RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH

Transcription

1 FOR THE YEAR ENDED 31 MARCH 2018

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3 AGENDA OPERATING CONTEXT Doug Murray BUSINESS OVERVIEW FINANCIAL REVIEW Doug Murray Anthony Thunström Doug Murray Chief Executive Officer Anthony Thunström Chief Financial Officer TFG FINANCIAL SERVICES Jane Fisher TFG LONDON TFG AUSTRALIA Ben Barnett Gary Novis Jane Fisher Group Director Ben Barnett TFG London OUTLOOK Anthony Thunström Gary Novis TFG Australia 2 1

4 OPERATING CONTEXT OUR OPERATING CONTEXT GEOGRAPHIC TURNOVER CONTRIBUTION ONLINE TURNOVER CONTRIBUTION CASH VS CREDIT TURNOVER CONTRIBUTION Online turnover contribution 6,5% TFG London 18,7% TFG Australia 11,0% Credit turnover contribution 34,1% TFG Africa 70,3% Outlet turnover contribution 93,5% Cash turnover contribution 65,9% 4 2

5 OPERATING CONTEXT SOUTH AFRICA Latest period Comparative period CPI % 3,8 6,1 GDP 1,3 0,6 Consumer Confidence Index Business Confidence Index Political uncertainty in South Africa continued to impact the economy for most of the financial year. Outlook has however improved with the inauguration of President Ramaphosa mid February Foreign and local credit ratings affirmed outlook revised from negative to stable (Moody). Rand remained volatile for most of the year, strengthening in early Outlook for SA economy: Improved outlook for consumer spending growth forecast at 2,3% for Interest rate expected to remain flat. Inflation outlook stable averaging just below 5% for GDP forecast 1,9% for 2018 and 2% for Source: Stats SA, BER 5 OPERATING CONTEXT UK Latest period Comparative period CPI % 2,5 2,3 GDP 1,8 1,9 GfK Consumer Sentiment -7-6 CBI Business Optimism -4 1 Political and economic uncertainty relating to outcome of Brexit negotiations continues. Economic growth slowed during 2017 as growth in consumer spending moderated and consumer price inflation increased. UK growth rated slowest of G7 countries in 2017, and had the weakest consumer confidence of major EU countries The interest rate increased to 0,5% from 0,25% in November 2017, the first increase in more than a decade, with further increases likely in The Pound remains weak and volatile compared to its pre-brexit levels, particularly against the Euro. UK retailers face increasing headwinds as a number of high street brands fall into administration (e.g. Jacques Vert, EAST, Jones the Bootmaker, Agent Provocateur, Jaeger) as well as increased threats of store closures from larger retailers (New Look, Mothercare, Carpetright, Homebase etc). Source: Office for National Statistics, GfK, Tradingeconomics.com 6 3

6 OPERATING CONTEXT AUSTRALIA Latest period Comparative period CPI % 1,9 2,1 GDP 2,1 2,8 Consumer Sentiment 3,2 0,6 Business Confidence 7 6 Consumer confidence in Australia is slightly more optimistic. The level of unemployment remains low and unchanged. Within the retail sector, declining traffic in shopping centres partially attributable to changes in consumer behaviour as customers shift to online sales channels. Recent retail results indicate tough trading conditions in Australia. Source: Australian Bureau of Statistics, Westpac-Melbourne Institute, Tradingeconomics.com, National Australia Bank, Reserve Bank of Australia 7 BUSINESS OVERVIEW 4

7 BUSINESS OVERVIEW: TFG Diverse group with a successful portfolio of 28 leading fashion retail brands Diversification through: Cash and credit turnover Geography outlets in 32 countries on 5 continents Full OMNI offering brick and mortar, concessions and online Broad product offering across various merchandise categories: Clothing, jewellery, homeware & furniture, cellphones and cosmetics 9 SIGNIFICANT CHANGES DURING THE YEAR CHANGES IN STRUCTURE TFG London Phase Eight: buy-out of c.15% minority interest completed December 2017 Hobbs: 4 months trading included in current year, no trading included in prior year (effective date 25 November 2017) TFG Australia Retail Apparel Group: 8 months trading included in current year, no trading included in prior year (effective date 24 July 2017) CAPITAL RAISE R2,5 billion accelerated bookbuild launched 31 July 2017 to fund acquisition of RAG 17,2 million ordinary shares issued at R145 per share Shares issued at 0,9% premium to 30-day VWAP Offer 3 times oversubscribed 10 5

