Agenda. Review of the period Financial review. Credit management Strategic focus areas Outlook. Group. Truworths. Office Retail Group

Transcription

1 GROUP INTERIM RESULTS for the 26 weeks ended 27 December 2015

2 Agenda Review of the period Financial review Group Truworths Office Retail Group Credit management Strategic focus areas Outlook 2

3 Review of the period

4 Review of the period Building a strong international retail base Commenced international expansion, outside Africa, with the acquisition of Office Retail Group in the UK. Diversified earnings and customer base, access to northern hemisphere markets, increased cash sales ratio. Strong performance from Truworths Merchandise ranges have been well received by customers since July 2015 resulting in higher sales growth and a stable gross margin. Credit environment appears to have stabilised after one of the longest credit contractions in many years. Earthchild and Naartjie successfully integrated into the business. The first kids emporium stores have had a promising start. 4

5 Office at a glance Leading fashion footwear retailer in UK, Republic of Ireland and Germany with sales of c. 271 million in FY2015 (ended January). Strong in-house brands and excellent relationships with third-party brands. Targets 16 to 25 year olds at mid-level price range. 162 stores and concessions. Opportunities for meaningful expansion in Germany and elsewhere in Europe. Highly efficient multi-channel distribution model. Online channel accounts for 20% of sales (expected to increase to 25% over the next two years), growing in excess of 25% on average over the past 3 years. Recent awards: One of a cluster of leading retailers in the IRUK Top report, which highlights the industry s foremost players in UK ecommerce and multichannel retailing. Ranked 12 th in the RetailWeek list of UK retailers by sales density. Healthy cash flow generation. 5

6 Office s outstanding track record of top line growth Double-digit CAGR in top line since 2011 Plans in place to improve growth and margins Continued growth from stores roll-out, e-commerce platform, as well as the expansion into Germany Office London opens as a concession in the shopping mecca Hyper First standalone Office store opens on the fashionable Kings Road Continued growth through the 1980s and 1990s is launched Expansion into Ireland European expansion begins with Germany m Revenue ( m) (Fiscal Year End) Number of Stores and Concessions (Calendar Year End) 6

7 Unique Office product offering: sports to formal, for men, women and kids Third-party brands In-house brands Select exclusives Breadth and depth of product range Nike Mango Sunset Toms Skull Print Adidas Stan Smith UGG Australia Petra Short Boots Converse Shearling Inside Timberland Wedge Sole Havaianas Slim Logo Metallic Solillas Solillas Sandals 7

8 Cross benefits between Truworths and Office Truworths will benefit from Office s knowledge and expertise in footwear fashion. Initial experimentation with some Office inspired styles looks promising. Opportunity to introduce Office products and brands into South Africa and other African markets. Truworths plans to launch an Office range on its e-commerce platform as well as a limited Office range in some Truworths stores during the 2017 calendar year. Office has an upmarket exposure in the UK through Offspring, its upmarket sports shoe chain. Truworths will benefit from Office s experience and leadership in online retail and multichannel approach. Truworths gains access to an expansion platform in Germany and ultimately into Europe. Office will benefit from the introduction of Truworths retail skills, retail IT systems and customer relationship management expertise. 8

9 Improved Truworths merchandise offering Focused on our DNA and well established merchandise strategy. Youthful focus, but not too edgy or fringe fashion. Aligned with international fashion, but with the South African customer in mind. Put detail and quality fabric back into our garments (slightly more expensive), and customers have responded positively. Getting the balance right across the ranges prints and plains, price points, fabric mixes. Continuing to build flexibility into our supply chain for quick response. Naartjie and Earthchild acquisitions together with LTD kids have made Truworths a significant force in the better-end kids market with exciting expansion potential outside SA. Resulted in improved sales and a stable gross margin in H

10 Stabilising credit metrics Credit market is stabilising. Credit metrics in the Truworths book have improved and are within targeted norms and are still improving against the industry. Truworths continues to gain market share. Doubtful debt allowance reduced to 12.8% at December 2015 from 13% at December There are leading indicators that the debtors allowance percentage may reduce in future and bad debt could continue to improve during the 2016 financial period. Group active account base growth of 5%. Gross trade receivables growth of 15%. 10

