THE GROUP OVERCAME SEVERAL MACROECONOMIC HEADWINDS TO REPORT A STRONG ALL-ROUND PERFORMANCE IN THE POST-PANDEMIC TRADING ENVIRONMENT FOR THE 53 WEEKS TO 3 JULY 2022. EXPANDING GROSS AND OPERATING MARGINS AND TIGHT EXPENSE CONTROL CONTRIBUTED TO PROFIT BEFORE FINANCE COSTS AND TAX INCREASING 45.4% TO A RECORD R4.4 BILLION (2021: R3.0 BILLION).

The strong operational performance from both Truworths and Office, together with robust cash generation and prudent capital management, contributed to headline earnings per share (HEPS) increasing by 49.9% to 780 cents (52 weeks: increasing by 42.4% to 741 cents).

In the past year, the Group generated R3.9 billion in cash from operations, with R3.2 billion returned to shareholders in dividend payments of R1.6 billion and share buy-backs of R1.6 billion.

The annual cash dividend increased by 44.3% to 505 cents per share (2021: 350 cents), comprising an interim dividend of 300 cents and final dividend of 205 cents, with the dividend cover being maintained at 1.5 times.

It is pleasing that the Group has again achieved all six of its board-approved financial targets, with four of the targets being exceeded.

GROUP FINANCIAL AND OPERATING TARGETS

Financial targets are published to provide guidance to shareholders on the Group's financial performance objectives. Targets and performance are benchmarked against JSE-listed apparel retailers and leading global-listed fashion retailers. The targets are reviewed annually by the board, based on actual performance and the medium-term outlook.

		Actual  2022  (52 weeks)	Medium-    term    target#	Target achieved or exceeded	Local    benchmark@	Global    benchmark^
Gross margin	(%)	53.5	49 - 53	✓	44.6	55.0
Operating margin	(%)	24.1	16 - 21	✓	14.4	11.6
Return on equity	(%)	47	27 - 32	✓	22	12
Return on assets	(%)	31	20 - 25	✓	19	12
Inventory turn	(times)	4.5	3.5 - 4.5	✓	3.4	3.2
Asset turnover	(times)	1.3	0.9 - 1.3	✓	1.1	1.0

#	Medium-term targets as previously published in the 2021 Integrated Report.
@	The local benchmarks are based on the average ratios for comparable JSE-listed apparel retailers, being Mr Price Group and TFG, for the 2022 period.
^	The global benchmarks are based on the average ratios for listed global fashion retailers, being H&M and Inditex (owner of the Zara fashion chain), for the 2021 period.

The revised medium-term financial targets are set out below.

