Foschini Group Limited · JSE:TFG
Foschini — The Foschini Group — FY2017 Earnings Presentation
40 slides from Foschini's earnings presentation, June 2017
Slide 1: Results Presentation for the Year Ended 31 March 2017
RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2017
Slide 2: TFG brand portfolio
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Slide 3: Agenda
RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2017 AGENDA Doug Murray Anthony Thunstrӧm Jane Fisher Chief Executive Officer Chief Financial Officer Group Director − Economy and retail environment Doug Murray − Business overview & review of the year Doug Murray − Financial review Anthony Thunström
Slide 4: Economy and Retail Environment – South Africa and UK
ECONOMY AND RETAIL ENVIRONMENT – SOUTH AFRICA INTEREST GDP CPI RATE (Dec 2016) 6,1% 10,5% 0,3% (March 2016: 6,3%) (March 2016: (Dec 2015: 10,5%) 1,3%) − Impact of political uncertainty and corruption on the South African economy remains of deep concern − South Africa’s credit rating under further th
Slide 5: Business Overview & Review of the Year
BUSINESS OVERVIEW & REVIEW OF THE YEAR BUSINESS OVERVIEW TFG GROUP − Diverse group with a successful portfolio of 22 leading fashion retail brands across various lifestyle and merchandise categories − Broad product offering across various merchandise categories: • Clothing, jewellery, homeware & fur
Slide 6: Review of the Year: Changes in Group Structure
REVIEW OF THE YEAR CHANGES IN GROUP STRUCTURE − Phase Eight: fully comparable (12 months’ trading included in both current and prior financial year) • Damsel in a Dress: 2 months’ trading included in current year (acquired 3 February 2017) − Whistles: 12 months’ trading included in current year (acq
Slide 7: Turnover: Merchandise Category and Geographic Contribution
TURNOVER: MERCHANDISE CATEGORY CONTRIBUTION 6,1% 4,8% Cosmetics Homeware & − A strength of the Group is the furniture Clothing & footwear - Sport diversification across different 8,2% 20,4% merchandise categories with further Cellphones diversification within clothing • No major dependency on any pa
Slide 8: Turnover: Cash vs Credit
TURNOVER: CASH VS CREDIT TURNOVER TFG TFG TFG TFG GROUP AFRICA GROUP AFRICA March March March March % change % change 2017 2017 2016 2016 TFG TFG Retail turnover (Rm) (Rm) (Rm) (Rm) GROUP AFRICA Cash sales 14 294,3 9 658,4 12 065,3 8 462,2 18,5 14,1 Credit sales 9 254,4 9 254,4 9 042,2 9 042,2 2,3 2
Slide 9: March 2017: Salient Features
MARCH 2017: SALIENT FEATURES Headline earnings growth (total) +10,1% (constant currency = 11,7%) Headline earnings growth excluding acquisition costs +6,8% (constant currency = 8,3%) HEPS (cents) 1 099,2 HEPS growth (excl acquisition costs) +4,1% (constant currency = 5,7%) Final dividend (cents per
Slide 10: Financial Review: Income Statement Highlights
FINANCIAL REVIEW FINANCIAL REVIEW: INCOME STATEMENT HIGHLIGHTS TFG TFG TFG TFG % % GROUP AFRICA GROUP AFRICA change change March March March March TFG TFG 2017 2017 2016 2016 GROUP AFRICA Revenue (Rm) 26 413,6 21 776,7 23 746,4 20 143,3 11,2 8,1 Retail turnover (Rm) 23 548,7 18 912,8 21 107,5 17 504
Slide 11: Group Earnings & Distributions; Revenue
TFG GROUP EARNINGS & DISTRIBUTIONS CONTINUING OPERATIONS 10,9% 1200.0 5yr compounded HEPS growth 1 099.2 1 055.8 1000.0 897.9 818.7 800.0 780.6 720 691 653.9 Cents 588 600.0 536 506 HEPS* DPS 455 400.0 200.0 0.0 March 2012 March 2013 March 2014 March 2015 March 2016 March 2017 * Excludes acquisition
Slide 12: Gross Profit and Trading Expenses
GROSS PROFIT TFG TFG TFG TFG % % GROUP AFRICA GROUP AFRICA change change March March March March TFG TFG 2017 2017 2016 2016 GROUP AFRICA Gross profit (Rm) 11 703,5 8 784,6 10 494,4 8 211,5 11,5 7,0 Gross margin (%) 49,7 46,4 49,7 46,9 − TFG Africa gross margin mix impacted by strongly improved cell
Slide 13: Finance Cost and Stock
FINANCE COST TFG TFG TFG TFG GROUP AFRICA GROUP AFRICA % % March March March March change change 2017 2017 2016 2016 TFG TFG (Rm) (Rm) (Rm) (Rm) GROUP AFRICA Finance cost (607,4) (526,8) (509,0) (409,5) 19,3 28,6 − Level of finance cost in line with management’s expectation • 4 interest rate increas