11 Financial review Group

12 Group Financial performance Incl. Office Dec 2015* Change on prior period % Excl. Office Dec 2015 Change on prior period % Dec 2014 Sale of merchandise (Rm) Gross margin (%) Operating margin (%) Diluted HEPS (cents) Dividend per share (DPS) (cents) Net asset value per share (cents) * Results to December 2015 include one month of Office Retail Group trading 12

13 Group HEPS and DPS HEPS / DPS (cents) Compound growth rates: HEPS: Dec: 5-year 11%, 3-year 7% Compound growth rates: DPS: Dec: 5-year 16%, 3 year 10% Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 DPS (cents) HEPS (cents) 13

14 Group Adjusted HEPS Dec 2015 Cents Dec 2014 Cents Change on prior period % HEPS Once-off Office acquisition costs Adjusted HEPS

15 Group Statements of financial position Incl. Office Dec 2015 Rm Excl. Office Dec 2015 Rm* Dec 2014 Rm Incl. Office - change on prior period % Excl. Office - change on prior period %* Non-current assets Cash and cash equivalents (31) Trade and other receivables Inventories Other current assets Total assets Total equity Non-current liabilities Current liabilities Total equity and liabilities * Prior to consolidating the financial position of Office, but including the Group s investment in Office 15

16 Capital management Gearing Gearing to fund operational requirements after acquisition of Office. Net debt to equity:» Group: 25%» Truworths: 11% (weighted interest rate JIBAR %)» Office: 33% (interest rate LIBOR %) Targeted Group net debt to equity ratio of 45% - 50% at June 2016, excluding the impact of a scrip dividend. Dividends Proposed dividend in the form of the issue of fully paid capitalisation shares in the company, to be made from the share premium account, and to the extent necessary the retained income of the company at a 4% discount to 3-day VWAP. Proposed interim dividend per share increased 14% to 270 cents (2014: 236 cents). Financial position Financial position remains strong with net asset value per share up 16% to cents. 16

17 Return on equity (ROE) and return on capital (ROC) (Prior to consolidating the results and financial position of Office) % Average: ROE: Dec: 5-year 42%, 3-year 41% Average: ROC: Dec: 5-year 60%, 3-year 57% Dec 2011* Dec 2012* Dec 2013* Dec 2014* Dec 2015* * Annualised ROE ROC 17

18 Return on assets and asset turnover (Prior to consolidating the results and financial position of Office and excluding the Group s investment in Office) Return on assets (%) 60 Average: Return on assets: Dec: 5-year 43%, 3-year 41% Average: Asset turnover: Dec: 5-year 1.3 times, 3-year 1.3 times Asset turnover (times) Dec 2011* Dec 2012* Dec 2013* Dec 2014* Dec 2015* 0.5 Return on assets (%) Asset turnover (times) * Annualised 18

19 Group Cash flows Rm (112) - (51) (713) (2 495) (211) EBITDA Working capital movement Interest received Dividends received Tax paid Finance costs Capex maintenance Free cash flow Dividends paid Capex expansion Net increase in interestbearing debt Net acquisition of business Other Net cash increase 19

20 Financial review Truworths

21 Truworths Financial overview Strong growth in sale of merchandise. Stable gross profit margin. Trade receivable costs improved as a percentage of credit sales. Strong cash generation. Continued investment for growth in stores, systems and the debtors book. 21

22 Truworths Financial performance Dec 2015 Change on prior period % Dec 2014 Sale of merchandise (Rm) Gross margin (%) Trading profit (Rm) Trading margin (%) Operating profit (Rm) Operating margin (%)

23 Truworths Three-year performance Dec 2015 change on prior period % Dec 2014 change on prior period % Dec 2013 change on prior period % Jun 2015 change on prior period % Sale of merchandise Gross profit Trade receivable costs Trading profit 20 (5) (4) (1) Operating profit 20 (1) - 3 Profit after tax 17 (1)

24 Truworths Retail sales growth analysis Retail sales Rm Retail sales growth % LFL store growth % Product Inflation % Unit growth: Comp stores % Unit growth: Non-comp stores % Dec Dec (1) 6 (7) 6 Dec (6) 6 Dec Dec (2) 5 24

