| Wed 30 Aug 2006, 17:46 | | Foschini- Amended Results of AGM and Statement by the Chairman |
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FOS FOSP
FOS
Foschini- Amended Results of AGM and Statement by the Chairman
Foschini Ltd
Registration number 1937/009504/06
Share codes: FOS-FOSP
ISIN codes: ZAE000031019 & ZAE000031027
The announcement on SENS earlier today in respect of the results of Annual
General Meeting and Statement by the Chairman contained an error. In the
prospects for the 2007 financial year the statement should read:
* Total sales for the first 5 months of this financial year have been
strong and have exceeded budget, by growing 17,4% over the previous
comparable period.
The full amended SENS announcement follows:
STATEMENT BY THE CHAIRMAN
At Foschini"s 69th Annual General Meeting held earlier to-day, Chairman
Eliot Osrin updated the meeting as follows:
"RESULTS FOR 2006
I am delighted to report that the year ended March 2006 was another very
good year for our group, with a 28,8% growth in headline earnings per
share, which follows compounded growth in the past four years of 63,7%.
The year saw many highlights, some of which are as follows:
* Record sales of R6,4 billion, an increase of 21,8% over the previous
year.
* Operating margin of 24,3%, which is the highest ever achieved.
* Net profit before tax of almost R1,5 billion.
* Net profit after tax for the first time exceeding R1 billion.
* An increase in the annual dividend of 34,1%
* An increase in our group"s return on equity to 35,3%.
The phenomenal growth achieved over the past number of years is best
illustrated by comparing our pre-tax profit which has grown this year to
R1,49 billion from R282,8 million in 2002.
The past five years have been very good for the retail sector. The
political stability in our country combined with the low interest rate
environment and low inflation, has assisted retailers to produce above
normal results. In addition, the growth of the emerging black middle class
has enabled the retail environment to grow at a faster rate than the
overall economy which is evidenced by our comparable turnover growth for
the 52 weeks of 14,9% compared to the product inflation rate in our company
of approximately 3%.
Having regard to the strength of the economy and our business, as well as
our very strong balance sheet and cash flow, we have reduced our dividend
cover this year from 2,2 to 2,1 times resulting in the total dividend for
the year being increased by 34,1% to 220 cents per share.
Our group"s return on equity has increased further to 35,3%, which is
indeed impressive by world standards.
Group gearing remains relatively low at 16,9%, 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 over 14 000 for their fine efforts, dedication and
commitment.
TRADING DIVISIONS
In the strong economic climate of recent years, our group has successfully
continued with its strategy of reinventing, extending and revitalising our
brands. All our stores remain world-class in regard to their appearance
and layout, systems, merchandise offering and customer service. Our staff
is at the heart of our success and I am very pleased to report that the
calibre of our staff continues to improve year on year.
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 well.
Our gross margins were marginally down on the previous year, primarily as a
result of a change in the sales mix, with cell phones and cosmetics growing
at a higher rate than our other products.
FINANCIAL SERVICES
Our financial services division comprising RCS Personal Finance and RCS
Cards, under the direction of a young and dynamic team continued to show
phenomenal growth during the year, growing its pre-tax profit by 30,4%.
The sale of a minority stake in this business to the Standard Bank of South
Africa Limited, which was only consummated last November, will open up new
business opportunities to our group and assist us in gaining a foothold in
new markets. As from 1 April 2006 our group"s shareholding in this
division is 65%. Standard Bank has the right to acquire a further 10% in
April 2007 which will result in our shareholding decreasing to 55%.
PROSPECTS FOR THE 2007 FINANCIAL YEAR
I would now like to comment briefly on the group"s prospects for 2007.
* Whilst the continued low inflation and relatively low interest rate
environment, together with the favourable economy continue to benefit
consumer confidence, there is early evidence that the credit cycle may be
entering a new phase where conditions may not be as favourable as they have
been in recent years. Interest rates have now started to rise from their
previous very low base, and consumer spending, whilst still buoyant, may
not be as strong in the second half of the year.
* Total sales for the first 5 months of this financial year have been
strong and have exceeded budget, by growing 17,4% over the previous
comparable period. Growth in the different merchandise categories is as
follows:
- Clothing: 14,4%
- Jewellery: 13,8%
- Cosmetics: 23,3%
- Homewares: 34,7%
- Cell phones: 29,9%
Sales in comparative stores have increased by 10,4%.
In addition, our financial services division continues to grow very
satisfactorily.
In the absence of unforeseen circumstances, though mindful of recent
turbulence in financial markets, we remain confident about trading in the
year ahead and expect to be able to produce 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
30 August 2006
SPONSOR:
UBS South Africa (Pty) Ltd
Date: 30/08/2006 05:46:25 PM Produced by the JSE SENS Department