FACTORS IMPACTING FINANCIAL PERFORMANCE AND HOW WE RESPONDED

Civil unrest in KwaZulu-Natal and Gauteng	Truworths' response
The outbreak of civil unrest in KwaZulu-Natal and Gauteng in July 2021 caused extensive damage to 57 Group stores, resulting in stock losses, damage to property and equipment, and loss of profits. Trading in the region was impacted for an extended period while customers' access to stores to pay accounts was also restricted. The civil unrest also caused widespread disruption to the supply chain owing to damage to infrastructure and warehouse facilities, while also affecting road transportation for deliveries in the region.	At the height of the unrest, 160 Group stores were closed as a precautionary measure to ensure the safety of employees and customers. The Truworths operations team, together with external service providers, ensured that 51 of the 57 damaged stores were repaired and trading within six weeks of the civil unrest. The Group had adequate insurance to cover the losses arising from the unrest. Insurance claims for stock losses (R69 million) and damage to store fixtures (R50 million) have been settled in full and paid. The claim for business interruption has not yet been finalised, with R17 million of the insurance claim recognised as other income at period-end. Customers were encouraged to make account payments online or at stores further afield which were still trading.
Pressure on consumer spending in South Africa	Truworths' response
Consumer spending has come under increasing pressure from escalating fuel, electricity and food prices, together with rising interest rates, which could negatively affect sales growth.	Continued focus on cost containment to mitigate the impact of constrained top-line growth on profitability. Drove sales growth by launching new and expanded retail store concepts and brands. Expanded e-commerce offering to all brands. New credit products and account payment options being piloted. Negotiated store rentals on acceptable terms.
Electricity load shedding impacting retail trading	Truworths' response
Widespread electricity outages continued to have a significant impact on the trading performance of South African stores that do not have alternative power supplies.	Generators being connected to our stores in select major areas where the loss of sales impact is high. Ongoing engagement with landlords to install mall generators. Successfully piloted the installation of inverters as a solution for select smaller stores to continue to trade during load shedding.
High inflationary environment in UK impacting spending	Office's response
Inflationary pressures resulting from the rapid increases in fuel and energy costs and rising living expenses have contributed to a deteriorating consumer macro environment, with inflation reaching its highest level in four decades. Rising prices in the post-pandemic environment have been compounded by oil and gas supply disruptions following the outbreak of the war in Ukraine in February 2022.	Continued strong focus on cost containment. 'Buy now, pay later' payment option launched on the Office website. Own-brand range expanded to introduce wide-fit styles and new menswear product. Margin improvements because of better inventory management and larger contribution of made-to-order (MTO) product. New ranges to be introduced in the new financial year. Closed six under-performing stores and negotiated favourable, flexible lease renewals on several others.
Global supply chain disruption	Group response
The disruption of the global supply chain due to COVID-19 caused wide-scale port congestion and closures, container shortages and significantly increased sea freight costs. Supply chains have been further impacted by the war in the Ukraine in the second half of the financial year. These supply chain challenges have affected both Truworths and Office, with the late or non-delivery of goods negatively impacting stock availability and sales.	Merchandise teams increased shipping lead times to mitigate the impact of shipping delays and the late delivery of orders. Reduced dependency on imports from China in recent years and diversified countries of origin to include Bangladesh, Pakistan, India, Mauritius and Madagascar to reduce supply chain risk. Worked closely with South African local suppliers, particularly the exclusive design centres and cut-make-trim (CMT) partners, to provide funding and support to mitigate the financial challenges and to smooth seasonal peaks through early production planning. Integrated Truworths Design Department with Barrie Cline design capability and purchased Bonwit Design Centre to ultimately create an integrated design division across the broad spectrum of lifestyles designed by Truworths.

GROUP

STATEMENTS OF COMPREHENSIVE INCOME

Sale of merchandise

Group retail sales increased by 9.0% (52 weeks: 6.6%) to R18.5 billion from R17.0 billion reported in the prior period. Account sales comprised 52% (2021: 52%) of retail sales for the period. Account and cash sales increased by 8.7% (52 weeks: 6.1%) and 9.3% (52 weeks: 7.2%) respectively.

Group sale of merchandise, which comprises Group retail sales, together with wholesale sales and delivery fee income, less accounting adjustments, increased by 9.1% (52 weeks: 6.6%) to R17.9 billion.

Divisional sales	53 weeks to 3 Jul 22 Rm	52 weeks to 26 Jun 22 Rm	52 weeks to 27 Jun 21 Rm	Change on prior period 53 on 52 weeks %	Change on prior period 52 on 52 weeks %
Truworths Africa	13 986	13 668	13 015	7.5	5.0
Truworths ladieswear	4 974	4 861	4 676	6.4	4.0
Truworths menswear‡	3 645	3 557	3 438	6.0	3.5
Identity	2 287	2 233	2 117	8.0	5.5
Truworths Kids#	1 409	1 382	1 265	11.4	9.2
Other@	1 671	1 635	1 519	10.0	7.6
Office	4 536	4 445	3 980	14.0	11.7
Group retail sales	18 522	18 113	16 995	9.0	6.6
YDE agency sales	230	225	171	34.5	31.6

‡	Truworths Man, Uzzi, Daniel Hechter Mens and Fuel.
#	LTD Kids, Earthchild and Naartjie.
@	Cosmetics, Cellular, Truworths Jewellery, Office London (South Africa), Loads of Living and Sync.

Group trading space reduced by 0.3% (decrease of 0.2% in Truworths and 4.4% in Office) as a net 14 stores were closed across all brands. Truworths opened 15 stores and closed 23, while Office closed six, including two concession stores.

At the end of the period, the Group had 877 stores, including 11 concession outlets (2021: 891 stores, including 13 concession outlets).

Gross margin

The Group's gross margin expanded to 53.5% (2021: 51.0%). Truworths' gross margin increased to 56.7% (2021: 54.1%), mainly due to lower markdown activity. The gross margin in Office improved to 44.2% (2021: 41.5%), benefiting from lower markdowns due to improved stock control and an increase in contribution of higher margin merchandise.

Trading expenses

The Group continued to exercise rigorous expense control. Trading expenses for the current period increased by 2.4% to R6.6 billion and constituted 36.9% (2021: 39.4%) of sale of merchandise. Trading expenses were contained as a result of lower right-of-use asset impairments in the current period, foreign exchange losses in the prior period (compared to foreign exchange gains in the current period included in other income), business rates relief in Office (although lower than in the prior period) and further rent relief experienced by Office in the current period relating to COVID-19 lockdowns in the prior period.

