| Thu 28 May 2009, 14:00 | | FOS/FOSP - Foschini - Reviewed preliminary condensed results for the year ended |
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FOS FOSP
FOS
FOS/FOSP - Foschini - Reviewed preliminary condensed results for the year ended
31 March 2009
Foschini Limited
Registration number 1937/009504/06
Share codes: FOS-FOSP
ISIN codes: ZAE000031019 - ZAE000031027
The following condensed consolidated results of Foschini Limited for the year
ended 31 March 2009 have been reviewed by the company`s auditors, KPMG Inc.
Their unqualified review report is available for inspection at the company`s
registered office.
Reviewed Preliminary Condensed Results for the Year Ended 31 March 2009
SALIENT FEATURES
* Retail turnover up 5,5% to R8,1 billion
* Headline earnings per share up 2,3% to 559,5 cents per share
* Diluted headline earnings per share up 2,8% to 553,0 cents per share
* Significant improvement in the second half
* Final dividend of 170,0 cents per share - the same as last year
* Good performance from our retail debtors` book
CONDENSED CONSOLIDATED INCOME STATEMENT
2009 2008 % Change
Reviewed Audited
Rm Rm
Revenue (note 4) 9 988,9 9 253,6 7,9
======= ======= =======
Retail turnover 8 089,6 7 668,7 5,5
Cost of turnover (4 694,4) (4 479,2)
-------- --------
Gross profit 3 395,2 3 189,5
Interest received (note 5) 1 300,7 1 056,4
Dividends received 19,1 17,2
Net trading expenses (note 6) (2 689,5) (2 357,6)
-------- --------
Operating profit before finance 2 025,5 1 905,5 6,3
charges
Interest paid (249,8) (120,1)
Income from associate - 0,9
-------- --------
Profit before tax 1 775,7 1 786,3
Income tax expense (564,4) (580,2)
-------- --------
Profit for the year 1 211,3 1 206,1
======== ========
Attributable to:
Equity holders of Foschini Limited 1 145,8 1 128,4 1,5
Minority interest 65,5 77,7
--------- ---------
Profit for the year 1 211,3 1 206,1
========= =========
EARNINGS PER ORDINARY SHARE (cents)
- Basic 559,5 547,0 2,3
- Headline 559,5 547,0 2,3
- Diluted (basic) 553,0 538,0 2,8
- Diluted (headline) 553,0 538,0 2,8
DIVIDEND PER ORDINARY SHARE
(cents)
- Interim 118,0 118,0
- Final 170,0 170,0
------ ------
- Total 288,0 288,0
------ ------
Dividend cover (times) 1,9 1,9
CONDENSED CONSOLIDATED BALANCE SHEET
2009 2008
Reviewed Audited
Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 981,3 847,4
Goodwill and intangible assets 43,2 30,8
Preference share investment 200,0 200,0
Investment in associate - 5,0
Staff housing loans 1,2 1,3
Private label card receivables 433,3 253,0
Loan receivables 886,4 567,3
Participation in export partnerships 87,8 92,5
Deferred taxation asset 160,5 174,5
-------- --------
2 793,7 2 171,8
-------- --------
Current assets
Inventory (note 7) 1 524,9 1 290,0
Trade receivables - retail 2 746,3 2 445,6
Private label card receivables 1 051,1 815,3
Other receivables and prepayments 143,1 131,4
Loan receivables 101,8 148,9
Participation in export partnerships 6,9 8,0
Cash 296,2 169,5
-------- --------
5 870,3 5 008,7
-------- --------
Total assets 8 664,0 7 180,5
======== ========
EQUITY AND LIABILITIES
Equity attributable to equity holders of 4 496,3 3 845,2
Foschini Limited
Minority interest 359,2 290,9
------- -------
Total equity 4 855,5 4 136,1
------- -------
Non-current liabilities
Interest-bearing debt 937,4 172,2
Minority interest loans 783,2 495,2
Operating lease liability 128,3 128,7
Deferred taxation liability 149,9 156,5
Post-retirement defined benefit plan 84,1 84,1
-------- --------
2 082,9 1 036,7
-------- --------
Current liabilities
Interest-bearing debt 402,5 1 201,0
Trade and other payables (note 8) 1 252,5 741,8
Taxation payable 70,6 64,9
-------- --------
1 725,6 2 007,7
-------- --------
Total liabilities 3 808,5 3 044,4
-------- --------
