
-------- --------
Profit before tax 1 786,3 1 782,3
Income tax expense (580,2) (590,3)
-------- -------- --------
Profit for the year 1 206,1 1 192,0 1,2
======== ======== ========
Attributable to:
Equity holders of Foschini Limited 1 128,4 1 119,2
Minority interest 77,7 72,8
-------- -------- --------
Profit for the year 1 206,1 1 192,0 1,2
======== ======== ========
RECONCILIATION OF ATTRIBUTABLE PROFIT TO HEADLINE EARNINGS
Profit attributable to equity 1 128,4 1 119,2
holders of Foschini Limited
-------- -------- --------
Headline earnings 1 128,4 1 119,2 0,8
======== ======== ========
EARNINGS PER ORDINARY SHARE (cents)
- Basic 547,0 534,2 2,4
- Headline 547,0 534,2 2,4
- Diluted (basic) 538,0 514,8 4,5
- Diluted (headline) 538,0 514,8 4,5
DIVIDEND PER ORDINARY SHARE
(cents)
- Interim 118,0 100,0
- Final 170,0 170,0
------ ------ ------
- Total 288,0 270,0 6,7
------ ------ ------
Dividend cover (times) 1,9 2,0
CONSOLIDATED BALANCE SHEET
2008 2007
Reviewed Audited
Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 847,4 782,1
Goodwill and intangibles 34,2 30,9
Preference share investment 200,0 200,0
Investment in associate 1,6 -
Staff housing loans 1,3 2,9
Private label card receivables 253,0 155,0
Loan receivables 567,3 706,3
Participation in export partnerships 92,5 103,5
Deferred taxation 174,5 179,7
-------- --------
2 171,8 2 160,4
-------- --------
Current assets
Inventory (note 7) 1 290,0 1 292,9
Trade receivables - retail 2 414,9 2 235,2
Private label card receivables 815,3 671,7
Other receivables and prepayments 162,1 186,6
Loan receivables 148,9 160,2
Participation in export partnerships 8,0 7,6
Cash 63,4 69,1
-------- --------
4 902,6 4 623,3
-------- --------
Total assets 7 074,4 6 783,7
======== ========
EQUITY AND LIABILITIES
Equity attributable to equity holders of 3 845,2 3 823,6
Foschini Limited
Minority interest 290,9 181,3
------- -------
Total equity 4 136,1 4 004,9
------- -------
Non-current liabilities
Interest-bearing debt 561,3 1 014,6
Operating lease liability 128,7 121,0
Deferred taxation 156,5 146,8
-------- --------
846,5 1 282,4
-------- --------
Current liabilities
Interest-bearing debt 1 201,0 5,9
Trade and other payables (note 8) 741,8 1 171,7
Taxation payable 64,9 234,7
Post-retirement defined benefit plan 84,1 84,1
-------- --------
2 091,8 1 496,4
-------- --------
Total liabilities 2 938,3 2 778,8
-------- --------
Total equity and liabilities 7 074,4 6 783,7
======== ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity Minority Total
holders of interest
Foschini
Limited
Rm Rm Rm
Equity at 31 March 2006 3 267,9 88,9 3 356,8
Profit for the year 1 119,2 72,8 1 192,0
Change in degree of control - 71,2 71,2
Profit on dilution of 112,1 - 112,1
interest in subsidiary
Share-based payments reserve 19,2 - 19,2
movements
Dividends paid (500,6) (51,6) (552,2)
Proceeds on delivery of 92,9 - 92,9
shares by share trust
Shares purchased by share (288,4) - (288,4)
trust
Unrealised gain on hedging 1,3 - 1,3
instruments
------- ------- -------
Equity at 31 March 2007 3 823,6 181,3 4 004,9
Profit for the year 1 128,4 77,7 1 206,1
Change in degree of control - 119,4 119,4
Investment in associate - (2,7) (2,7)
Profit on dilution of 92,1 - 92,1
interest in subsidiary
Share-based payments reserve 30,7 - 30,7
movements
Insurance cell reserve 1,5 - 1,5
movements
Dividends paid (592,6) (84,8) (677,4)
Proceeds on delivery of 109,5 - 109,5
shares by share trust
Shares purchased by share (760,4) - (760,4)
trust and subsidiary
Unrealised gain on hedging 12,4 - 12,4
instruments
------- ------- -------
Equity at 31 March 2008 3 845,2 290,9 4 136,1
======= ======= =======
SUPPLEMENTARY INFORMATION
2008 2007
Net ordinary shares in issue (millions) 204,6 212,0
Weighted average ordinary shares in issue 206,3 209,5
(millions)
Tangible net asset value per ordinary share 1 862,7 1 789,4
(cents)
CONSOLIDATED CASH FLOW STATEMENT
2008 2007
Reviewed Audited
Rm Rm
Cash flows from operating activities
Operating profit before working capital 1 074,2 1 187,9
changes (note 9)
Increase in working capital (568,3) (218,1)