An analysis of trading expenses is included in the Truworths and Office sections in this report.

Interest income

Interest income increased 3.5% to R789 million as a consequence of higher account sales and interest rates, countered to some extent by the improvement in the quality of the trade receivables portfolio resulting in lower interest earned on overdue accounts.

Trading profit

Group trading profit increased 59.5% to R3.6 billion, mainly as a result of the improved sales and gross margin performance. The trading margin increased to 20.2% (2021: 13.8%).

Profit before finance costs and tax

Group profit before finance costs and tax increased 45.4% to R4.4 billion (2021: R3.0 billion). The operating margin increased to 24.7% (2021: 18.5%).

The Group's results in the current period benefited from several once-off items, most notably the inclusion of an additional trading week. Excluding these once-off benefits, profit before finance costs and tax in the current period would have been R467 million lower than the reported number, although still 30.0% higher than the prior period. The details and impact of these once-off benefits are illustrated below:

Finance costs

Finance costs decreased by 19.5% to R235 million (2021: R292 million), mainly due to the repayment of a portion of the Group's borrowings in the prior period.

Earnings

Headline earnings per share (HEPS) increased 49.9% (52 weeks: 42.4%) to 779.8 cents while diluted HEPS grew by 49.2% (52 weeks: 41.7%) to 770.8 cents.

Basic earnings per share (EPS) and diluted basic EPS increased by 65.4% (52 weeks: 57.2%) to 794.1 cents and 64.4% (52 weeks: 56.5%) to 784.9 cents, respectively.

STATEMENTS OF FINANCIAL POSITION

Net asset value

The Group's financial position remains strong with the net asset value per share increasing 6.0% to 1 658 cents.

Right-of-use assets

Right-of-use assets increased by 18.1% due to new leases being entered into and the renewal of leases (options being exercised) since the prior period, together with a net impairment reversal in the current period.

Inventory

Inventories increased by 3.6% to R1 819 million (2021: R1 755 million) and the Group's inventory turn was consistent with the prior period at 4.6 times.

Gross inventory in Truworths increased 4.9% to R1 506 million (2021: R1 435 million) and the inventory turn decreased to 4.4 times (2021: 4.9 times). The decrease in inventory turn is mainly due to higher strategic fabric holdings and a lower markdown provision at the period-end. In Office, gross inventory decreased by 11.2% to £34.1 million (2021: £38.4 million) as the Group continues to optimise Office's inventory levels. Office's inventory turn increased to 4.8 times (2021: 3.8 times) in Sterling.

Net debt

Group net debt (excluding IFRS 16 lease liabilities) totalled R564 million at period-end compared to net cash of R577 million at the prior period-end.

CAPITAL MANAGEMENT

The Group generated R3.9 billion (2021: R4.1 billion) in cash from operations and this funded the following:

• Dividend payments of R1 646 million
• Share buy-backs of R1 588 million

The Group bought back 29.4 million shares during the period at an average price per share of R54.13. Since the inception of the share buy-back programme in 2002, 155 million shares have been repurchased at a total cost of R6 billion at an average price of R38.72 per share.

The cash realisation rate, which is a measure of how profits are converted into cash, was 80% for the current period (2021: 107%). The cash realisation rate was negatively impacted by the inclusion of a 53rd week in the 2022 trading calendar, which resulted in month-end creditors and tax payments being made before the financial period-end compared to after the period-end in the previous year thereby decreasing the cash inflow from operations. Excluding these, the cash realisation rate in the current period would have been approximately 93%.

The Group's net debt to equity ratio at the end of the current period was 9.2% (2021: net cash to equity ratio of 9.3%) and net debt to EBITDA was 0.1 times (2021: net cash to EBITDA of 0.1 times).

TRUWORTHS AND OFFICE BUSINESS SEGMENTS

Management measures the operating results of the Truworths and Office business segments separately for the purpose of resource allocation and performance assessment. Segmental performance is reported on an IFRS basis and evaluated with reference to revenue, gross margin, operating margin, EBITDA and profit after tax.

