| Mon 4 Nov 2002, 17:18 | | Foschini Limited Interim Report To Shareholders |
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Foschini Limited Interim Report To Shareholders
Registration number 1937/009504/06
Share codes: FOS-FOSP
ISIN`s: ZAE000031019 - ZAE000031027
This report has not been audited or reviewed by the company`s auditors.
HIGHLIGHTS
* Turnover up by 20,6%
* Trading income up by 50,6%
* Headline earnings per share up by 58,0%
* Interim dividend per share increased by 54,8%
* Sustained strong balance sheet
CONSOLIDATED BALANCE SHEET
Sept. 2002 Sept. 2001 March 2002
Unaudited Unaudited Audited
Rm Rm Rm
Assets
Non-current assets
Fixed assets 265,4 310,9 271,8
Goodwill 19,8 13,9 12,4
Preference share investment 150,0 150,0 150,0
Loans 87,9 94,9 92,8
Loan debtors 413,1 312,4 388,0
Participation in export 252,1 277,0 260,4
partnerships
1 188,3 1 159,1 1 175,4
Current assets
Inventory 608,2 561,8 595,1
Accounts receivable 1 371,5 1 224,4 1 288,8
Cash 31,3 40,1 26,8
2 011,0 1 826,3 1 910,7
Total assets 3 199,3 2 985,4 3 086,1
Equity and liabilities
Capital and reserves 1 935,7 1 868,2 1 830,1
Minority interest 5,9 3,9 8,6
Non-current liabilities
Interest bearing debt 372,0 369,3 431,8
Deferred taxation 185,1 214,7 193,4
557,1 584,0 625,2
Current liabilities
Interest bearing debt - 63,9 57,8
Accounts payable 595,7 408,5 507,6
Taxation 104,9 56,9 56,8
700,6 529,3 622,2
Total equity and liabilities 3 199,3 2 985,4 3 086,1
CONSOLIDATED INCOME STATEMENT
26 weeks ended year ended
28.09.2002 29.09.2001 31.03.2002
Unaudited Unaudited Change Audited
Rm Rm % Rm
Turnover 1 815,5 1 505,8 20,6 3 289,9
Cost of turnover 1 061,9 887,4 1 998,3
Gross profit 753,6 618,4 1 291,6
Net income - RCS 18,2 13,2 32,5
Personal Finance
(note 3)
Trading expenses (525,8) (468,2) (990,8)
(note 4)
Trading income 246,0 163,4 50,6 333,3
Dividends received 7,7 6,8 15,2
Operating income 253,7 170,2 348,5
Finance charges 31,5 28,4 62,6
Net operating income 222,2 141,8 285,9
Goodwill written off* 2,4 1,6 3,1
Income before 219,8 140,2 56,8 282,8
taxation
Taxation 63,3 35,6 74,6
Income after taxation 156,5 104,6 208,2
Minority interest 2,7 3,4 8,3
Retained earnings 153,8 101,2 199,9
Adjustment * 2,4 1,6 3,1
Headline earnings 156,2 102,8 51,9 203,0
Earnings per ordinary 68,1 43,1 86,6
share (cents)
Goodwill written off 1,1 0,7 1,3
per ordinary share
(cents)
Headline earnings per 69,2 43,8 58,0 87,9
ordinary share
(cents)
Diluted earnings per 67,3 86,2
ordinary share
(cents)
Diluted headline 68,3 87,5
earnings per ordinary
share (cents)
Dividend per share 24,0 15,5 54,8 31,0
(cents)
Dividend cover 2,7 2,7 2,7
(times)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
26 weeks ended year ended
28.09.2002 29.09.2001 31.03.2002
Unaudited Unaudited Audited
Rm Rm Rm
Equity at the beginning of 1 830,1 1 854,5 1 775,1
the period
Earnings for the period 153,8 101,2 199,9
Dividends paid (35,2) (13,2) (48,0)
Shares purchased by (13,0) (74,3) (96,9)
subsidiary
Equity at the end of the 1 935,7 1 868,2 1 830,1
period
CONSOLIDATED CASH FLOW STATEMENT
Sept. 2002 Sept. 2001 March 2002
Unaudited Unaudited Audited
Rm Rm Rm
Cash flows from operating
activities
Cash generated by operations 311,4 236,2 473,2
(Increase) decrease in (7,7) 44,0 (11,6)
working capital
Cash generated by operating 303,7 280,2 461,6
activities
Decrease in loans 4,9 5,9 7,5
Finance charges (31,5) (28,4) (62,6)
Taxation (23,5) (60,8) (104,1)
Dividend (37,3) (13,2) (48,0)
Net cash inflows from 216,3 183,7 254,4
operating activities
Cash flows from investing
activities
Purchase of fixed assets (54,1) (50,3) (112,5)
Proceeds of sale of fixed 2,8 2,5 5,9
assets
Decrease in participation in 8,3 12,8 29,4
export partnerships
Increase in loan debtors (25,1) (49,9) (125,5)
Share buy-back by subsidiary (13,0) (74,3) (96,9)
Purchase of additional shares (13,1) - -
in RCS Personal Finance
Net cash outflows from (94,2) (159,2) (299,6)
investing activities
Cash flows from financing
activities
(Decrease) increase in long- (59,8) (18,1) 44,4
term loans
(Decrease) increase in short- (57,8) 8,4 2,3
term loans
Net cash (inflows) outflows (117,6) (9,7) 46,7
