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TFG TFGP
TFG
TFG\TFGP - The Foschini Group Limited - Reviewed Preliminary Condensed
Consolidated Results for the Year Ended 31 March 2012
The Foschini Group Limited
Registration number 1937/009504/06
Share codes: TFG-TFGP
ISIN codes: ZAE000148466 - ZAE000148516
The following condensed consolidated results of The Foschini Group Limited for
the year ended 31 March 2012 have been reviewed by the company`s auditors, KPMG
Inc. Their unqualified review report is available for inspection at the
company`s registered office. These results were prepared by the TFG Finance and
Administration department of The Foschini Group Limited acting under supervision
of Ronnie Stein CA(SA), CFO of The Foschini Group Limited.
SALIENT FEATURES
* Retail turnover up 17,0% to R11,6 billion
* Headline earnings per share up 22,1% to 772,0 cents
* Diluted headline earnings per share up 23,6% to 766,1 cents
* Final dividend per share increased by 25,0% to 265,0 cents
* Total dividend per share for the year increased by 30,0% to 455,0 cents
* Continued growth in new accounts
* Sustained strong financial position
* Strong market share gains
CONDENSED CONSOLIDATED INCOME STATEMENT
2012 2011 % Change
Reviewed Audited
Rm Rm
Revenue (note 5) 14 530,8 12 370,6
======= =======
Retail turnover 11 630,5 9 936,5 17,0
Cost of turnover (note 6) (6 750,1) (5 768,1)
-------- --------
Gross profit 4 880,4 4 168,4
Interest income (note 7) 1 712,1 1 486,2
Dividend income 9,9 12,1
Other revenue (note 8) 1 178,3 935,8
Trading expenses (note 9) (4 994,2) (4 301,3)
-------- --------
Operating profit before finance charges 2 786,5 2 301,2 21,1
Finance cost (284,9) (250,1)
-------- --------
Profit before tax 2 501,6 2 051,1 22,0
Income tax expense (809,8) (662,3)
-------- --------
Profit for the year 1 691,8 1 388,8
======== ========
Attributable to:
Equity holders of The Foschini Group 1 582,1 1 301,8 21,5
Limited
Non-controlling interest 109,7 87,0
--------- ---------
Profit for the year 1 691,8 1 388,8
========= =========
EARNINGS PER ORDINARY SHARE (cents)
- Basic 771,0 630,4 22,3
- Headline 772,0 632,3 22,1
- Diluted (basic) 765,1 618,1 23,8
- Diluted (headline) 766,1 619,9 23,6
Weighted average ordinary shares in 205,2 206,5 (0,6)
issue (millions)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2012 2011
Reviewed Audited
Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 1 313,2 1 086,9
Goodwill and intangible assets 109,8 37,0
Staff housing loans - 0,7
RCS Group private label card receivables 465,1 320,8
RCS Group loan receivables 610,1 521,7
Participation in export partnerships 53,4 72,5
Deferred taxation asset 254,3 249,9
-------- --------
2 805,9 2 289,5
-------- --------
Current assets
Inventory (note 10) 2 155,0 1 804,7
Trade receivables - retail 4 569,9 3 823,0
RCS Group private label card receivables 1 917,8 1 709,4
RCS Group loan receivables 457,5 336,7
Other receivables and prepayments 226,4 194,3
Participation in export partnerships 13,0 6,4
Preference share investment - 200,0
Cash 710,9 338,5
-------- --------
10 050,5 8 413,0
-------- --------
Total assets 12 856,4 10 702,5
======== ========
EQUITY AND LIABILITIES
Equity attributable to equity holders of The 6 293,1 5 462,9
Foschini Group Limited
Non-controlling interest 571,1 485,6
------- -------
Total equity 6 864,2 5 948,5
------- -------
Non-current liabilities
Interest-bearing debt 1 006,8 262,8
RCS Group external funding 1 140,2 491,0
Non-controlling interest loans 242,4 144,3
Operating lease liability 159,5 134,1
Deferred taxation liability 100,5 165,2
Post-retirement defined benefit plan 97,9 91,0
