| Wed 29 May 2002, 0:00 | | Foschini Limited Year End Profit Announcement |
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Foschini Limited Year End Profit Announcement
Foschini Limited
Registration number 1937/009504/06
Share codes: FOS-FOSP
ISIN codes: ZAE000031019 - ZAE000031027
Consolidated audited results of the Foschini Group for the years ended 31
March
HIGHLIGHTS
Turnover up by 10,4%
Trading income up by 74,6%
Headline earnings per share up by 75,4% to 87,9 cents
Total dividend declared per share increased by 72,2%
Sustained strong balance sheet
CONSOLIDATED INCOME STATEMENT
2002 2001 Change
Rm Rm %
Turnover 3 289,9 2 980,5 10,4
Trading income 333,3 190,9 74,6
Dividends received 15,2 11,8
Operating income 348,5 202,7
Finance charges 62,6 43,2
Net operating income 285,9 159,5
Goodwill written off * 3,1 3,1
Income before taxation 282,8 156,4
Taxation 74,6 40,4
Income after taxation 208,2 116,0 79,5
Minority interest 8,3 -
Retained earnings 199,9 116,0 72,3
Adjustment * 3,1 3,1
Headline earnings 203,0 119,1 70,4
Earnings per ordinary
share (cents) 86,6 48,8 77,5
Goodwill written off per
ordinary share(cents) 1,3 1,3
Headline earnings per
ordinary share (cents) 87,9 50,1 75,4
Dividend per share (cents) 31,0 18,0 72,2
Dividend cover (times) 2,7 2,7
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2002 2001
Rm Rm
Equity at the beginning of
the year 1 775,1 1 755,7
Changes in accounting policies - (64,6)
Restated equity at the
beginning of the year 1 775,1 1 691,1
Earnings for the
period 199,9 116,0
Capitalisation awards - (8,3)
Distributions declared - 8,1
Dividends paid (48,0) (31,8)
Shares purchased by
subsidiary (96,9) -
Equity at the end of the year 1 830,1 1 775,1
CONSOLIDATED BALANCE SHEET
2002 2001
Rm Rm
Assets
Non-current assets
Fixed assets 271,8 289,6
Goodwill 12,4 15,5
Preference share investment 150,0 150,0
Loans 92,8 100,3
Loan debtors 388,0 262,5
Participation in export
partnerships 260,4 289,8
1 175,4 1 107,7
Current assets
Inventory 595,1 554,3
Accounts receivable 1 288,8 1 201,7
Cash 26,8 25,3
1 910,7 1 781,3
Total assets 3 086,1 2 889,0
Equity and liabilities
Capital and reserves 1 830,1 1 775,1
Minority interest 8,6 -
Non-current liabilities
Interest bearing debt
- operations 43,8 124,9
- loan debtors funding 388,0 262,5
Deferred taxation 193,4 211,9
625,2 599,3
Current liabilities
Interest bearing debt 57,8 55,5
Accounts payable 507,6 391,3
Taxation 56,8 67,8
622,2 514,6
Total equity and
liabilities 3 086,1 2 889,0
SUPPLEMENTARY INFORMATION
Net ordinary shares in issue
(millions) 226,3 240,5
Weighted average ordinary
shares in issue (millions) 231,0 237,9
Tangible net asset value
per ordinary share (cents) 803,2 731,5
Capital expenditure 112,5 128,3
Depreciation 126,8 131,9
Lease expenses 312,1 267,9
NOTES
1. Dividends and the related STC charges are now accounted for in the period
when the dividend is declared. The statement of changes in equity and
relevant comparative figures have been restated accordingly.
2. The cost of post retirement medical aid benefits is now accounted for in
the year in which the employees rendered the service. Comparative figures
have been restated to reflect the change as if the new policy had been
applied retrospectively. The provision at the year-end amounted to R57
million.
3. Depreciation is now provided on owner-occupied properties. Comparative
figures have been restated to reflect the change as if the new policy had
been applied retrospectively.
