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’22
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Review of 2022 and outlook for 2023 Introducing our Integrated Report Group profile Sustainable future in fashion
WE BELIEVE THAT GOOD GOVERNANCE CONTRIBUTES TO BETTER CORPORATE PERFORMANCE AND CREATES VALUE FOR SHAREHOLDERS AND OTHER STAKEHOLDERS.
Our Business Philosophy Value-creating business model Managing stakeholder relationships Material issues, risks and opportunities Material issues, risks and opportunities: Truworths and Office Group strategy How we create stakeholder value
‘WE SUCCESSFULY NAVIGATED THE MACROECONOMIC HEADWINDS THROUGH THE CONTINUED FOCUS ON OUR BUSINESS PHILOSOPHY WHICH ENSURES OUR CONSISTENT FOCUS ON CREATING LONG-TERM VALUE FOR OUR STAKEHOLDERS.’
Chairman’s report Truworths International board Group leadership Governance creating value Remuneration Committee report
‘WE BELIEVE THAT GOOD GOVERNANCE CONTRIBUTES TO BETTER CORPORATE PERFORMANCE AND CREATES VALUE FOR SHAREHOLDERS AND OTHER STAKEHOLDERS.’
Retail trading environment Chief Executive Officer’s report Five-year review of financial performance Chief Financial Officer’s report Summarised Group financial statements
‘OUR EXPANSIVE AND OPTIMISTIC STRATEGY SERVED US WELL IN THE NEW ENVIRONMENT, AND CONTRIBUTED TO 2022 BEING A RECORD YEAR FOR THE GROUP AS WE REPORTED THE HIGHEST HEADLINE EARNINGS IN OUR HISTORY.’
Market-leading brand portfolio Aspirational fashion Supply chain Account management Retail presence Human capital
‘WE HAVE STRENGTHENED TRUWORTHS’ POSITION AS THE LEADING ASPIRATIONAL, BETTER-END, MASS-MARKET RETAILER FOR YOUTHFUL, FASHIONABLE CONSUMERS WHO ARE SEEKING FASHION AT WELL ABOVE AVERAGE QUALITY.’
Leading brand portfolio Aspirational fashion Supply chain Retail presence Human capital
‘OFFICE CONTINUES TO BUILD COLLABORATIVE AND STRATEGIC PARTNERSHIPS WITH SOME OF THE MOST SOUGHT-AFTER BRANDS IN THE GLOBAL FOOTWEAR AND SNEAKERS MARKET.’
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CREATING SUSTAINABLE VALUE
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OPERATIONAL REVIEW: TRUWORTHS
OPERATIONAL REVIEW: TRUWORTHS
OPERATIONAL REVIEW: OFFICE
OPERATIONAL REVIEW: OFFICE
SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION

SUMMARISED GROUP FINANCIAL STATEMENTS

* Please click on the circled arrow to see more information

SUMMARISED GROUP STATEMENTS OF FINANCIAL POSITION

at 
3 Jul 
2022 
Rm 		 at 
27 Jun 
2021 
Rm 
  ASSETS 
  Non-current assets  5 520  5 305 
Property, plant and equipment  1 685  1 707 

Total additions of R307 million in respect of plant, equipment, furniture and fittings (R305 million) and motor vehicles (R2 million).
Right-of-use assets  2 594  2 196 

Right-of-use assets increased by R398 million due to new leases being entered into and the renewal of existing leases (options being exercised) since the prior period together with a net impairment reversal of R33 million in the current period.
Intangible assets  539  551 

R38 million invested in computer software.
  Goodwill  294  294 
  Other non-current assets  69  126 
  Deferred tax  339  431 
  Current assets  7 971  7 216 
Inventories  1 819  1 755 

Inventory turn unchanged at 4.6 times. Truworths’ gross inventory increased 4.9% to R1.8 billion and inventory turn decreased to 4.4 times (2021: 4.9 times), mainly due to higher strategic fabric holdings and a reduction in the markdown provision. Office’s gross inventory decreased 11.2% and inventory turn increased to 4.8 times (2021: 3.8 times) in Sterling.
Trade and other receivables  4 908  4 327 

