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Foschini Limited - Group Results For The Half-Year Ended September 2004.
Foschini Limited unaudited interim profit announcement
Registration number 1937/009504/06
Share codes: FOS-FOSP
ISIN`s: ZAE000031019 - ZAE000031027
The following are the Foschini group results for the half-year ended September
2004.
This report has not been audited or reviewed by the company`s auditors.
HIGHLIGHTS
* Turnover up by 20%
* Income before taxation up by 45,5%
* Headline earnings per share up by 43,3%
* Interim dividend per share increased by 93,8%
* Sustained strong balance sheet
CONSOLIDATED INCOME STATEMENT
26 weeks ended year ended
25.09.2004 27.09.2003 31.03.2004
Unaudited Unaudited Change Audited
Rm Rm % Rm
Retail turnover 2 393,6 1 994,9 20,0 4 410,0
Cost of turnover 1 386,1 1 165,2 2 554,2
---------- ---------- ----------
Gross profit 1 007,5 829,7 1 855,8
Interest received 129,6 95,0 208,5
(note 5)
Trading expenses (689,1) (605,7) (1 266,4)
(note 6)
---------- ---------- ----------
Trading income 448,0 319,0 40,4 797,9
Dividends received 7,3 9,2 16,7
Goodwill and trade - (3,2) (6,5)
marks written off
---------- ---------- ------ ----------
Operating income 455,3 325,0 40,1 808,1
Net finance charges 24,0 28,6 55,5
---------- ---------- ------ ----------
Income before 431,3 296,4 45,5 752,6
taxation
Taxation 133,7 88,7 228,8
---------- ---------- ------ ----------
Income after taxation 297,6 207,7 523,8
Minority interest 5,1 2,5 6,9
---------- ---------- ------ ----------
Income attributable 292,5 205,2 42,5 516,9
to ordinary
shareholders
========== ========== ====== ==========
RECONCILIATION OF ATTRIBUTABLE INCOME TO HEADLINE EARNINGS
Income attributable 292,5 205,2 516,9
to ordinary
shareholders
Goodwill and - 3,2 6,5
trademarks written
off
-------- -------- --------
Headline earnings 292,5 208,4 40,4 523,4
======== ======== ========
EARNINGS PER ORDINARY SHARE (CENTS)
Basic 136,3 93,6 45,6 234,2
Headline 136,3 95,1 43,3 237,1
Diluted (basic) 130,4 89,8 225,3
Diluted (headline) 130,4 91,2 228,2
DIVIDEND PER ORDINARY 62,0 32,0 93,8 94,0
SHARE (cents)
DIVIDEND COVER 2,2 2,7 2,5
(times)
CONSOLIDATED BALANCE SHEET
Sept. 2004 Sept. 2003 March 2004
Unaudited Unaudited Audited
Rm Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 308,8 297,6 315,6
Goodwill and trademarks 28,6 24,0 22,3
Preference share investment 200,0 200,0 200,0
Loans 7,9 10,4 8,8
Loan debtors 246,7 167,4 213,8
Participation in export 213,6 229,1 222,5
partnerships
---------- ---------- ----------
1 005,6 928,5 983,0
---------- ---------- ----------
Current assets
Inventory 722,9 603,7 689,7
Trade receivables - retail 1 557,8 1 350,9 1 494,4
Private label card debtors 243,0 161,0 195,3
Other debtors and prepayments 149,5 121,8 92,3
Loan debtors 362,4 311,1 323,3
Cash 30,1 25,2 29,2
---------- ---------- ----------
3 065,7 2 573,7 2 824,2
---------- ---------- ----------
Total assets 4 071,3 3 502,2 3 807,2
========== ========== ==========
EQUITY AND LIABILITIES
Capital and reserves 2 316,1 2 131,6 2 291,4
Minority interest 10,3 5,7 10,1
Non-current liabilities
Interest bearing debt 478,2 257,4 320,4
Deferred taxation 140,7 158,4 150,6
---------- ---------- ----------
618,9 415,8 471,0
---------- ---------- ----------
Current liabilities
Short term loans - 0,3 0,9
Accounts payable 845,1 679,9 769,2
Taxation 174,4 174,9 163,1
Provisions 106,5 94,0 101,5
---------- ---------- ----------
1 126,0 949,1 1 034,7
---------- ---------- ----------
Total equity and liabilities 4 071,3 3 502,2 3 807,2
========== ========== ==========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
26 weeks ended year ended
25.09.2004 27.09.2003 31.03.2004
Unaudited Unaudited Audited
Rm Rm Rm
Equity at the beginning of 2 291,4 2 077,0 2 077,0
the period
AC133: Financial instruments - (9,9) (6,9)
adjustment