------- -------
Cash generated by operations 505,9 969,8
Increase in private label card receivables (241,6) (346,6)
Decrease (increase) in loan receivables 150,3 (49,0)
Interest received 1 056,4 877,4
Interest paid (120,1) (104,7)
Taxation paid (735,1) (718,2)
Dividends received 17,2 22,8
Dividends paid (677,4) (552,2)
------- -------
Net cash (outflows) inflows from operating (44,4) 99,3
activities
------- -------
Cash flows from investing activities
Purchase of property, plant and equipment (274,4) (304,4)
Proceeds from sale of property, plant and 6,4 4,0
equipment
Acquisition of client list (1,8) (2,8)
Investment in associate (6,1) -
Decrease in participation in export 10,6 6,0
partnerships
Decrease in staff housing loans 1,6 1,2
Proceeds on dilution of interest in subsidiary 211,5 183,3
------- -------
Net cash outflows from investing activities (52,2) (112,7)
------- -------
Cash flows from financing activities
Shares purchased by share trust and subsidiary (760,4) (288,4)
Proceeds on delivery of shares by share trust 109,5 92,9
Increase in interest-bearing debt 741,8 215,5
------- -------
Net cash inflows from financing activities 90,9 20,0
------- -------
Net (decrease) increase in cash and cash (5,7) 6,6
equivalents during the year
Cash and cash equivalents at the beginning of 69,1 62,5
the year
------- -------
Cash and cash equivalents at the end of the 63,4 69,1
year
======= =======
NOTES
1. The reviewed provisional results for the year ended 31 March 2008 have
been prepared in accordance with IAS 34 Interim Financial Reporting, using
the group`s accounting policies, which comply with International Financial
Reporting Standards (IFRS) and have been consistently applied to prior
periods.
Certain comparative figures have been reclassified in order to improve
disclosure.
2. These financial statements incorporate the financial statements of the
company, all its subsidiaries and all entities over which it has operational
and financial control.
3. Included in share capital are 24,0 (2007: 16,9) million shares which are
owned by a subsidiary of the company, and 11,9 (2007: 11,6) million shares
which are owned by the share incentive trust. These have been eliminated on
consolidation.
2008 2007
Reviewed Audited
Rm Rm
4. Revenue
Retail turnover 7 668,7 7 230,0
Interest received (refer note 5) 1 056,4 877,4
Dividends received - retail 17,2 22,8
Merchant`s commission - RCS Group 39,7 36,2
Club income - retail 175,6 159,9
Club income - RCS Group 5,5 4,3
Customer charges income - retail 16,5 16,0
Customer charges income - RCS Group 99,1 39,7
Insurance income - retail 80,0 35,5
Insurance income - RCS Group 66,0 66,9
Cellular income - one2one airtime product 22,6 8,8
Sundry income 6,3 30,3
-------- --------
9 253,6 8 527,8
======== ========
5. Interest received
Trade receivables - retail 385,5 299,3
Loan receivables 314,7 336,5
Private label card receivables 347,9 237,0
Sundry - RCS Group 1,1 1,0
Sundry - retail 7,2 3,6
-------- --------
1 056,4 877,4
======== ========
6. Net trading expenses
Depreciation and amortisation (204,7) (174,1)
Employee costs: normal (1 053,9) (920,9)
Employee costs: bonuses - (4,4)
Employee costs: restraint payments (35,4) (20,0)
Employee costs: share-based payments (30,7) (19,2)
Store occupancy costs: normal (575,8) (512,7)
Store occupancy costs: operating lease (7,7) (7,7)
liability adjustment
Net bad debts and provision movement - (217,2) (187,8)
retail
Net bad debts and provision movement - RCS (253,7) (132,4)
Group
Other income 511,3 397,6
Other operating costs (489,8) (466,5)
--------- ---------
(2 357,6) (2 048,1)
======== ========
7. Inventory
Merchandise 1 227,5 1 194,8
Raw materials 32,8 44,4
Goods in transit 10,0 34,3
Shopfitting stock 15,1 18,1
Consumables 4,6 1,3
-------- --------
1 290,0 1 292,9
======== ========
8. Trade and other payables
In the 2007 financial year, March month-end trade creditors amounting to
R286,9 million were paid on 2 April 2007, after the year-end whilst those in
respect of the current year amounting to R289,7 million were paid prior to
the year-end.