8 SIGNIFICANT CHANGES DURING THE YEAR (CONTINUED) CHANGES IN E-COMMERCE Launched online selling Exact, Foschini and SODA Bloc brands 20 of our 28 brands now trade online CHANGES IN INTEREST RATE ENVIRONMENT TFG Africa: Current financial year: repo rate in South Africa reduced by 0,25% to 6,75% in July 2017 with a further 0,25% reduction in March 2018 Prior financial year: no changes to repo rate TFG London: Current financial year: Interest rate in UK increased to 0,5% in November 2017 Prior financial year: Interest rate in UK reduced from 0,5% to 0,25% in August 2016 TFG Australia: Unchanged at 1,5% 11 FY 2018: SALIENT FEATURES Headline earnings growth (excl acquisition costs) + 9,6% (constant currency = +10,2%) HEPS growth (excl acquisition costs) + 3,4% (constant currency = +4,0%) HEPS (cents) (excl acquisition costs) 1 136,5 Interim dividend (cents per share) 325,0 Final dividend (cents per share) 420,0 Growth in final dividend +5,0% Total dividend (cents per share) 745,0 Growth in total dividend +3,5% 12 6

9 FY 2018: SALIENT FEATURES (CONTINUED) March 2018 March 2017 Net bad debt as a % of debtors book (TFG Africa) 10,0 11,3 Free cash flow 1 880, ,8 Debt / equity recourse (%) 54,6 53,6 Debt / equity total (%) 61,4 65,3 13 SEGMENTAL PERFORMANCE: March 2018 March 2017 % change Retail turnover , ,8 6,3 Gross margin (%) 47,8 46,4 EBITDA excl acquisition costs 4 074, ,0 6,6 New outlets Closed outlets Total outlets at end of year Turnover growth pleasing in difficult trading environment Gross margin improvement good performance in a deflationary product price environment and high levels of discounting in market Focus on cost control continued, although increased marketing and promotional spend was required to drive turnover in tough retail market Space growth of 3,5% 4,9% new space added 2,3% space closed Balance enlargements and relocations 14 7

10 SEGMENTAL PERFORMANCE: TFG LONDON TFG LONDON March 2018 TFG LONDON March 2017 TFG LONDON % change Retail turnover (GBPm) 310,9 251,8 23,5 Gross margin (%) 61,9 63,0 EBITDA excl acquisition costs (GBPm) 24,8 28,9 (14,2) Underlying EBITDA (GBPm) 28,0 27,8 0,7 New outlets Closed outlets Total outlets at end of year 935* 739 Inclusion of Hobbs for four months in current financial year As expected, tough trading conditions continued during 2018 driven by the shift in consumer spend from offline to online Gross margin slightly down, reflective of trading conditions as well as shift to online Phase Eight concession partners online sales negatively impacted in H1 by system platform changes in the UK and adverse weather in February of H2 Underlying EBITDA: As reported at interim, adverse forex impact in 2018 (loss of 0,7m) compared to 2017 gain ( 1,4m) due to Brexit exchange rate movements Proactively managing the store estate given the shift in consumer spend (March 2018: 2,5m and March 2017: 0,3m) * Includes 188 outlets acquired with Hobbs 15 SEGMENTAL PERFORMANCE: TFG AUSTRALIA TFG AUSTRALIA March 2018 Retail turnover (AUDm) 312,1 Gross margin (%) 65,5 EBITDA excl acquisition costs (AUDm) 39,6 New outlets 44 Closed outlets 11 Total outlets at end of year months trading of RAG and 12 months trading of G-Star included Turnover growth in AUD 8 month comparative period c.14% Gross margin and EBITDA ahead of expectation Strong performance despite pressure on consumer spend and increased competitive behaviour in Australian market 16 8

11 TURNOVER: MERCHANDISE CATEGORY CONTRIBUTION March 2018 March 2017 % change % change ZAR % same store growth Clothing , ,7 28,8 9,4 4,8 Jewellery 1 499, ,5 0,6 0,6 (1,7) Cellphones 1 923, ,7 (0,2) (0,2) (3,2) Homeware & furniture 1 436, ,0 0,1 0,1 (2,3) Cosmetics 1 091, ,8 (2,4) (2,4) (3,8) Total , ,7 21,4 6,3 2,2 Pleasing H1 turnover growth followed by strong H2 performance Clothing: strong turnover growth in difficult trading environments Jewellery, a discretionary product sensitive to economic conditions and consumer confidence levels, continues to gain market share in a tough environment Cellphones: turnover growth coming off a high base (March 2017: 15,3%) and impacted by product price deflation and availability Homeware & furniture and cosmetics both impacted by significant discounting in the market 17 TURNOVER: TENDER TYPE CONTRIBUTION March 2018 March 2017 % change % change ZAR Cash turnover , ,3 31,9 7,3 Credit turnover 9 744, ,4 5,3 5,3 Total , ,7 21,4 6,3 March 2018 March 2017 March 2018 March 2017 Cash turnover contribution 65,9% 60,7% 51,5% 51,1% Credit turnover contribution 34,1% 39,3% 48,5% 48,9% TFG London and TFG Australia cash turnover only TFG Africa cash turnover growth coming off a high base (March 2017: 14,1%) Credit turnover growth driven in part by growth in active account base 18 9