---------- ---------- ----------
Restated equity at the 2 291,4 2 067,1 2 070,1
beginning of the period
Acquisition of shares from - (83,7) (83,7)
share trust
Earnings for the period 292,5 205,2 516,9
Dividends paid (132,3) (70,8) (142,4)
Sale of shares by share trust 9,3 28,5 42,9
Shares purchased by (151,4) - (108,0)
subsidiary
Unrealised gain (loss)on 6,6 (14,7) (4,4)
hedging instruments
---------- ---------- ----------
Equity at the end of the 2 316,1 2 131,6 2 291,4
period
========== ========== ==========
SUPPLEMENTARY INFORMATION
Net ordinary shares in issue 211,6 221,3 218,4
(millions)
Weighted average ordinary 214,6 219,2 220,7
shares in issue (millions)
Tangible net asset value per 1 080,8 952,1 1 038,9
ordinary share (cents)
Lease expenses 206,0 173,7 384,7
CONSOLIDATED CASH FLOW STATEMENT
Sept. 2004 Sept. 2003 March 2004
Unaudited Unaudited Audited
Rm Rm Rm
Cash flows from operating
activities
Operating profit before 381,7 289,3 723,4
working capital changes
(Increase) decrease in (66,3) 51,7 (41,2)
working capital
---------- ---------- ----------
Cash generated by operations 315,4 341,0 682,2
Increase in loan debtors (72,0) (50,5) (109,1)
Increase in private label (47,7) (53,1) (87,4)
card debtors
Interest received 129,6 95,0 208,5
Net finance charges (24,0) (28,6) (55,5)
Taxation (132,3) (52,4) (209,1)
Dividend paid (133,9) (71,8) (143,4)
---------- ---------- ----------
Net cash inflows from 35,1 179,6 286,2
operating activities
---------- ---------- ----------
Cash flows from investing
activities
Purchase of fixed assets (52,7) (70,6) (151,9)
Proceeds from sale of fixed 3,5 2,9 5,0
assets
Net increase in preference - (50,0) (50,0)
share investment
Decrease in participation in 8,9 7,4 14,0
export partnerships
Decrease in loans 0,9 2,8 4,4
Shares purchased by (151,4) - (108,0)
subsidiary
Acquisition of trademark - - (1,6)
Acquisition of additional (9,6) (3,5) (3,5)
interest in subsidiary
---------- ---------- ----------
Net cash outflows from (200,4) (111,0) (291,6)
investing activities
---------- ---------- ----------
Cash flows from financing
activities
Proceeds from sale of shares 9,3 28,5 42,9
by share trust
Increase (decrease) in 157,8 (90,0) (27,0)
interest bearing debt
Decrease in short-term loans (0,9) (9,1) (8,5)
---------- ---------- ----------
Net cash inflows (outflows) 166,2 (70,6) 7,4
from financing activities
---------- ---------- ----------
Net increase (decrease) in 0,9 (2,0) 2,0
cash and cash equivalents
during the period
Cash and cash equivalents at 29,2 27,2 27,2
the beginning of the period
---------- ---------- ----------
Cash and cash equivalents at 30,1 25,2 29,2
the end of the period
========== ========== ==========
NOTES
1. ACCOUNTING POLICIES - These financial statements have been prepared in
accordance with South African Standards of Generally Accepted Accounting
Practice. The principal accounting policies, as set out in the group`s annual
report for the year ended 31 March 2004, have been consistently applied
throughout the six months under review.
2. IFRS3 (Business Combinations) does not permit the amortisation of goodwill.
No goodwill has therefore been written off during the current period, and
comparatives have not been restated.
3. These financial statements incorporate the financial statements of the
company, all its subsidiaries and all entities over which it has operational and
financial control.
4. Included in share capital are 16,9 (2003: 16,9) million shares, which were
purchased by a subsidiary of the company, and 12,0 (2003: 2,3) million shares,
which are owned by the share incentive trust. These have been eliminated on
consolidation.
Sept. 2004 Sept. 2003 March 2004
Unaudited Unaudited Audited
Rm Rm Rm
5. INTEREST RECEIVED 129,6 95,0 208,5
This comprises interest
received on RCS Personal
Finance loan debtors and
private label card debtors.
