RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 - PDF document

RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018

RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 AGENDA FINANCIAL HIGHLIGHTS Anthony Thunström GROUP OVERVIEW Anthony Thunström BUSINESS SEGMENT REVIEW Anthony Thunström � TFG Africa � TFG London Anthony Thunström Chief Executive Officer � TFG Australia TFG FINANCIAL SERVICES Jane Fisher OUTLOOK Anthony Thunström Jane Fisher Group Director RESULTS PRESENTATION 2 FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 TFG Results presentation September 2018 1 www.tfglimited.co.za

FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS Turnover growth Headline earnings Free cash flow @ +28,6% growth +14,3% 85% of net (excl acq costs +9,1%) profit Gross margin HEPS Debt equity ratio expansion to 53,6% growth +8,3% stable at (PY: 51,0%) (excl acq costs +3,4%) 63,9% RESULTS PRESENTATION 4 FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 2

REVIEW OF THE PERIOD CHANGES IN GROUP STRUCTURE Brand Effective date FY 2019 FY 2018 trading included trading included Hobbs 25 November 2017 6 months 0 months RAG 24 July 2017 6 months 2 months CHANGES IN E-COMMERCE 2 additional brands launched online selling (Donna and The FIX) 22 total number of brands available online 8% Group online turnover contribution to total turnover Business segment online turnover contribution to its turnover: TFG TFG TFG AFRICA LONDON AUSTRALIA 1% of turnover 30% of turnover 4% of turnover LEADERSHIP CHANGES � Bongiwe Ntuli appointed as Group CFO as from 14 January 2019 RESULTS PRESENTATION 5 FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 REVIEW OF THE PERIOD CONTINUED SIGNIFICANT ACCOUNTING CHANGES � IFRS 15 • Lay-by revenue previously accounted for on initiation of contract • IFRS 15 requires that the Group accounts for lay-by revenue once the contract is concluded and the goods handed over to the customer • Change applied fully retrospectively � IFRS 9 • Will be dealt with by Jane Fisher RESULTS PRESENTATION 6 FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 TFG Results presentation September 2018 3 www.tfglimited.co.za

GROUP OVERVIEW TURNOVER: MERCHANDISE CATEGORY CONTRIBUTION The Group’s performance is underpinned by the success of its diversification strategy which lessens the dependency on any specific merchandise category: 100% 3,3% Cosmetics 4,2% 90% 4,5% Jewellery 5,5% Homeware 80% 7,6% Cellphones 70% 17,7% Clothing - value 60% 20,0% Clothing - sport 50% 40% 37,2% Clothing – fashion 30% 20% 10% Clothing – international 0% Sept 2013 Sept 2014 Sept 2015 Sept 2016 Sept 2017 Sept 2018 RESULTS PRESENTATION 8 FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 4

TURNOVER: MERCHANDISE CATEGORY CONTRIBUTION CONTINUED TFG AFRICA GROUP TFG AFRICA % same store % change % change growth (ZAR) (ZAR) (ZAR) Clothing 36,1 11,2 7,2 Jewellery 2,7 2,7 1,0 Cellphones (2,6) (2,6) (4,2) Homeware & furniture 7,8 7,8 2,8 Cosmetics 1,0 1,0 - Total 28,6 8,4 4,8 � Strong TFG Africa turnover growth despite challenging start to the financial year • Clothing: very strong performance • Jewellery: improved performance against background of market contraction • Cellphones: strong volume growth in deflationary environment • Homeware & furniture: strong performance • Cosmetics: improved performance (Sept 2017: -1,9%) � TFG London (50,7% growth) and TFG Australia (170,7% growth) non-comparable RESULTS PRESENTATION 9 FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 TURNOVER: TENDER TYPE CONTRIBUTION � TFG London and TFG Australia cash sales Group only 18 000,0 � IFRS 15 change resulted in a c.4% lay-by 16 000,0 14 000,0 contribution shift from credit to cash for TFG 4 516,0 12 000,0 Africa 10 000,0 4 228,8 8 000,0 � In line with Group’s strategy, cash vs credit 6 000,0 11 397,1 4 000,0 8 148,7 split is well diversified 2 000,0 0,0 � Current year cash:credit Sept 2017 Sept 2018 Rm Rm – Group: 72:28 – TFG Africa: 55:45 Cash Credit � Prior year cash:credit (restated for IFRS 15) TFG Africa – Group: 66:34 – TFG Africa: 54:46 12 000,0 10 000,0 8 000,0 4 516,0 4 228,8 6 000,0 4 000,0 5 466,0 4 979,6 2 000,0 0,0 Sept 2017 Sept 2018 Rm Rm Cash Credit RESULTS PRESENTATION 10 FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 TFG Results presentation September 2018 5 www.tfglimited.co.za