			Truworths  Rm	Office  Rm	Consolidation   entries   Rm	Group  Rm
SEGMENT REPORTING
2022
Total revenue			14 643	4 730	(33)	19 340
	Third party		14 610	4 730	–	19 340
	Inter–segment		33	–	(33)	–
Trading expenses			5 278	1 345	(16)	6 607
	Depreciation and amortisation		1 046	115	–	1 161
	Employment costs		1 806	471	(10)	2 267
	Occupancy costs		575	226	–	801
	Trade receivable costs		851	–	–	851
	Other operating costs		1 000	533	(6)	1 527
Interest income			806	–	(17)	789
Finance costs			207	45	(17)	235
Profit for the period			2 453	614	–	3 067
	Profit before tax		3 416	766	–	4 182
	Tax expense		(963)	(152)	–	(1 115)
EBITDA			4 669	926	(17)	5 578
Segment assets			12 316	2 137	(962)^	13 491
Segment liabilities			5 789	1 774	(178)^	7 385
Capital expenditure			325	20	–	345
Other segmental information
	Gross margin	(%)	56.7	44.2	–	53.5
	Trading margin	(%)	21.2	17.6	–	20.2
	Operating margin	(%)	27.3	17.6	–	24.7
	Inventory turn	(times)	4.4	4.9	–	4.6
	Account:cash sales mix	(%)	69:31	0:100	–	52:48

^	Elimination of investment in Office as well as inter-segment assets and liabilities.

			Truworths  Rm	Office   Rm	Consolidation   entries   Rm	Group  Rm
SEGMENT REPORTING
2021
Total revenue			13 449	4 108	(23)	17 534
	Third party		13 426	4 108	–	17 534
	Inter–segment		23	–	(23)	–
Trading expenses			4 927	1 535	(8)	6 454
	Depreciation and amortisation		1 014	215	–	1 229
	Employment costs		1 666	413	(6)	2 073
	Occupancy costs		527	155	–	682
	Trade receivable costs		768	–	–	768
	Other operating costs		952	752	(2)	1 702
Interest income			777	–	(15)	762
Finance costs			244	63	(15)	292
Profit for the period			1 863	93	–	1 956
	Profit before tax		2 615	131	–	2 746
	Tax expense		(752)	(38)	–	(790)
EBITDA			3 873	409	(15)	4 267
Segment assets			11 087	2 041	(607)^	12 521
Segment liabilities			4 221	2 262	(153)^	6 330
Capital expenditure			296	24	–	320
Other segmental information
	Gross margin	(%)	54.1	41.5	–	51.0
	Trading margin	(%)	16.8	4.8	–	13.8
	Operating margin	(%)	23.2	4.8	–	18.5
	Inventory turn	(times)	4.9	4.0	–	4.6
	Account:cash sales mix	(%)	68:32	0:100	–	52:48

^	Elimination of investment in Office as well as inter-segment assets and liabilities.

TRUWORTHS

This analysis covers the performance of Truworths, which operates in South Africa and in the rest of Africa, and includes YDE.

STATEMENTS OF COMPREHENSIVE INCOME

Sale of merchandise

Retail sales in Truworths increased by 7.5% (52 weeks: 5.0%) to R14.0 billion (2021: R13.0 billion), with account and cash sales increasing by 8.7% (52 weeks: 6.1%) and 4.9% (52 weeks: 2.8%), respectively.

Account sales comprised 69% (2021: 68%) of retail sales. Like-for-like store retail sales increased by 7.3% (52 weeks: 4.9%) with product deflation averaging 0.6% (2021: 1.4% product inflation).

Retail trading space decreased by 0.2% as Truworths opened 15 stores and closed 23.

The South African operations accounted for 96.7% (2021: 96.5%) of Truworths' retail sales, with the 31 (2021: 35) stores in the rest of Africa contributing the balance.

Trading densities grew by 7.1% (52 weeks: 4.7%) to R37 121 per m² (2021: R34 649 per m²).

Gross margin

The gross margin expanded from 54.1% to 56.7% owing mainly to lower markdown activity.

Trading expenses

	Jun 2022 Rm	Jun 2021 Rm	Change on prior period %
Depreciation and amortisation	1 046	1 014	3
Employment costs	1 806	1 666	8
Occupancy costs	575	527	9
Trade receivable costs	851	768	11
Other operating costs	1 000	952	5
Trading expenses	5 278	4 927	7

Trading expenses increased by 7% to R5.3 billion. Excluding foreign exchange losses, trading expenses increased by 10%. Trading expenses to sale of merchandise decreased to 39.8% from 39.9% in the prior period.