-------- --------
2 747,3 1 288,4
-------- --------
Current liabilities
Interest-bearing debt 722,1 1 246,8
RCS Group external funding 626,2 417,0
Trade and other payables 1 827,0 1 710,7
Operating lease liability 12,3 12,0
Taxation payable 57,3 79,1
-------- --------
3 244,9 3 465,6
-------- --------
Total liabilities 5 992,2 4 754,0
-------- --------
Total equity and liabilities 12 856,4 10 702,5
======== ========
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2012 2011
Reviewed Audited
Rm Rm
Profit for the year 1 691,8 1 388,8
---------- ---------
OTHER COMPREHENSIVE INCOME
Movement in effective portion of 7,2 (0,6)
changes in fair value of cash flow
hedges
Foreign currency translation 0,3 1,0
reserve movements
Movement in insurance cell - 2,9
reserves
---------- ---------
Other comprehensive income for the 7,5 3,3
year before tax
Deferred tax on movement in (2,0) 0,1
effective portion of changes in
fair value of cash flow hedges
---------- ---------
Other comprehensive income for the 5,5 3,4
year, net of tax
---------- ---------
Total comprehensive income for the 1 697,3 1 392,2
year
========== =========
Attributable to:
Equity holders of The Foschini 1 587,6 1 305,2
Group Limited
Non-controlling interest 109,7 87,0
---------- ---------
Total comprehensive income for the 1 697,3 1 392,2
year
========== =========
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity Non-controlling Total
holders of interest equity
The Foschini
Group
Limited
Rm Rm Rm
Equity at 31 March 2010 5 058,3 427,0 5 485,3
Profit for the year 1 301,8 87,0 1 388,8
Other comprehensive income
Movement in effective portion of (0,6) - (0,6)
changes in fair value of cash
flow hedges
Foreign currency translation 1,0 - 1,0
reserve movements
Movement in insurance cell 2,9 - 2,9
reserves
Deferred tax on movement in 0,1 - 0,1
effective portion of changes in
fair value of cash flow hedges
-------- ------- --------
Total comprehensive income for 1 305,2 87,0 1 392,2
the year
Contributions by and
distributions to owners
Share-based payments reserve 55,9 - 55,9
movements
Dividends paid (637,5) (28,4) (665,9)
Proceeds on delivery of shares by 134,8 - 134,8
share trust
Shares purchased in terms of (453,8) - (453,8)
share incentive schemes
-------- ------- --------
Equity at 31 March 2011 5 462,9 485,6 5 948,5
Profit for the year 1 582,1 109,7 1 691,8
Other comprehensive income
Movement in effective portion of 7,2 - 7,2
changes in fair value of cash
flow hedges
Foreign currency translation 0,3 - 0,3
reserve movements
Deferred tax on movement in (2,0) - (2,0)
effective portion of changes in
fair value of cash flow hedges
-------- ------- --------
Total comprehensive income for 1 587,6 109,7 1 697,3
the year
Contributions by and
distributions to owners
Share-based payments reserve 72,2 - 72,2
movements
Dividends paid (828,6) (20,4) (849,0)
Sale of subsidiary - (3,8) (3,8)
Proceeds on delivery of shares by 54,4 - 54,4
share trust
Shares purchased in terms of (77,2) - (77,2)
share incentive schemes
Deferred tax on shares purchased 14,5 - 14,5
Current tax on shares purchased 7,3 - 7,3
-------- ------- --------
Equity at 31 March 2012 6 293,1 571,1 6 864,2
======== ======= ========
2012 2011
Reviewed Audited
DIVIDEND PER ORDINARY SHARE (CENTS)
Interim 190,0 138,0
Final 265,0 212,0
-------- --------
Total 455,0 350,0
======== ========
Dividend cover 1,7 1,8
SUPPLEMENTARY INFORMATION
2012 2011
Reviewed Audited
Net ordinary shares in issue (millions) 206,4 205,3
Weighted average ordinary shares in issue 205,2 206,5
(millions)
Tangible net asset value per ordinary share 2 995,8 2 642,9
