| Wed 31 Aug 2005, 14:45 | | Foschini Ltd - Results of Annual General Meeting and Statement by the Chairman |
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Foschini Ltd - Results of Annual General Meeting and Statement by the Chairman
at the Annual General Meeting
Foschini Ltd
Registration number 1937/009504/06
Share codes: FOS-FOSP
ISIN codes: ZAE000031019 - ZAE000031027
STATEMENT BY THE CHAIRMAN
At Foschini`s 68th Annual General Meeting held earlier to-day, Chairman Eliot
Osrin updated the meeting as follows:
`RESULTS FOR 2005
I am pleased to report that the year ended March 2005 was a phenomenal year for
our group with a 51,7% growth in headline earnings per share, following
compounded growth over the past 3 years of 60% per annum. This year`s
performance surpassed even that of the prior year and must rate as the best year
ever achieved by our group.
The year saw many highlights, some of which are as follows:
* Record sales of 5,3 billion Rands, an increase of 19,7% over the previous
year.
* Operating margin of 22,7% this year, exceeding 20% for the first time.
* An increase in net profit before tax of 51,6%, achieving pre-tax income at
1,1 billion Rands, for the first time in excess of 1 billion Rands.
* An increase in the annual dividend of 74,5%
* An increase in our group`s Return on Equity to 31,6% from 24% last year.
Whilst we approached this year with a confident feeling about the year ahead, we
had an exceptionally good first 6 months as lower inflation and lower interest
rates continued to boost consumer confidence. The second half, trading against a
much higher base from the previous year, surpassed the performance of the first
half with sales growth of 19.5% against 16,1% the previous year.
Due to trading and cash flow continuing on a strong trend, we reduced the
dividend cover from 2,5 to 2,2 times, resulting in the total dividend for the
year being increased by 74,5% to R1, 64 per ordinary share.
The group`s balance sheet remains exceptionally strong and the Return on Equity
has increased to 31,6%, which by world standards is very impressive. Group
gearing remains relatively low at 12,1%, below the group`s medium term target of
20%.
The past year has been an exceptional one for our group and for this I must
congratulate and thank our CEO Dennis Polak, his management team and in fact our
entire staff of 13,580 for their superb efforts.
TRADING DIVISIONS
Our group has continued with its strategy of re-inventing, extending and
revitalising our brands and I can proudly say that all our stores are world
class in regard to their appearance and layout, merchandise systems, merchandise
offering and customer service. As mentioned more fully in our published
accounts, the buoyant trading conditions experienced in the first half of the
financial year continued into the second half, and all our divisions performed
beyond expectations.
Our gross margins improved on the back of lower markdown turnover growth, a
reflection of consumer buoyancy, aided by our improved understanding of customer
needs and adherence to our focus on providing the right product at the right
price.
NEW BRANDS
1. In early November our @home division will open 2 new lifestyle stores to be
called @homelivingspace, offering a range of furniture in addition to our
current @home product offering.
2. The Foschini division will be launching a 4th major brand towards the end
of this calendar year named LUELLA, which will offer a range of ladies
footwear, handbags and accessories aimed at the middle to upper middle
market. An exiting new store format has been developed and 6 new stores
will be opened in major shopping centres in October 2005.
RCS INVESTMENT HOLDINGS AGREEMENT WITH STANDARD BANK OF SOUTH AFRICA LIMITED
- As was announced on SENS very recently our group has entered into an
agreement with Standard Bank, subject to the fulfilment of certain
conditions precedent, whereby Standard Bank will acquire an initial 25% of
RCS Investment Holdings with options to acquire an additional 20% in the
future.
- Following on from the success of RCS Investment Holdings to date, it is now
poised to further expand its consumer lending operations into new products
and markets.
It has always been the intention of our group that as the business of RCS
Investment Holdings expanded, and its product offerings moved outside the ambit
of a typical retailer consumer lending business, a banking partner would be
found which could assist to expand the operation, building on the core lending
competencies already developed by RCS Investments.
We believe that, as a partner, Standard Bank will be able to assist in RCS
Investment Holdings` growth opportunities, and that its involvement in areas
such as treasury and product development will add value to the business and
assist in realising future growth opportunities.
For the current financial year this transaction will have no material effect on
the earnings of Foschini. In future years, being able to launch new products
that our group would not be in a position to do without a banking partner, the
expectation is that this transaction will be earnings enhancing.
PROSPECTS FOR THE 2006 FINANCIAL YEAR
I would now like to comment briefly on the group`s prospects for 2006.
* The retail environment continues to experience solid growth on the back of
lower interest rates and lower inflation, and consumer spending is expected
to remain strong.
* Total sales for the first 5 months of this financial year have exceeded
budget and have grown by 20,5% over the previous year, made up as follows:
- Clothing: 16,3%
- Jewellery: 15,7%
- Cosmetics: 33,3%
- Homewares: 30,9%
- Cell phones: 69,0%
Sales in comparative stores have increased by 15,2%. In addition, our financial
services division continues to grow very satisfactorily.
In the absence of unforeseen circumstances we remain confident about the year
ahead and expect to enjoy another year of good growth.
ACKNOWLEDGMENTS
Once more, on behalf of my colleagues on the board and myself, I thank all our
dedicated staff for their loyalty and commitment, and for their meticulous
attention to strategy and execution that continues to so effectively drive the
group.`
RESULTS OF ANNUAL GENERAL MEETING
Shareholders are advised that, at the annual general meeting of shareholders of
Foschini Ltd, which was held earlier to-day, all resolutions as proposed in the
notice of the annual general meeting were approved by the requisite majority of
members.
The special resolution will be lodged for registration with the Registrar of
Companies.
Cape Town
31 August 2005
SPONSOR:
UBS South Africa (Pty) Ltd
Date: 31/08/2005 02:33:07 PM
Produced by the JSE SENS Department
