| Fri 30 May 2003, 12:08 | | Reviewed results for the year ended 31 March 2003 |
|
Foschini Limited -
Registration number 1937/009504/06
Share codes: FOS-FOSP
ISIN codes: ZAE000031019 - ZAE000031027
The following consolidated results of the Foschini Group for the year ended 31
March have been reviewed by the company"s auditors, KPMG Inc. Their unqualified
report is available for inspection at the company"s registered office.
HIGHLIGHTS
* Turnover up by 18,0%
* Income before taxation up by 81,5%
* Headline earnings per share up by 84,5% to 162,2 cents
* Total dividend declared per share increased by 80,6%
* Sustained strong balance sheet
CONSOLIDATED INCOME STATEMENT
2003 2002 Change
Rm Rm %
Retail turnover 3 880,6 3 289,9 18,0
Cost of turnover 2 282,6 1 998,3
-------- --------
Gross profit 1 598,0 1 291,6
Interest received (note 3) 127,8 97,5
Trading expenses (note 4) (1 162,7) (1 055,8)
-------- --------
Trading income 563,1 333,3 68,9
Dividends received 18,9 15,2
-------- --------
Operating income 582,0 348,5
Net finance charges 63,5 62,6
-------- --------
Net operating income 518,5 285,9 81,4
Goodwill written off * 5,3 3,1
-------- --------
Income before taxation 513,2 282,8 81,5
Taxation 148,2 74,6
-------- --------
Income after taxation 365,0 208,2
Minority interest 5,5 8,3
-------- --------
Income attributable to ordinary 359,5 199,9
shareholders
Adjustment * 5,3 3,1
-------- --------
Headline earnings 364,8 203,0 79,7
======== ========
Earnings per ordinary share (cents) 159,8 86,6
Goodwill written off per ordinary 2,4 1,3
share (cents)
-------- --------
Headline earnings per ordinary 162,2 87,9 84,5
share (cents)
======== ========
Diluted earnings per ordinary share 157,7 86,3
(cents)
Diluted headline earnings per 160,0 87,6
ordinary share (cents)
Dividend per ordinary share (cents)
Interim 24,0 15,5 54,8
Final 32,0 15,5 106,5
Dividend cover (times) 2,7 2,7
CONSOLIDATED BALANCE SHEET
2003 2002
Rm Rm
Assets
Non-current assets
Property, plant and equipment 286,0 271,8
Goodwill 24,6 12,4
Preference share investment - 150,0
Loans 79,9 92,8
Loan debtors 117,8 178,1
Participation in export partnerships 246,4 260,4
-------- --------
754,7 965,5
-------- --------
Current assets
Inventory 599,3 595,1
Accounts receivable 1 543,9 1 288,8
Preference share investment 150,0 -
Loan debtors 310,2 209,9
Cash 27,2 26,8
-------- --------
2 630,6 2 120,6
-------- --------
Total assets 3 385,3 3 086,1
======== ========
Equity and liabilities
Capital and reserves 2 077,0 1 830,1
Minority interest 5,1 8,6
Non-current liabilities
Interest bearing debt 347,4 431,8
Deferred taxation 167,3 193,4
-------- --------
514,7 625,2
-------- --------
Current liabilities
Short term loans 9,4 57,8
Accounts payable 560,4 433,9
Taxation 129,7 56,8
Provisions 89,0 73,7
-------- --------
788,5 622,2
-------- --------
Total equity and liabilities 3 385,3 3 086,1
======== ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2003 2002
Rm Rm
Equity at the beginning of the year 1 830,1 1 775,1
Earnings for the period 359,5 199,9
Dividends paid (88,5) (48,0)
Shares purchased by subsidiary (24,5) (96,9)
Unrealised gain on interest rate swap 0,4 -
-------- --------
Equity at the end of the year 2 077,0 1 830,1
======== ========
SUPPLEMENTARY INFORMATION
Net ordinary shares in issue (millions) 223,6 226,3
Weighted average ordinary shares in issue 224,9 231,0
(millions)
Tangible net asset value per ordinary share 917,6 803,2
(cents)
Capital expenditure 137,5 112,5
Lease expenses 344,0 312,1
CONSOLIDATED CASH FLOW STATEMENT
2003 2002
Rm Rm
Cash flows from operating activities
Operating profit before working capital 572,9 375,7
changes
Increase in working capital (117,5) (11,6)
-------- --------
Cash generated by operations 455,4 364,1
Increase in loan debtors (40,0) (125,5)
Interest received - RCS Personal Finance 127,8 97,5
Net finance charges (63,5) (62,6)
Taxation (101,3) (104,1)
Dividend paid (90,1) (48,0)
-------- --------
Net cash inflows from operating activities 288,3 121,4
-------- --------
Cash flows from investing activities
Purchase of fixed assets (137,5) (112,5)
Proceeds on sale of fixed assets 4,6 5,9
Decrease in participation in export 14,0 29,4
partnerships
Decrease in loans 12,9 7,5
Share buy-back by subsidiary (24,5) (96,9)
Purchase of additional shares in RCS Personal (24,6) -
Finance
-------- --------
Net cash outflows from investing activities (155,1) (166,6)
-------- --------
Cash flows from financing activities
(Decrease) increase in long-term loans (84,4) 44,4
(Decrease) increase in short-term loans (48,4) 2,3
-------- --------
Net cash (outflows) inflows from financing (132,8) 46,7
activities
-------- --------
Net increase in cash and cash equivalents 0,4 1,5
during the year
Cash and cash equivalents at the beginning of 176,8 175,3
the year
-------- --------
Cash and cash equivalents at the end of the 177,2 176,8
year
======== ========
NOTES
These financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice, and are consistent with
prior reporting periods.
