Foschini Group Limited · JSE:TFG
Foschini — The Foschini Group — FY2015 Earnings Presentation
38 slides from Foschini's earnings presentation, June 2015
Slide 1: Results Presentation for the Year Ended 31 March 2015
RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2015
Slide 2: TFG brands
AMERICANSWISS CHARLES & KEITH DONNACLAIRE (UESOUTH EXACT Fabiani. FASHIONEXPRESS FOSCHINI G-STAR RAW hr MARKHAM MAT « MAY £ hae, Cught, sportscene STERNS TOTALSPORTS 1896
Slide 3: Agenda
RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2015 AGENDA Q Economy & retail environment Doug Murray Q Review of the year & business review Doug Murray Q Financial review Anthony Thunström Q TFG Financial Services Jane Fisher Q Phase Eight Ben Barnett Q Strategy & outlook Doug Murray TFG | MARCH
Slide 4: The Economy and Retail Environment
ECONOMY & RETAIL ENVIRONMENT THE ECONOMY AND RETAIL ENVIRONMENT Q Mixed view on global economy remains › Positive impact of lower oil price offset by increased concern over outlook for leading emerging market economies › Growth prospects downgraded for most economies excluding US Q Domestic economy
Slide 5: Impact of Load Shedding
IMPACT OF LOAD SHEDDING Q Lost sales of approximately R71 million since December 2014 › approximately 1% impact Q All stores have ability to trade off-line Q Stores not in shopping centres less impacted › Sufficient light Q Stores in shopping centres › Often impacted by centre closing › Considering
Slide 6: Review of the Year
TRADING ENVIRONMENT Source of graphs: BER Economic Snapshot May 2015 TFG | MARCH 2015 RESULTS PRESENTATION 7 REVIEW OF THE YEAR 4 TFG | MARCH 2015 RESULTS PRESENTATION
Slide 7: Review of the Year
REVIEW OF THE YEAR Q Busy year for the group but extremely positive Q Disposal of RCS Group completed June 2014 › TFG share of proceeds R1,4 billion Q Launch of online selling November 2014 › @home & TFG Mobile Q Acquisition of Phase Eight in January 2015 › Will be dealt with in more detail later on
Slide 8: March 2015: Salient Features Continued
MARCH 2015: SALIENT FEATURES CONTINUED HEPS continuing – 897,9 cents (Excluding once-off acquisition cost) + 9,7% FINAL DISTRIBUTION – 325 cents + 10,9% TOTAL DIVIDEND – 588 cents + 9,7% TFG | MARCH 2015 RESULTS PRESENTATION 11 BUSINESS REVIEW 6 TFG | MARCH 2015 RESULTS PRESENTATION
Slide 9: Business Review: Overview
BUSINESS REVIEW: OVERVIEW Q TFG = home of leading retail brands › 18 brands Primarily own brands – leading household names Addition of Phase Eight brand during 2015 financial year Q Broad product offering across various merchandise categories › Clothing › Jewellery › Homeware & furniture › Cellphone
Slide 10: Footprint
FOOTPRINT (TFG EXCLUDING PHASE EIGHT) Total South number Brand Africa Africa of stores @home 80 4 84 @home livingspace 20 1 21 American Swiss 215 18 233 Charles & Keith 11 - 11 DonnaClaire 83 4 87 Duesouth 41 5 46 Exact 249 13 262 Fabiani 16 - 16 Fashion Express 213 16 229 Foschini 254 20 274 G-Star
Slide 11: Turnover by Merchandise Category
TURNOVER BY MERCHANDISE CATEGORY % INCL EXCL EXCL Same PHASE PHASE PHASE % % store EIGHT EIGHT EIGHT Change Change growth March March March INCL EXCL EXCL Retail turnover by 2015 2015 2014 PHASE PHASE PHASE merchandise category (Rm) (Rm) (Rm) EIGHT EIGHT EIGHT Clothing 10 849,9 10 447,8 9 481,9 14,4
Slide 12: Turnover: Merchandise Category Contribution
TURNOVER: MERCHANDISE CATEGORY CONTRIBUTION TFG EXCL PHASE EIGHT Cosmetics 6,4% Homeware and furniture Sport 7,7% 20,8% Cellphones 9,9% Jewellery 9,4% Fashion 32,9% Value 12,9% TFG | MARCH 2015 RESULTS PRESENTATION 19 CASH VS CREDIT TURNOVER GROWTH (EXCLUDING PHASE EIGHT) 25,0% 20,3% 19,6% 20,0% 19,
Slide 13: Cash vs Credit Turnover Growth
CASH VS CREDIT TURNOVER GROWTH FY (INCLUDING PHASE EIGHT) 30,0% 26,3% Cash sales growth inflated 25,0% by Phase Eight acquisition 19,6% Growth in sales (%) 20,0% 15,9% Growth in cash sales 15,0% 13,7% Growth in credit sales 9,1% 10,0% 5,7% 4,3% 4,3% 5,0% 0,0% FY 2013 FY 2014 FY 2015 FY 2015 TFG (Exc