Total equity and liabilities 8 664,0 7 180,5
======== ========
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity Minority Total
holders of interest equity
Foschini
Limited
Rm Rm Rm
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 reserves
movements 1,5 - 1,5
Dividends paid (592,6) (84,8) (677,4)
Proceeds on delivery of 109,5 - 109,5
shares by share trust
Shares purchased by share
trust and subsidiary (760,4) - (760,4)
Effective portion of changes 12,4 - 12,4
in fair value of cash flow
hedges
------- ------- -------
Equity at 31 March 2008 3 845,2 290,9 4 136,1
Profit for the year 1 145,8 65,5 1 211,3
Change in degree of control - 3,4 3,4
Share-based payments reserve 25,7 - 25,7
movements
Dividends paid (589,2) (0,6) (589,8)
Proceeds on delivery of 88,3 - 88,3
shares by share trust
Effective portion of changes (19,5) - (19,5)
in fair value of cash flow
hedges
-------- ------- --------
Equity at 31 March 2009 4 496,3 359,2 4 855,5
======== ======= ========
SUPPLEMENTARY INFORMATION
2009 2008
Net ordinary shares in issue (millions) 207,3 204,6
Weighted average ordinary shares in issue 204,8 206,3
(millions)
Tangible net asset value per ordinary share 2 148,1 1 862,7
(cents)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
2009 2008
Reviewed Audited
Rm Rm
Cash flows from operating activities
Operating profit before working capital 945,7 1 074,2
changes (note 9)
Increase in working capital (34,2) (568,3)
------- -------
Cash generated by operations 911,5 505,9
Increase in private label card receivables (248,5) (241,6)
(Increase)decrease in loan receivables (272,0) 150,3
Interest received 1 300,7 1 056,4
Interest paid (249,8) (120,1)
Taxation paid (551,3) (735,1)
Dividends received 19,1 17,2
Dividends paid (589,8) (677,4)
------- -------
Net cash inflows (outflows) from operating 319,9 (44,4)
activities
------- -------
Cash flows from investing activities
Purchase of property, plant and equipment (370,6) (274,4)
Proceeds from sale of property, plant and 3,7 6,4
equipment
Acquisition of client list (0,2) (1,8)
Investment in associate - (6,1)
Acquisition of Massdiscounters receivables (175,0) -
book
Decrease in participation in export 5,8 10,6
partnerships
Decrease in staff housing loans 0,1 1,6
Proceeds on dilution of interest in - 211,5
subsidiary
------- -------
Net cash outflows from investing activities (536,2) (52,2)
------- -------
Cash flows from financing activities
Shares purchased by share trust and - (760,4)
subsidiary
Proceeds on delivery of shares by share 88,3 109,5
trust
Increase in minority interest loans 288,0 105,5
(Decrease)increase in interest-bearing debt (33,3) 609,2
------- -------
Net cash inflows from financing activities 343,0 63,8
------- -------
Net increase(decrease) in cash during the 126,7 (32,8)
year
Cash at the beginning of the year 169,5 202,3
------- -------
Cash at the end of the year 296,2 169,5
======= =======
NOTES
The condensed consolidated results of Foschini Limited for the year ended 31
March 2009 have been reviewed by the company`s auditors, KPMG Inc. Their
unqualified review report is available at the company`s registered office.
1. The reviewed preliminary results for the year ended 31 March 2009 have been
prepared in accordance with the presentation and disclosure requirements of IAS
34 Interim Financial Reporting, using the group`s accounting policies, that are
in line with the measurement and recognition principles of International
Financial Reporting Standards (IFRS) and have been consistently applied to prior
periods.
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 (2008: 24,0) million shares which are
owned by a subsidiary of the company, and 9,1 (2008: 11,9) million shares which
are owned by the share incentive trust. These have been eliminated on
consolidation.