9. Operating profit before working capital
changes
Operating profit before finance charges 1 905,5 1 887,0
Interest received (1 056,4) (877,4)
Dividends received (17,2) (22,8)
Non-cash items 242,3 201,1
-------- --------
1 074,2 1 187,9
======== ========
SEGMENTAL ANALYSIS
RCS Group RCS Group Retail Retail
2008 2007 2008 2007
Reviewed Audited Reviewed Audited
Rm Rm Rm Rm
REVENUE *
External 874,2 721,6 8 379,4 7 806,2
Inter-segment - - - -
------- ------- ------- -------
Total revenue 874,2 721,6 8 379,4 7 806,2
------- ------- ------- -------
SEGMENT RESULT
Operating profit 386,7 408,5 1 518,8 1 478,5
before finance
charges
------- ------- ------- -------
External interest (51,8) (31,0) (68,3) (73,7)
Inter-segment (65,3) (54,8) 65,3 54,8
interest
------- ------- ------- -------
Interest paid (117,1) (85,8) (3,0) (18,9)
------- ------- ------- -------
Profit before tax 269,6 322,7 1 515,8 1 459,6
and income from
associate
------- ------- ------- -------
* includes retail turnover, interest received, and other income
SEGMENT ASSETS
Non-current assets 871,0 888,9 1 126,3 1 091,8
Current assets 1 004,6 839,5 3 898,0 3 783,8
Inter-segment 12,9 12,9 (12,9) (12,9)
assets
(liabilities)
------- ------- ------- -------
Total assets 1 888,5 1 741,3 5 011,4 4 862,7
------- ------- ------- -------
SEGMENT
LIABILITIES
Non-current 495,7 391,6 194,3 744,0
liabilites
Current 120,9 119,6 1 906,0 1 142,1
liabilities
Inter-segment 665,9 725,4 (665,9) (725,4)
liabilities
(assets)
------- ------- ------- -------
Total liabilities 1 282,5 1 236,6 1 434,4 1 160,7
------- ------- ------- -------
SEGMENT
INFORMATION
Capital 27,1 13,2 247,3 291,2
expenditure
Depreciation and 13,1 5,5 191,6 168,6
amortisation
SEGMENTAL ANALYSIS
(continued)
Consol- Consol-
idated idated
2008 2007
Reviewed Audited
Rm Rm
REVENUE *
External 9 253,6 8 527,8
Inter-segment - -
------- -------
Total revenue 9 253,6 8 527,8
------- -------
SEGMENT RESULT
Operating profit 1 905,5 1 887,0
before finance
charges
------- -------
External interest (120,1) (104,7)
Inter-segment - -
interest
------- -------
Interest paid (120,1) (104,7)
------- -------
Profit before tax 1 785,4 1 782,3
and income from
associate
------- -------
* includes retail turnover, interest received, and other income
SEGMENT ASSETS
Non-current assets 1 997,3 1 980,7
Current assets 4 902,6 4 623,3
Inter-segment - -
assets
(liabilities)
------- -------
Total assets 6 899,9 6 604,0
------- -------
SEGMENT
LIABILITIES
Non-current 690,0 1 135,6
liabilities
Current 2 026,9 1 261,7
liabilities
Inter-segment - -
liabilities
(assets)
------- -------
Total liabilities 2 716,9 2 397,3
------- -------
SEGMENT
INFORMATION
Capital 274,4 304,4
expenditure
Depreciation and 204,7 174,1
amortisation
All retail divisions within the group operate in an established retail market
and are therefore considered to be subject to similar risks and rewards.
COMMENT
GROUP OVERVIEW
In our latest annual report we indicated that this year would be one of the
most difficult that the group would experience for many years.
The introduction of the National Credit Act (NCA) last June, together with
interest rates which have increased nine times since June 2006, as well as
petrol price hikes and above-average food inflation have considerably
dampened the economy and have made life extremely difficult for the average
South African consumer.