6. TRADING EXPENSES
Depreciation (57,5) (57,7) (116,0)
Employee costs (323,7) (294,9) (657,3)
Occupancy costs (189,7) (170,4) (362,8)
Other operating costs/income (118,2) (82,7) (130,3)
---------- ---------- ----------
(689,1) (605,7) (1 266,4)
---------- ------------ ----------
SEGMENTAL ANALYSIS
26 weeks ended 25.09.2004
Financial Retail Consolidated
Services
Unaudited Unaudited Unaudited
Rm Rm Rm
Revenue
External 129,6 2 393,6 2 523,2
Inter-segment - - -
-------- -------- --------
Total revenue 129,6 2 393,6 2 523,2
-------- -------- --------
Segment result
Operating income 114,8 340,5 455,3
-------- -------- --------
External (3,3) (20,7) (24,0)
Inter-segment (24,5) 24,5 -
-------- -------- --------
Net finance (charges) income (27,8) 3,8 (24,0)
-------- -------- ---------
Taxation (23,6) (110,1) (133,7)
Minority interest (5,1) - (5,1)
--------- -------- --------
Income attributable to 58,3 234,2 292,5
ordinary shareholders
-------- -------- --------
Segment assets
Non-current assets 262,5 743,1 1 005,6
Current assets 623,3 2 442,4 3 065,7
Inter-segment assets (440,6) 440,6 -
-------- -------- --------
Total assets 445,2 3 626,1 4 071,3
-------- -------- --------
Segment liabilities
Non-current (assets) (15,1) 634,0 618,9
liabilities
Current liabilities 87,5 1 038,5 1 126,0
Inter-segment liabilities 211,3 (211,3) -
-------- -------- --------
Total liabilities 283,7 1 461,2 1 744,9
-------- -------- --------
Segment information
Capital expenditure 0,6 52,1 52,7
Depreciation 1,6 55,9 57,5
Amortisation - - -
SEGMENTAL ANALYSIS (cont.)
26 weeks ended 27.09.2003
Financial Retail Consolidated
Services
Unaudited Unaudited Unaudited
Rm Rm Rm
Revenue
External 95,0 1 994,9 2 089,9
Inter-segment - - -
-------- -------- --------
Total revenue 95,0 1 994,9 2 089,9
-------- -------- --------
Segment result
Operating income 76,2 248,8 325,0
-------- -------- --------
External - (28,6) (28,6)
Inter-segment (34,9) 34,9 -
-------- -------- --------
Net finance (charges) income (34,9) 6,3 (28,6)
-------- -------- ---------
Taxation (13,7) (75,0) (88,7)
Minority interest (2,5) - (2,5)
--------- -------- --------
Income attributable to 25,1 180,1 205,2
ordinary shareholders
-------- -------- --------
Segment assets
Non-current assets 185,5 743,0 928,5
Current assets 486,6 2 087,1 2 573,7
Inter-segment assets (395,4) 395,4 -
-------- -------- --------
Total assets 276,7 3 225,5 3 502,2
-------- -------- --------
Segment liabilities
Non-current (assets) (5,3) 421,1 415,8
liabilities
Current liabilities 51,0 898,1 949,1
Inter-segment liabilities 165,8 (165,8) -
-------- -------- --------
Total liabilities 211,5 1 153,4 1 364,9
-------- -------- --------
Segment information
Capital expenditure 0,9 69,7 70,6
Depreciation 1,2 56,5 57,7
Amortisation 3,2 - 3,2
All retail divisions within the group operate in an established retail market
and are therefore considered to be subject to similar risks and rewards.
COMMENT
GROUP OVERVIEW
The buoyant trading conditions resulting from the lower inflation and the lower
interest rate environment continued to benefit consumer confidence in the first
6 months of this financial year. Turnover for the first 6 months increased by
20%, which is all the more pleasing, having been achieved on an increased
trading area of less than 1%.
This, together with improved gross margins resulted in net operating income
increasing by 40,1%. Headline earnings per share increased by 43,3% from 95,1
cents per share to 136,3 cents per share, whilst the group`s trading margin
increased from 16,0% to 18,7%.
During the period under review 13 new stores were opened while 16 stores were
closed across all divisions. At the end of the period the group was trading out
of 1 194 stores with a trading area of 323 917 square metres, an increase of
less than 1% compared to the corresponding trading period last year.
Having regard to the group`s trading performance and cash generation, the
group`s dividend cover has been reduced to 2,2 times attributable earnings per
share. Accordingly, the interim dividend has been increased by 93,8% to 62 cents
per share.
TRADING DIVISIONS
The tempo of trade experienced in the second half of the previous financial year
continued and all our divisions performed well.