12 FINANCIAL REVIEW FY 2018: FINANCIAL HIGHLIGHTS Strong H2 performance Positive performance from acquisitions Further improvement in free cash flow Like-for-like expense control Strong 2 nd half performance across the Group Turnover growth H1 H2 TFG Africa (ZAR) 5,0% 7,6% Acquisitions are performing ahead of management s expectation Positive contribution to current year bottom line earnings Free cash flow increased by 44,8% - 77,2% of profit for the year TFG Africa stock growth contained to 3,3% Like for like expense control 5,1% TFG London (GBP) (excl Hobbs acquisition) 4,1% 4,4% 17% contribution to Group EBITDA 20 10

13 INCOME STATEMENT HIGHLIGHTS March 2018 March 2017 % change Revenue , ,6 19,4 Retail turnover , ,7 21,4 Gross margin (%) 52,5 49,7 Total trading expenses , ,2 28,1 Net bad debt 837,5 896,1 (6,5) Operating margin (%) 14,6 16,2 Headline earnings growth (excl acquisition costs) (%) 9,6 6,8 HEPS (excl acquisition costs) (cents) 1 136, ,2 3,4 21 REVENUE March 2018 March 2017 % change TFG AFRICA % change ZAR Retail turnover , ,7 21,4 6,3 Interest income 1 755, ,9 1,1 1,1 Other revenue 1 187, ,0 5,3 5,3 Total , ,6 19,4 5,9 Retail turnover +21,4% refer previous slides Interest income Two interest rate cuts in South Africa during the current financial year (July 2017 and March 2018) no interest rate movements in prior financial year Gross book growth of 5,5% (March 2017: +2,9%) Other revenue Growth of 5,3% (March 2017: + 2,0%) despite tough economic environment and Affordability Regulations constraining new account growth 22 11

14 GROSS PROFIT March 2018 March 2017 % change TFG AFRICA % change ZAR Gross profit , ,5 28,2 9,5 Gross margin (%) 52,5 49,7 Improved performance of Group gross margin at 52,5% (March 2017: 49,7%) TFG Africa Gross margin increased to 47,8% (March 2017: 46,4%) Improved gross margin across all merchandise categories with the exception of cosmetics Merchandise price deflation of 3,5% (clothing merchandise price deflation of 3,8%) TFG London Gross margin 61,9% (March 2017: 63,0%) Slightly down, reflective of trading conditions as well as shift to online TFG Australia Gross margin 65,5% 23 TRADING EXPENSES March 2018 March 2017 % change % change ZAR Depreciation and amortisation (745,5) (540,3) 38,0 16,6 Employee costs (4 948,0) (3 669,8) 34,8 10,3 Occupancy costs (3 411,5) (2 431,8) 40,3 11,3 Other net operating costs (3 836,5) (3 219,2) 19,2 9,4 Trading expenses before net bad debt (12 941,5) (9 861,1) 31,2 10,7 Net bad debt (837,5) (896,1) (6,5) (6,5) Total trading expenses (13 779,0) (10 757,2) 28,1 8,8 Group includes non-comparable TFG Australia and TFG London (Hobbs) expenses Depreciation and amortisation: 3,1% movement excluding impact of useful life change in FY 2016 Occupancy costs Normal lease escalations on renewals average 5,8% (prev 7,2%) Rent reversion average -2,5% (March 2017: +4,0%) 5,5% non-comp enlargements and net new stores Employee costs Annual salary and promotional increase approx 7,5% Continued investment in e-commerce, analytics and forensics continued Employee costs continued Minimum ZAR increase for Bargaining Unit employees resulted in an increase of just under 10% for many of our lower paid employees which drove the above inflationary increase Other costs focus on cost control continued Branch level comp expense growth well contained at 4,2% (March 2017: 5,6%) Increased marketing and promotional spend including Black Friday required to drive turnover in tough retail market Excluding additional marketing investment and non-comparable stores expense growth of 5,1% 24 12

15 WORKING CAPITAL MANAGEMENT March 2018 March 2017 % change TFG AFRICA % change ZAR Trade receivables 7 573, ,7 8,2 8,2 Other receivables 1 118, ,1 10,0 3,7 Stock 6 773, ,2 22,9 3, , ,0 14,3 6,1 Trade and other payables (3 608,2) (2 751,3) 31,1 9, , ,7 10,0 5,4 Strong credit turnover growth of 5,3% (March 2017: +2,3%) supported growth in net debtors book of 8,2% (March 2017: +4,6%) Stock levels well controlled 25 BORROWINGS March 2018 March 2017 Interest-bearing debt 9 350, ,2 Less: cash (1 206,1) (878,5) Net borrowings Group 8 144, ,7 Less: TFG Australia net borrowings (non-recourse) (99,0) 130,5 Less: TFG London net borrowings (non-recourse) (800,4) (1 368,2) TFG Africa borrowings 7 245, ,0 TFG Africa (recourse debt) gearing 54,6% 53,6% Group gearing 61,4% 65,3% Overall improvement in Group gearing due to capital raise and strong cash generation TFG London net debt down due to repayment Consolidated level of finance cost remain within management s expectation 26 13