Slide 14: Financial Review: Income Statement Highlights
FINANCIAL REVIEW: INCOME STATEMENT HIGHLIGHTS EXCL EXCL INCL PHASE PHASE PHASE % % EIGHT EIGHT EIGHT Change Change March March March EXCL INCL 2015 2015 2014 PHASE PHASE (Rm) (Rm) (Rm) EIGHT EIGHT Revenue (Rm) 18 544,0 18 141,9 16 362,9 10,9 13,3 Retail turnover (Rm) 16 085,9 15 683,8 14 159,0 10,8
Slide 15: Phase Eight Transaction
PHASE EIGHT TRANSACTION Q As was announced on SENS on 16 January 2015, the group acquired a c.85% holding in Phase Eight Q Acquisition at enterprise value of £238m Q Funded by combination of RCS proceeds and available cash resources Q 2 months of trading has been included in our year-end results Q O
Slide 16: Revenue and Gross Profit
REVENUE INCL EXCL EXCL PHASE PHASE PHASE EIGHT EIGHT EIGHT % Change % Change March March March EXCL INCL 2015 2015 2014 PHASE PHASE (Rm) (Rm) (Rm) EIGHT EIGHT Retail turnover 16 085,9 15 683,8 14 159,0 10,8 13,6 Interest income 1 367,7 1 367,7 1 148,1 19,1 19,1 Other revenue 1 090,4 1 090,4 1 055,8
Slide 17: Interest Income and Trading Expenses
INTEREST INCOME INCL PHASE EXCL PHASE EXCL PHASE EIGHT EIGHT EIGHT March March March % Change 2015 2015 2014 EXCL PHASE (Rm) (Rm) (Rm) EIGHT Trade receivables – retail 1 337,7 1 337,7 1 130,5 18,3 Sundry 30,0 30,0 17,6 1 367,7 1 367,7 1 148,1 19,1 Total interest income Interest income from retail de
Slide 18: Finance Cost and Taxation
FINANCE COST INCL EXCL EXCL PHASE PHASE PHASE EIGHT EIGHT EIGHT % Change % Change March March March EXCL INCL 2015 2015 2014 PHASE PHASE (Rm) (Rm) (Rm) EIGHT EIGHT Finance cost (228,1) (211,3) (161,8) 30,6 41,0 Interest impacted by: › Higher average borrowing levels Level of debtors’ book and capex
Slide 19: Trade Receivables and Borrowings
TRADE RECEIVABLES March March 2015 2014 (Rm) (Rm) % Change Trade receivables - retail 6 199,9 5 796,6 7,0 Our biggest asset by far Grown at faster rate than credit turnover due to the slight lengthening of the book Continue to be well managed in the current climate › Adequate provisioning Jane Fishe
Slide 20: Cash Generation & Utilisation
CASH GENERATION & UTILISATION Rm March 2015 (Rm) Net borrowings at beginning of the year (2 659,1) Cash EBITDA 2 849,3 Increase in creditors 216,0 Proceeds on disposal of discontinued operations 1 442,7 Other net investing activities 24,4 Cash generated 4 532,4 Taxation paid (765,7) Dividends paid (
Slide 21: TFG Financial Services: Industry Review
TFG FINANCIAL SERVICES TFG FINANCIAL SERVICES: INDUSTRY REVIEW Q Consumer credit index increased to 54,3% this quarter up from 50,6% last quarter Q This improvement in the TU index is showing clear signs that credit health of the industry is improving › Consistent with our own experience Q Household
Slide 22: TFG Financial Services – Credit: Performance
TFG FINANCIAL SERVICES – CREDIT: PERFORMANCE March March 2015 2014 (Rm) (Rm) % Growth Interest income 1 337,7 1 130,5 18,3 Net bad debt (1 023,6) (935,5) 9,4 Credit costs (220,4) (184,9) 19,2 EBIT 93,7 10,1 Q Interest income › Increase in book › Repo rate increases (50bps January 2014 and 25bps June
Slide 23: Credit Statistics and Value Added Products
TFG FINANCIAL SERVICES – CREDIT: STATISTICS March March Key debtor statistics 2015 2014 Overdue values % to debtors’ book 14,6 15,3 Net bad debt write off as a % of credit transactions 8,0 7,1 Net bad debt write off as a % of debtors’ book 13,6 12,4 Doubtful debt provision as a % of debtors’ book 13
Slide 24: TFG Financial Services: Strategy & Outlook
TFG FINANCIAL SERVICES: STRATEGY & OUTLOOK Q Early signs that deterioration in credit metrics are slowing › Account base should remain at current levels › Improvement in credit sales expected › Payment rates are expected to continue to stabilise › Growth rate in bad debts continues to fall › May be
Slide 25: Phase Eight – Brand Overview