Sales and sales growths in the various divisions were as follows:
No. of Sales Rm % change
stores
@home 29 103,2 42,5
Exact! 169 218,0 15,1
Foschini 328 1 040,3 25,0
Markham 211 399,1 9,7
Jewellery division 295 318,2 15,3
Sports division 162 314,8 20,7
-------- -------- --------
Total 1 194 2 393,6 20,0
-------- -------- --------
Total same store sales for the period grew by 16,3% with apparel growing 17,6%,
cosmetics by 22,0%, cell phones by 8,6%, jewellery by 14,5% and homewares by
10,5%.
The Foschini division traded exceptionally well with same store growth of 22,5%.
This division is now benefiting from the restructuring decisions made over the
last few years.
The Markham division under-performed our other clothing divisions, achieving
total same store growth of 7,9%. As dealt with in our 2004 annual financial
statements, this division has this month launched its new store design concept
with pleasing results, which will assist in rejuvenating and repositioning its
brand.
Exact! continued with its very strong performance, achieving same store growth
of 13,4%.
The Sports division, trading as Sportscene and TotalSports, once again out-
performed its market by growing its turnover by 20,7%. Same store growth was
16,1%.
Our jewellery division, comprising American Swiss Jewellers, Matrix and Sterns,
once again grew its market share with turnover growth of 15,3%. Same store
growth was 14,5%. This division is continuing with its strategy of
rationalising its store portfolio in order to further improve sales densities.
Our @home division continued with substantial growth, increasing its store base
to 29 stores and growing its turnover to R103,2 million for the first half.
Our retail debtors book, which amounts to R1,6 billion increased by 15,3% on
credit turnover growth of 17,4% and remains conservatively valued, with
continued improvements reflected in a lower percentage of arrear accounts,
reduction in net bad debts and improved collections. Cash sales as a percentage
of total sales increased from 27,1% to 28,7%.
FINANCIAL SERVICES
Our financial services division comprises RCS Personal Loans, our group`s
personal loans business, and RCS Cards, which offers credit to customers of
merchants outside of the group. This division had an impressive first 6 months
with substantial growth in attributable income of 132,3% over the corresponding
period. Bad debts are well managed and the net bad debt experienced remained
low.
PROSPECTS
Turnover for the first 5 weeks of the second half remained buoyant and well
ahead of budget, as the lower inflation and the lower interest rate environment
continue to benefit consumer confidence. Whilst the second half of the year is
always heavily dependent on the level of Christmas trading, we anticipate
continued strong growth in the group`s earnings for the second half of the year.
PREFERENCE DIVIDEND ANNOUNCEMENT
Dividend no. 136 of 3,25% (6,5 cents per share) in respect of the six months
ending 31 March 2005 has been declared, payable on Tuesday 29 March 2005 to
holders of 6,5% preference shares recorded in the books of the company at the
close of business on Thursday, 24 March 2005.
The last day to trade (`cum` the dividend) in order to participate in the
dividend will be Wednesday, 16 March 2005. Foschini Ltd preference shares will
commence trading `ex` the dividend from the commencement of business on
Thursday, 17 March 2005 and the record date, as indicated, will be Thursday, 24
March 2005.
Preference shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Thursday, 17 March 2005 to
Thursday, 24 March 2005, both dates inclusive.
INTERIM ORDINARY DIVIDEND ANNOUNCEMENT
The directors have declared an interim ordinary dividend of 62 cents per
ordinary share payable on Monday, 10 January 2005 to ordinary shareholders
recorded in the books of the company at the close of business on Friday, 7
January 2005.
The last day to trade (`cum` the dividend) in order to participate in the
dividend will be Friday, 31 December 2004. Foschini Ltd ordinary shares will
commence trading `ex` the dividend from the commencement of business on Monday,
3 January 2005 and the record date, as indicated, will be Friday, 7 January
2005.
Ordinary shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Monday, 3 January 2005 to
Friday, 7 January 2005, 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 2004
Non-executive Directors:
E Osrin (Chairman), D M Nurek (Deputy Chairman), Prof. F Abrahams, S E Abrahams,
L F Bergman (Austrian), W V Cuba, N H Goodwin, M Lewis
Executive Directors:
D M Polak, R Stein
Registered Office:
Stanley Lewis Centre, 340 Voortrekker Road, Parow East, 7500.
Transfer Secretaries:
Computershare Investor Services 2004 (Pty) Ltd, Ground Floor, 70 Marshall
Street, Johannesburg, 2001.
SPONSOR:
UBS South Africa (Pty) Ltd.
Visit our website at http://www.foschinigroup.com/
Date: 04/11/2004 02:00:15 PM
Produced by the JSE SENS Department
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