16 FREE CASH FLOW March 2018 March 2017 % change Operating profit before acquisition costs and finance costs (EBIT) 4 165, ,2 Add back: depreciation and amortisation 745,5 540,3 EBITDA 4 911, ,5 12,9 Less: taxation* (1 157,6) (1 012,7) Operating profit before depreciation and amortisation after taxation 3 753, ,8 Less: capex (896,6) (883 5) Less: working capital cash movement (976,3) (1 156,5) (15,6) Free cash flow 1 880, ,8 44,8 * Effective tax rate used Free cash flow increased by 44,8% 77,2% of profit for the year 27 CAPEX March 2018 March 2017 TFG Africa 652,8 742,7 - Stores 389,7 438,9 - IT 196,9 222,8 - Other 66,2 81,0 TFG London 122,6 140,8 TFG Australia 121,2 896,6 883,5 Excluding non-comparable TFG Australia, capex down by 12,2% Store capex: 146 new TFG Africa outlets vs 206 new outlets in the prior year Mall expansion / revamp such as Mall of Africa, Eastgate, Menlyn in the base Tight control over build rates IT capex cyclical based on major developments Other: Prior period included costs related to Caledon factory Capex of R5,0 million invested in sustainable water-saving and water-efficiency initiatives 28 14

17 TFG FINANCIAL SERVICES TFG FINANCIAL SERVICES: INDUSTRY REVIEW - The TransUnion SA Consumer Credit Index (CCI) declined marginally in the fourth quarter 2017 to 53,4 from 53,7 in the third quarter Credit health has improved since 2016 mainly due to tighter lending standards, relatively soft inflation and stable-to-lower interest rates - Household cash flow declined by 0,8% year on year in Q Tax increases, such as the increase in the rate of VAT and the fuel levy, will place added pressure on households, but relief comes in the form of lower food price inflation, rand appreciation and potential interest rate cuts by the Reserve Bank 30 15

18 TFG FINANCIAL SERVICES: CREDIT PERFORMANCE March 2018 March 2017 % change Income 2 072, ,3 1,8 Net bad debt (837,5) (896,1) (6,5) Credit costs (578,4) (567,3) 2,0 EBIT 656,1 571,9 14,7 Income growth of 1,8% (March 2017: +11,7%) Flat rate environment during the 2017 FY, but 25 bps repo rate cuts during July 2017 and March 2018 Recovery of credit turnover has resulted in gross book growth of 5,5% (March 2017: +2,9%) Net bad debt decreased further by 6,5% (March 2017: -5,4%) Growth in bad debt write off slows to 2,9% (March 2017: +10,2%) Strong recoveries growth at 10,6% (March 2017: +18,7%) Improved book construct necessitates a lower impairment charge Credit costs increased by only 2,0% (March 2017: +2,2%) whilst increasing analytical investment and in spite of additional costs to comply with Affordability Regulations Collection costs reduced by a further 9,6% (March 2017: -9,2%) Mailing costs reduced by 5,6% (March 2017: -16,7%) due to increased use of electronic media 31 TFG FINANCIAL SERVICES: CREDIT BOOK Key indicators March 2018 March 2017 % change Number of active accounts ( 000) 2 450, ,8 1,1 Credit turnover 9 744, ,3 Credit turnover as a % of total retail turnover (TFG Africa only) 48,5 48,9 Active accounts increase by 1,1% (March 2017: -5,4%) due to an increase in new accounts activated as a result of higher demand and improved accept rates Positive active account growth resulted in an increase in credit turnover growth to 5,3% (March 2017: +2,3%) 1 st half growth: 6,2% (1 st half March 2017 financial year: +1,4%) 2 nd half growth: 4,5% (2 nd half March 2017 financial year: +3,3%) Credit turnover as a % of total turnover in line with strategic objectives 32 16