2009 2008
Reviewed Audited
Rm Rm
4. Revenue
Retail turnover 8 089,6 7 668,7
Interest received (refer note 5) 1 300,7 1 056,4
Dividends received - retail 19,1 17,2
Merchant`s commission - RCS Group 36,7 39,7
Club income - retail 169,6 175,6
Club income - RCS Group 6,0 5,5
Customer charges income - retail 18,9 16,5
Customer charges income - RCS Group 136,2 99,1
Insurance income - retail 99,5 80,0
Insurance income - RCS Group 75,3 66,0
Cellular income - one2one airtime product 29,8 22,6
Sundry income - retail 7,5 6,3
-------- --------
9 988,9 9 253,6
======== ========
5. Interest received
Trade receivables - retail 526,1 385,5
Loan receivables 307,6 314,7
Private label card receivables 449,2 347,9
Sundry - RCS Group 8,2 1,1
Sundry - retail 9,6 7,2
-------- --------
1 300,7 1 056,4
======== ========
6. Net trading expenses
Depreciation and amortisation (231,1) (204,7)
Employee costs: normal (1 180,3) (1 053,9)
Employee costs: bonuses and restraint (16,0) (35,4)
payments
Employee costs: share-based payments (25,7) (30,7)
Store occupancy costs: normal (676,2) (575,8)
Store occupancy costs: operating lease 0,4 (7,7)
liability adjustment
Net bad debts and provision movement - (261,5) (217,2)
retail
Net bad debts and provision movement - RCS (317,1) (253,7)
Group
Other operating costs (561,5) (489,8)
Other revenue 579,5 511,3
--------- ---------
(2 689,5) (2 357,6)
========= =========
7. Inventory
Merchandise 1 433,0 1 227,5
Raw materials 55,2 32,8
Goods in transit 12,9 10,0
Shopfitting stock 18,1 15,1
Consumables 5,7 4,6
-------- --------
1 524,9 1 290,0
======== ========
8. Trade and other payables
In the 2008 financial year, March month-end trade creditors amounting to R289,7
million were paid prior the year-end, whilst those in respect of the current
year amounting to R310,9 million were paid after the year-end.
9. Operating profit before working capital
changes
Operating profit before finance charges 2 025,5 1 905,5
Interest received (1 300,7) (1 056,4)
Dividends received (19,1) (17,2)
Non-cash items 240,0 242,3
-------- --------
Operating profit before working capital 945,7 1 074,2
changes
======== ========
10. Reclassifications
In order to provide increased disclosure, the following reclassifications have
been made:
Cash balances of R106,1 million in 2008 previously set off against interest-
bearing debt, are now separately disclosed.
Minority interest loans previously included in interest-bearing debt are now
separately disclosed.
Certain receivables totalling R30,7 million in 2008 previously included in other
receivables, are now included in trade receivables.
These changes have no impact on overall equity, net assets or profitability.
GROUP SEGMENTAL ANALYSIS
RCS Group RCS Group Retail Retail
2009 2008 2009 2008
Reviewed Audited Reviewed Audited
Rm Rm Rm Rm
REVENUE *
External 1 020,1 874,2 8 968,8 8 379,4
Inter-segment - - - -
------- ------- ------- -------
Total revenue 1 020,1 874,2 8 968,8 8 379,4
------- ------- ------- -------
SEGMENT RESULT
Operating profit 397,3 386,7 1 628,2 1 518,8
before finance
charges
------- ------- ------- -------
External interest (91,3) (51,8) (158,5) (68,3)
Inter-segment (103,5) (65,3) 103,5 65,3
interest
------- ------- ------- -------
Interest paid (194,8) (117,1) (55,0) (3,0)
------- ------- ------- -------
Profit before tax 202,5 269,6 1 573,2 1 515,8
and income from
associate
------- ------- ------- -------
* includes retail turnover, interest received, and other income
SEGMENT ASSETS
Non-current assets 2 009,2 871,0 1 241,8 1 126,3
Current assets 623,4 1 004,6 4 629,1 3 898,0
Inter-segment 12,9 12,9 (12,9) (12,9)
assets
(liabilities)
------- ------- ------- -------
Total assets 2 645,5 1 888,5 5 858,0 5 011,4
------- ------- ------- -------
SEGMENT
LIABILITIES
Non-current 781,5 495,7 1 151,5 278,4
liabilites
Current 161,8 120,9 1 493,2 1 821,9
liabilities
Inter-segment 918,6 665,9 (918,6) (665,9)
liabilities
(assets)
------- ------- ------- -------
Total liabilities 1 861,9 1 282,5 1 726,1 1 434,4
------- ------- ------- -------
SEGMENT
INFORMATION
Capital 19,1 27,1 351,5 247,3
expenditure
Depreciation and
amortisation 13,5 13,1 217,6 191,6
SEGMENTAL ANALYSIS
(continued)
Consol- Consol-
idated idated
2009 2008
Reviewed Audited
Rm Rm
REVENUE *
External 9 988,9 9 253,6
Inter-segment - -
------- -------
Total revenue 9 988,9 9 253,6
------- -------
SEGMENT RESULT
Operating profit 2 025,5 1 905,5
before finance
charges
------- -------
External interest (249,8) (120,1)
Inter-segment - -
interest
------- -------
Interest paid (249,8) (120,1)
------- -------
Profit before tax 1 775,7 1 785,4
and income from
associate
------- -------
* includes retail turnover, interest received, and other income
SEGMENT ASSETS
Non-current assets 3 251,0 1 997,3
Current assets 5 252,5 4 902,6
Inter-segment - -
assets
(liabilities)
------- -------
Total assets 8 503,5 6 899,9
------- -------
SEGMENT
LIABILITIES
Non-current 1 933,0 774,1
liabilities
Current 1 655,0 1 942,8
liabilities
Inter-segment - -
liabilities
(assets)
------- -------
Total liabilities 3 588,0 2 716,9
------- -------
SEGMENT
INFORMATION
Capital 370,6 274,4
expenditure
Depreciation and 231,1 204,7
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 last annual report we anticipated that this year would be difficult as
consumers had to contend with high interest rates, high inflation and high
levels of consumer debt. This proved to be correct.