25 Truworths Improving credit performance Dec 2015 (Incl. EC and Naartjie) % Dec 2015 (Excl. EC and Naartjie) % Dec 2014 % Dec 2013 % Dec 2012 % Retail sales growth Cash sales growth Credit sales growth Credit sales growth to customers with more than 24 month old accounts Credit sales growth to customers with less than 24 month old accounts (2) (3) 13 Gross trade receivables growth New account growth Acceptance rate

26 Truworths Divisional retail sales * Daniel Hechter, LTD and Earthaddict ** LTD Kids, Earthchild and Naartjie *** Cellular, Truworths Jewellery and Cosmetics Dec 2015 Rm Dec 2014 Rm Change on prior period (Incl. Earthchild and Naartjie) % Change on prior period (Excl. Earthchild and Naartjie) % Truworths ladieswear Truworths menswear Truworths designer emporium* Truworths kids emporium** Other*** Truworths emporium Identity Truworths retail sales YDE agency sales (1) (1) 26

27 Truworths Trading space Trading m Dec 2015 Dec 2014 Truworths Identity Uzzi 4 4 Earthchild and Earthaddict 3 - Naartjie 3 - Total excluding YDE YDE 7 7 Total Growth on prior period 6.5% 6.9% Growth excl. Earthchild and Naartjie 4.8% 27

28 Truworths Number of stores Dec 2015 Departments within stores Total Dec 2014 Departments within stores Truworths Identity Uzzi Earthchild and Earthaddict Truworths Man Naartjie YDE Daniel Hechter LTD Ginger Mary Total Total 28

29 Truworths Rest of Africa corporate stores Retail sales Dec 2015 Rm Retail sales Dec 2014 Rm Change on prior period % Number of stores Dec 2015 Number of stores Dec 2014 Namibia Botswana Swaziland Zambia Ghana Lesotho Mauritius Nigeria 5 7 (29)* 4 2 Kenya Total * The decline in Nigeria retail sales is due to regulatory limitations preventing the Group from importing merchandise into Nigeria 29

30 Truworths Sales densities trend R per m 2 Compound growth rates: Sales density: Dec: 5-year 3%, 3-year 1% 7% growth on prior period Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec

31 Truworths Gross profit trend Compound growth rates: Average: Gross profit (Rbn) Gross profit: Dec: 5-year 11%, 3-year 9% Gross margin: Dec: 5-year 56.2%, 3-year 55.6% Gross margin (%) Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Gross profit (Rbn) Gross margin (%) 10-31

32 Truworths Analysis of trading expenses Dec 2015 Rm Dec 2014 Rm Change on prior period % Depreciation and amortisation Employment costs Occupancy costs Trade receivable costs Other operating costs Trading expenses

33 Truworths Analysis of trading expenses (continued) Depreciation and amortisation (28% growth): Capital expenditure of R 256 million mainly due to store expansion, computer infrastructure and software purchases. Excluding noncomparable stores, depreciation increased 7%. Employment costs (30% growth): Excluding non-comparable store costs, comparable employment costs increased by 22%. The increase in employment costs is primarily the result of the acquisition of Earthchild and Naartjie and the additional costs of equalising flexi-staff benefits following the amendment of the Labour Relations Act. Occupancy costs (18% growth): A net 108 stores were opened and acquired from Dec 2014 to Dec 2015 with trading space growth of 6.5%. Excluding non-comparable store costs, occupancy costs increased 9%. Normal rental escalations averaged 7% during the period. Electricity cost increased by 16%. 33

34 Truworths Analysis of trading expenses (continued) Trade receivable costs (15% growth): Doubtful debt allowance reduced to 12.8% of gross trade receivables (Dec 2014: 13.0%, Jun 2015: 12.5%). Net bad debt as a percentage of gross trade receivables decreased to 12.1% (Dec 2014: 13.3%, Jun 2015: 12.5%). Interest income earned (including notional interest) on the debtors book during the period = R 542 million (Dec 2014: R 459 million). Net bad debts and associated costs = R 663 million (Dec 2014: R 578 million). Other operating costs (29% growth): Included are foreign exchange gains of R 110 million (Dec 2014: R 26 million gain) and once off Office deal fees (R 110 million*). Excluding the above, other operating costs increased by 19%. *This amount was on-charged to Office and therefore had no impact on the Truworths net results. (Refer to slide 44) 34