19 TFG FINANCIAL SERVICES: CREDIT STATISTICS Key debtors statistics March 2018 March 2017 Net debtors book 7 573, ,7 Overdue values % to debtors book 12,4 13,9 % able to purchase 83,0 81,8 Net bad debt write off as a % of credit transactions 7,9 8,2 Net bad debt write off as a % of debtors book 13,2 13,9 Net bad debt as a % of debtors book 10,0 11,3 Doubtful debt provision as a % of debtors book 9,5 11,8 Strong turnover growth and improved provision level results in net debtors book growth for the year improving to 8,2% (March 2017: +4,6%) Overdue values as a % to debtors book continue to decline reflecting improved book quality Increased ratio of customers able to purchase reflect improved delinquencies Net bad debt write off and net bad debt as % of debtors book improve as bad debt growth decrease below book growth, coupled with strong recovery yields requires a lower level of provisioning 33 TFG FINANCIAL SERVICES: VALUE ADDED SERVICES March 2018 March 2017 % change Insurance net income 212,5 196,0 8,4 Publishing net income 181,0 180,6 0,2 Mobile one2one airtime net income 66,2 67,4 (1,8) EBIT 459,7 444,0 3,5 Number of new product / service launches 3 4 Insurance income Expansion of existing products to include spouse and family options has strengthened our customer propositions Optimisation of resource allocation in our sales channels delivering good returns Publishing income TFG remains the largest monthly magazine publisher in South Africa Increased the number of titles sold in selected retail stores Value Magazine was successfully launched increasing total publications to 16 One2one Fierce market competition, coupled with low margins has made the environment challenging 34 17

20 TFG FINANCIAL SERVICES: REGULATION REGULATION UPDATE Affordability Court Case The favourable court ruling on the 16th of March removed the onerous requirement for credit applicants to provide documented proof of income when applying for credit The NCR have recently released Affordability Guidelines requesting that credit providers collect documented proof of income. Credit Providers are asked to submit comments on these Guidelines by 31 st May Debt Intervention Expectations are that the Debt Intervention legislation will be finalised imminently and no clarification provided if it will be circulated for public comment Difficult to assess the impact of this legislation until it is published 35 TFG FINANCIAL SERVICES: STRATEGY FOCUS APPROACH Customer acquisition Increase in active account base through acquisition and targeted reactivation strategies Leverage data science to improve customer experience Continual focus on growth of cash rewards base in order to increase the % of trackable transactions Increase the number of new-to-group customers to our e-commerce sites Collect Data : Further optimisation of the TFG Rewards program will enable us to collect valuable customer data in order to deepen our customer insights Connect Data : Single view of customer project well underway to ensure all customer information is able to be leveraged across all consumer touchpoints Use Data : Personalised and relevant customer engagement strategies will help us to attract, grow and retain customers in line with each brand strategy Analyse Data : Deep analysis of customer behaviour to assist Retail Divisions Accounting and reporting Preparatory work for the implementation of IFRS 9 well advanced Impact of Debt Intervention legislation on provision requirements to be assessed 36 18

21 TFG LONDON TFG LONDON IS BUILDING A PORTFOLIO OF HIGH QUALITY BRANDS SALES BY CHANNEL SALES BY REGION Wholesale / Other ROW Premium British brand with a global following. Dedicated to dressing women of all ages, for all occasions, in high quality and versatile clothing. Well-known for modern florals, exclusive designs and contemporary details. Concessions Online Stores Europe UK Wholesale / Other Europe ROW British contemporary fashion brand. Loved for its confident, modern attitude to style and its curated edit of both casual and occasionwear. Great designs that are modern, effortless and accessible. Concessions Online Stores UK Wholesale / Other Europe ROW Affordable luxury brand with impeccable British heritage in tailoring and smart daywear. Provides wardrobe solutions to smart and busy women with a focus on luxurious fabrics and quality craftsmanship. Delivers collections with timeless style. Concessions Online Stores UK 38 19

22 TFG LONDON IS FOCUSED ON DELIVERING THE ONLINE OPPORTUNITY SALES EVOLUTION¹ (GBPm) 103 SPLIT BETWEEN OWN SITE AND OTHER/MARKETPLACE SITES Partner websites Own Sites Collect from store introduced Launch of Inno, Manor, De Bijenkorf and Breuninger Single stock pool project completed Bloomingdales online launched Studio 8 launched online in the UK, Germany and the Netherlands Whistles acquired (Mar 16) Current Director of Marketing & Online Trading appointed Launched segmented marketing to online database via Adobe Campaign Manager Launched personal styling online booking Hobbs acquired Hudson Bay: partner launch Focus on database growth through e-receipt capture New shipping options launched (e.g. weekend delivery) E-commerce has scaled in recent years to form a key part of TFG London s multi-channel strategy Note: 1. Refers to actual numbers per financial year 2. Partner websites include House of Fraser, John Lewis Partnership, Debenhams, Next and Amazon 3. January year end until FY 15, 14 mth period to March 2016, and March year ends thereafter 39 INTERNATIONAL AN INCREASINGLY MATERIAL CONTRIBUTOR TO SALES SALES EVOLUTION¹ (GBPm) SPLIT BETWEEN EUROPE AND REST OF WORLD ROW Europe Opened Hong Kong IFC pop-up Entered Mexico with 4 concessions in El Palacio del Hierro Launched in Singapore Launched further concessions in Netherlands and Germany Launched wholesale in US Grew Mexico to 12 concessions Further rollout in Hong Kong and Singapore Whistles acquired with nascent US department store business Entered Japan Launched in Spain with El Corte Ingles Further rollout in Germany across multiple fascias Launched Whistles in Hong Kong Hobbs acquisition and expansion of US presence Launch with Hudson Bay in Canada Wholesale entry to Russia Launch of Whistles in Middle East and SE Asia Further rollout in USA, Germany and Japan International has been and will continue to be a key engine of growth for TFG London as we leverage deep existing international Phase Eight department store relationships Note: 1. Refers to actual numbers per financial year 2. January year end until FY 15, 14 mth period to March 2016, and March year ends thereafter 40 20