4. Included in share capital are 14,2 million shares which were repurchased
by a subsidiary of the company. These have been eliminated on consolidation.
CONSOLIDATED CASH FLOW STATEMENT
2002 2001
Rm Rm
Cash flows from operating
activities
Cash generated by
operations 473,2 333,7
Increase in working capital (11,6) (59,6)
Cash generated by operating
activities 461,6 274,1
Decrease (increase) in loans 7,5 (0,6)
Finance charges (62,6) (43,2)
Taxation (104,1) (132,4)
Dividend (48,0) (31,8)
Net cash inflows from
operating activities 254,4 66,1
Cash flows from investing
activities
Purchase of fixed
assets (112,5) (128,3)
Proceeds of sale of fixed
assets 5,9 5,4
Decrease in participation in
export partnerships 29,4 37,6
Investment in RCS Personal
Finance (125,5) (204,5)
Share buy-back by subsidiary (96,9) -
Acquisition of subsidiary - (80,4)
Net cash outflows from
investing activities (299,6) (370,2)
Net decrease in cash and cash
equivalents during the year (45,2) (304,1)
Net borrowings, cash and cash
equivalents at the beginning
of the year (267,6) 36,5
Net borrowings, cash and cash
equivalents at the end of
the year (312,8) (267,6)
The financial statements have been prepared on a basis consistent with prior
periods, in accordance with South African Statements of Generally Accepted
Accounting Practice.
COMMENT
RESULTS
After the company`s disappointing performance last year, we are pleased to
report that the recovery which was experienced in the 1st half of the year,
continued into the 2nd half. For the year as a whole, sales increased to
R3,29 billion - a 10,4% improvement on the prior year. Improved gross
margins and a tight control on costs resulted in trading income increasing
by 74,6% to R333,3 million from R190,9 million last year. Headline earnings
per share increased by 75,4% from 50,1 cents to 87,9 cents.
The group has maintained its policy of covering its dividend 2,7 times and a
final dividend of 15,5 cents per share has been declared. Accordingly, the
dividend for the full year amounts to 31,0 cents per share, an increase of
72,2% on the previous year`s dividend of 18,0 cents per share.
The group`s balance sheet remains as strong as ever with a gearing ratio of
17,1%. Cash generated by operations for the year amounted to R461,6 million,
a substantial improvement on the prior year, and which was almost sufficient
to cover all of the group`s investing activities during the year, including
the share buy back of R97 million.
TRADING DIVISIONS
Notwithstanding the challenging market conditions, the group as a whole has
traded above budget for the year and all trading divisions have performed to
expectations. Turnover and turnover growths in the various divisions were as
follows:
No. of stores Sales Rm % Change
Foschini Stores 344 1 398,9 3,4
Markhams 205 604,4 11,2
exact! 165 300,5 17,2
Sports Division 152 410,2 24,9
Jewellery Division 312 528,0 7,4
@home 8 46,4 -
The restructuring of the Foschini division is progressing positively, with
improvement season by season. Whilst turnover growth for the full year was
3,4%, sales in the last quarter of the year grew by 8,5%, and this improved
performance has continued into the first 8 weeks of the new financial year.
Since the year-end, a further 26 Foschini stores have been converted to the
Fashion Express value chain, which now totals 103 stores countrywide, and
which completes that part of the Foschini division restructure.
This division now comprises of the following stores - Foschini: 199, Fashion
Express: 103 and Donna Claire: 42.
Markhams with its much improved merchandise assortment continues to trade
above budget whilst growing its market share. At the year-end this division
comprised 172 Markhams and 33 RJL stores.
Exact!`s performance remains encouraging, confirming an acceptance of this
new brand by both existing and new customers. This division`s relocation
strategy into shopping centres continues whilst at the same time closing its
smaller unsuitably located stores. Turnover increased by 17,2%,
notwithstanding the fact that the number of stores was reduced during the
year from 187 to 165.
