Foschini Group Limited · JSE:TFG
Foschini — The Foschini Group — H1 2016 Earnings Presentation
30 slides from Foschini's earnings presentation, November 2015
Slide 1: Results Presentation for the 6 Months Ended 30 September 2015
THE FOSCHINI GROUP LIMITED RESULTS PRESENTATION FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2015
Slide 2: Slide 2
Slide 3: Agenda
RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2015 AGENDA − Economy and retail environment Doug Murray − Business overview Doug Murray − Review of the period Doug Murray − Financial review Anthony Thunström − TFG Financial Services Jane Fisher − Phase Eight Doug Murray − Key performance
Slide 4: Economy and Retail Environment
ECONOMY AND RETAIL ENVIRONMENT THE ECONOMY AND RETAIL ENVIRONMENT Global economy remains challenging − Slower global growth expected as a result of weakness in China, Brazil and Russia • Uncertainty regarding US Fed interest rate • Weak commodity demand Domestic economy − Volatile current account de
Slide 5: Trading Environment
TRADING ENVIRONMENT Source of graphs: BER Economic Snapshot October 2015 TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 5 TRADING ENVIRONMENT Source of graphs: BER Economic Snapshot October 2015 TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 6 TFG | SEPTEMBER 2015 RESULTS PRESENTATION 3
Slide 6: Business Overview
BUSINESS OVERVIEW BUSINESS OVERVIEW − TFG = home of leading retail brands • 20 brands › Primarily own brands – leading household names › Addition of SODA Bloc and Colette towards end of 1st half of 2016 financial year − Broad product offering across various merchandise categories • Clothing • Jewell
Slide 7: TFG Footprint
TFG FOOTPRINT − 2 913 outlets in 31 countries globally • TFG South Africa 2 226 stores • TFG rest of Africa 164 stores in 7 countries • Phase Eight 523 outlets in 23 countries TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 9 FOOTPRINT (EXCLUDING PHASE EIGHT) Rest Total South of number Brand Afric
Slide 8: Footprint: Rest of Africa and Phase Eight
FOOTPRINT: REST OF AFRICA − All stores in rest of Africa are corporate stores − Rest of Africa 164 stores in 7 countries • 16 stores opened during the period − 27,1% turnover growth with 9,0% same store turnover growth excluding Namibia • 14,6% turnover growth including Namibia − Namibia impacted by
Slide 9: Turnover by Merchandise Category
TURNOVER BY MERCHANDISE CATEGORY % change excl % same September September % Phase store Retail turnover by merchandise category 2015 (Rm) 2014 (Rm) change Eight growth Clothing 7 186,0 4 903,2 46,6 12,5 6,6 Jewellery 697,6 656,0 6,3 6,3 2,6 Cellphones 740,5 729,0 1,6 1,6 (2,5) Homeware & furniture 6
Slide 10: Cash vs Credit Turnover Growth
CASH VS CREDIT TURNOVER GROWTH EXCLUDING PHASE EIGHT 25.0% 10,8% 9,7% 10,8% 20.0% 20.3% 19.6% GROWTH IN SALES % 15.0% 15.8% 10.0% 6.8% 5.0% 4.3% 0.0% 2.5% FY 2015 Apr 2014 - Sep 2014 Apr 2015 - Sep 2015 (excl Phase Eight) (excl Phase Eight) GROWTH IN CASH SALES GROWTH IN CREDIT SALES TFG | SEPTEMBER
Slide 11: Review of the Period
REVIEW OF THE PERIOD − Continued strong cash sales growth of 15,8% (67,4% including Phase Eight) − Improved credit turnover growth at 6,8% (September 2014: 2,5%) − Gross margins in all categories maintained • Phase Eight margin boosts overall GP • Merchandise inflation at approximately 7% − Like-for
Slide 12: September 2015: Salient Features
SEPTEMBER 2015: SALIENT FEATURES HEPS from continuing operations (cents) 470,2 HEPS from continuing operations - growth 16,6% Interim distribution (cents per share) 306,0 Growth in interim distribution 16,3% TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 19 FINANCIAL REVIEW 10 TFG | SEPTEMBER 201
Slide 13: Financial Review: Income Statement Highlights
FINANCIAL REVIEW: INCOME STATEMENT HIGHLIGHTS % change September September excl Phase 2015 2014 % change Eight Revenue (Rm) 11 082,6 8 538,3 29,8 10,2 Retail turnover (Rm) 9 761,2 7 305,1 33,6 10,8 Gross margin (%) 49,1 45,4 Trading expenses excl net bad debt (Rm) 4 005,2 2 819,8 42,0 11,6 Net bad d
Slide 14: Revenue and Gross Profit
REVENUE September September % change 2015 2014 excl Phase (Rm) (Rm) % change Eight Retail turnover 9 761,2 7 305,1 33,6 10,8 Interest income 732,4 663,5 10,4 10,4 Other revenue 589,0 569,7 3,4 3,4 Group total 11 082,6 8 538,3 29,8 10,2 − Strong growth in retail turnover − Interest income will be dea
Slide 15: Interest Income and Trading Expenses