23 TFG LONDON IS WELL POSITIONED FOR SUSTAINABLE GROWTH TFG London operates a retail model focused on sustainable growth where costs are substantially flexed with sales Retail sales are predominantly generated Online (33%) and through turnover rent based concessions (35%) TRADING MODEL & MANAGEMENT Staffing costs increasingly flexed with sales, and further enhanced through the introduction of Shared Staffing Physical store estate benefits from short average lease lengths Clothing and accessories sourced on a test and repeat model, with c.45% near sourcing in Europe and Turkey Incumbent management have a strong track record, and have been retained in the business since acquisition in January 2015 TFG London s brands are outperforming the broader market through the delivery of a true omni-channel proposition Online represents 33% of TFG London brand sales, versus 17% on the acquisition of Phase Eight in January 2015 E-COMMERCE Delivery of OneStock project has provided full enterprise availability to online and offline channels The focus remains on delivering sustainable growth across own and third party channels to market New online partners and marketplace launches Increased focus on international online sales (+250% since January 2015) The market potential remains significant for our brand portfolio, building on the profitable platform that has been established International grown by 112% since January 2015 (59% excluding acquired brands) INTERNATIONAL Focus is now on growing Key Markets where we can achieve scale through our brand portfolio TFG London s international model mimics the successful retail approach designed in the UK International operating profitability continues to grow across all brands at limited capex risk Significant growth opportunity for Hobbs and Whistles 41 TFG LONDON IS WELL POSITIONED FOR SUSTAINABLE GROWTH (CONTINUED) BRAND DEVELOPMENT / ACQUISITION TFG London has developed a strong track record in the identification, acquisition and management of new brands TFG London is confident of successfully embedding its operating model and strategic relationships into both Whistles and Hobbs Our focus is on leveraging central functions to deliver sustainable and scalable profitability and to build the TFG London platform Consolidated back office functions including Finance, Logistics, Legal, Property and Procurement in place by YE 2019 MARKET SHARE GROWTH Market conditions continue to be challenging in the UK, which creates opportunity for market share growth Jacques Vert Group and EAST entered administration in April/May 2018 Landlords and department store partners are actively proposing new stores and concessions on favourable terms The Group are trialling mat extensions in selected locations to drive share of floor spend 42 21

24 TFG AUSTRALIA CONTENT #1 #2 #3 Business Overview Current Performance Strategic Focus & Next Steps 44 22

25 RAG IS AMONGST AUSTRALIA S BEST PERFORMING RETAILERS Sales +14%(8 mths) 5 Specialty Brands Stores years of continuous growth Omni-Channel Targeted Product strategy 45 RAG IS 5 SPECIALTY BRANDS A leading mid-market, on-trend menswear brand A leading mid-market, fashionable menswear brand One of the fastest growing value, on-trend menswear brands The only known mono brand mid-market, on-trend big and tall menswear retailer Differentiated value, on-trend women s athleisurewear 46 23

26 FOCUSED ON FASHIONABLE MID-MARKET & VALUE SEGMENTS Fashion Saba H&M Zara Topshop Ben Sherman Marcs MJ Bale Politix Calibre Herringbone Factorie Country Road Trenery Oxford Uniqlo Witchery Sportscraft Jay Jays Cotton On Jeans West Ron Bennett GAP Price Just Jeans Fletcher Jones Ed Harry Department stores Discount department stores Lowes GAZMAN Rodd & Gunn Menswear Only Menswear and Womenswear 47 Typical customer: He wants to look smart and up to date without standing out from the crowd He is often shopping for dressy attire or an occasion year old males Product positioning: Smart casual, on-trend sharp designs Stores (Mar-18) 116 Price point Mid-market 48 24

27 ` Typical customer: He has an urban, fast-paced lifestyle and is usually shopping for a night out or an occasion where he likes to stand out Fashion conscious year old males Product positioning: Fashionable mid-market menswear for going out Stores (Mar-18) 100 Price point Mid-market 49 Typical customer: He wants to look good when going out and he appreciates value Average Australian year old males Product positioning: Affordable on-trend menswear Stores (Mar-18) 145 Price point Value 50 25

28 Typical customer: He is the previously underserved bigger, broader, and taller man who wants to look good when he goes out He is willing to spend more per unit and buys more units per transaction year old males requiring large sizes Product positioning: One-stop-shop for the big and tall Australian male Stores (Mar-18) 38 Price point Mid-market 51 Typical customer: She wears fashionable, high performance athleisurewear at a great price Active year old females Product positioning: Athleisure with a focus on value but with high performance technical fabrics Stores (Mar-18) 32 Price point Value 52 26