(cents)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
2012 2011
Reviewed Audited
Rm Rm
Cash flows from operating activities
Operating profit before working capital 3 180,4 2 630,3
changes (note 11)
Increase in working capital (1 568,4) (824,1)
------- -------
Cash generated by operations 1 612,0 1 806,2
Interest income 16,0 16,8
Finance cost (284,9) (250,1)
Taxation paid (880,9) (769,0)
Dividend income 9,9 12,1
Dividends paid (849,0) (665,9)
------- -------
Net cash (outflows) inflows from operating (376,9) 150,1
activities
------- -------
Cash flows from investing activities
Purchase of property, plant and equipment (541,1) (382,8)
Acquisition of assets through business (82,5) -
combinations
Proceeds from sale of property, plant and 6,5 7,5
equipment
Sale of subsidiary 0,1 -
Redemption of preference share investment 200,0 -
Repayment of participation in export 12,5 6,1
partnerships
Repayment of staff housing loans 0,7 0,2
------- -------
Net cash outflows from investing activities (403,8) (369,0)
------- -------
Cash flows from financing activities
Proceeds on delivery of shares by share trust 54,4 134,8
Shares purchased in terms of share incentive (77,2) (453,8)
schemes
Increase (decrease) in non-controlling 98,1 (334,0)
interest loans
Increase in RCS Group external funding 858,4 535,9
Decrease in interest-bearing debt 219,3 390,5
------- -------
Net cash inflows from financing activities 1 153,0 273,4
------- -------
Net increase in cash during the year 372,3 54,5
Cash at the beginning of the year 338,5 284,0
Effect of exchange rate fluctuations on cash 0,1 -
held
------- -------
Cash at the end of the year 710,9 338,5
======= =======
NOTES
The reviewed preliminary condensed consolidated results of The Foschini Group
Limited for the year ended 31 March 2012 have been reviewed by the company`s
auditors, KPMG Inc. Their unqualified review report is available at the
company`s registered office. These results were prepared by the TFG Finance and
Administration department of The Foschini Group Limited acting under supervision
of Ronnie Stein CA(SA), CFO of The Foschini Group Limited.
1. These results have been prepared in accordance with the presentation and
disclosure requirements of the South African Companies Act (No 71 of 2008)
and IAS 34 Interim Financial Reporting, applying the group`s accounting
policies, that are in line with the measurement and recognition principles
of International Financial Reporting Standards (IFRS) and the AC 500
standards as issued by the Accounting Practices Board or its successor, and
have been consistently applied to prior periods excepts as described in
note 2.
2. During the year, the group adopted the following revised accounting
standards:
- IFRS 7 Financial Instruments: Disclosures (amendments resulting from May
2010 Annual Improvements to IFRSs)
- IAS 1 Presentation of Financial Statements (amendments resulting from May
2010 Annual Improvements to IFRSs)
- IAS 24 Related Party Disclosures (revised definition of related parties)
- IAS 34 Interim Financial reporting (amendments resulting from May 2010
Annual Improvements to IFRSs)
The adoption of these standards has had no significant effect on these
results.
3. These financial statements incorporate the financial statements of the
company, all its subsidiaries and all entities over which it has
operational and financial control.
4. Included in share capital are 24,0 (March 2011: 24,0) million shares which
are owned by a subsidiary of the company, and 10,1 (March 2011: 11,1)
million shares which are owned in terms of share incentive schemes. These
have been eliminated on consolidation.
