Foschini Group Limited · JSE:TFG
Foschini — The Foschini Group — H1 FY2017 Earnings Presentation
32 slides from Foschini's earnings presentation, November 2016
Slide 1: Results Presentation for the Half-Year Ended 30 September 2016
RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2016
Slide 2: TFG brand logos
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Slide 3: Agenda
RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2016 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 − Growth Doug Murray − Outlook Doug Murray 2
Slide 4: Economy and Retail Environment
ECONOMY AND RETAIL ENVIRONMENT THE ECONOMY AND RETAIL ENVIRONMENT GLOBAL ECONOMY − Outlook remains subdued • Brexit – impact on UK and Europe • US elections and economy • Chinese economy UK ECONOMY − Brexit uncertainties − Retail numbers weak DOMESTIC ECONOMY − Outlook for consumer spending remains
Slide 5: Trading Environment
TRADING ENVIRONMENT Source of graphs: BER Economic Snapshot October 2016 5 TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2016 TRADING ENVIRONMENT Source of graphs: BER Economic Snapshot October 2016 6 TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2016 TFG | SEPTEMBER
Slide 6: Business Overview
BUSINESS OVERVIEW BUSINESS OVERVIEW TFG GROUP − Offers prominent lifestyle brands to consumers across the majority of LSM groups, from value to upper market − Comprises 22 brands • Towards the end of the 2016 financial year, we commenced the roll-out of the rebranding of Fashion Express to The FIX w
Slide 7: Donna and The FIX Rebranding
DONNA REBRANDING 9 TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2016 THE FIX REBRANDING 10 TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2016 TFG | SEPTEMBER 2016 RESULTS PRESENTATION 5
Slide 8: Footprint: TFG Group and TFG Africa
FOOTPRINT : TFG GROUP 3 221 OUTLETS IN 34 COUNTRIES: − TFG Africa: 8 countries − TFG International: 26 countries • South Africa: 2 341 outlets • Phase Eight: 569 outlets • Rest of Africa: 185 outlets in 7 countries • Whistles: 126 outlets 11 TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEM
Slide 9: Footprint: TFG International; Turnover by Merchandise Category
FOOTPRINT: TFG INTERNATIONAL Stores Concessions Total outlets UK & Ireland 155 340 495 Netherlands - 7 7 - 14 14 USA Germany 2 41 43 Australia - 16 16 Norway 1 - 1 Switzerland 11 30 41 Hong Kong 3 2 5 Malaysia - 1 1 Bahrain - 1 1 Mexico - 13 13 Latvia - 1 1 Kuwait - 2 2 Saudi Arabia - 8 8 Italy - 4
Slide 10: Turnover: Merchandise Category and Geographic Contribution
TURNOVER: MERCHANDISE CATEGORY CONTRIBUTION 5,9% 4,6% Homeware & Cosmetics furniture Clothing & footwear - 7,8% Sport Cellphones 18,5% 6,0% Jewellery Clothing & footwear – 75,7% International division Clothing & footwear - Clothing and footwear 22,4% Value 10,4% Clothing & footwear – Fashion 24,4% 1
Slide 11: Turnover: Cash vs Credit
TURNOVER: CASH VS CREDIT Sept 2016 Sept 2015 Credit 38,6% Credit 44,6% Cash Cash 61,4% 55,4% 17 TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2016 CASH VS CREDIT TURNOVER GROWTH (TFG AFRICA) EXCLUDING PHASE EIGHT 9,5% 10,8% 12,3% 11,6% 25% 20% 20,6% 19,0% 18,4% Growth in turnover (%)
Slide 12: Review of the Period
REVIEW OF THE PERIOD REVIEW OF THE PERIOD CHANGES IN GROUP STRUCTURE DURING THE PERIOD • Phase Eight: 6 months’ trading included in both current and prior year (acquired January 2015) • Whistles: 6 months’ trading included in current year (acquired March 2016) CHANGES IN E-COMMERCE • Launched online
Slide 13: September 2016: Salient Features
SEPTEMBER 2016: SALIENT FEATURES Retail turnover R11,4 bn Retail turnover growth +16,9% Gross margin 49,6% Net bad debt / closing debtors’ book 14,0% Debt / equity - recourse 53,2% Debt / equity - total 67,6% 21 TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2016 SEPTEMBER 2016: SALIE
Slide 14: Financial Review: Income Statement Highlights
FINANCIAL REVIEW FINANCIAL REVIEW: INCOME STATEMENT HIGHLIGHTS TFG TFG TFG TFG % % GROUP AFRICA GROUP AFRICA change change Sept Sept Sept Sept TFG TFG 2016 2016 2015 2015 GROUP AFRICA Revenue (Rm) 12 854,9 10 299,3 11 082,6 9 412,5 16,0 9,4 Retail turnover (Rm) 11 415,7 8 860,1 9 761,2 8 091,1 16,9
Slide 15: TFG Group Earnings & Distributions; Revenue
TFG GROUP EARNINGS & DISTRIBUTIONS CONTINUING OPERATIONS 600,0 500,0 496,8 470,2 400,0 403,3 373,6 300,0 320,0 Cents 306,0 263,0 243,0 200,0 100,0 0,0 Sep-13 Sep-14 Sep-15 Sep-16 HEPS - continuing operations DPS * HEPS excludes acquisition costs 25 TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30
Slide 16: Gross Profit; Interest Income
GROSS PROFIT TFG TFG TFG TFG % % GROUP AFRICA GROUP AFRICA change change Sept Sept Sept Sept TFG TFG 2016 2016 2015 2015 GROUP AFRICA Gross profit (Rm) 5 659,4 4 027,7 4 788,8 3 726,1 18,2 8,1 Gross margin (%) 49,6 45,5 49,1 46,1 − Gross margins broadly consistent in all merchandise categories excep