• Depreciation and amortisation increased by 3%. Excluding non-comparable stores, depreciation and amortisation of property, plant and equipment and software decreased 9%. Depreciation of the right-of-use assets increased by 4% due to an increase in the number of leases accounted for under IFRS 16 and the impact of impairment unwinding being lower in the current period.
• Employment costs increased by 8%. Excluding incentives and other non-comparable costs, employment costs increased by 6%.
• Occupancy costs, which comprise rentals not accounted for in terms of IFRS 16 as well as other occupancy costs, increased by 9% due to higher utility costs. Excluding non-comparable stores, rentals paid decreased by 2%.
• Trade receivable costs increased by 11%. The expected credit loss allowance decreased from 23.4% to 20.9% of gross trade receivables, however, gross trade receivables increased by 9%, resulting in a R26 million credit to the income statement (2021: credit of R403 million). Collection and other trade receivable costs decreased 2%. The total cost of accounts of R990 million exceeded total income from accounts (including notional interest) of R875 million by R115 million (2021: R79 million).
• Other operating costs, excluding foreign exchange losses and impairments in the current and prior periods, increased by 11%, mostly due to higher account acquisition costs and website (online) spend, operating costs associated with the new Oracle platform, and the normalising of other costs post COVID-19.

Interest income

Interest income increased by 4% to R806 million owing to higher account sales and interest rates. The South African benchmark repo rate was increased progressively from 3.50% in November 2021 to 4.75% at period-end.

Finance costs

Finance costs reduced by R36 million to R208 million (2021: R244 million) mainly due to the repayment of term loans in the prior period.

Trading profit

Trading profit increased by 35% (52 weeks: 27%) to R2 809 million (2021: R2 075 million). The trading margin increased from 19.5% to 21.2% (52 weeks: 20.3%), mainly due to higher sales and the strong gross margin performance.

Profit before finance costs and tax

Profit before finance costs and tax increased by 27% (52 weeks: 21%) to R3.6 billion (2021: R2.9 billion), with the operating margin increasing from 23.2% to 27.3% (52 weeks: 26.6%).

OFFICE

This analysis covers the financial performance of Office which operates primarily in the UK, with a presence in Germany and the Republic of Ireland.

STATEMENTS OF COMPREHENSIVE INCOME

Sale of merchandise

Sale of merchandise increased by 16.2% (52 weeks: 13.8%) to £228 million (2021: £196 million) for the period while retail sales increased by 16.6% (52 weeks: 14.2%) to £224 million (2021: £192 million), owing to improved trading conditions post the COVID-19 lockdown when stores were closed for 18 weeks in the prior period. Trading space decreased 4.4% following the closure of six stores, including two concession outlets.

Store retail sales recovered strongly and increased by 74% to £124 million. E-commerce retail sales declined by 17% to £100 million from the high base set in the prior lockdown-impacted period and accounted for 45% of total retail sales (2021: 63%), still higher than pre-pandemic levels.

The UK accounted for 93% of retail sales, Germany 3% and the Republic of Ireland 4%.

	Retail sales Jun 2022 53 weeks £m	Retail sales Jun 2022 52 weeks £m	Jun 2021 £m	Change on prior period 53 on 52 weeks %	Change on prior period 52 on 52 weeks %	Number   of stores   Jun 2022	Number   of stores   Jun 2021
United Kingdom	208.9	204.6	181.0	15	13	78	83
Germany	6.3	6.1	5.9	8	5	7	8
Republic of Ireland	9.1	9.0	5.5	66	64	7	7
Total	224.3	219.7	192.4	17	14	92^	98^

^	Including 11 concession stores (Jun 2021: 13 concession stores).

Gross margin

The gross margin strengthened to 44.2% (2021: 41.5%), owing mainly to lower markdowns due to improved stock control and a change in mix with an increase in contribution of higher margin merchandise.

Trading expenses

	Jun 2022 £m	Jun 2021 £m	Change  on prior  period  %
Depreciation and amortisation	5.7	10.4	(45)
Employment costs	23.3	20.0	17
Occupancy costs	11.2	7.5	49
Other operating costs	26.3	36.9	(29)
Trading expenses	66.5	74.8	(11)

• Depreciation and amortisation decreased 45% due to assets becoming fully depreciated and lower capital expenditure. The decrease in the right-of-use asset depreciation is due mainly to lease expiries and additional right-of-use asset impairments of £10.9 million recognised in the prior period.
• Employment costs increased 17%. Excluding once-off cost savings in the prior period due to COVID-19-related furlough grants, employment costs decreased 4% mainly due to a reduction in headcount arising from store closures and store operational efficiencies.
• Occupancy costs increased 49%. Excluding the business rates holiday granted in the UK and Ireland in both periods, occupancy costs decreased 10% due to store closures.
• Other operating costs decreased 29% due to a £10.9 million right-of-use asset impairment in the prior period compared to £0.4 million in the current period.

