Foschini Group Limited · JSE:TFG
Foschini — The Foschini Group — FY2016 Earnings Presentation
32 slides from Foschini's earnings presentation, June 2016
Slide 1: Results Presentation for the Year Ended 31 March 2016
THE FOSCHINI GROUP LIMITED RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2016
Slide 2: TFG brand logos
slivingspace AMERICANSWISS CHARLES & KEITH colette — (QUESOUTH EXACT Fabiani. FOSCHINI G-STAR RAW Al’ MARKHAM MAT «MAY next PhawGght s oD AQ Sportscene STERNS JOIALSPORTS WHISTLES
Slide 3: Agenda
RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2016 AGENDA − Economy and retail environment Doug Murray − Business overview Doug Murray − Review of the year Doug Murray − Financial review Anthony Thunström − TFG Financial Services Jane Fisher − International expansion Doug Murray − Key performance
Slide 4: Economy and Retail Environment
ECONOMY AND RETAIL ENVIRONMENT THE ECONOMY AND RETAIL ENVIRONMENT GLOBAL ECONOMY REMAINS UNCERTAIN − Brexit − US elections and economy − Concerns remain with regards to the Chinese economy DOMESTIC ECONOMY − Outlook for consumer spending a concern – impact of: • Rising inflation • Interest rate hike
Slide 5: Trading Environment
TRADING ENVIRONMENT Source of graphs: BER Economic Snapshot May 2016 5 TFG RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2016 TRADING ENVIRONMENT Source of graphs: BER Economic Snapshot May 2016 6 TFG RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2016 TFG | MARCH 2016 RESULTS PRESENTATION 3
Slide 6: Business Overview
BUSINESS OVERVIEW BUSINESS OVERVIEW TFG COMPRISES: − 22 brands • Primarily own brands that are leading household names • During the 2016 financial year, we added SODA Bloc, Colette, Next and Whistles to our group and rebranded Fashion Express to The FIX • We continue to benefit from and leverage our
Slide 7: TFG Footprint
TFG FOOTPRINT − 3 125 outlets in 31 countries globally • TFG South Africa 2 286 stores • TFG rest of Africa 176 stores in 6 countries • Phase Eight 542 outlets and Whistles 121 outlets in 24 countries 9 TFG RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2016 FOOTPRINT (EXCLUDING INTERNATIONAL) Sou
Slide 8: Footprint: Rest of Africa and International
FOOTPRINT: REST OF AFRICA − All stores in rest of Africa are corporate stores − Rest of Africa 176 stores in 6 countries • 31 stores opened during the year − 16,6% turnover growth • Excluding Namibia, 31,6% turnover growth with 14,6% same store turnover growth − Namibia impacted by: • Angolan oil-de
Slide 9: Turnover by Merchandise Category
TURNOVER BY MERCHANDISE CATEGORY % INCL EXCL INCL EXCL same PHASE PHASE PHASE PHASE % % store EIGHT EIGHT EIGHT EIGHT Change change growth March March March March INCL EXCL EXCL Retail turnover by merchandise 2016 2016 2015 2015 PHASE PHASE PHASE category (Rm) (Rm) (Rm) (Rm) EIGHT EIGHT EIGHT Clothi
Slide 10: Cash vs Credit Turnover Growth
CASH VS CREDIT TURNOVER GROWTH (EXCLUDING PHASE EIGHT) EXCLUDING PHASE EIGHT 25.0% 10,8% 12,3% 11,6% 10,8% 20.0% 20.6% 19.6% 18.4% Growth in sales (%) 15.0% 15.8% 10.0% 6.8% 5.0% 5.9% 5.1% 4.3% 0.0% April 2015 - Sept 2015 Oct 2015 - March 2016 FY 2016 FY 2015 GROWTH IN CASH SALES GROWTH IN CREDIT SA
Slide 11: Review of the Year: Salient Features
REVIEW OF THE YEAR CHANGES IN GROUP STRUCTURE DURING THE YEAR • Phase Eight: 12 months’ trading included (acquired January 2015) • Acquired franchise rights for Colette and Next • Launched SODA Bloc • Rebranded Fashion Express to The FIX • Acquired Whistles in March 2016 CHANGES IN E-COMMERCE • Laun
Slide 12: Financial Review: Salient Features
MARCH 2016: SALIENT FEATURES HEPS from continuing operations including acquisition costs (cents) 1 024,0 HEPS from continuing operations including acquisition costs – growth +35,3% HEPS from continuing operations excluding acquisition costs (cents) 1 055,8 HEPS from continuing operations excluding a
Slide 13: Income Statement Highlights; Earnings & Distributions
FINANCIAL REVIEW: INCOME STATEMENT HIGHLIGHTS INCL EXCL INCL EXCL % % PHASE PHASE PHASE PHASE change change EIGHT EIGHT EIGHT EIGHT INCL EXCL March March March March PHASE PHASE 2016 2016 2015 2015 EIGHT EIGHT Revenue (Rm) 23 746,4 20 143,3 18 544,0 18 141,9 28,1 11,0 Retail turnover (Rm) 21 107,5 1
Slide 14: Revenue and Gross Profit
REVENUE INCL EXCL INCL EXCL PHASE PHASE PHASE PHASE % % EIGHT EIGHT EIGHT EIGHT change change March March March March INCL EXCL 2016 2016 2015 2015 PHASE PHASE (Rm) (Rm) (Rm) (Rm) EIGHT EIGHT Retail turnover 21 107,5 17 504,4 16 085,9 15 683,8 31,2 11,6 Interest income 1 533,0 1 533,0 1 367,7 1 367,
Slide 15: Interest Income and Trading Expenses
INTEREST INCOME March 2016 March 2015 (Rm) (Rm) % change Trade receivables – retail 1 510,7 1 337,7 12,9 Sundry 22,3 30,0 (25,7) Total interest income 1 533,0 1 367,7 12,1 − Interest income from retail debtors’ book up 12,9% • Repo rate increases during the year • Book growth of 8% (March to March m