Slide 17: Trading Expenses; Finance Cost
TRADING EXPENSES TFG TFG TFG TFG TFG TFG GROUP AFRICA GROUP GROUP AFRICA GROUP Sept Sept % to Sept Sept % to % change % change 2016 2016 turnover 2015 2015 turnover TFG TFG (Rm) (Rm) Sept 2016 (Rm) (Rm) Sept 2015 GROUP AFRICA Depreciation and amortisation (261,8) (206,1) 2,3 (213,7) (161,4) 2,2 22,5
Slide 18: Segmental Revenue and Profit Before Tax
SEGMENTAL REVENUE Sept 2016 Sept 2015 TFG TFG International International 15,1% 19,9% TFG Africa TFG Africa 80,1% 84,9% Sep-16 Sep-15 Sep-16 Sep-15 % % Rm Rm contribution contribution TFG Africa 10 299,3 9 412,5 80,1% 84,9% TFG International 2 555,6 1 670,1 19,9% 15,1% TFG Group 12 854,9 11 082,6 31
Slide 19: Stock; Trade Receivables
STOCK September 2016 March 2016 (Rm) (Rm) % change Stock 5 126,5 5 116,1 0,2 − TFG Africa: stock up by 4,1% − Accelerated roll-out of Sports division impacts stock levels (76 number of stores since Sept 2015) 33 TFG RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2016 TRADE RECEIVABLES Sep
Slide 20: Borrowings; Cash Generation & Utilisation
BORROWINGS September 2016 March 2016 (Rm) (Rm) Interest-bearing debt 7 708,4 8 165,7 Less: Cash (973,5) (888,8) Net borrowings TFG Group 6 734,9 7 276,9 Less: TFG International net borrowings (non-recourse) (1 435,7) (1 770,1) TFG Africa borrowings 5 299,2 5 506,8 − Close focus on working capital an
Slide 21: Capex; TFG Financial Services
CAPEX September September 2016 2015 (Rm) (Rm) Stores 218,5 212,5 IT 103,5 110,1 International division 54,8 46,8 Other 59,0 48,6 Total 435,8 418,0 − In line with our growth strategy the majority of capex relates to opening of new stores • TFG Africa: 83 outlets opened during 6 months ended September
Slide 22: TFG Financial Services: Industry Review and Credit Performance
TFG FINANCIAL SERVICES: INDUSTRY REVIEW − Consumer credit index improves slightly from previous quarter, but still in negative territory − Effect of prior year increases in interest rates, increased unemployment and higher food price inflation coupled with rand volatility impacting negatively on hou
Slide 23: TFG Financial Services: Credit Book and Statistics
TFG FINANCIAL SERVICES: CREDIT BOOK September September Key indicators 2016 2015 % change Number of active accounts (‘000) 2 448,6 2 667,4 (8,2) Credit sales as a % of total retail sales (TFG Africa only) 49,8 53,8 Net debtors’ book (Rm) 6 669,5 6 339,2 5,2 − Active accounts reduce by 8,2% as afford
Slide 24: TFG Financial Services: Value Added Products and Strategy
TFG FINANCIAL SERVICES: CUSTOMER VALUE ADDED PRODUCTS September September 2016 2015 (Rm) (Rm) % change Publishing net income 81,5 92,9 (12,2) Insurance net income 91,7 99,1 (7,5) Mobile one2one airtime net income 31,4 30,1 4,5 EBIT 204,6 222,1 (7,8) Number of new product / service launches 3 2 − Slo
Slide 25: Growth: Africa
GROWTH GROWTH: AFRICA − Overall space growth in Africa of 5,3% for the period REST OF AFRICA − All stores in rest of Africa are corporate stores − Rest of Africa 185 outlets in 7 countries • 9 outlets opened during the period − 17,7% turnover growth • 6,0% same store turnover growth − Opened 1st sto
Slide 26: Growth: International
GROWTH: INTERNATIONAL PHASE EIGHT − Continued UK and international roll-out with 40 new outlets opened during the period • Includes 2 new countries, Macau and Spain • 13 closures during the period − Performance for the period: • Revenue = £97 million (Sept 2015 = £87 million) • Operational EBITDA =
Slide 27: Outlook & Guidance for 2017
OUTLOOK OUTLOOK & GUIDANCE FOR 2017 − Continued uncertainty in global and local markets − Cash sales • Expected to continue at current levels − Credit sales • Environment to remain challenging • Impact of the Affordability Regulations will continue to inhibit new account growth • Await outcome of le
Slide 28: Thank You
THANK YOU 26 TFG | SEPTEMBER 2016 RESULTS PRESENTATION
Slide 29: Condensed Consolidated Statement of Financial Position
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Restated Sept 2016 Sept 2015 March 2016 Unaudited Unaudited Audited Rm Rm Rm ASSETS Non-current assets Property, plant and equipment 2 380,1 2 055,6 2 335,7 Goodwill and intangible assets 4 861,4 5 436,2 5 577,8 Participation in export partnersh
Slide 30: Condensed Consolidated Income Statement
CONDENSED CONSOLIDATED INCOME STATEMENT 6 months 6 months Year ended ended ended 30 Sept 30 Sept 31 March 2016 2015 2016 Unaudited Unaudited % Audited Rm Rm change Rm Revenue 12 854,9 11 082,6 23 746,4 Retail turnover 11 415,7 9 761,2 16,9 21 107,5 Cost of turnover (5 756,3) (4 972,4) (10 613,1) Gro
Slide 31: 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 32: TFG brand logos
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