| Mon 28 May 2001, 0:00 | | Foschini Limited Year End Profit Announcement |
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Registration Number 1937/009504/06
Consolidated results of The Foschini Group for the year ended 31 March 2001.
CONSOLIDATED INCOME STATEMENT
2001 2000
52 Weeks 53 Weeks
Audited Audited Change
Rm Rm %
Turnover 2 980,5 2 646,5 12,6
Trading income 190,9 319,6 (40,3)
Dividends received 11,8 14,1
Operating income 202,7 333,7
Finance charges 43,2 23,4
Net operating income 159,5 310,3
Goodwill written off* 3,1 -
Income before taxation 156,4 310,3
Taxation 40,4 77,0
Income after taxation 116,0 233,3
Adjustment* 3,1 -
Headline earnings 119,1 233,3 (48,9)
Earnings per ordinary share (cents) 48,8 100,1 (51,2)
Headline earnings per ordinary share (cents)50,1 100,1 (49,9)
Pre-tax margin (%) 5,2 11,7
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2001 2000
Audited Audited
Rm Rm
Income after taxation 116,0 233,3
Increase in share capital and premium 47,1 50,7
(Decrease) increase in share
distribution reserve (34,5) 10,7
Dividends (43,0) (83,3)
Added to equity during the year 85,6 211,4
Equity at the beginning of the year 1 755,7 1 544,3
Equity at the end of the
year 1 841,3 1 755,7
CONSOLIDATED BALANCE SHEET
2001 2000
Audited Audited
Rm Rm
ASSETS
Non-current assets
Fixed assets 329,1 320,2
Goodwill 15,5 -
Preference share investment 150,0 -
Loans 100,3 100,0
Loan debtors 262,5 58,0
Participation in export partnerships 289,8 327,4
1 147,2 805,6
Current assets
Inventory 554,3 522,0
Accounts receivable 1 201,7 1 148,0
Cash 25,3 127,2
1 781,3 1 797,2
Total assets 2 928,5 2 602,8
EQUITY AND LIABILITIES
Capital and reserves 1 841,3 1 755,7
Non-current liabilities
Interest bearing debt
- normal operations 124,9 (6,0)
- loan debtors funding 262,5 58,0
Deferred taxation 229,0 324,2
616,4 376,2
Current liabilities
Accounts payable 389,8 391,5
Taxation 67,8 64,6
Shareholders for dividend 13,2 14,8
470,8 470,9
Total equity and liabilities 2 928,5 2 602,8
Debt equity ratio (%) 13,0 3,0
Tangible net asset value per ordinary
share(cents) 773,8 752,7
Number of ordinary shares in issue
(millions) 240,5 235,0
Number of ordinary shares on which
earnings and net asset value
calculated (millions) 237,9 233,2
CONSOLIDATED CASH FLOW STATEMENT
2001 2000
Audited Audited
Rm Rm
Cash generated by
operating activities 290,9 312,9
Finance charges (43,2) (23,4)
Taxation (132,4) (108,0)
Dividend (31,8) (22,5)
Net cash inflows from
operating activities 83,5 159,0
Net cash (outflows) inflows from
investing activities (370,2) 43,6
Net cash inflows (outflows) from
financing activities 334,8 (83,8)
Net increase in cash and
cash equivalents during the year 48,1 118,8
Investment in preference shares (150,0) -
Cash and cash equivalents at
the beginning of the year 127,2 8,4
Cash and cash equivalents at
the end of the year 25,3 127,2
COMMENT
RESULTS
The current year will probably go down as the most difficult year in the
history of the Group, particularly the second half of the year. The change
in consumer spending patterns towards cellphones, gambling and higher fuel
costs has made the trading environment increasingly more difficult and
competitive.
In our interim report to shareholders issued early in November 2000 we
indicated that the second half of the year would be very dependent on an
upturn, particularly in November and December trading.
During the eight-week period from mid-October to mid-December the Group's
turnover was more than R100 million below budget, which resulted in a very
severe overstocked position. In order to reduce the stock holding, excessive
markdowns had to be taken, which were substantially higher than those of the
previous year.
As soon as the impact of the markdowns was quantified, the company issued a
profit warning indicating that profits for the full year would be very
substantially below last year's result, which included a 53rd trading week.
In addition, as a result of the reduction in the Usury rate during the
period under review, interest received from customers was substantially
reduced.
Although turnover was up 12,6% for the year, a large portion of this
increase resulted from the acquisition of Totalsports, without which
turnover grew by only 3,9%. As previously indicated, the cost of turning
around the newly acquired Totalsports had the effect of reducing the Group's
earnings by over R10 million for the current financial year. However, this
division is now trading well and will make a satisfactory contribution to
next year's results.
These factors were the principal causes in the group's attributable headline
earnings decreasing by 48,9% to R119,1 million from last year's R233,3
million, which were the highest attributable earnings ever achieved by this
Group.
Finance charges of R43,2 million include an amount of R18,5 million in
respect of the funding of the loan debtors book of RCS Personal Finance - a
division which, while not being a contributor to profits in this financial
year, will be highly profitable in the year ahead.
The dividend cover for the second half of the year remains at 2,7 times.
The financial position of the Group is as strong as ever with a very low
level of gearing and a balance sheet virtually free of intangibles. Our
debtors book, by far our biggest asset, is conservatively valued and cash
collections from customers remain extremely strong.
DIVISIONS
Due to the factors referred to above, none of our divisions had a
satisfactory performance during the year under review. All store turnover
growth in the various divisions was as follows:
Foschini Stores : 0,3 %
Markhams : 5,7 %
Exact! : 9,2 %
Jewellery Division 1,9 %
-
Because of the acquisition of Totalsports, sales growth in the sports
division is not comparable with that of the prior year.
PROSPECTS
The first two months of the new financial year have shown an encouraging
improvement in turnover and because of the various strategies being
implemented in each of the divisions, the Group anticipates a substantial
recovery in earnings in the year ahead.
PREFERENCE DIVIDEND
Dividend No. 131 of 3,25% (6,5 cents per share) in respect of the six months
ending 30 September 2001 has been declared, and will be paid on or about
that date to holders of 6,5% preference shares registered in the books of
the company at the close of business on Friday 3 August 2001.
FINAL DIVIDEND, including notification of LDR
The directors have declared a final ordinary dividend of 5,5 cents per
ordinary share payable on or about 26 July 2001 to ordinary shareholders
registered in the books of the company at the close of business on Friday,
15 June 2001
Shareholders are reminded that all entitlements to dividends with a value of
less than R5,00 per shareholder per transaction 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 D M Polak, Managing Director
28 May 2001
Directors:
E Osrin (Chairman)*, D M Nurek (Deputy Chairman)*, S E Abrahams *, W V Cuba
*, N H Goodwin *, H A Gorvy *, K Jowell *, M Lewis *, D M Polak, R Stein (*
Non-executive)
Registered Office: Transfer Secretaries:
12th Floor, Shell House Mercantile Registrars Ltd
9 Riebeek Street 10th Floor, 11 Diagonal Street
Cape Town, 8001 Johannesburg, 2001
LEAD SPONSOR:
UBS WARBURG SECURITIES (SOUTH AFRICA) (PTY) LTD, a financial services group
of UBS AG (member of the JSE Securities Exchange South Africa) (Registration
Number 1996/011140/07).
CO-SPONSOR:
MERRILL LYNCH SOUTH AFRICA (PTY) LTD, (Member of the JSE Securities Exchange
South Africa) (Registration Number 1995/001805/07).
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