| Mon 5 Nov 2001, 0:00 | | Foschini Limited - Interim Report To Shareholders |
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Foschini Limited
Registration number 1937/009504/06
Share Code : FOS
ISIN CODE : ZAE000031019
HIGHLIGHTS
Turnover up by 10,3%
Trading income up by 34,6%
Headline earnings per share up by 27%
Interim dividend per share increased by 24%
Sustained strong balance sheet
CONSOLIDATED INCOME STATEMENT
26 weeks ended year ended
29.09.2001 30.09.2000 31.03.2001
Unaudited Unaudited Change Audited
Rm Rm % Rm
Turnover 1 505,8 1 365,0 10,3 2 980,5
Trading income 163,4 121,4 34,6 190,9
Dividends received 6,8 4,8 11,8
Operating income 170,2 126,2 34,9 202,7
Finance charges 28,4 14,6 43,2
Net operating
Income 141,8 111,6 159,5
Goodwill
written off * 1,6 1,6 3,1
Income before
Taxation 140,2 110,0 156,4
Taxation 35,6 30,1 40,4
Income after
Taxation 104,6 79,9 116,0
Minority interest 3,4 - -
Retained earnings 101,2 79,9 116,0
Adjustment * 1,6 1,6 3,1
Headline earnings 102,8 81,5 26,1 119,1
Earnings per ordinary
share (cents) 43,1 33,8 27,5 48,8
Headline earnings per
ordinary
share (cents) 43,8 34,5 27,0 50,1
Dividend per
share (cents) 15,5 12,5 24,0 18,0
Dividend
cover (times) 2,7 2,7 2,7
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
26 weeks ended year ended
29.09.2001 30.09.2000 31.03.2001
Unaudited Unaudited Audited
Rm Rm Rm
Equity at the beginning of
the period 1 854,5 1 770,5 1 770,5
Earnings for the
Period 101,2 79,9 116,0
Capitalisation awards - (0,2) (8,3)
Distributions declared - (0,7) 8,1
Dividends paid (13,2) (14,1) (31,8)
Shares purchased by
Subsidiary (74,3) - -
Equity at the end
of the period 1 868,2 1 835,4 1 854,5
CONSOLIDATED BALANCE SHEET
Sept. 2001 Sept. 2000 March 2001
Unaudited Unaudited Audited
Rm Rm Rm
Assets
Non-current assets
Fixed assets 310,9 316,4 329,1
Goodwill 13,9 17,0 15,5
Preference share investment 150,0 150,0 150,0
Loans 94,9 95,7 100,3
Loan debtors 312,4 185,8 262,5
Participation in export
Partnerships 277,0 305,2 289,8
1 159,1 1 070,1 1 147,2
Current assets
Inventory 561,8 628,2 554,3
Accounts receivable 1 224,4 1 135,9 1 201,7
Cash 40,1 24,8 25,3
1 826,3 1 788,9 1 781,3
Total assets 2 985,4 2 859,0 2 928,5
Equity and liabilities
Capital and reserves 1 868,2 1 835,4 1 854,5
Minority interest 3,9 - -
Non-current liabilities
Interest bearing debt
- operations 56,9 103,7 124,9
- loan debtors funding 312,4 185,8 262,5
Deferred taxation 214,7 298,1 229,0
584,0 587,6 616,4
Current liabilities
Interest bearing debt 63,9 20,8 55,5
Accounts payable 408,5 358,0 334,3
Taxation 56,9 57,2 67,8
529,3 436,0 457,6
Total equity and
Liabilities 2 985,4 2 859,0 2 928,5
SUPPLEMENTARY INFORMATION
Ordinary shares in issue
(millions) 229,3 238,5 240,5
Weighted average ordinary
shares in issue (millions) 234,8 236,4 237,9
Tangible net asset value
per ordinary share (cents) 808,6 762,4 764,5
Capital expenditure 54,4 53,7 128,3
Depreciation 67,7 64,7 131,9
Lease expenses 145,6 121,6 267,9
NOTES
1. The principal accounting policies, as set out in the group's annual
report for the year ended 31 March 2001, have been consistently applied
throughout the six months under review.
2. The accounting policy for dividends and related STC charges has been
changed to accord with Generally Accepted Accounting Practice. These are now
accounted for in the periods when declared, and the statement of changes in
equity and relevant comparative figures have been restated accordingly.
3. Included in share capital are the 11,2 million shares which were
repurchased by a subsidiary of the company. These have been eliminated on
consolidation.
CONSOLIDATED CASH FLOW STATEMENT
Sept. 2001 Sept. 2000 March 2001
Unaudited Unaudited Audited
Rm Rm Rm
Cash flows from operating
activities
Cash generated by
Operations 236,2 189,4 333,7
Decrease (increase) in
working capital 44,0 (44,2) (59,6)
Cash generated by operating
Activities 280,2 145,2 274,1
Decrease (increase)
in loans 5,9 4,2 (0,6)
Finance charges (28,4) (14,6) (43,2)
Taxation (60,8) (63,7) (132,4)
Dividend (13,2) (14,8) (31,8)
Net cash inflows from
operating activities 183,7 56,3 66,1
Cash flows from investing
activities
Purchase of fixed
Assets (50,3) (44,6) (128,3)
Proceeds of sale of fixed
Assets 2,5 2,3 5,4
Decrease in participation in
export partnerships 12,8 22,2 37,6
Investment in RCS Personal
Finance (49,9) (127,8) (204,5)
Share buy-back by
Subsidiary (74,3) - -
Acquisition of subsidiary - (80,4) (80,4)
Net cash outflows from
investing activities (159,2) (228,3) (370,2)
Net increase (decrease)
in cash and cash equivalents
during the period 24,5 (172,0) (304,1)
Net borrowings, cash and cash
equivalents at the beginning
of the period (267,6) 36, 5 36,5
Net borrowings, cash and cash
equivalents at the end of
the period (243,1) (135,5) (267,6)
COMMENT
Results
In the 2001 Annual Report to shareholders issued at the end of June this
year, the company indicated that because of the various strategies being
implemented in each of the group's divisions, a meaningful recovery in
earnings in the year was anticipated.