With Totalsports now fully integrated, the Sports division continues to
improve, and maintains its position as the leading speciality sports apparel
chain in the country. The number of stores in this division at the year-end
comprised 59 Sport Scene and 93 Totalsports outlets.
The jewellery division continues to grow its market share and the new-look
American Swiss millennium stores, which are being rolled out in major
shopping centres, have made a big impact and are reflecting vastly improved
growth. At the year end this division was trading out of 188 American Swiss
and 124 Sterns stores.
The newly established @home division, which was trading out of 8 stores at
the year-end, continues to trade well above expectations. A further 6 stores
will be opened in the 2003 financial year, with a target of 40 stores
countrywide over a period of time. This division, in its first 10 months of
operations, is already breaking even and will start contributing to profits
in the new financial year.
CREDIT
Our debtors book, which at the year-end amounted to R1,2 billion, increased
by only 5,1% on a turnover growth of 10,4%, reflecting the continuing
improvement in the group`s debtors book which, as usual, continues to remain
very conservatively valued. Credit sales as a percentage of total sales
decreased from 72% to 71%.
RCS PERSONAL FINANCE
Our financial services division, RCS Personal Finance, performed extremely
well during the year under review and contributed R20,5 million to group
profits for the year. This division, which commenced operations two and a
half years ago, has to date made advances of R620 million to customers, but
with repayments, the value of the book at the end of the financial year
amounted to R388 million. The cash flow in this business is such that it has
now become self-funding.
All the loans in this division are made on a pre-approved basis to the best
customers in our group, and accordingly, as expected, the bad debt arising
from this book is relatively low at below 4%. In the forthcoming financial
years, it is envisaged that this division will continue its very pleasing
growth in profitability.
SHARE BUY BACK
Under the group`s share buyback programme, which commenced at the end of May
2001, 14,2 million shares have been repurchased at an average cost per share
of R6,81, comprising 5,9% of the company`s issued share capital. These
shares will be held by the group as treasury stock.
PROSPECTS
Having regard to the devaluation of the Rand and its effect on inflation and
interest rates, it is necessary to move cautiously, but optimistically, into
the new financial year. Nevertheless, turnover for the first 8 weeks of the
new year has been particularly buoyant in all divisions and barring any
unforeseen events, the group should be in a position to achieve material
growth in earnings in the year ahead.
PREFERENCE DIVIDEND INCLUDING NOTIFICATION OF RECORD DATE
Dividend no. 133 of 3,25% (6,5 cents per share) in respect of the six months
ending 30 September 2002 has been declared, payable on 30 September 2002 to
holders of 6,5% preference shares recorded in the books of the company at
the close of business on Friday, 27 September 2002.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Thursday, 19 September 2002. Foschini Ltd preference shares
will commence trading "ex" the dividend from the commencement of business on
Friday, 20 September 2002 and the record date, as indicated, will be Friday,
27 September 2002.
Preference shareholders should take note that share certificates may not be
dematerialised during the period Friday, 13 September 2002 to Friday, 27
September 2002, both dates inclusive.
FINAL ORDINARY DIVIDEND, INCLUDING NOTIFICATION OF RECORD DATE
The directors have declared a final ordinary dividend of 15,5 cents per
ordinary share payable on Monday, 22 July 2002 to ordinary shareholders
recorded in the books of the company at the close of business on Friday, 19
July 2002.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Friday, 12 July 2002. Foschini Ltd ordinary shares will
commence trading "ex" the dividend from the commencement of business on
Monday, 15 July 2002 and the record date, as indicated, will be Friday, 19
July 2002.
Ordinary shareholders should take note that share certificates may not be
dematerialised during the period Monday, 8 July 2002 to Friday, 19 July
2002, 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 D M Polak, Managing Director
29 May 2002
Directors:
E Osrin (Chairman)*, D M Nurek (Deputy Chairman)*, S E Abrahams*, L F
Bergman*, 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:
Computershare Services Ltd, 8th Floor, 11 Diagonal Street, Johannesburg,
2001.
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).
Visit our website at http://www.foschinigroup.com/