2012 2011
Reviewed Audited
Rm Rm
5. Revenue
Retail turnover 11 630,5 9 936,5
Interest income (refer note 7) 1 712,1 1 486,2
Dividend income 9,9 12,1
Other revenue (refer note 8) 1 178,3 935,8
-------- --------
14 530,8 12 370,6
======== ========
6. Cost of turnover
Cost of goods sold (6 097,5) (5 239,7)
Costs of purchase, conversion and other (652,6) (528,4)
costs
--------- ---------
(6 750,1) (5 768,1)
========= =========
7. Interest income
Trade receivables - retail 853,7 705,2
Receivables - RCS Group 842,4 764,2
Sundry 16,0 16,8
-------- --------
1 712,1 1 486,2
======== ========
8. Other revenue
Merchants` commission 36,4 30,9
Club income 297,5 253,5
Customer charges income 411,5 305,1
Insurance income 372,2 294,0
Cellular income - one2one airtime product 52,8 47,5
Sundry income 7,9 4,8
-------- --------
1 178,3 935,8
======== ========
9. Trading expenses
Depreciation (311,2) (282,3)
Amortisation (0,4) (0,4)
Goodwill impairment - (5,8)
Employee costs: normal (1 857,4) (1 600,2)
Employee costs: share-based payments (72,2) (55,9)
Occupancy costs: normal (1 041,9) (912,7)
Occupancy costs: operating lease liability (25,7) (9,2)
adjustment
Net bad debt (721,2) (632,8)
Other operating costs (964,2) (802,0)
--------- ---------
( 4 994,2) (4 301,3)
========= =========
10. Inventory
Merchandise 1 990,0 1 678,8
Raw materials 101,4 82,3
Goods in transit 30,2 22,5
Shopfitting stock 30,9 17,1
Consumables 2,5 4,0
-------- --------
2 155,0 1 804,7
======== ========
Inventory write-downs included above 94,9 92,7
-------- --------
11. Operating profit before working capital
changes
Profit before tax 2 501,6 2 051,1
Finance cost 284,9 250,1
-------- --------
Operating profit before finance charges 2 786,5 2 301,2
Interest income - sundry (16,0) (16,8)
Dividend income (9,9) (12,1)
Non-cash items 419,8 358,0
-------- --------
Operating profit before working capital 3 180,4 2 630,3
changes
======== ========
12. Reconciliation of profit for the year
to headline earnings
Profit for the year attributable to equity 1 582,1 1 301,8
holders of The Foschini Group Limited
Adjusted for the after-tax effect of:
Goodwill impairment - 5,8
Less: non-controlling interest - (2,6)
-------- --------
Goodwill impairment - effective portion - 3,2
Profit on disposal of property, plant and (0,3) (0,2)
equipment
Loss on disposal of property, plant and 2,4 0,8
equipment
-------- --------
Headline earnings 1 584,2 1 305,6
======== ========
13. CONTINGENT LIABILITIES
The group has provided RCS Group with a total facility of R835,3 million
(2011: R835,3 million) in respect of their domestic medium-term notes
(DMTN) programme. As at 31 March, the utilised portion of this facility
was R291,9 million (2011: R733,5 million), which is included in the group`s
statement of financial position. The unused liquidity facility at this
date was R543,4 million (2011: R101,75 million), which constitutes a
contingent liability.
14. RELATED PARTIES
Related party transactions similar to those disclosed in the group`s annual
financial statements for the year ended 31 March 2011 took place during the
year.
15. BUSINESS COMBINATIONS
Jeffdee Clothing CC trading as Fabiani
On 1 October 2011 the group acquired the business of Jeffdee Clothing CC
trading as Fabiani as a going concern. Fabiani is a leading, premium
menswear retailer in South Africa. As a result of the acquisition, the
group has now gained an entry into the high wealth customer segment in
menswear.