35 Truworths Operating profit performance Operating profit (Rbn) Compound growth rates: Operating profit: Dec: 5-year 9%, 3-year 7% Average: EBITDA margin: Dec: 5-year 36%, 3-year 34% Average: Operating margin: Dec: 5-year 34%, 3-year 33% Margins (%) Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Operating profit (Rbn) EBITDA margin (%) Operating margin (%) - 35

36 Truworths Inventory analysis Dec 2015 Rm Dec 2014 Rm Growth on prior period % Finished goods Goods in transit Add: fabric and work-in-progress (manufacturing) Total, excl. Earthchild and Naartjie Earthchild and Naartjie Total inventory

37 Truworths Capital expenditure Store renovations and development Computer infrastructure and software Actual spend for Dec 2015 Rm Actual spend for Dec 2014 Rm Planned spend for Jun 2016 Rm Actual spend for Jun 2015 Rm Head office refurbishment Motor vehicles Distribution facilities Land and buildings Trademarks* Total * Trademarks acquired through business combinations. Recognition of Office trademarks are subject to finalisation of the purchase price allocation 37

38 Financial review Office

39 Office Summary of acquisition Acquired 88.9% stake in Office for R 5.6 billion ( 256 million) on a 100% basis. Experienced, high quality management team owns remaining 11.1%. Truworths has the option to buy management s shares over a 3 to 5 year period after the acquisition. c. R 3.5 billion of cash from South Africa to pay for purchase and expenses. 80 million of term loans and 6 million drawdown against revolving credit facilities (total facility of 20 million) in the UK, to refinance existing Office net debt. Acquisition completed 4 December 2015 per IFRS 3 accounted for profits from 23 November 2015 (5-week December period). Access to northern hemisphere retail markets and opportunity to diversify Group s customer base and earnings. Approximately 35% of Group revenue will be generated outside SA. 39

40 Office Review of the financial period Dec 2015 (Excl. onceoff deal costs) Dec 2015 Dec 2015 R Sale of merchandise (m) Gross margin (%) Trading expenses (m) Operating profit (m) Operating margin (%) Earnings attributable to parent (m) Post acquisition trading in line with expectations. Office traded satisfactorily in the 5-week period from 23 November 2015 (from which date results have been consolidated), which included both Black Friday and Christmas trading. Once-off deal costs of 5.8 million (R million), before tax, were incurred in December (including R 110 million on-charge from Truworths). 40

41 Office Other financial information Sales by country Retail sales Dec 2015 m Number of stores Dec 2015 United Kingdom Germany Republic of Ireland Total Stock turn 2.4 times (annualised) 41

42 Credit management Truworths

43 Credit risk management Strong in-house analytics team, complemented by local and international outsource analytics partners. Over 50 predictive models used to manage credit portfolio scorecards, decision trees, logistic and linear regressions, profile models and action-effect sensitivity models. Combination of in-house built and outsource developed models. Maximum credit limit is allocated to customers based on their affordability, but actual credit limit is sometimes lower than maximum to allow customers to establish themselves as good payers. This applies particularly to first time credit applicants without credit experience elsewhere. No changes to credit policies and account management systems were made during the reporting period. Use contractual delinquency and behaviour scorecards to determine eligibility to buy. Assess credit limits within the portfolio monthly using a suite of predictive scorecards. The Group has experienced significant changes to the credit market in the past, sometimes caused by legislative changes, and these have been dealt with by following a systematic champion/challenge process. The launch of loyalty program later this year will enhance Truworths ability to manage the relationship with regular customers, get to know them better and offer them credit when appropriate. 43

44 Affordability National credit regulator published regulations on the assessment mechanisms and procedures to be followed when opening new accounts and increasing credit limits. Compliance with the regulations was dependent on 3 key factors: store assessment and collection of physical documentation, a sophisticated document management solution (DMS) and extensive credit system changes primarily to enable significant changes to affordability calculations and changes to scoring requirements. The systems and processes developed will see ongoing focus and improvement over the next financial period. Impact thus far has been a reduction in acceptance rate from 32% in the prior period to 29% in the current period. Given current trends we expect the 6 month moving acceptance rate to decline. Prior to the new affordability regulations, cash sales grew by 26% and credit sales by 18%. Subsequently cash sales continued to experience growth at 28% while credit sales grew by 13%, and approved new accounts declined compared to the prior period due to the onerous administrative burden to the customers introduced by the regulations. 44