INTEREST INCOME September September 2015 2014 (Rm) (Rm) % change Trade receivables – retail 721,6 654,0 10,3 Sundry 10,8 9,5 13,7 Total interest income 732,4 663,5 10,4 − Interest income from retail debtors’ book increased by 10,3% • Repo rate increase of 25bps in July 2014 and July 2015 • Book grow
Slide 16: Depreciation & Amortisation and Finance Cost
DEPRECIATION & AMORTISATION % change September September excl Phase 2015 2014 % change Eight Depreciation & amortisation (Rm) – revised (213,7) (198,2) 7,8 (18,6) Depreciation & amortisation (Rm) – excl revision (278,1) (198,2) 40,3 13,9 Total trading expenses (Rm) – revised (4 511,9) (3 305,0) 36,5
Slide 17: Stock, Creditors and Trade Receivables
STOCK & CREDITORS September 2015 March 2015 (Rm) (Rm) % change Stock 4 363,2 3 813,9 14,4 − Excluding Phase Eight, stock up by 12,3% • New stores • Inflation September 2015 March 2015 (Rm) (Rm) % change Trade and other payables 2 671,2 2 553,0 4,6 − Excluding Phase Eight, payables up by 4,3% TFG | S
Slide 18: Borrowings and Cash Generation & Utilisation
BORROWINGS September 2015 March 2015 (Rm) (Rm) Interest-bearing debt 7 847,1 7 042,5 Less: Cash (1 003,7) (800,4) Net borrowings TFG including Phase Eight 6 843,4 6 242,1 Less: Phase Eight net borrowings (non-recourse) (1 712,4) (1 639,2) TFG borrowings excluding Phase Eight 5 131,0 4 602,9 − Net bo
Slide 19: Capex
CAPEX September September 2015 2014 (Rm) (Rm) Stores 212,5 197,9 IT 110,1 95,3 Phase Eight 46,8 - Other 48,6 28,3 Total 418,0 321,5 − The majority of capex relates to opening of new stores, in line with our strategy of growing floor space and market share − Ongoing investment in IT retail systems −
Slide 20: TFG Financial Services: Industry Review and Credit Performance
TFG FINANCIAL SERVICES: INDUSTRY REVIEW − Overall, the improvement observed in the index at the start of year has stalled, but the trend nevertheless remains positive. − The decrease in fuel prices provided some brief relief to consumers. However, this has since been eroded by higher fuel levies and
Slide 21: TFG Financial Services – Credit: Book and Statistics
TFG FINANCIAL SERVICES – CREDIT: BOOK September September Key debtors statistics 2015 2014 % growth Number of active accounts (‘000) 2 667,4 2 663,3 0,2 Credit sales as a % of total retail sales (excl Phase Eight) 53,8 55,8 Net debtors’ book (Rm) 6 339,2 5 971,0 6,2 − Flat active account base growth
Slide 22: Customer Value Added Products; Strategy & Outlook
TFG FINANCIAL SERVICES – CUSTOMER VALUE ADDED PRODUCTS September September 2015 2014 (Rm) (Rm) % change Publishing net income 92,9 88,1 5,4 Insurance net income 99,1 104,1 (4,8) Mobile one2one airtime net income 30,1 36,9 (18,4) EBIT 222,1 229,1 (3,1) − Income streams have been affected by a slowdow
Slide 23: Phase Eight
PHASE EIGHT PHASE EIGHT − All strategic Year 1 initiatives on track • Launch of “One Stock” system • Launch of Studio 8 plus size range • Continued international and UK roll-out – Opened 81 new outlets – Expanded to 4 new countries • Development of wholesale range and establishment of US wholesale o
Slide 24: Key Performance Indicators
KEY PERFORMANCE INDICATORS KEY PERFORMANCE INDICATORS September March September 2015 2015 2014 Key debtors statistics 2021 target (6 months) (12 months) (6 months) Turnover (Rbn) R39 bn 9,8 16,1 7,3 Gross margin (%) 47% - 48% 49,1 47,3 45,4 Operating margin (%) 17% - 19% 16,4 17,5 17,1 Debt equity r
Slide 25: Outlook & Guidance for Second Half 2016
OUTLOOK OUTLOOK & GUIDANCE FOR SECOND HALF 2016 − We expect to continue to benefit from good cash sales growth − Credit environment likely to remain challenging particularly in light of the Affordability Regulations − Gross margin to be maintained • Product inflation anticipated to be around 8% - 9%
Slide 26: Additional Information
ADDITIONAL INFORMATION 24 TFG | SEPTEMBER 2015 RESULTS PRESENTATION
Slide 27: Condensed Consolidated Statement of Financial Position
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Sept 2015 Sept 2014 March 2015 Unaudited Unaudited Audited Rm Rm Rm ASSETS Non-current assets Property, plant and equipment 2 444,5 1 813,3 2 197,0 Goodwill and intangible assets 5 047,3 91,9 4 365,2 Participation in export partnerships 8,1 20,8
Slide 28: Condensed Consolidated Income Statement
CONDENSED CONSOLIDATED INCOME STATEMENT 6 months 6 months Year ended ended ended 30 Sept 30 Sept 31 March 2015 2014 2015 Unaudited Unaudited % Audited Continuing operations Rm Rm change Rm Revenue 11 082,6 8 538,3 18 544,0 Retail turnover 9 761,2 7 305,1 33,6 16 085,9 Cost of turnover (4 972,4) (3 9
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