Prestige Clothing CC
On 1 March 2012, as part of our ongoing supply chain initiatives, the group
acquired the business of Prestige Clothing CC as a going concern. Prestige
Clothing is a longstanding clothing manufacturing supplier of our group. This
acquisition will improve the group`s competitive advantage and enable the group
to meet the increased demands for seasonal fast-fashion merchandise.
G-Star
As a consequence of the group`s acquisition of Fabiani, with effect from 1 April
2012, the group has acquired two G-Star franchise stores in South Africa, with
the rights to roll out further stores. These stores will be managed together
with the Fabiani stores.
Fair value of assets acquired and liabilities assumed through these business
combinations:
Property, plant and equipment 10,3 -
Inventory 12,2 -
Trade and other payables (4,7) -
-------- --------
Total identifiable net assets 17,8 -
Trademark 60,0 -
Goodwill 24,1 -
-------- --------
Total purchase price 101,9 -
======== ========
Cashflow
Business combinations occurring during the 82,5 -
reporting period
Business combinations effected after the 19,4 -
end of the reporting period
-------- --------
101,9 -
======== ========
16. SALE OF SUBSIDIARY
During the year under review, the RCS Group disposed of one of their
subsidiaries, Effective Intelligence (Pty) Ltd. The disposal did not have
a material effect on the consolidated results of The Foschini Group
Limited.
17. COMPARATIVE FIGURES
In order to provide improved disclosure in the condensed consolidated
statement of financial position, a portion of the operating lease liability
has been reclassified to current liabilities. This change has no impact on
overall equity, net assets or profitability.
The effect on the comparative statement of financial position is as follows:
Movement in operating lease liability - non- - (12,0)
current portion
Movement in operating lease liability - current - 12,0
portion
-------- --------
- -
======== ========
GROUP SEGMENTAL ANALYSIS
Retail TFG Central and Total RCS Group
trading Financial shared retail
divisions Services services
2012 2012 2012 2012 2012
Reviewed Reviewed Reviewed Reviewed Reviewed
Rm Rm Rm Rm Rm
External 11 630,5 673,8 70,6 12 374,9 443,8
revenue#
External - 853,7 10,0 863,7 848,4
interest
income
--------- --------- -------- -------- --------
Total revenue* 11 630,5 1 527,5 80,6 13 238,6 1 292,2
======== ======== ======== ======== ========
Inter-segment 126,5 126,5 8,9
revenue
External (105,7) (105,7) (179,2)
finance cost
Depreciation (295,8) (295,8) (15,8)
and
amortisation
======== ======== ======== ======== ========
Segmental 2 610,7 395,4 (757,3) 2 248,8 345,2
profit before
tax#
Other material
non-cash items
Foreign 5,5 -
exchange
transactions
Share-based (72,2) -
payments
Operating (25,7) -
lease
liability
adjustment
------- -------
Group profit 2 156,4 345,2
before tax
Capital 525,7 21,7
expenditure
Segment assets 8 998,3 3 858,1
Segment 3 350,5 2 641,7
liabilities
Retail TFG Central and Total RCS Group
trading Financial shared retail
divisions Services services
2011 2011 2011 2011 2011
Audited Audited Audited Audited Audited
Rm Rm Rm Rm Rm
External 9 936,5 507,5 64,4 10 508,4 376,0
revenue#
External - 705,2 8,9 714,1 772,1
interest
income
--------- --------- -------- -------- --------
Total revenue* 9 936,5 1 212,7 73,3 11 222,5 1 148,1
======== ======== ======== ======== ========
Inter-segment 95,5 95,5 11,2
revenue
External (138,7) (138,7) (111,4)
finance cost
Depreciation (268,7) (268,7) (14,0)
and
amortisation
======== ======== ======== ======== ========
Segmental 2 192,5 311,2 (664,4) 1 839,3 281,4
profit before
tax
Other material
non-cash items
Goodwill - (5,8)
impairment
Foreign 1,3 -
exchange
transactions
Share-based (55,9) -
payments
Operating (9,2) -
lease
liability
adjustment
------- -------
Group profit 1 775,5 275,6