Slide 14: Trade Receivables and Borrowings
TRADE RECEIVABLES TFG GROUP TFG GROUP March 2017 March 2016 (Rm) (Rm) % change Trade receivables - retail 7 000,7 6 695,0 4,6 − Detail on the performance of our receivables will be provided by Jane Fisher TFG RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2017 23 BORROWINGS TFG GROUP TFG GROUP Mar
Slide 15: Free Cash Flow and Capex
FREE CASH FLOW TFG GROUP TFG GROUP March 2017 March 2016 (Rm) (Rm) Operating profit before acquisition costs and finance costs (EBIT) 3 811,2 3 596,1 Add back: depreciation and amortisation 540,3 464,7 EBITDA 4 351,5 4 060,8 Less: taxation* (1 012,7) (1 006,3) Operating profit before depreciation an
Slide 16: Prestige: Caledon Factory
PRESTIGE: CALEDON FACTORY − Completed December 2016 − Manufacturing commenced early January 2017 − Official launch 31 May 2017 − The plant is one of the most modern of its kind in South Africa − Equipped with the latest sewing machine technology globally available − Purpose-built for Quick Response
Slide 17: TFG Financial Services: Industry Review
TFG FINANCIAL SERVICES TFG FINANCIAL SERVICES: INDUSTRY REVIEW − Leading indicators hinted at improved economic growth prospects before March cabinet reshuffle − Overall consumer credit health appears to have stabilised • Consumer credit index just under 50 • Household cash flow at weakest level sin
Slide 18: TFG Financial Services: Credit Performance and Credit Book
TFG FINANCIAL SERVICES: CREDIT PERFORMANCE March 2017 March 2016 (Rm) (Rm) % change Interest income 1 703,8 1 510,7 12,8 Net bad debt (896,1) (947,7) (5,4) Credit costs (235,8) (242,9) (2,9) EBIT 571,9 320,1 78,7 − Interest income growth of 12,8% (March 2016: +12,9%) • Gross book growth of 2,9% (Mar
Slide 19: Credit Statistics and Customer Value Added Products
TFG FINANCIAL SERVICES: CREDIT STATISTICS March March Key debtors statistics 2017 2016 Overdue values % to debtors’ book 13,9 14,0 % able to purchase 81,8 81,0 Net bad debt write off as a % of credit transactions 8,2 8,0 Net bad debt write off as a % of debtors’ book 13,9 13,4 Net bad debt as a % of
Slide 20: TFG Financial Services: Regulation and Strategy
TFG FINANCIAL SERVICES: REGULATION Regulation Update Affordability Regulations Legal proceedings against the dti and NCR are ongoing. Matter is set down to be heard at the High Court on 7 August 2017. Proposed Debt A portfolio committee Bill will be drafted on this. The NCRF has made Forgiveness sub
Slide 21: RAG Acquisition: Introduction and Rationale
RAG ACQUISITION INTRODUCTION AND RATIONALE INTRODUCTION − TFG Retailers (“TFG Australia”), a wholly-owned Australian subsidiary of TFG, has entered into an agreement to acquire the entire issued share capital of the Retail Apparel Group (“RAG”) • Shares acquired from private equity group Navis Capit
Slide 22: Overview of Retail Apparel Group
OVERVIEW OF RETAIL APPAREL GROUP WHY RAG? − Strong management team with extensive retail experience − Leading speciality menswear player in the Australian market − Consistent growth in sales and profitability within the Australian market – track record of growing sales at a faster rate than the reta
Slide 23: Overview of Retail Apparel Group: Brands and Stores
OVERVIEW OF RETAIL APPAREL GROUP − Through its customer centred approach, RAG has grown its national footprint to a network of 400 stores, strategically positioned to capture its target market − 80% of stores are located in shopping centres, with the remainder in city centres, neighbourhood centres
Slide 24: Connor, Johnny Big
CONNOR TFG RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2017 43 JOHNNY BIG TFG RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2017 44 22 TFG RESULTS PRESENTATION 2017 www.tfglimited.co.za
Slide 25: YD., Rockwear
YD. TFG RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2017 45 ROCKWEAR TFG RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2017 46 TFG RESULTS PRESENTATION 2017 www.tfglimited.co.za 23
Slide 26: Acquisition Consideration