In the context of the economic climate which prevailed during the year, we are
pleased with this result, particularly the second half. Whilst the first half of
the year produced turnover growth of 2,9% and a reduction in headline earnings
of 2,7%, the second half saw a significant improvement with turnover growth of
7,8% and an increase in headline earnings of 6,1%.
For the year as a whole, retail turnover increased by 5,5% to R8,1 billion.
Gross margins for the period were up by 0,4% on the previous year. This was
primarily due to lower markdowns flowing from Christmas trading which was above
expectation. Diluted headline earnings per share increased by 2,8% to 553,0
cents, while headline earnings per share increased by 2,3% to 559,5 cents. The
group`s operating margin increased from 24,8% to 25,0%.
A final dividend of 170,0 cents per share has been declared. Accordingly
dividends declared in respect of the full year amount to 288,0 cents per share,
the same level as last year.
In line with our strategy of investing for the longer term, the group continued
to grow trading space in the second half by opening a further 85 stores. 154
stores were therefore opened for the full year, whilst 8 stores were closed. At
the year-end the group was trading out of 1 539 stores, with an increase in
trading area of 13,9% compared to the previous year.
TRADING DIVISIONS
Trading in the first half was challenging with turnover growth of 2,9%, but the
second half has shown an improvement with turnover growth of 7,8%, resulting in
growth of 5,5% for the year as a whole. Retail turnover and growths in the
various trading divisions were as follows:
Number of Retail % Change
stores turnover
Rm
@home 72 508,1 10,9
exact! 198 743,5 5,1
Foschini 432 3 103,5 1,1
Jewellery division 350 1 126,0 3,2
Markham 223 1 311,7 10,1
Sports division 264 1 296,8 12,6
------ -------- --------
Total 1 539 8 089,6 5,5
------ -------- --------
Whilst total same store turnover for the first half reduced by 2,5%, the second
half produced positive growth of 3,0% resulting in same store turnover for the
year being flat.
Product inflation averaged approximately 8% for the period.
Cash sales as a percentage of total sales increased from 36,4% to 38,2%.
Our @home division continued with its expansion, opening 11 stores and now has
72 stores, 7 of which are the larger @homelivingspace stores. Whilst turnover
growth in the first half was 6,1%, the second half saw an improvement to 15%,
aggregating to 10,9% for the year as a whole which is satisfactory in this
competitive sector. Same store turnover for the year reduced by 1,3%, with the
second half growing by 1,9%. What is particularly pleasing is that same store
turnover in the last quarter grew by 3%.
exact! which offers stylish and affordable fashion for the modern South African
family, grew its store base during the year from 182 to 198, growing turnover
for the year by 5,1% and achieving same store turnover growth of 1,9%.
The Foschini division comprising Foschini, donna-claire, fashionexpress and
Luella performed much better in the second half of the year with turnover growth
of 6,3% and same store turnover growth of 2,5% compared with -4,2% and -8,8%
respectively for the first half. The repositioning and turnaround of the
Foschini brand is now well under way and we expect the performance of this
business to continue improving. This division increased its store base by 32
stores to 432 stores.