before tax
Capital 367,4 15,4
expenditure
Segment assets 7 599,3 3 103,2
Segment 2 675,8 2 078,2
liabilities
Consolidated Consolidated
2012 2011
Reviewed Audited
Rm Rm
External revenue# 12 818,7 10 884,4
External interest income 1 712,1 1 486,2
-------- --------
Total revenue* 14 530,8 12 370,6
======== ========
Inter-segment revenue 135,4 106,7
External finance cost (284,9) (250,1)
Depreciation and amortisation (311,6) (282,7)
======== ========
Segmental profit before tax 2 594,0 2 120,7
Other material non-cash items
Goodwill impairment - (5,8)
Foreign exchange transactions 5,5 1,3
Share-based payments (72,2) (55,9)
Operating lease liability adjustment (25,7) (9,2)
------- -------
Group profit before tax 2 501,6 2 051,1
Capital expenditure 547,4 382,8
Segment assets 12 856,4 10 702,5
Segment liabilities 5 992,2 4 754,0
* includes retail turnover, interest income, dividend income and other income
# During 2012 the board being the chief operating decision-maker, refined the
reportable segments. Amounts previously reported as part of TFG Financial
Services are now reported as part of Retail Trading Divisions and Central
and shared services. These amounts are not material and the 2011
comparatives have been restated accordingly.
COMMENT
GROUP OVERVIEW
The strategic initiatives undertaken by our group have produced a good result
for this year.
Notwithstanding the strong comparative base, retail turnover increased by 17,0%
to R11,6 billion whilst headline earnings per share increased by 22,1% to 772,0
cents. Diluted headline earnings per share increased by 23,6% to 766,1 cents.
In line with our strategy of driving top line growth, buying efficiencies
achieved during the year were once again passed on to our customers resulting in
the gross margin being the same as the previous year.
The group`s operating margin for the year increased to 24,0% from 23,2%, moving
closer to our medium-term target of 25%.
The final dividend has been increased by 25,0% to 265,0 cents per share. In
declaring this dividend, the STC saving which the company will make due to the
abolition of STC, has been passed through to shareholders. Accordingly, the
dividend declared in respect of the full year amounts to 455,0 cents per share,
an increase of 30,0%.
Supporting our strategy of investing for the longer term, the group continued to
grow trading space in the second half by opening a further 79 stores. 150
stores were opened in the full year whilst 20 were closed. At the year-end the
group was trading out of 1 857 stores, with an increase in trading area of 7,7%
compared to the previous year.
MERCHANDISE CATEGORIES
Total sales have grown by 17,0% over the previous year with growths in the
various merchandise categories as follows:
- Clothing 18,3%
- Jewellery 7,9%
- Cosmetics 10,3%
- Homewares and furniture 18,0%
- Cellphones 23,9%
All merchandise categories continued to perform well with strong gains in market
share in all categories.
TRADING DIVISIONS
Retail turnover and growths in the various trading divisions were as follows:
Number of stores Retail turnover % change
Rm
@home 88 801,8 18,0
Exact 215 1 118,1 19,9
Foschini division 516 4 254,3 14,3
Jewellery division 395 1 334,4 9,2
Markham division 266 1 991,1 21,7
TFG Sports division 377 2 130,8 21,8
-------- -------- --------
Total 1 857 11 630,5 17,0
-------- -------- --------
Same store turnover grew by 10,6% whilst product inflation averaged
approximately 6% for the year. Cash sales as a percentage of total sales
increased to 39,0% from 38,5%.
@home increased its store base by 5 stores and is now trading out of 88 stores,
14 of which are the larger @homelivingspace stores. Turnover grew by 18,0% with
same store turnover growth of 13,5%. Over the last two years greater focus has
been placed on merchandise efficiencies with excellent results.