ACQUISITION CONSIDERATION PURCHASE PRICE − Capped at the lower of 7 x RAG’s audited normalised EBITDA for year ending June 2017 and AUD302,5 million, calculated on a debt free, cash free basis PAYMENT MECHANISM − Payment to be settled in cash on completion, being the later of: • 26 June 2017; and •
Slide 27: Growth: Africa
GROWTH GROWTH: AFRICA − Overall space growth in Africa of 4,4% for the year REST OF AFRICA − Rest of Africa 183 outlets in 7 countries • 9 outlets opened during the year • 2 outlets closed during the year − 9,9% turnover growth • 3,4% same store turnover growth − Target for 2022: approximately 250 -
Slide 28: Growth: International
GROWTH: INTERNATIONAL − UK and international roll-out continued • 125 new outlets opened during the year – Includes 3 new countries • 49 closures during the year − Performance for the year: • Revenue = £251,8 million (March 2016 = £173,7 million) – growth of 45,0% • Operational EBITDA = £30,0 millio
Slide 29: Outlook & Guidance for 2018
OUTLOOK OUTLOOK & GUIDANCE FOR 2018 − Uncertainty in global and local markets remain − Credit sales: anticipate stronger credit turnover growth with annualisation of the credit regulations. • This should however not be allowed to mask the underlying impact that these regulations have on the long-ter
Slide 30: Thank You / Disclaimer
THANK YOU DISCLAIMER THIS ANNOUNCEMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE FOSCHINI GROUP LIMITED AND ITS SUBSIDIARIES, WHICH BY THEIR NATURE INVOLVE RISK AND UNCERTAINTY BECAUSE THEY RELATE TO EVENTS AND DEPEND ON CIRC
Slide 31: Appendices
APPENDICES TRADING ENVIRONMENT – SOUTH AFRICA TFG RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2017 58 TFG RESULTS PRESENTATION 2017 www.tfglimited.co.za 29
Slide 32: Trading Environment – South Africa
TRADING ENVIRONMENT – SOUTH AFRICA ZAR / USD exchange rate since April 2015 18.00 17.00 16.00 15.57 15.00 14.88 14.76 13.77 14.00 13.46 13.00 13.66 13.63 12.00 12.26 11.96 11.00 10.00 9.00 8.00 April 2015 June 2015 October 2015 January 2016 April 2016 June 2016 October 2016 January 2017 May 2015 Aug
Slide 33: Trading Environment – UK
TRADING ENVIRONMENT - UK TFG RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2017 61 TRADING ENVIRONMENT - UK GBP exchange rate since April 2015 1.7 26 1.6 24 1.5 22 1.4 20 1.3 18 1.2 Euro into GBP US $ into GBP 16 1.1 ZAR into GBP 14 1 0.9 12 Brexit vote 0.8 10 Source: Bank of England TFG RESULTS
Slide 34: TFG Mission and Values
TFG MISSION AND VALUES MISSION To be the leading fashion lifestyle retailer in Africa whilst growing our international footprint by providing innovative products, creative customer experiences and by leveraging our portfolio of diverse brands to differentiate our offering. Our talented and engaged p
Slide 35: TFG Footprint: Africa and International
TFG FOOTPRINT: AFRICA TFG RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2017 65 TFG FOOTPRINT: INTERNATIONAL UK & Ireland 152 377 529 Netherlands - 8 8 - 9 9 USA Germany 2 47 49 Australia - 16 16 Norway 1 - 1 Switzerland 10 29 39 Hong Kong 6 2 8 Malaysia - 1 1 Bahrain - 1 1 Mexico - 13 13 Latvia
Slide 36: Condensed Consolidated Statement of Financial Position
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION March 2017 March 2016 Reviewed Audited Rm Rm ASSETS Non-current assets Property, plant and equipment 2 469,0 2 335,7 Goodwill and intangible assets 4 675,9 5 577,8 Participation in export partnerships – 8,2 Deferred taxation asset 483,6 527,2 7
Slide 37: Condensed Consolidated Income Statement
CONDENSED CONSOLIDATED INCOME STATEMENT Year ended Year ended 31 March 31 March 2017 2016 Reviewed Audited % Rm Rm change Revenue 26 413,6 23 746,4 Retail turnover 23 548,7 21 107,5 11,6 Cost of turnover (11 845,2) (10 613,1) Gross profit 11 703,5 10 494,4 Interest income 1 736,9 1 533,0 Other incom
Slide 38: TFG RESULTS PRESENTATION 2017 www.tfglimited.co.za
36 TFG RESULTS PRESENTATION 2017 www.tfglimited.co.za
Slide 39: Greymatter & Finch
GREYMATTER & FINCH # 11063
Slide 40: TFG brands
THE HOMEWARE STORE AMERICANSWISS CHARLES & KEITH NUESOUTH EXACT JFLLX) hr MARKHAM Prope Eig/bt SODA TOIALSPORTS WHISTLES