WORKING CAPITAL MANAGEMENT GROUP GROUP TFG Sept 2018 March 2018 GROUP AFRICA (Rm) (Rm) % change % change Trade receivables 7 083,2 7 373,6 (3,9) (3,9) Other receivables 1 266,9 1 118,6 13,3 8,4 Inventory 7 609,5 6 900,6 10,3 8,0 15 959,6 15 392,8 3,7 1,4 Trade and other payables (4 376,2) (3 724,3) 17,5 12,1 11 583,4 11 668,5 (0,7) (1,0) � Trade receivables lower due to new additional IFRS 9 provisioning requirement � Inventory growth tracking turnover growth and in line with year-end targets � Trade and other payables growth in line with expectation RESULTS PRESENTATION 11 FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 BORROWINGS GROUP GROUP Sept 2018 March 2018 (Rm) (Rm) TFG Africa net borrowings (recourse) 7 879,4 7 245,1 TFG Australia net borrowings (non-recourse) 25,7 99,0 TFG London net borrowings (non-recourse) 750,1 800,4 Net borrowings Group 8 655,2 8 144,5 TFG Africa (recourse debt) gearing 58,2% 55,2% Group gearing 63,9% 62,0% � TFG Australia net borrowings A$2,5 million (March 2018: A$10,9 million) � TFG London net borrowings £41,7 million (March 2018: £48,2 million) � For comparability, March 2018 gearing adjusted for IFRS 9 = 64,6% RESULTS PRESENTATION 12 FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 6

FREE CASH FLOW GROUP GROUP GROUP Sept 2018 Sept 2017 March 2018 (Rm) (Rm) (Rm) 6 months 6 months 12 months Free cash flow 987,8 1 284,6 1 891,6 % of net profit 85,4% 127,6% 78,5% � Free cash flow conversion of 85,4% well above 10-year average and in line with expectation � Remains a key focus area RESULTS PRESENTATION 13 FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 CAPEX GROUP GROUP Sept 2018 Sept 2017 (Rm) (Rm) TFG Africa 285,3 293,0 - Stores 179,7 178,5 - IT 81,1 83,4 - Other 24,5 31,1 TFG London 58,0 56,7 TFG Australia 118,9 22,6 462,2 372,3 � Gross TFG Africa space growth (Sept vs. Sept) 5,0% � TFG London and TFG Australia not comparable due to prior year acquisitions • TFG London capex constrained due to continued online migration and tough retail conditions • TFG Australia opened 22 stores in line with management’s expectation � No major shifts in spend RESULTS PRESENTATION 14 FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 TFG Results presentation September 2018 7 www.tfglimited.co.za

BUSINESS SEGMENT REVIEW: TFG AFRICA TFG AFRICA: OPERATING CONTEXT Latest Comparative period period CPI % 4,9 5,1 GDP 0,5 0,9 FNB/BER consumer confidence index 22 -9 RMB/BER business confidence index 38 35 � Tough economic conditions and political uncertainty remains � The interest rate environment in South Africa remained stable during the financial period • Prior comparative period: 25bps decrease in July 2017 and in March 2018 � Impact of drought (in SA and other African countries) • Western Cape province had lowest comp store turnover growth during the period at 2% � Consumer under pressure • One percentage point increase in VAT rate since 1 April 2018 (RSA, Lesotho) and 1 August 2018 (Swaziland) • Continued fuel price increases Source: BER, Stats SA RESULTS PRESENTATION 16 FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2018 8