Exact increased its store base by 7 stores and is now trading out of 215 stores.
Clothing turnover increased by 21,8% with clothing same store turnover growth of
18,0%. The focus on clothing price points continues to be very successful.
Cellphone turnover increased by 10,8% with total same store turnover increasing
by 16,4%.
The Foschini division comprising Foschini, Donna-Claire, Fashion Express, Luella
and Charles & Keith, increased its store base by 32 stores and is now trading
out of 516 stores. Clothing turnover grew by 15,6% with clothing same store
turnover growth of 10,0%. Cosmetics same store turnover grew by 5,6%. Same
store turnover of cellphones increased by 9,8%, whilst total same store turnover
increased by 8,9%.
The Jewellery division comprising American Swiss Jewellers, Sterns and Matrix
increased its store base by 14 stores and is now trading out of 395 stores.
Jewellery merchandise turnover grew by 8,5% whilst cellphone turnover increased
by 13,9%. Jewellery same store turnover grew by 3,0% and total same store
turnover increased by 4,1%.
The Markham division including Fabiani increased its store base by 19 stores and
is now trading out of 266 stores. Clothing turnover growth was 22,1% whilst
cellphone turnover increased by 19,1%. Clothing same store turnover grew by
15,5% whilst cellphone same store turnover increased by 14,3%. Total same
store turnover increased by 15,4%.
TFG Sports division, trading as Totalsports, Sportscene and Duesouth, increased
its store base by 53 stores and is now trading out of 377 stores. Clothing
turnover growth was 17,6%, notwithstanding the 2010 FIFA World CupTrade Mark
inflated base. During the year, this division continued introducing cellphones
into its product offering with positive results. Clothing same store turnover
grew by 6,8% whilst total same store growth was 10,8%. Excluding the base
effect of the World Cup months of May and June last year, same store clothing
growth was 12,2%.
TFG Financial Services` retail debtors` book, which amounts to R4,6 billion,
increased by 19,5% during the year, reflecting the impact of good account
growth, increased credit sales and the increase in the number of 12-month
accounts. New accounts have been sourced in the main from in-store account
openings, where there is an inherently greater risk of bad debt than from
established accounts. Having regard to the increase in unsecured lending and
the growth in new accounts, bad debt as a percentage of closing debtors` book
was within management expectations, increasing to 9,4% from 9,2% in the previous
year.
RCS GROUP
The RCS Group is an operationally independent consumer finance business that
provides a broad range of financial services under its own brand in South
Africa, Namibia and Botswana. It is structured into two operating 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, whilst the fixed term finance business comprises RCS personal
loans.
Despite interest margin compression arising from the interest-capping formula
under the National Credit Act, the RCS Group performed well during the year with
net profit before tax increasing by 25,3% to R345,2 million. Net bad debt
further improved with a reduction of 13,9% compared to the previous year. Its
debtors` book of R3,4 billion increased by 19,5% during the year as its advances
to customers increased.
Its domestic medium-term note (DMTN) programme continues to be successfully
implemented with R1,9 billion of funding being raised in a mixture of long- and
short term paper. At the year-end the RCS Group had surplus funding of
approximately R1 billion which is available to support its future growth.
Our group`s shareholding in RCS Group is 55% with the balance being held by The
Standard Bank of South Africa Limited.
As mentioned in our 2011 Integrated Annual Report, it remains our intention to
list RCS at some point in the future.
NEW ACQUISITIONS
Effective from 1 October 2011, our group acquired the luxury menswear brand
Fabiani which gave our group an entry into the high end customer segment where
we previously did not operate. Fabiani currently trades out of 7 stores and has
great potential for expansion. As a consequence of the group`s acquisition of
Fabiani, with effect from 1 April 2012, the group has acquired the two G-Star
franchise stores in South Africa, with the rights to roll out further stores.
