GOVERNANCE ADDING VALUE

The Group’s approach to corporate governance is to ensure it contributes to improved operational decision-making and corporate performance, thereby reducing the risk of failure. The Group’s aim therefore is for the relevant governance policies, structures and processes, which initially may have been brought into existence to ensure adherence to applicable regulation and codes of conduct, to add value, ensure corporate sustainability and enable the Group to take advantage of opportunities that present themselves.

Our corporate governance aim is achieved by:

Improved corporate performance arising from sound corporate governance has manifested itself in a number of ways in the Group over an extended period, including:

• diversity and independence of opinion in board decision-making, with the aim of ensuring sound outcomes;
• improved operational decision-making that takes into account the breadth of the perspectives expressed;
• maintenance of discipline and integrity in management’s reporting to the board;
• enhanced levels of accountability and transparency by management to the board;
• meaningful risk management processes and controls that are practically embedded in day-to-day operations and decision-making;
• better and more comprehensive integrated reporting of both financial and non-financial aspects to stakeholders;
• high levels of assurance regarding the reporting by management to shareholders; and
• achievement of an appropriate balance in meeting the expectations of the different stakeholders of the Group.

It is the view of the board that, in a demanding operating environment, the sound governance framework has served to mitigate against the erosion of value, and has in fact preserved value for the business and its stakeholders, in the form of lower risk, ongoing sustainability and resilience, reasonable consistency of financial performance, sound stakeholder relationships, high levels of legislative compliance and reputational integrity.

Board deliberations

OFFICE

A material matter considered and discussed by the board during prior reporting periods related to the performance of the Office segment, and the interventions planned by executive management to address the issues that had contributed to its disappointing levels of revenue and profitability. In the reporting period, the board monitored the successful implementation of these plans, and was pleased to note the material improvement in both its operational and financial performance. The matters monitored included:

• the effect of restructuring the Office segment’s borrowings and the provision by the Truworths segment of ongoing operational and financial support;
• further rationalising the store portfolio by reviewing leases and closing loss-making stores;
• the Office segment’s operational and capital expenditure and cash flow management so as to ensure alignment with the turnaround plan and medium-term strategic direction;
• further reviewing staffing levels in stores and head office and continuing a redundancy process;
• better aligning merchandise buying/planning processes with Truworths’ practices;
• improving the made-to-order (MTO) own-brand range thereby increasing the MTO contribution to revenue;
• aligning marketing and communication strategies, and strengthening relationships with international brands; and
• the performance of the new Managing Director and executive management team.

The board was most satisfied with the implementation of these action plans, and will continue to assess their effectiveness on an ongoing basis with a view to maintaining the business on a positive growth trajectory.

NON-EXECUTIVE DIRECTOR SUCCESSION

A further significant matter considered by the board is succession for long-serving non-executive directors. The board had embarked in recent years on a process of refreshing the non-executive component of the board in a systematic manner that will enable the Group to have continuity in terms of the important and ongoing contribution from long-standing directors, while newly appointed non-executive directors grow their knowledge of the Group and begin to influence board deliberations in a substantive manner.

Over the past 54 months, six new non-executive directors have been appointed to the board (while one, being Cindy Hess, has resigned) as part of this succession strategy and it is envisaged that, as they have been and are to be promoted to committee membership, long-serving non-executives will be retiring from the board.

Mike Thompson retired as a non-executive director and chairman of the Social and Ethics Committee on 1 September 2022. Mike made a valuable contribution to the Group over a period of more than 18 years, during which he also served as the chairman and as a member of the Audit Committee.

CEO AND SENIOR EXECUTIVE SUCCESSION

The succession for the CEO and senior executives has been an important consideration for the board during the period under review.

In light of the prospective retirement of Michael Mark as Group Chief Executive Officer, the board had in the 2020 year agreed a succession plan which was to be implemented in a structured and phased manner to ensure a smooth transition.

The transition process has gone very well and subsequent to the end of the period under review, the board has announced the appointment of Sarah Proudfoot and Emanuel (Mannie) Cristaudo as the Group’s Joint Deputy CEOs, with effect from 1 October 2022. The board feels confident that Sarah and Mannie, together with the 8 Truworths directors and 12 divisional directors, and the 5 directors and divisional directors of Office, are the right team to take the Group into the new era by retaining the strength of the Group’s unique DNA while at the same time being able to continue to move the businesses forward.

The board has requested Michael Mark to extend the transition process beyond the November 2022 AGM by retaining the position of the Group’s CEO and chairman of the material subsidiary companies, while handing over an increasing number of operational responsibilities to Sarah and Mannie and the executives who report to them. The appointments of Sarah and Mannie as the Group’s Joint Deputy CEOs confirm the board’s firm belief in their competence and leadership, and that of the directors and divisional directors who report to them.

The ultimate timing of the formal appointment of the CEO to succeed Michael Mark has yet to be decided by the board.