Slide 16: Finance Cost and Stock
FINANCE COST INCL EXCL INCL EXCL PHASE PHASE PHASE PHASE % % EIGHT EIGHT EIGHT EIGHT change change March March March March INCL EXCL 2016 2016 2015 2015 PHASE PHASE (Rm) (Rm) (Rm) (Rm) EIGHT EIGHT Finance cost (509,0) (409,5) (228,1) (211,3) 123,1 93,8 − Level of finance cost in line with management
Slide 17: Trade Receivables and Borrowings
TRADE RECEIVABLES March 2016 March 2015 (Rm) (Rm) % change Trade receivables - retail 6 695,0 6 199,9 8,0 − Remains the biggest asset on our balance sheet − Growth in book higher than growth in credit turnover • Slight lengthening of the book • Impact of interest rate increases during the year − Con
Slide 18: Cash Generation & Utilisation; Capex
CASH GENERATION & UTILISATION (Rm) March 2016 (Rm) Net borrowings at beginning of the year (6 242,1) Cash EBITDA 3 640,5 Increase in creditors 116,8 Other net investing activities 22,9 Cash generated 3 780,2 Taxation paid (921,8) Funds reinvested in the business for growth (2 679,6) Receivables incr
Slide 19: TFG Financial Services: Industry Review
TFG FINANCIAL SERVICES TFG FINANCIAL SERVICES: INDUSTRY REVIEW − Consumer credit index dropped below 50%, reflection of the stress of credit customers − Absolute value of household disposable incomes remained higher than in 2014 − Subsequent interest rate increases and inflationary pressures have le
Slide 20: TFG Financial Services: Credit Performance and Credit Book
TFG FINANCIAL SERVICES: CREDIT PERFORMANCE March 2016 March 2015 (Rm) (Rm) % change Interest income 1 510,7 1 337,7 12,9% Net bad debt (947,7) (1 023,6) (7,4%) Credit costs (242,9) (220,4) 10,2% EBIT 320,1 93,7 241,6% − Interest income • Gross book growth of 7,4% (March 2015: 8,5%) • Repo rate incre
Slide 21: Credit Statistics; Customer Value Added Products
TFG FINANCIAL SERVICES: CREDIT STATISTICS March March Key debtors statistics 2016 2015 Overdue values % to debtors’ book 14,0 14,6 Net bad debt write off as a % of credit transactions 8,0 8,0 Net bad debt write off as a % of debtors’ book 13,4 13,6 Doubtful debt provision as a % of debtors’ book 13,
Slide 22: TFG Financial Services: Strategy
TFG FINANCIAL SERVICES: STRATEGY Challenge Strategy Regulatory environment − Increasing use of digital applications system − Continual process improvement to increase ease of account opening Credit sales and new account growth − Invitational mailings to credit unaware population − Investment in anal
Slide 23: International Expansion
INTERNATIONAL EXPANSION VISION − To be the leading fashion retailer in Africa whilst growing our international footprint WHY − Constantly looking for profitable growth opportunities • Limited meaningful acquisition opportunities in South Africa − Leveraging 92 years of retail experience, systems, in
Slide 24: International Expansion: Whistles
INTERNATIONAL EXPANSION CONTINUED WHISTLES − Rationale: • Strong brand equity • Opportunistic acquisition • Unique product proposition • Clear growth opportunity • Obvious synergies with Phase Eight − Overview of business: • A leading British contemporary fashion brand for men and women • Establishe
Slide 25: Key Performance Indicators
KEY PERFORMANCE INDICATORS March March 2021 target 2016 2015 Turnover (Rbn) R39 bn 21,1 16,1 Gross margin (%) 47% - 48% 49,7 47,3 Operating margin (%) 17% - 19% 17,0 17,5 Debt equity ratio – recourse (%) 40% 55,6 56,6 ROE (%) 28% - 30% 23,9 23,4 Space growth (TFG excluding international) (%) 6% 6,6
Slide 26: Outlook & Guidance for 2017
OUTLOOK & GUIDANCE FOR 2017 − Cash sales • Expected to continue at current levels − Credit sales • Environment likely to remain challenging • Impact of the Affordability Regulations will inhibit new account growth − Gross margin to be maintained • Product inflation anticipated to be around 8% - 9% −
Slide 27: Condensed Consolidated Statement of Financial Position
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Restated March 2016 March 2015 Reviewed Audited Rm Rm ASSETS Non-current assets Property, plant and equipment 2 335,7 1 925,2 Goodwill and intangible assets 5 577,8 4 637,0 Participation in export partnerships 8,2 8,4 Deferred taxation asset 527
Slide 28: Condensed Consolidated Income Statement
CONDENSED CONSOLIDATED INCOME STATEMENT Year ended Year ended 31 March 31 March 2016 2015 Reviewed Audited % Continuing operations Rm Rm change Revenue 23 746,4 18 544,0 Retail turnover 21 107,5 16 085,9 31,2 Cost of turnover (10 613,1) (8 484,2) Gross profit 10 494,4 7 601,7 Interest income 1 533,0
Slide 29: Notes
NOTES
Slide 30: 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 31: Slide 31
Slide 32: TFG brand logos
ivingspace AMERICANSWISS CHARLES & KEITH Colette DONNACLAIRE MUESOUTH EXACT Fabiani. FOSCHINI G-STAR RAW Ai’ MARKHAM MAT «MAY next ThawGght) s oD ADM sportscene STERNS TOIALSPORTS WHISTLES