Foschini Group Limited · JSE:TFG
Foschini — The Foschini Group — H1 FY2018 Earnings Presentation
34 slides from Foschini's earnings presentation, November 2017
Slide 1: Results Presentation for the Half-Year Ended 30 September 2017
THE FOSCHINI GROUP LIMITED RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2017
Slide 2: Slide 2
Slide 3: Agenda
RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 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 period Doug Murray – Financial review Anthon
Slide 4: Economy and Retail Environment – South Africa
ECONOMY AND RETAIL ENVIRONMENT ECONOMY AND RETAIL ENVIRONMENT – SOUTH AFRICA Latest Comparative period period CPI % y-o-y (Sept 2017 vs Sept 2016) 5,1 6,1 GDP (Q2 2017 q-o-q growth) 2,5 3,1 FNB/BER Consumer Confidence Index (Q2 2017 vs Q2 2016) -9 -11 RMB/BER Business Confidence Index (Q3 2017 vs Q3
Slide 5: Economy and Retail Environment – UK and Australia
ECONOMY AND RETAIL ENVIRONMENT – UK Latest Comparative period period CPIH % change on year (Sept 2017 vs Sept 2016) 2,8 1,3 GDP (Q3 2017 q-o-q growth) 0,4 0,4 GfK Consumer Sentiment Index (Sept 2017 vs Sep 2016) -9 -1 CBI Business Optimism index (Q3 2017 vs Q3 2016) 5 -47 Source: Office for National
Slide 6: Business Overview
BUSINESS OVERVIEW & REVIEW OF THE PERIOD BUSINESS OVERVIEW − Diverse group with a successful portfolio of 27 leading fashion retail brands − Diversification through: • Cash and credit sales • Geography – 3 809 outlets in 32 countries • Full OMNI offering – brick and mortar, concessions and online •
Slide 7: Significant Changes During the Period
SIGNIFICANT CHANGES DURING THE PERIOD CHANGES IN GROUP STRUCTURE − TFG London • Phase Eight and Whistles: fully comparable − TFG Australia • G-Star Australia: 6 months‟ trading included in current period, no trading in prior period (effective date 3 April 2017) • Retail Apparel Group: 2 months‟ trad
Slide 8: Segmental Performance: TFG Africa and TFG London
SEGMENTAL PERFORMANCE: TFG AFRICA TFG AFRICA TFG AFRICA TFG AFRICA TFG AFRICA % change % change Sept 2017 Sept 2016 Sept 2017 Sept 2016 Retail turnover (Rm) 9 300,0 8 860,1 5,0 9,5 Gross margin (%) 46,7 45,5 EBITDA excl acquisition costs (Rm) 1 809,4 1 665,3 8,7 7,1 Operating margin excl acquisition
Slide 9: Segmental Performance: TFG Australia; Turnover by Merchandise Category
SEGMENTAL PERFORMANCE: TFG AUSTRALIA RAG G-STAR Sept 2017 Sept 2017 TFG AUSTRALIA 2 months 6 months Sept 2017 Retail turnover (AUD‟m) 78,1 10,2 88,3 Gross margin (%) 64,6 56,1 63,6 EBITDA excl acquisition costs (AUD‟m) 10,7 (0,5) 10,2 Operating margin excl acquisition costs (AUD‟m) 10,5 (7,6) 8,4 Ne
Slide 10: Turnover: Geographic Contribution; Cash vs Credit
TURNOVER: GEOGRAPHIC CONTRIBUTION 100% 90% 17,1% 17,1% 19,7% 22,4% 25,4% − TFG International 80% contribution continues to 70% increase • Sept 2017 contribution 60% 27,7% in constant 50% currency 40% 82,9% 82,9% 80,3% − Total e-commerce turnover 77,6% 74,6% contribution to total Group 30% turnover n
Slide 11: TFG Africa Cash vs Credit Turnover Growth
TURNOVER: TFG AFRICA CASH VS CREDIT TURNOVER GROWTH 25% 20% 20,6% 19,0% 18,4% 15% 15,8% 14.1% 12,3% 10% 11,6% 10,8% 10,3% 9,5% 8.0% 5% 6,8% 6,8% 6,2% 3.8% 5,1% 5,9% 1,4% 3,3% 2.3% 5,0% 0% H1 2016 H2 2016 FY 2016 H1 2017 H2 2017 FY 2017 H1 2018 − 10-year cash turnover CAGR of 13,6% and credit turnove