With effect from 1 March 2012, the group has acquired its long standing clothing
manufacturing supplier, Prestige Clothing as part of the group`s ongoing supply
chain initiatives. This will improve the group`s competitive advantage and
enable the group to meet the increased demands for seasonal fast-fashion
merchandise.
During the year our group entered into a franchise agreement with an exciting
international footwear and accessory brand, Charles & Keith.
AFRICA EXPANSION
The group currently trades out of 87 stores outside of South Africa, with 58 in
Namibia, 11 in Botswana, 12 in Zambia, 2 in Lesotho and 4 in Swaziland. Over
the next two years a further 39 stores are planned to be opened in the countries
where we already operate as well as Mozambique and Nigeria.
PROSPECTS
Whilst there has been a softening in turnover since January of this year, retail
turnover for the first eight weeks of the new financial year has been
satisfactory, though some caution is warranted given the impact of fuel and
utility increases on our customers, as well as the very strong comparative base.
In line with our strategy of investing for long-term growth, we will continue to
open new stores in certain of our formats. We anticipate opening in excess of
140 new stores in the year ahead which will increase trading space by
approximately 6%.
PREFERENCE DIVIDEND ANNOUNCEMENT
Dividend no. 151 of 3,25% (6,5 cents per share) (gross) in respect of the six
months ending 30 September 2012 has been declared from income reserves, payable
on Tuesday, 25 September 2012 to holders of 6,5% preference shares recorded in
the books of the company at the close of business on Friday, 21 September 2012.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Friday, 14 September 2012. The Foschini Group Limited
preference shares will commence trading "ex" the dividend from the commencement
of business on Monday, 17 September 2012 and the record date, as indicated, will
be Friday, 21 September 2012.
Preference shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Monday, 17 September 2012 to
Friday, 21 September 2012, both dates inclusive.
In terms of the new Dividends Tax effective 1 April 2012, and the amendments to
section 11.17 of the JSE Listings Requirements, the following additional
information is disclosed:
1) Local dividend tax rate is 15%;
2) No STC credits were utilised in determining the net dividend;
3) The withholding tax, if applicable at the rate of 15%, will result in a net
cash dividend per share of 5,52500 cents;
4) The issued preference share capital of The Foschini Group Limited is 200
000 shares at 29 May 2012; and
5) 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 265,0 cents per
ordinary share from income reserves, for the period ended 31 March 2012, payable
on Monday, 9 July 2012 to ordinary shareholders recorded in the books of the
company at the close of business on Friday, 6 July 2012.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Friday, 29 June 2012. The Foschini Group Limited ordinary
shares will commence trading "ex" the dividend from the commencement of business
on Monday, 2 July 2012 and the record date, as indicated, will be Friday, 6 July
2012.
Ordinary shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Monday, 2 July 2012 to
Friday, 6 July 2012, both dates inclusive.
In terms of the new Dividends Tax effective 1 April 2012, and the amendments to
section 11.17 of the JSE Listings Requirements, the following additional
information is disclosed:
1) Local dividend tax rate is 15%;
2) No STC credits were utilised in determining the net dividend;
3) The withholding tax, if applicable at the rate of 15%, will result in a net
cash dividend per share of 225,25000 cents;
4) The issued gross ordinary share capital of The Foschini Group Limited is
240 498 241 shares at 29 May 2012; and
5) The Foschini Group Limited`s tax reference number is 9925/133/71/3P.
------------------------------------------------------------------
Signed on behalf of the Board
D M Nurek, Chairman A D Murray, CEO
29 May 2012
Non-executive directors:
D M Nurek (Chairman), Prof F Abrahams, S E Abrahams, W V Cuba, M Lewis, E
Oblowitz, 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 (Pty) Ltd, Ground Floor, 70 Marshall Street,
Johannesburg, 2001
Sponsor:
UBS South Africa (Pty) Ltd
Visit our website at http://www.tfg.co.za/
Date: 29/05/2012 14:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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