This year has been a tale of two halves. While trading conditions for the
first half were challenging, our group nevertheless achieved acceptable
performance for this period with retail turnover growth up 8,8% and headline
earnings per share up 12,2%. Trading in the second half of the year became
extremely difficult with turnover growth of 3,7% and a reduction in headline
earnings per share of 4,0%.
For the year as a whole, retail turnover increased by 6,1% to R7,7 billion.
Gross margins for the period were marginally down by 0,4% on the previous
year due to the additional markdowns which had to be taken after Christmas
trading. Headline earnings per share increased by 2,4% to 547,0 cents per
share, whilst the group`s operating margin reduced to 24,8% from 26,1%.
Prior to the introduction of the NCA our group adopted a conservative
approach to the opening of new pre-approved accounts, having opened far fewer
new accounts than other credit providers in the country. Whilst this
negatively affected the level of our retail turnover, it has resulted in our
group entering these more challenging times with a healthy retail debtors`
book, in contrast to what appears to be happening in the wider economy.
The final dividend has been maintained at 170,0 cents per share. Accordingly
dividends declared in respect of the full year of 288,0 cents per share have
increased by 6,7%.
During the year under review the group opened 76 new stores across all
divisions, whilst 15 stores were closed. At the year-end the group was
trading out of 1 393 stores with a trading area of 403 601 square metres, an
increase of 6,0% compared to the previous year.
TRADING DIVISIONS
Trading in the first half was satisfactory, but since mid-June trading
conditions for all our trading divisions have become difficult.
Product inflation averaged approximately 4% for the year. Retail turnover
and growths in the various trading divisions were as follows:
Number of Retail % Change
stores turnover
Rm
@home 61 458,0 11,1
Exact! 182 707,2 3,6
Foschini 400 3 070,5 5,5
Jewellery division 328 1 090,7 6,7
Markham 201 1 190,9 6,6*
Sports division 221 1 151,4 8,4
------ -------- --------
Total 1 393 7 668,7 6,1
------ -------- --------
*Growth excludes the discontinued RJL brand.
Total same store turnover for the year grew by 2,2%, with apparel growing
2,2%, cosmetics 6,6%, cellphones (0,7%), jewellery 3,5% and homewares (0,3%).
Cash sales as a percentage of total sales increased from 33,3% to 36,4%.
Our @home division continues to expand and increased its store base to 61
during the year, growing its turnover by 11,1% to R458,0 million. The
@homelivingspace stores are trading encouragingly and the current three
stores will be expanded to ten over the next two years. This division
achieved virtually flat same store growth in this extremely competitive
market sector.
Exact! with its lower LSM customer base traded marginally worse than
expectation with growth in turnover of 3,6% and same store growth of 1,7%.
Customers with less disposable income bought less than expected in the summer
season and it was necessary to take more markdowns than planned. Whilst 44%
of turnover is generated in shopping malls as opposed to high streets and
rural areas, this percentage will continue to increase with planned store
expansion.
The Foschini division achieved turnover growth of 5,5% and unsatisfactory
same store growth of 1,2%. Particular emphasis is being placed on the
Foschini stores business, the benefits of which should be evident in the
forthcoming summer season. The Donna-claire and Fashionexpress stores
continued to trade satisfactorily and are now well established in the
marketplace. Both these brands are under-represented and will be actively
expanded in the next year.
The jewellery division comprising American Swiss Jewellers, Sterns and Matrix
performed better than expected with turnover growth of 6,7% and same store
growth of 3,3% and remains the dominant player in the mass middle-market
jewellery sector. This division has been severely impacted by the increase
in the gold price and the current rand/dollar rate of exchange, both of which
have resulted in the input gold price increasing in excess of 30% during the
year. This required pro-active planning to ensure that the product mix was
adjusted to soften the impact on price points.
The Markham division which had a disappointing first half performance, traded
better in the second half achieving turnover growth of 6,6% for the full
year. Same store growth was 3,4%. The repositioning exercise undertaken in
the past few years towards a younger and more fashionable customer is now
beginning to bear fruit and its new "Markham Relay" casual range format has
been well received in the marketplace.
The sports division, trading as Totalsports, Sportscene and DueSouth traded
satisfactorily with turnover growth of 8,4% and same store growth of 3,7%.
Ongoing focus remains on leveraging World Cup 2010 where we are the partner
of choice for some of the major brands.