from financing activities
Net increase in cash and cash 4,5 14,8 1,5
equivalents during the period
Cash and cash equivalents at 176,8 175,3 175,3
the beginning of the period
Cash and cash equivalents at 181,3 190,1 176,8
the end of the period
SEGMENTAL ANALYSIS
Sept. 2002 Sept. 2001 March 2002
Unaudited Unaudited Audited
Rm Rm Rm
Contribution to income after
taxation
Retail 144,4 95,8 187,7
RCS Personal Finance 12,1 8,8 20,5
Total 156,5 104,6 208,2
Total segment assets
Retail 2 781,2 2 655,5 2 667,6
RCS Personal Finance 418,1 329,9 418,5
Total 3 199,3 2 985,4 3 086,1
Total segment liabilities
Retail 871,3 803,5 859,7
RCS Personal Finance 386,4 309,8 387,7
Total 1 257,7 1 113,3 1 247,4
No further segmental reporting is provided as, in the opinion of the directors,
there are no material groups of related products nor geographical components
within the group which are subject to significantly different risks and rewards.
SUPPLEMENTARY INFORMATION
Net ordinary shares in 224,8 229,3 226,3
issue(millions)
Weighted average ordinary 225,8 234,8 231,0
shares in issue (millions)
Tangible net asset value per 852,1 808,6 803,2
ordinary share (cents)
Capital expenditure 74,1 54,4 112,5
Lease expenses 160,2 145,6 312,1
NOTES
1. These financial statements have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice. The principal
accounting policies, as set out in the group`s annual report for the year ended
31 March 2002, have been consistently applied throughout the six months under
review.
2. Included in share capital are 15,7 (2001: 11,2) million shares, which were
repurchased by a subsidiary of the company. These have been eliminated on
consolidation.
Sept. 2002 Sept. 2001 March 2002
Unaudited Unaudited Audited
Rm Rm Rm
3. Net income - RCS Personal
Finance
Interest received 60,5 43,7 97,5
Interest paid (23,5) (16,4) (38,0)
Other costs/income (18,8) (14,1) (27,0)
18,2 13,2 32,5
4. Trading expenses
Depreciation (59,4) (67,7) (126,8)
Employee costs (271,4) (246,5) (528,2)
Occupancy costs (154,4) (136,2) (280,3)
Restraint of trade payments (22,0) - -
(note 5)
Other operating costs/income (18,6) (17,8) (55,5)
(525,8) (468,2) (990,8)
5. Restraint of Trade agreements have been entered into with a number of key
employees.
COMMENT
Results
We are extremely pleased with our group`s trading performance for the first 6
months of this financial year, these results being achieved on the back of last
year`s growth in headline earnings per share of 75,4%.
For the first 6 months sales increased by an impressive 20,6%, which together
with improved gross margins, resulted in net operating income increasing by
56,7%. Headline earnings per share increased by 58,0% from 43,8 to 69,2 cents
per share.
The group has maintained its policy of covering its dividend 2,7 times at the
interim stage and a dividend of 24 cents per share has been declared, an
increase of 54,8%.
During this period the group opened 18 new stores across all divisions, whilst
at the same time closing 20. At the end of the period, the group was trading out
of 1,184 stores with a trading area of 312,639 square metres, a growth of 2%
compared to the end of the last financial year.
The group`s already strong balance sheet continues to improve with a gearing
ratio of below 10%. Cash generated by operating activities for the six months
amounted to R303,7 million, which resulted in the group`s total borrowings at
the end of the period being reduced by R117,6 million.
Trading Divisions
All divisions performed beyond expectations and at growth levels well above the
inflation rate in our industry. Sales and sales growths in the various divisions
were as follows:
No. of Sales Rm % change
stores
Foschini 342 791,1 19,6
Markhams 205 333,8 19,2
Exact! 168 167,5 22,5
Sports division 150 227,8 25,5
Jewellery division 307 250,4 6,7
@home 12 44,9 N/a
Internal inflation in the group for the first 6 months averaged approximately 8%
and the sales growths achieved were accordingly real. Total same store sales for
the half year grew by 17,6%, with apparel growing at an impressive 25,3%,
jewellery 5,4%, cosmetics 25,1% and cell phones 5,4%.