Slide 12: Financial Review: Income Statement Highlights; Earnings & Distributions
FINANCIAL REVIEW: INCOME STATEMENT HIGHLIGHTS GROUP GROUP GROUP Sept 2017 Sept 2016 % change Revenue (Rm) 13 972,2 12 854,9 8,7 Retail turnover (Rm) 12 469,1 11 415,7 9,2 Gross margin (%) 51,0 49,6 Total trading expenses (Rm) 6 029,7 5 369,5 12,3 Net bad debt (Rm) 464,6 485,6 (4,3) Operating margin
Slide 13: Revenue and Gross Profit
REVENUE TFG GROUP GROUP TFG AFRICA LONDON Sept 2017 Sept 2016 GROUP % change % change (Rm) (Rm) % change ZAR GBP Retail turnover 12 469,1 11 415,7 9,2 5,0 4,1 Interest income 883,2 862,8 2,4 2,3 - Other revenue 619,9 576,4 7,5 7,5 Group total 13 972,2 12 854,9 8,7 4,9 4,1 – TFG Africa: • Turnover +5
Slide 14: Trading Expenses and Finance Cost
TRADING EXPENSES TFG TFG AFRICA AFRICA TFG GROUP GROUP % change % change LONDON Sept 2017 Sept 2016 GROUP ZAR ZAR % change (Rm) (Rm) % change Sept 2017 Sept 2016 GBP Depreciation and amortisation (331,3) (261,8) 26,5 19,1 27,7 20,7 Employee costs (2 062,4) (1 799,9) 14,6 6,3 11,4 1,8 Occupancy costs
Slide 15: Working Capital Management and Borrowings
WORKING CAPITAL MANAGEMENT TFG GROUP GROUP TFG AFRICA LONDON Sept 2017 March 2017 GROUP % change % change (Rm) (Rm) % change ZAR GBP Trade receivables 7 121,0 7 000,7 1,7 1,7 - Other receivables 1 106,7 1 017,1 8,8 3,8 (4,6) Stock 6 276,0 5 511,2 13,9 (0,3) (7,7) 14 503,7 13 529,0 7,2 1,0 (6,5) Trad
Slide 16: Free Cash Flow and Capex
FREE CASH FLOW GROUP GROUP Sept 2017 Sept 2016 (Rm) (Rm) Operating profit before acquisition costs and finance costs (EBIT) 1 833,2 1 729,1 Add back: depreciation and amortisation 331,3 261,8 EBITDA 2 164,5 1 990,9 Less: taxation* (502,0) (515,3) Operating profit before depreciation and amortisation
Slide 17: TFG Financial Services: Industry Review
TFG FINANCIAL SERVICES TFG FINANCIAL SERVICES: INDUSTRY REVIEW – The consumer credit index improved in Q2 2017 to 53,8 from 50,8 in Q1: • Indicates that credit health is improving • Non-performing loans growth continues to decline • Revolving credit (credit cards and store cards) utilisation however
Slide 18: TFG Financial Services: Credit Performance
TFG FINANCIAL SERVICES: CREDIT PERFORMANCE September September 2017 2016 (Rm) (Rm) % change Income 1 028,4 1 016,0 1,2 Net bad debt (464,6) (485,6) (4,3) Credit costs (272,7) (273,6) (0,3) EBIT 291,1 256,8 13,4 – Income growth of 1,2% (Sep 2016: +15,7%) • Gross book growth of 4,4% (Sep 2016: +4,1%)
Slide 19: TFG Financial Services: Credit Statistics
TFG FINANCIAL SERVICES: CREDIT STATISTICS September March September Key debtors statistics 2017 2017 2016 Net debtors‟ book (Rm) 7 121,0 7 000,7 6 669,5 Overdue values % to debtors‟ book 12,5 13,9 14,3 % able to purchase 84,3 81,8 82,1 Net bad debt write off as a % of credit transactions 8,1 8,2 8,4
Slide 20: TFG Financial Services: Regulation
TFG FINANCIAL SERVICES: REGULATION Regulation Update Affordability Regulations Legal proceedings against the dti and NCR are ongoing. Matter was heard at the High Court in August. No ruling as yet. Proposed Debt The draft Bill is currently before the portfolio committee for review. A Forgiveness/ De
Slide 21: Outlook & Guidance for H2 FY2018