29 CONTENT #1 #2 #3 Business Overview Current Performance Strategic Focus & Next Steps 53 CONTINUED PHYSICAL STORE ROLLOUT STRATEGY : 31 Net New stores Acquired Created expansions 431 stores Acquired Store Numbers 200 First store opens Founded Founded Founded Note: 1. Store numbers pre 2004 are indicative 2. Store numbers exclude online stores, temporary stores and Rockwear stores identified for closure on acquisition 54 27

30 DRIVEN INVESTMENT IN DIGITAL CHANNELS 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 April May June July August September October November December January February March Sales 8,724,597 9,070,146 9,420,309 10,026,152 10,263,402 10,774,575 11,319,731 11,889,293 12,462,912 13,104,144 13,698,310 14,243,761 % of RAG 2.4% 2.5% 2.5% 2.6% 2.7% 2.8% 2.9% 3.0% 3.1% 3.2% 3.3% 3.4% 3.6% 3.4% 3.2% 3.0% 2.8% 2.6% 2.4% 2.2% 2.0% +65% growth in Digital revenues Steady growth as a % of Group Sales 55 ACQUISITION REVIEW Information above is based on management accounts

31 ACQUISITION REVIEW Information above is based on management accounts. 56 CONTENT #1 #2 #3 Business Overview Current Performance Strategic Focus & Next Steps 57 29

32 RAG LONG TERM STRATEGIC GOALS STORES Maximise store portfolio in Australia & New Zealand GROWTH BRANDS CUSTOMER STORES Continue to add Growth Brands to the portfolio Uniqueness of Brands maintained at all times Target unique markets Increase store sizes as opportunity evolves DIGITAL Double % Growth and investment in Digital Channels LEVERAGE Shared Services managed as a strategically efficient standardisation OPTIMUM Store Optimisation testing of the optimal store COSTS CHURN Churn low profitability stores INVEST Invest for scalability and leverage COSTS Cost Management key metrics maintained % wages % rent % Mkt % 58 STORE FOOTPRINT. STRATEGIC GROWTH TARGETS Store roll-out ~ ~120 FY2017 FY2018 FY2019 B Target stores Tarocash yd. Connor Johnny Bigg Rockwear TFG Africa brand 59 30

33 OUTLOOK OUTLOOK Cautiously positive around SA outlook Credit outlook more positive given recent court ruling however uncertainty around future legislation Gross margin to be maintained Product price deflation anticipated at similar levels to last year Ongoing focus on our existing key strategic initiatives Superior customer experiences Cost control Working capital management Capital optimisation Additional focus - strategic investment in digital transformation TFG LONDON Continuing uncertainty around Brexit Building TFG London platform Back office integration Continued implementation of business model into Whistles and Hobbs 61 31

34 OUTLOOK (CONTINUED) TFG AUSTRALIA Outlook remains stable Continued strong growth Test launch TFG Africa brand Continuing store roll out of existing brands Gross margin to be expanded Retail turnover for first 7 weeks: TFG Australia and TFG London ahead of management expectation. TFG Africa experienced volatile trading in first 7 weeks largely driven by move of Easter, shift in school holidays and introduction of VAT increase. Despite these factors, turnover is in line with management s expectation. 62 THANK YOU 32

35 DISCLAIMER THIS ANNOUNCEMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE FOSCHINI LIMITED AND ITS SUBSIDIARIES, WHICH BY THEIR NATURE INVOLVE RISK AND UNCERTAINTY BECAUSE THEY RELATE TO EVENTS AND DEPEND ON CIRCUMSTANCES THAT MAY OCCUR IN THE FUTURE. 64 APPENDICES 33

36 ECONOMIC SOURCES Operating context South Africa Latest period Comparative period CPI % y-o-y (March 2018 vs March 2017) 3,8 6,1 GDP (2017 y-o-y growth vs 2016 y-o-y growth) 1,3 0,6 FNB/BER Consumer Confidence Index (Q vs Q1 2017) RMB/BER Business Confidence Index (Q vs Q1 2017) Source: Stats SA, BER Operating context United Kingdom CPI % y-o-y (March 2018 vs March 2017) 2,5 2,3 GDP (2017 y-o-y growth vs 2016 y-o-y growth) 1,8 1,9 GfK Consumer Sentiment Barometer (March 2018 vs March 2017) -7-6 CBI Business Optimism Indicator (Q vs Q2 2017) -4 1 Source: Office for National Statistics, GfK, Tradingeconomics.com Operating context - Australia CPI % y-o-y (March 2018 vs March 2017) 1,9 2,1 GDP (2017 y-o-y growth vs 2016 y-o-y growth) 2,1 2,8 Westpac Melbourne Institute Index of Consumer Sentiment (y-o-y March 2018 vs March 2017) 3,2 0,6 NAB Business Confidence (March 2018 vs March 2017) 7 6 Source: Australian Bureau of Statistics, Westpac-Melbourne Institute, Tradingeconomics.com, National Australia Bank, Reserve Bank of Australia 66 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 people will always be guided by our values, social conscience and customer-centric mindset. VALUES TFG believes that teamwork coupled with professionalism in all aspects of retailing will continue to be the foundation for the future. PASSIONATE ABOUT SERVICE We passionately and truly believe that the customer comes first RESILIENCE We have the courage of our convictions and the boldness to constructively challenge INTEGRITY Our word is our honour, we are honest and ethical DIGNITY AND RESPECT We treat everyone the way we want to be treated EMPOWERMENT We embrace diversity and create equal opportunity for all in a supportive environment EXCELLENT PERFORMANCE We are accountable and drive performance in a creative and innovative way