The restructuring of the Foschini division is now achieving the desired result
and its improvement during this period was exceptional with total same store
growth of 18,7% and same store apparel growth of 20,2%. Fashion Express
accounted for 12,3% of this division`s turnover, the balance coming from the
Foschini and Donna Claire Stores.
The Markhams division continues with its strong performance with same store
growth of 18,9%. Its RJL division traded particularly well.
Exact! had a very encouraging performance, achieving total same store growth of
25,4% and 32,2% for apparel. Its relocation strategy into shopping centres
continues.
The Sports division, trading as Sport Scene and Totalsports, continued its very
impressive performance by growing its turnover 25,5% following on a strong 24,9%
growth for the last financial year. The same store growth was 22,5%.
Our Jewellery division, comprising American Swiss Jewellers and Sterns, again
grew its market share in a shrinking market. This division continues to
rationalise its store portfolio, which will improve sales densities for the
future.
Our newly established @home division is trading well above expectations and has
grown its store base from 8 stores at the year-end to 12. A further 3 stores
will be opened during the remainder of the financial year, and this division
will be grown to approximately 40 stores over the next few years.
Credit And Financial Services
Our debtors book, which amounts to R1,3 billion increased by only 13,5% on a
turnover growth of 20,6%, reflecting continuing improvement in the group`s
debtors book, which as usual continues to remain very conservatively valued.
Cash sales as a percentage of total sales increased from 27% to 28%.
RCS Personal Finance, our personal loans business, which selectively advances
pre-approved loans to our best customers, continued with its growth in
profitability and contributed a net surplus, before minority interest, of R18,2
million to our group compared to R13,2 million in the comparative period last
year. During the period under review the group purchased an additional 14,3% of
this company for R13,1 million, increasing the group`s holding to 77,3%.
Adequate provisions are made on all loans advanced and this division`s current
bad debt experience remains below 4% of advances.
The RCS Cards Division, which offers credit to merchants outside of the group,
also performed admirably during the period under review. This division, whilst
still in its infancy, will become a meaningful contributor to group profits in
the future. The RCS Cards debtors book at the mid-year amounted to R82 million.
Share Buy Back
Under the group`s share buy back programme, a further 1,5 million shares were
repurchased, bringing the total number of shares held as treasury stock to 15,7
million. These shares, which were acquired at an average cost of R7 per share,
comprise 6,53% of the company`s issued share capital.
Prospects
Turnover for the first 5 weeks of the second half has continued its very
pleasing trend, growing on a similar basis to the first half. We expect trading
conditions to be more challenging in the second half of the financial year due
to the rising interest rates and the resultant effect on the consumer. In
addition, the second half of the year is always heavily dependent on the level
of Christmas trading. Notwithstanding these factors, we remain confident about
the second half and expect a material growth in earnings for the full year.
PREFERENCE DIVIDEND INCLUDING NOTIFICATION OF RECORD DATE
Dividend no. 132 of 3,25% (6,5 cents per share) in respect of the six months
ending 31 March 2003 has been declared, payable on 31 March 2003 to holders of
6,5% preference shares recorded in the books of the company at the close of
business on Friday, 28 March 2003.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Thursday, 20 March 2003. Foschini Ltd preference shares will
commence trading "ex" the dividend from the commencement of business on Monday,
24 March 2003 and the record date, as indicated, will be Friday, 28 March 2003.
Preference shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Monday, 24 March 2003 to
Friday, 28 March 2003, both dates inclusive.
INTERIM ORDINARY DIVIDEND, INCLUDING NOTIFICATION OF RECORD DATE
The directors have declared an interim ordinary dividend of 24,0 cents per
ordinary share payable on Monday 6 January 2003 to ordinary shareholders
recorded in the books of the company at the close of business on Friday, 3
January 2003.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Tuesday, 24 December 2002. Foschini Ltd ordinary shares will
commence trading "ex" the dividend from the commencement of business on Friday,
27 December 2002 and the record date, as indicated, will be Friday, 3 January
2003.
Ordinary shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Friday, 27 December 2002 to
Friday, 3 January 2003, 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
4 November 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:
Stanley Lewis Centre, 340 Voortrekker Road, Parow East, 7500.
Transfer Secretaries:
Computershare Investor Services Ltd, 9th Floor, 70 Marshall 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/
Date: 04/11/2002 05:00:00 PM Produced by the JSE SENS Department