45 Insurance and other charges Truworths offers credit in order to enable our regular customers to purchase our brands - Credit as an enabler. Truworths does not focus on maximising revenues from additional credit products such as insurance and other service fees; the focus is enabling customers to purchase fashionable merchandise. Truworths will not be changing this strategy in response to the affordability regulation. The only insurance product offered to customers as a service facility is account balance protection. Total revenue for the six-month period to Dec 2015 of R 34 million (Dec 2014: R 31 million). 45

46 Industry: TransUnion SA Consumer Credit Index (Source: TransUnion SA Consumer Credit Index) The index measures consumer credit health where 50.0 is the break-even level between improvement and deterioration. In 2014 Q4 the index edged over 50.0 (breakeven) for the first time since 2012 Q2 The index showed a marginal decline to 51.2 in 2015 Q3, down from a revised 53.6 in Q2. 46

47 Year-on-year change 4+ Cycle balances (Source: Principa Credit Compass) % Truworths maintains a positive trend against the industry which is showing a slight deterioration Y-on-Y % ChangeRetail Industry (excl. TW) Y-on-Y % Change TW Group 47

48 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Clothing Retail Share of Wallet (All Credit) (Source: Total Bureau Solution) 29 % Clothing retail gaining market share Share of wallet considers monthly instalments. Mortgages and vehicles are large credit commitments but paid off over a longer term so instalment is used instead of balance 48

49 L M K H I Industry G A F B Group1 Truworths Identity Truworths M L G F A K Group1 Industry B H I Truworths Truworths Identity Originating accounts limit by credit segment (Source: Principa Credit Compass) Credit aware Originating Accounts Limit by Credit 4000 lowest limits to credit aware 3000 Segment Truworths and Identity offer the customers 2000 Credit aware average limit assigned The average limit assigned is approximately half that of the industry average Credit unaware 3500 Credit unaware average limit assigned Truworths and Identity offer the lowest limits to credit unaware customers The average limit assigned is approximately half that of the 0 industry average 49

50 Key trade receivable statistics Dec 2015 Dec 2014 Number of active accounts (000's) Growth in active accounts (%) 5 2 Gross trade receivables (before doubtful debt allowance) (Rm) Growth in gross trade receivables (before doubtful debt allowance) (%) 15 8 Credit sales as a % of retail sales (%) Qualifying payment (%) Applicants granted credit (%)

51 Key trade receivable statistics (continued) Dec 2015 Dec 2014 Active account holders able to purchase at period-end (%) Overdue values as a % of gross trade receivables (%) Net bad debt as a % of credit sales* (%) Net bad debt as a % of gross trade receivables* (%) Doubtful debt allowance as a % of gross trade receivables (%) Trade receivable interest as a % of gross trade receivables* (%) * Annualised 51

52 Trade receivable costs vs. interest received Rm Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Trade receivable interest (Rm) Trade receivable costs (Rm) 52

53 Active accounts vs. acceptance rate Acceptance rate (%) No. of active accounts ('000) Impacted by new affordability regulations Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec Acceptance rate No of active accounts 53

54 Active account holders able to purchase 100 % Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Shoppable (%) Delinquent (%) 54

55 Interest-bearing book 90 % Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec

56 Strategic focus areas

57 Strategic focus areas Office growth plans Kidswear expansion E-commerce Supply chain Loyalty programme 57

58 Office growth plans and benefits Committed to growing Office in its core market and in Germany. Currently 74 of the top 150 UK retail destinations do not have standalone Office stores. Office believes at least 20 of these may be low hanging fruit. Open stores in Germany in next 2-3 years. Medium-term expansion into neighbouring European countries. Focus on growing higher margin Office in-house brands. Expand range to include accessories. Test Truworths outerwear on the Office website. Office expansion in SA through ecommerce and stores. Modelled EBITDA increase from the mid 30 s ( m) in 2016 (for an equivalent 12 month period) by an average of 5% - 7% per annum. 58