We are pleased to report that this recovery is well under way, and operating
income for the first 6 months of this financial year has increased by 34,9%
over the prior year, on a sales increase of 10,3 %. Headline earnings per
share increased by 27 % to 43,8 cents per share.
Divisions
Although trading conditions remain difficult, the group as a whole has
traded above budget for the first half of this year and all trading
divisions have performed to expectations in the current trading environment.
Turnover growths in the various divisions were as follows:
Foschini Stores : 3,0%
Markhams : 11,2%
Exact! : 20,7%
Sports Division : 30,7%
Jewellery Division : 7,2%
Total : 10,3%
The restructuring of the Foschini chain is progressing, and whilst trading
in the current period has improved, the expectation is that this improvement
will continue season by season. Eighty of the Foschini outlets have been
converted to the Fashion Express value chain thus far, and it is envisaged
that, after the restructuring, there will be 200 Foschini stores, 120
Fashion Express and 40 Donna Claire stores.
Markhams, with its improved merchandise assortment, continues to trade ahead
of budget.
Exact!'s performance was pleasing, indicating an acceptance of its products
by both existing and new customers. This division continues with its
relocation strategy into shopping centres.
The jewellery division, which comprises 16% of the group's turnover,
continues to grow its market share, with sales having increased by a
pleasing 7,2%, notwithstanding that the jewellery market in which it
operates had negative growth for the period.
The sports division has been successfully turned around and has contributed
positively to the profits for this period.
Our financial services division, RCS, consisting of personal loans to
customers as well as private label cards to other retailers, performed
particularly well and for the first time has contributed to the profits of
the group.
Our newly launched homewares division, @home, which has already opened 5
stores during this period has traded well above expectations, and a further
3 stores will be opened before the Christmas trading period. Because of the
positive reaction from the market place this division will be rolled out to
approximately 40 stores countrywide over a period of time, and will become a
good contributor to future growth.
Share Buy Back
The group's share buy back programme commenced at the end of May and 11,2
million shares amounting to 4,7% of the company's issued share capital have
been repurchased at an average cost per share of R6,62. These shares will be
held by the group as treasury stock.
Prospects
The disastrous events in America on 11 September have adversely affected
consumer confidence worldwide and left the future uncertain. Our group,
however, traded satisfactorily during September and October.
The second half of the year is always very dependent on the level of
Christmas trading. However, the group's recovery in the second half should
exceed the 27% headline earnings per share growth achieved in the first
half.
PREFERENCE DIVIDEND INCLUDING NOTIFICATION OF RECORD DATE
Dividend no. 130 of 3,25% (6,5 cents per share) in respect of the six months
ending 31 March 2002 has been declared, payable on 2 April 2002 to holders
of 6,5% preference shares registered in the books of the company at the
close of business on Thursday, 28 March 2002.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Wednesday, 20 March 2002. Foschini Ltd preference shares
will commence trading "ex" the dividend from the commencement of business on
Friday, 22 March 2002 and the record date, as indicated, will be Thursday,
28 March 2002.
Preference shareholders should take note that share certificates may not be
dematerialised during the period Thursday, 14 March 2002 to Thursday, 28
March 2002, both dates inclusive.
INTERIM ORDINARY DIVIDEND, INCLUDING NOTIFICATION OF RECORD DATE
The directors have declared an interim ordinary dividend of 15,5 cents per
ordinary share payable on 7 January 2002 to ordinary shareholders registered
in the books of the company at the close of business on Friday, 4 January
2002.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Thursday, 27 December 2001. Foschini Ltd ordinary shares
will commence trading "ex" the dividend from the commencement of business on
Friday, 28 December 2001 and the record date, as indicated, will be Friday,
4 January 2002.
Ordinary shareholders should take note that share certificates may not be
dematerialised during the period Wednesday, 19 December 2001 to Friday, 4
January 2002, both dates inclusive.
Certificated ordinary shareholders are reminded that all entitlements to
dividends with a value less than R5,00 per certificated 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.
STRATE
As fully explained in a letter to shareholders last month, Foschini Ltd's
share capital will transfer to the STRATE environment on 12 November 2001.
Trading for electronic settlement will commence on 3 December 2001 with
electronic settlement taking place from 10 December 2001. Existing share
certificates will no longer be good for delivery for transactions entered
into on or after 3 December 2001
Signed on behalf of the Board
E Osrin, Chairman D M Polak, Managing Director
5 November 2001
Directors:
E Osrin (Chairman)*, D M Nurek (Deputy Chairman)*, S E Abrahams*, W V Cuba*,
N H Goodwin*, M Lewis*, D M Polak, R Stein (*Non-Executive)
Registered Office:
12th Floor, Shell House, 9 Riebeeck Street, Cape Town, 8001
Transfer Secretaries:
Mercantile Registrars Ltd, 10th Floor, 11 Diagonal Street, 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).
Visit our website at http://www.foschinigroup.com/