INTRODUCTION PHASE EIGHT – BRAND OVERVIEW CUSTOMER PRODUCT EXPERIENCE/MULTI-CHANNEL The Phase Eight customer is: Key selling points of the Phase Eight product: What the Phase Eight woman looks for in her Q 35-55 year old woman with high disposable Q Feminine and colourful shopping experience: income
Slide 26: Phase Eight Has Delivered a Decade of Growth
PHASE EIGHT HAS DELIVERED A DECADE OF GROWTH... NET SALES EVOLUTION1, 4, 5 (ZARm) POINT OF SALE (“POS”) BY GEOGRAPHY2 2 877 29% 05-15 CAGR: 2 532 18.2% 2 195 1 951 1 672 1 308 956 1 066 686 830 542 71% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 UK & Ireland International UK & Ireland Int
Slide 27: Phase Eight Operating Model
OPERATING MODEL PHASE EIGHT OPERATES A DIFFERENTIATED ‘TEST & REPEAT’ MODEL... TRADITIONAL MODEL 10% Product development 10-15 c.90% in-season 9-12 months weeks delivery pre-season buy repeats ahead of the season PHASE EIGHT “TEST & REPEAT” MODEL 20% in-season repeats Continuous product 10-15 20% c.
Slide 28: Multi-Channel Portfolio
MULTI- CHANNEL PORTFOLIO PHASE EIGHT HAVE BUILT A DIVERSIFIED STORE AND CONCESSION PORTFOLIO IN UK & IRELAND The highly successful and low risk concession format has been a fundamental part of Phase Eight’s success story, and will be a key strategy going forward as management applies its in-depth kn
Slide 29: Phase Eight International Strategy
PHASE EIGHT HAVE DEVELOPED A PROFITABLE INTERNATIONAL STRATEGY LEVERAGING INTERNATIONAL DEPARTMENT STORE RELATIONSHIPS INTERNATIONAL POS EVOLUTION KEY CONCESSION PARTNERS Net sales (ZARm) 29 247 509 375 76 Concessions Stores 128 15 64 11 10 0 54 113 299 7 4 2012 2013 2014 2015 2020 Mar YE Retail pre
Slide 30: Avenues for Growth
AVENUES FOR GROWTH KEY AVENUES FOR GROWTH Q The market potential is significant, building on the profitable platform that has been established › Additional concession rollout remains for Phase Eight, as well as the recently established Studio8 INTERNATIONAL brand › Standalone stores have been succes
Slide 31: Strategic Objectives
STRATEGY STRATEGIC OBJECTIVES We will offer our customers a range of compelling rewards We will deliver superior customer experiences CUSTOMER Alternative credit products will be investigated across our retail brands that will appeal to our changing customer base We will be the leading fashion lifes
Slide 32: Key Performance Indicators
KEY PERFORMANCE INDICATORS INCL EXCL EXCL PHASE PHASE PHASE EIGHT EIGHT EIGHT March March March Medium term target* 2015 2015 2014 Turnover (Rm) R34 bn 16 085,9 15 683,8 14 159,0 Gross margin (%) 47% - 48% 47,3 46,7 46,5 Operating margin (%) 17% - 19% 17,5 17,7 17,9 ROE combined (%) 28% - 30% 23,4 2
Slide 33: Outlook & Guidance for 2016
OUTLOOK & GUIDANCE FOR 2016 Q We expect to continue to benefit from good cash sales growth Q Credit environment likely to remain challenging › Have started to see some improvement › Anticipate higher credit turnover growth levels Q Gross margin to be maintained › Product inflation anticipated to be
Slide 34: Condensed Consolidated Statement of Financial Position
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION March 2015 March 2014 Reviewed Audited Rm Rm ASSETS Non-current assets Property, plant and equipment 2 197,0 1 696,1 Goodwill and intangible assets 4 365,2 63,4 Participation in export partnerships 8,4 23,9 Deferred taxation asset 354,7 337,1 6
Slide 35: Condensed Consolidated Income Statement
CONDENSED CONSOLIDATED INCOME STATEMENT Year ended Year ended 31 March 31 March 2015 2014 Reviewed Audited % Continuing operations Rm Rm change Revenue 18 544,0 16 362,9 Retail turnover 16 085,9 14 159,0 13,6% Cost of turnover (8 484,2) (7 579,4) Gross profit 7 601,7 6 579,6 Interest income 1 367,7
Slide 36: Notes
NOTES 34 TFG | MARCH 2015 RESULTS PRESENTATION
Slide 37: Disclaimer
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 circumstances
Slide 38: www.tfglimited.co.za
% www.tfglimited.co.za J