59 Kidswear expansion Full integration of Earthchild and Naartjie completed late Kids emporiums (including LTD Kids, Earthchild and Naartjie) unique in SA retail. All three are aspirational upmarket brands, yet with different profiles. First kids emporiums opened in October 2015 (Constantia and Zevenwacht) with a further five in November Plan to roll out 150 kidswear stores (both stand alone and emporium) over the next five years. Earthaddict, acquired together with Earthchild, fits well into the Truworths ladies designer emporium. Earthaddict has been included in 4 emporiums and will be added to others where appropriate. 59

60 E-commerce The Truworths website generates sales equivalent to a small store. The existing Naartjie, Earthchild and Earthaddict websites are currently fully functional and run successfully. An e-commerce project is underway which will dramatically improve all aspects of Truworths e-commerce business, including customer experience and order fulfilment, through use of a new, functionally rich e-commerce platform. Significant learnings from Office e-commerce expertise. The online product catalogue will ramp up to cover all of the latest fashion, and utilising sophisticated payment methods, more customers will be able to transact on the Truworths website. Created a roadmap for the next 18 to 24 months which covers the full e- commerce solution, including digital in-store experience, the inclusion of further Truworths brands as well as Office, and the implementation of seamless omni-channel functionality. 60

61 Supply chain Continue to achieve efficiency improvements of about 5% p.a. in the distribution centres. Naartjie, Earthchild and Earthaddict integrated into Truworths distribution network and processes. Project underway to significantly enlarge the current distribution centres to accommodate both growth and new distribution methods. Implementing a new warehouse management system in H The internal sourcing office is now Truworths largest supplier. Focus on quality and new sources of supply. 61

62 Loyalty programme Truworths has an ongoing structured relationship with the majority of our customers through our credit offering. From this relationship Truworths has a unique and deep understanding of our customer behaviour and preferences. Truworths plans to introduce a new loyalty rewards programme during the 2016 calendar year, which will allow us to understand the behaviour of all of our regular customers (both cash and credit). The aim of the program is to create a fashion-focussed mutually financially beneficial relationship with our customers, increasing their basket size and frequency of shopping in Truworths. 62

63 Outlook

64 Outlook Truworths The credit environment has stabilised despite the current tough economic environment. Confident that the winter merchandise ranges will appeal to customers as much as the previous summer range did. Product inflation anticipated to average between 8% and 10% in 2016 period but increasing to the low/mid teens thereafter. Trading space planned to grow approximately 4% in 2016 (including Earthchild and Naartjie). Retail sales (excluding Earthchild and Naartjie) for the first six weeks of H up 13% (17% including Earthchild and Naartjie). New legislative interest rate cap has an impact of R 32 million in lost interest in

65 Outlook (continued) Office Office provides an excellent opportunity to expand the Group s operations into the northern hemisphere. Retail sales for the first six weeks of H up 18% and 17% on a like-forlike basis (with some margin reduction), thereby significantly outperforming the UK market, with the British Retail Consortium reporting like-for-like sales growth of only 2.6% for January Trading space planned to grow approximately 5% in Focus on extracting benefits from Office acquisition. Capital management To provide for the possibility of another acquisition in 2017/2018 the Group s medium-term targeted net debt to equity ratio is 25%. It is estimated that this ratio could be achieved by the end of the 2017 reporting period through the offering of scrip dividends (with a cash dividend alternative). 65

66 Outlook (continued) Group Jun 2016 Targets New Group Jun 2016 Targets Previous Gross margin (%) Operating margin (%) Return on equity (%) Return on assets (%) Inventory turn (times) Asset turnover (times) Targets have been restated to take into account the impact of Office on the Group 66

67 Questions

68 Disclaimer This announcement contains certain forward-looking statements with respect to the financial condition and results of operations of Truworths International Limited and its group companies, which by their nature involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: global and national economic conditions; growth in trading space; interest rates; credit and the associated risks of lending; merchandise clearance rates; inventory levels and stock turn; gross and operating margins achieved; and competitive and regulatory factors. The Group does not undertake to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or otherwise. 68