37 FOOTPRINT OUTLETS IN 32 COUNTRIES: TFG Africa: 8 countries TFG International: 24 countries South Africa: outlets TFG London: 935 outlets Rest of Africa: 194 outlets in 7 countries TFG Australia: 447 outlets FOOTPRINT:

38 FOOTPRINT: TFG LONDON AND TFG AUSTRALIA North America USA Europe UK & Ireland Asia Japan Mexico Middle East Qatar United Arab Emirates Kuwait Bahrain Saudi Arabia Sweden Estonia Latvia Netherlands Belgium Germany Switzerland Spain Hong Kong Macau Malaysia Singapore Australasia Australia New Zealand Stores Concessions Total outlets TURNOVER: MERCHANDISE CATEGORY CONTRIBUTION Cellphones 6,7% Clothing & footwear - Value 9,0% Homeware & furniture 5,0% Jewellery 5,2% Cosmetics 3,8% 79,3% Clothing & footwear Clothing & footwear - Fashion 21,0% Clothing & footwear - Sport 19,6% Diversification across different merchandise categories strengthens the Group TFG International contribution increased to 29,7% (March 2017: 19,7%) Turnover contributions across other merchandise in comparison to prior year: Clothing & footwear 79,3% vs 74,6% Cellphones 6,7% vs 8,2% Jewellery 5,2% vs 6,3% Homeware & furniture 5,0% vs 6,1% Cosmetics 3,8% vs 4,8% Clothing & footwear TFG International 29,7%

39 Condensed consolidated statement of financial position March 2018 Reviewed Rm March 2017 Audited Rm ASSETS Non-current assets Property, plant and equipment 2 861, ,0 Goodwill and intangible assets 7 667, ,9 Deferred taxation asset 620,6 483, , ,5 Current assets Inventory 6 773, ,2 Trade receivables retail 7 573, ,7 Other receivables and prepayments 821,8 771,0 Concession receivables 296,8 246,1 Cash and cash equivalents 1 206,1 878, , ,5 Total assets , ,0 EQUITY AND LIABILITIES Equity attributable to equity holders of The Foschini Group Limited , ,3 Non-controlling interest 4,5 4,2 Total equity , ,5 LIABILITIES Non-current liabilities Interest-bearing debt 4 825, ,2 Put option liability 72,7 74,7 Cash-settled share incentive scheme 6,8 Operating lease liability 335,1 255,7 Deferred taxation liability 829,4 337,9 Post-retirement defined benefit plan 215,8 233, , ,4 Current liabilities Interest-bearing debt 4 524, ,0 Trade and other payables 3 608, ,3 Operating lease liability 30,7 15,2 Taxation payable 107,0 92, , ,1 Total liabilities , ,5 Total equity and liabilities , ,0 37

40 Condensed consolidated income statement Year ended 31 March 2018 Reviewed Rm Year ended 31 March 2017 Audited Rm % change Revenue , ,6 Retail turnover , ,7 21,4 Cost of turnover (13 591,9) (11 845,2) Gross profit , ,5 Interest income 1 755, ,9 Other income 1 187, ,0 Trading expenses (13 779,0) (10 757,2) Operating profit before acquisition costs and finance costs 4 165, ,2 9,3 Acquisition costs (79,4) Finance costs (696,6) (607,4) Profit before tax 3 389, ,8 Income tax expense (953,5) (851,3) Profit for the year 2 436, ,5 Attributable to: Equity holders of The Foschini Group Limited 2 434, ,4 Non-controlling interest 1,3 1,1 Profit for the year 2 436, ,5 Earnings per ordinary share (cents) Total Basic 1 082, ,0 (2,3) Diluted (basic) 1 072, ,6 (2,4) Earnings per ordinary share (excluding acquisition costs) (cents) Headline 1 136, ,2 3,4 Diluted (headline) 1 125, ,9 3,3 GREYMATTER & FINCH #

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