Profit before finance costs and tax

Profit before finance costs and tax increased by 351% (52 weeks: 334%) to £40.1 million (2021: £8.9 million) with the operating margin improving from 4.5% to 17.6% (52 weeks: 17.3%).

GROUP INFORMATION TECHNOLOGY

In order to satisfy the demand for limited and skilled IT resources we have enhanced our information systems operating model. Select areas of IT are now in-sourced from various local and offshore partners to assist with meeting the business' growing information systems requirements. This has proved to be successful in helping us advance our technology initiatives in a cost efficient manner and with added flexibility.

Capital expenditure of R74 million (2021: R90 million) was invested in leading edge information technology (IT) systems over the past year to support the retail operations and supply chain. The Group has committed R103 million for Truworths and Office IT capital expenditure for the 2023 reporting period.

MAJOR IT PROJECTS: TRUWORTHS

Completed in 2022 financial period:

• Implemented major cloud-based solutions:
  • New financial planning and analysis system
  • New e-commerce and customer experience solution as well as in-house fulfilment system to support these applications
  • Replaced the financial merchandising planning solutions used across all product categories
• Upgraded key systems to ensure functionality and technology remain current:
  • Customer portfolio management and scoring solution
  • Customer analytics platform
  • Financial and human capital management enterprise resource planning (ERP) system
  • Major upgrade to product lifecycle management system
• Released new credit facility solution
• Commissioned new data centre for disaster recovery and application testing and development

Planned for completion in 2023 financial period:

• Commence roll-out of the new point-of-sale application, fully integrated into the customer experience and e-commerce solutions for a highly functional and seamless omni-channel customer experience
• Further integrate the Barrie Cline and Bonwit design department operations into the Truworths IT environment and onto a common systems platform
• Implement the next phase of the financial planning solution, focusing on expense management, forecasting and reporting
• Migrate the existing Truworths data networks platform onto the latest software-defined network technologies, supporting all our data and digital telephony needs
• Continue to enhance cybersecurity strategies

MAJOR IT PROJECTS: OFFICE

Completed in 2022 financial period:

• Implemented advanced anti-virus and threat detection technology to further mitigate cyber risk
• Implemented new backup and disaster recovery solution to ensure business continuity in case of systems failures or cyber threats
• Completed system and vendor selection process for new ERP system, including merchandise management, warehousing, business intelligence and planning
• Mitigated the risk of ageing merchandise management system
• Implemented 'buy now, pay later' online payment option

Planned for completion in 2023 financial period:

• Implement resilient new wide area network across the business
• Select and implement new customer relationship management platform
• Continue to implement ERP system, with completion expected in the 2024 financial period

GROUP FINANCIAL PLANS FOR 2023

Capital expenditure of R817 million (Truworths R740 million and Office £3.9 million) has been committed for the 2023 financial period and will be applied mainly as follows:

• R431 million for the development of the new Truworths distribution facility
• R273 million for new stores and the expansion and refurbishment of existing stores
• R103 million for computer infrastructure and software

Trading space is planned to increase by approximately 2% in Truworths and decrease by approximately 4% in Office.

The trading outlook for Truworths and Office for the 2023 financial period is covered in the Review of 2022 and Outlook for 2023 and in the Chief Executive Officer's report.

GROUP MEDIUM-TERM FINANCIAL TARGETS

The Group's medium-term financial and operating targets have been reviewed, and in some cases revised, to reflect the Group's expected performance over the next three years. These revised targets set out below have been approved by the board.

	Medium-term targets	Previous medium-term targets
Gross margin (%)	49 – 53	49 – 53
Operating margin (%)	18 – 23	16 – 21
Return on equity (%)	31 – 36	27 – 32
Return on assets (%)	22 – 27	20 – 25
Inventory turn (times)	3.5 – 4.5	3.5 – 4.5
Asset turnover (times)	0.9 – 1.3	0.9 – 1.3

APPRECIATION

Thank you to our local and international shareholders for your interest and engagement over the past year. I also thank my fellow directors, our employees who have committed many additional hours during this reporting period, our service providers, and in particular acknowledge the sterling support of our Group finance team who constantly strive to achieve the highest standards of financial reporting.

Emanuel Cristaudo
Chief Financial Officer and Joint Deputy Chief Executive Officer