Included in share capital are 16,9 (2002: 14,2) million shares, which were
purchased by a subsidiary of the company. These have been eliminated on
consolidation.
2003 2002
Rm Rm
3. Interest received 127,8 97,5
This comprises interest received on RCS
Personal Finance loan debtors.
4 Trading expenses
Depreciation (116,8) (126,8)
Employee costs (601,3) (528,2)
Occupancy costs (319,9) (280,3)
Restraint of trade payments (note 5) (37,1) -
Other operating costs/income (87,6) (120,5)
-------- --------
(1 (1 055,8)
162,7)
-------- --------
5. Restraint of Trade agreements have been entered into with a number of key
employees.
SEGMENTAL ANALYSIS
2003 2002
Rm Rm
Contribution to income after taxation
Retail 333,3 186,0
RCS Personal Finance 31,7 22,2
-------- --------
Total 365,0 208,2
-------- --------
Total segment assets
Retail 2 955,5 2 667,6
RCS Personal Finance 429,8 418,5
-------- --------
Total 3 385,3 3 086,1
-------- --------
Total segment liabilities
Retail 920,7 859,7
RCS Personal Finance 382,5 387,7
-------- --------
Total 1 303,2 1 247,4
-------- --------
Segmental reporting has been limited to Retail and RCS Personal Finance as, in
the opinion of the directors, all divisions within the group operate in an
established retail market and are therefore considered to be subject to similar
risks and rewards.
COMMENT
RESULTS
Following last year"s 75,4% growth in headline earnings per share, our group has
achieved another year of excellent performance. Sales increased by 18,0%, which
together with an improved gross margin of 41,2% resulted in net operating income
increasing by 81,4%. Headline earnings per ordinary share increased by 84,5% to
162,2 cents per share from 87,9 cents, which are record headline earnings
achieved by our group, being 62,0% higher than our previously recorded high of
100,1 cents per share in the year ended March 2000. The group"s trading margin
increased substantially from 10,1% to 14,5%.
The group has continued to cover its dividend 2,7 times and a final dividend of
32 cents per share has been declared. Accordingly the dividend for the full year
amounts to 56 cents per share, an increase of 80,6% on the previous year"s
dividend of 31 cents per share.
Due to the group"s strong cash generation, the group"s already solid balance
sheet has strengthened even further with a gearing ratio reducing to 8,6 from
last year"s 17,1. Cash generated by operating activities for the year amounted
to R455,4 million, which is a substantial improvement on the prior year, and
which resulted in the group"s total borrowings at the end of the year being
reduced by R132,8 million.
TRADING DIVISIONS
In a more positive trading environment all our divisions performed beyond
expectations and well above the inflation rate in our industry. Our market share
increased in all divisions.
Sales and sales growths in the various divisions were as follows:
No. of stores Sales Rm % Change
Foschini Stores 338 1 641,8 17,4
Markhams 207 693,8 14,8
Exact! 171 357,5 18,9
Sports Division 153 503,6 22,8
Jewellery Division 304 564,6 6,9
@home 15 119,1 156,7
Total same store sales for the year grew by 15,2% with apparel growing by a very
satisfactory 17,3%, cosmetics by 24,8%, jewellery by 4,6% and cell phones by
16,4%. During the year the group"s trading area grew by 1,5% with 38 new stores
being opened but at the same time 35 stores were closed across all divisions.