FG Financial Services - our retail debtors` book, which amounts to R2,4
billion, increased by 8,0% during the year. Because of our conservative
approach to new account openings prior to the NCA, the performance of our
debtors` book continues to be satisfactory with net bad debts as a percentage
of credit transactions increasing marginally from 3,0% to 3,5% and net bad
debt as a percentage of closing debtors` book increased from 7,4% to 8,3%.
During the next financial year, in line with current market practice, we will
provide customers with a 12-month account as an alternative to the current 6-
month option. This should positively impact our interest revenue as well as
retail turnover.
RCS GROUP
RCS Group provides a range of broader financial services to both customers of
the group, as well as to customers of retailers outside the group. This
group consists of two separate business units namely transactional finance
and fixed term finance. At present the transactional finance business
comprises the RCS general-purpose card and other private label card
programmes. The fixed term finance business comprises RCS Personal loans and
RCS Home Loans. This division experienced a challenging year having been
affected by the introduction of the NCA, which resulted in a reduction in the
number of new loans advanced and accordingly a reduction in the loan
receivables book. Net bad debt costs and provisions increased significantly
in line with current market trends. Profit before tax reduced from R322,7
million to R269,6 million for the year. Loan advances to customers will
remain tightly controlled, though an increase in advances and profitability
in this division is anticipated. RCS is in the process of acquiring the
consumer credit division of Mass Discounters, which is awaiting final
Competition Commission approval. Our group`s shareholding since 1 April 2007
is 55%, with the balance being held by the Standard Bank of South Africa
Limited.
PROSPECTS
In the last number of years we have been cautious in the opening of new
stores. Whilst this remains our approach, there are certain of our formats
which are ready for further roll-out and accordingly we anticipate opening in
excess of 100 new stores in the year ahead.
Our group has embarked on a group supply chain initiative which should result
over a period of time in reduced product lead times, increased stock turns
and stronger supplier relationships, ensuring our ability to be first to
market with key products. Retail turnover for the first eight weeks of the
new financial year remains difficult. Budgeted costs for the new year have
been curtailed to levels appropriate to the expected turnover.
Notwithstanding the downturn in the economy, all our trading divisions remain
in good shape which places our group in good stead to weather the current
consumer downturn, although we are mindful of the uncertain and challenging
macro-economic environment.
PREFERENCE DIVIDEND ANNOUNCEMENT
Dividend no. 143 of 3,25% (6,5 cents per share) in respect of the six months
ending 30 September 2008 has been declared, payable on Monday, 29 September
2008 to holders of 6,5% preference shares recorded in the books of the
company at the close of business on Friday, 26 September 2008.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Thursday, 18 September 2008. Foschini Limited preference
shares will commence trading "ex" the dividend from the commencement of
business on Friday, 19 September 2008 and the record date, as indicated, will
be Friday, 26 September 2008.
Preference shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Friday, 19 September 2008
to Friday, 26 September 2008, both dates inclusive.
FINAL ORDINARY DIVIDEND ANNOUNCEMENT
The directors have declared a final ordinary dividend of 170,0 cents per
ordinary share payable on Monday, 14 July 2008 to ordinary shareholders
recorded in the books of the company at the close of business on Friday, 11
July 2008.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Friday, 4 July 2008. Foschini Limited ordinary shares will
commence trading "ex" the dividend from the commencement of business on
Monday, 7 July 2008 and the record date, as indicated, will be Friday, 11
July 2008.
Ordinary shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Monday, 7 July 2008 to
Friday, 11 July 2008, both dates inclusive.
Certificated ordinary shareholders are reminded that all entitlements to
dividends with a value less than R5,00 per certificated shareholder will be
aggregated and the proceeds donated to a registered charity of the directors`
choice, in terms of the articles of association of the company.
Signed on behalf of the Board
E Osrin, Chairman A D Murray, CEO
29 May 2008
Non-executive directors:
E Osrin (Chairman), D M Nurek (Deputy Chairman), Prof. F Abrahams, S E
Abrahams, W V Cuba, N H Goodwin, M Lewis, D M Polak.
Executive directors:
A D Murray, R Stein.
Company secretary:
D Sheard
Registered Office:
Stanley Lewis Centre, 340 Voortrekker Road, Parow East, 7500
Transfer Secretaries:
Computershare Investor Services (Proprietary) Limited, Ground Floor, 70
Marshall Street, Johannesburg, 2001.
SPONSOR:
UBS South Africa (Pty) Ltd
Visit our website at http://www.foschinigroup.co.za/
Date: 29/05/2008 14:38:18 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.
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