The Jewellery division comprising American Swiss, Sterns and Matrix performed
above expectation in the current climate with turnover growth of 3,2%, with a
reduction in same store turnover of 1,4%. This division remains the dominant
player in the mass middle market jewellery sector and continued to grow its
market share this year. This division increased its store base by 22 stores to
350 stores.
The Markham division traded well with turnover growth of 10,1% and same store
turnover growth of 4,0%. This division continues to benefit from the brand
repositioning towards a younger and more fashionable customer that was
undertaken in the past few years. Its store base increased by 22 stores to 223
stores.
The Sports division, trading as Totalsports, sportscene and DueSouth continues
to trade well with turnover growth of 12,6% and same store turnover growth of
5,3%, maintaining its position as a market leader. This division is actively
focused on leveraging World Cup 2010, where we are the partner of choice for
several of the major brands. This division increased its store base by 43 stores
to 264 stores.
FG Financial Services - our retail debtors` book, which amounts to R2,7 billion,
increased by 12,3% during the year. Because of our conservative approach to new
account openings prior to the National Credit Act (NCA), the performance of our
debtors` book continues to be satisfactory with net bad debts as a percentage of
closing debtors` book increasing marginally to 8,7% from 8,3%. During this year
we commenced with our offer to customers of a 12-month account as an alternative
to the existing 6-month option. This has achieved positive results and since its
introduction, approximately 90% of new customers have opted for the 12-month
account which should positively impact our interest revenue as well as ongoing
retail revenue.
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 business units namely transactional finance and fixed term
finance. 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. The RCS Group, which experienced a challenging
first half with net bad debt costs and provisions increasingly significantly in
line with current market trends, had a far better performance in the second half
of the year resulting in profitability for the full year being down 24,9% as
opposed to 43,5% in the first half. Profit before tax for the full year reduced
from R269,6 million to R202,5 million. The quality of new business written in
the second half has improved and better results are expected next year. Whilst
the RCS Group has significant growth potential for the future, this growth is
dependent upon the availability of funding and this is currently being
addressed.
Our group`s shareholding in the RCS Group is 55% with the balance being held by
the Standard Bank of South Africa Limited.
PROSPECTS
In line with our strategy of investing for long-term growth, we will continue to
open new stores in certain of our formats that are under-represented and we
anticipate opening in excess of 120 new stores in the year ahead which will
increase trading space by approximately 11%.
In addition, our group supply chain initiative which commenced just over a year
ago will 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 has been
encouraging as the improving trend demonstrated in the second half of last year
has continued. The trading environment remains challenging however, and the
South African economy faces a number of risks which could impact negatively upon
our business. Accordingly, costs and inventory management will remain
significant focus areas.
Despite the current difficult trading climate, all our trading divisions remain
in good shape and are well placed to maximise any upturn in our economy.
PREFERENCE DIVIDEND ANNOUNCEMENT
Dividend no. 145 of 3,25% (6,5 cents per share) in respect of the six months
ending 30 September 2009 has been declared, payable on Monday, 28 September 2009
to holders of 6,5% preference shares recorded in the books of the company at the
close of business on Friday, 25 September 2009.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Thursday, 17 September 2009. Foschini Limited preference shares
will commence trading "ex" the dividend from the commencement of business on
Friday, 18 September 2009 and the record date, as indicated, will be Friday, 25
September 2009.
Preference shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Friday, 18 September 2009 to
Friday, 25 September 2009, 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, 13 July 2009 to ordinary shareholders recorded
in the books of the company at the close of business on Friday, 10 July 2009.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Friday, 3 July 2009. Foschini Limited ordinary shares will
commence trading "ex" the dividend from the commencement of business on Monday,
6 July 2009 and the record date, as indicated, will be Friday, 10 July 2009.
Ordinary shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Monday, 6 July 2009 to
Friday, 10 July 2009, 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
D M Nurek, Chairman A D Murray, CEO
28 May 2009
Non-executive directors:
D M Nurek (Chairman), Prof. F Abrahams, S E Abrahams, W V Cuba, K N Dhlomo, M
Lewis, D M Polak, N V Simamane
Executive directors:
A D Murray, R Stein, P S Meiring
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.
Visit our website at http://www.foschinigroup.co.za/
28 May 2009
SPONSOR:
UBS South Africa (Pty) Ltd
Date: 28/05/2009 14:00:01 Produced by the JSE SENS Department.
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