The restructuring of the Foschini division continues to progress and is
beginning to achieve the desired result. Its improvement during this year has
been encouraging, with same store growth of 16,6%. Fashion Express accounted for
11,9% of this division"s turnover, the balance coming from the Foschini and
Donna Claire stores.
The Markhams division, trading against a much higher base, continued with its
pleasing performance with same store growth of 14,9%. Its RJL division had a
particularly impressive year.
Exact! had a sterling performance, achieving total same store growth of 18,2%
and 20,7% 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 by 22,8%, following on a strong
24,9% growth for the last financial year. Same store growth was 20,7%.
The jewellery division, comprising American Swiss and Sterns, again grew its
market share in a shrinking market. Notwithstanding the growth in turnover of
only 6,9% this division managed to grow its operating profit in excess of 20%.
This was achieved through improved densities as well as extremely tight control
of expenses. This division will continue to rationalise its store portfolio,
which will improve sales densities in the future.
Our newly established @home division has had a remarkable year. It increased its
store base from 8 to 15 during the year, with outstanding acceptance in the
market place. Further store expansion will continue aggressively, and this
division will be grown to approximately 45 stores over the next few years.
CREDIT AND FINANCIAL SERVICES
Our debtors book, which at the year end amounted to R1,313 million, increased by
15,6% on a sales growth of 18%, reflecting a continuing improvement in the group
debtors book, which remains conservatively valued. Cash sales as a percentage of
total sales increased to 29,3% from 28,6%
RCS Personal Finance, our group"s personal loans business, which selectively
advances pre-approved loans to our better customers, continued with its growth
in profitability and contributed a net surplus after minority interest of R37,8
million, compared to last year"s R20,5 million.
During the year the group purchased an additional 22,5% of this company for
R24,6 million, increasing the group"s holding to 85,5% from 63,0%. Adequate
provisions continue to be 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,
although still in its infancy, performed admirably during the year. This
division, whilst contributing only R11 million to the operating profit this
year, will become a more meaningful contributor to group profits in the future.
The RCS Cards debtors book at the year end amounted to R112,3 million.
SHARE BUY BACK
Under the group"s share buy back programme, which commenced at the end of May
2001, 16,9 million shares have been purchased at an average cost of R7,20 per
share. Of these, 2,7 million shares were acquired during the current financial
year. This holding now comprises 7,0% of the company"s issued share capital.
These shares will be held by the group as treasury stock.
PROSPECTS
Turnover for the first 8 weeks of the new financial year is above budget,
although, as anticipated, at a slower pace than experienced in the past year.
The likely interest rate cuts later in the year, the expected reduction in the
rate of inflation and anticipated lower fuel prices, should all benefit consumer
confidence in the new financial year. We remain confident about the year ahead
and expect to grow our earnings materially, well ahead of inflation.
During the new year, whilst focussing on improved densities throughout our
divisions, we expect to open in excess of 30 new stores across all divisions.
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 2003 has been declared, payable on Monday 29 September 2003
to holders of 6,5% preference shares recorded in the books of the company at the
close of business on Friday, 26 September 2003.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Thursday, 18 September 2003. Foschini Ltd preference shares
will commence trading "ex" the dividend from the commencement of business on
Friday, 19 September 2003 and the record date, as indicated, will be Friday, 26
September 2003.
Preference shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Friday, 19 September 2003 to
Friday, 26 September 2003, both dates inclusive.
FINAL ORDINARY DIVIDEND, INCLUDING NOTIFICATION OF RECORD DATE
The directors have declared a final ordinary dividend of 32 cents per ordinary
share payable on Monday, 21 July 2003 to ordinary shareholders recorded in the
books of the company at the close of business on Friday, 18 July 2003.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Friday, 11 July 2003. Foschini Ltd ordinary shares will
commence trading "ex" the dividend from the commencement of business on Monday,
14 July 2003 and the record date, as indicated, will be Friday, 18 July 2003.
Ordinary shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Monday, 14 July 2003 to
Friday, 18 July 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
29 May 2003
Directors:
E Osrin (Chairman)*, D M Nurek (Deputy Chairman)*, Prof. F Abrahams*, S E
Abrahams*, L F Bergman*, W V Cuba*, N H Goodwin*, M Lewis*, D M Polak, R Stein
(*Independent non-Executive)
Registered Office:
Stanley Lewis Centre, 340 Voortrekker Road, Parow East, 7500
Transfer Secretaries:
Computershare Investor Services Ltd, Ground 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: 29/05/2003 05:10:14 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