OUTLOOK OUTLOOK & GUIDANCE FOR H2 FY2018 – Political and economic uncertainty continues in 2 of the 3 key markets we trade in – Current trend of cash and credit sales growth to continue – Gross margin to be maintained • Product inflation anticipated to be flat or negative for most merchandise catego
Slide 22: 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 23: Appendices
APPENDICES TRADING ENVIRONMENT – SOUTH AFRICA TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2017 42 TFG RESULTS PRESENTATION SEPTEMBER 2017 www.tfglimited.co.za 21
Slide 24: Trading Environment – South Africa
TRADING ENVIRONMENT – SOUTH AFRICA ZAR / USD exchange rate since April 2016 18,00 17,00 15,84 16,00 15,00 14,55 14,00 13,60 13,49 13,00 13,27 12,82 12,00 12,36 11,00 10,00 April 2016 July 2016 April 2017 July 2017 June 2016 August 2016 December 2016 March 2017 June 2017 August 2017 May 2016 October
Slide 25: Trading Environment – UK
TRADING ENVIRONMENT - UK TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2017 45 TRADING ENVIRONMENT - UK GBP Exchange Rate since April 2016 1,6 24 1,5 22 1,4 20 1,3 18 1,2 Euro into GBP 16 US $ into GBP 1,1 ZAR into GBP 14 1 12 0,9 Brexit vote 0,8 10 Source: Bank of England TFG RESULT
Slide 26: Trading Environment – Australia
TRADING ENVIRONMENT - AUSTRALIA TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2017 47 TRADING ENVIRONMENT - AUSTRALIA TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2017 48 24
Slide 27: 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 28: Footprint: TFG Africa and TFG International
FOOTPRINT: TFG AFRICA TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2017 51 FOOTPRINT: TFG INTERNATIONAL North America Europe Asia USA - 9 9 UK & Ireland 151 380 531 Japan - 4 4 Mexico - 13 13 Sweden 1 11 12 Hong Kong 7 2 9 Estonia - 1 1 Macau - 2 2 Middle East Latvia - 2 2 Qatar - 3
Slide 29: Turnover: Merchandise Category Contribution
TURNOVER: MERCHANDISE CATEGORY CONTRIBUTION Cosmetics − Diversification across different Homeware & 4,1% merchandise categories strengthens furniture 5,3% the Group Clothing & footwear Jewellery 5,5% - Fashion − TFG International contribution 23,3% increased to 25,4% (Sept 2016: 22,4%) Cellphones 7,
Slide 30: Condensed Consolidated Statement of Financial Position
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Sept 2017 Sept 2016 March 2017 Unaudited Unaudited Audited Rm Rm Rm ASSETS Non-current assets Property, plant and equipment 2 792,3 2 380,1 2 469,0 Goodwill and intangible assets 8 236,9 4 861,4 4 675,9 Participation in export partnerships – 10,
Slide 31: Condensed Consolidated Income Statement
CONDENSED CONSOLIDATED INCOME STATEMENT 6 months 6 months ended ended Year ended 30 Sept 30 Sept 31 March 2017 2016 2017 Unaudited Unaudited % Audited Rm Rm change Rm Revenue 13 972,2 12 854,9 26 413,6 Retail turnover 12 469,1 11 415,7 9,2 23 548,7 Cost of turnover (6 109,3) (5 756,3) (11 845,2) Gro
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Slide 33: Greymatter & Finch
GREYMATTER & FINCH # 11241
Slide 34: TFG Brands
THE HOMEWARE STORE AMERICANSwiss COletie by colette hayman CHARLES & KEITH domo. DUESOUTH ~<A | Fabiani. BY TAROCASH MNEXC Phase Eiht ROCKWEAR SODA ACTIVEWEAR SINCE 1991 sporiscene 2 TERNS 1896 TOTALSPORTS WHISTLES \~.