Gross trade receivables in respect of the Truworths accounts portfolio increased by 9.4% to R5.9 billion. The expected credit loss (ECL) allowance decreased from 23.4% to 20.9% of gross trade receivables. The decrease in the ECL allowance is due to improved account collections.
  Derivative financial assets  29  5 
  Cash and cash equivalents  1 068  1 077 
  Other current assets  147  52 
  Total assets  13 491  12 521 
  EQUITY AND LIABILITIES 
  Total equity  6 106  6 191 
  Non-current liabilities  2 628  2 195 
  Lease liabilities  2 464  2 062 
  Put option liability  6  15 
  Other non-current liabilities  158  118 
  Current liabilities  4 757  4 135 
Trade and other payables  1 678  1 965 

Trade and other payables decreased to R1.7 billion (2021: R2.0 billion), mainly as a result of the calendar month-end payments of approximately R580 million occurring before the end of the 53-week reporting period.
  Lease liabilities  979  1 397 
Interest-bearing borrowings  702  346 

Interest-bearing borrowings increased to R702 million (2021: R346 million), due to the net of the UK Pound Sterling-based revolving credit facility (RCF) being repaid in full during the current period (R346 million) and the utilisation of a portion of the South African Rand-based 12-month notice RCF (R700 million).
  Bank overdraft  930  154 
  Put option liability  33  10 
  Other current liabilities  435  263 
  Total liabilities  7 385  6 330 
  Total equity and liabilities  13 491  12 521 
Number of shares in issue (net of treasury shares) (millions) 368.3  396.4 

The number of shares in issue (net of treasury shares) decreased due to share buy-backs of R1.6 billion during the current period.
  Net asset value per share   (cents) 1 658  1 562 
  Key ratios 
Return on equity  (%) 50  32 

All Group published financial targets have been achieved. Refer to the Chief Financial Officer’s report.
Return on capital  (%) 72  50 

All Group published financial targets have been achieved. Refer to the Chief Financial Officer’s report.
Return on assets  (%) 33  24 

All Group published financial targets have been achieved. Refer to the Chief Financial Officer’s report.
Inventory turn  (times) 4.6  4.6 

All Group published financial targets have been achieved. Refer to the Chief Financial Officer’s report.
Asset turnover  (times) 1.3  1.3 

All Group published financial targets have been achieved. Refer to the Chief Financial Officer’s report.
Net (debt)/cash to equity  (%) (9.2) 9.3 

Group net debt (excluding IFRS 16 liabilities) amounted to R564 million compared to R577 million net cash at the prior period-end.
Net (debt)/cash to EBITDA  (times) (0.1) 0.1 

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

SUMMARISED GROUP STATEMENTS OF COMPREHENSIVE INCOME

53 weeks 
to 3 Jul 
2022 
Rm 		 52 weeks 
to 27 Jun 
2021 
Rm 
  Revenue  19 340  17 534 
Sale of merchandise  17 886  16 400 

Group sale of merchandise, which comprises Group retail sales, together with wholesale sales and delivery fee income, less variable consideration adjustments, increased by 9% to R17.9 billion.
  Cost of sales  (8 316) (8 042)
  Gross profit  9 570  8 358 
  Other income  655  365 
Trading expenses  (6 607) (6 454)

Trading expenses for the current period increased by 2.4% to R6.6 billion constituting a reduced 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 (albeit lower than in the prior period), and further rent relief in the current period in Office in respect of COVID-19 lockdown periods in the prior period.
  Trading profit  3 618  2 269 
Interest income  789  762 

Interest received increased 3.5% to R789 million as a consequence of higher credit sales and interest rates.
  Dividend income  10  7 
Profit before finance costs and tax  4 417  3 038 

Measured on a 52-week pro forma basis, and excluding the impact of one-off benefits in the current period, profit before finance costs and tax, increased 30%.
Finance costs  (235) (292)

Finance costs decreased by 19.5% to R235 million (2021: R292 million) mainly as a consequence of the repayment of a portion of the Group’s borrowings in the prior period.
  Profit before tax  4 182  2 746 
  Tax expense  (1 115) (790)
  Profit for the period  3 067  1 956 
  Attributable to: 
  Equity holders of the company  3 051  1 951 
  Holders of the non-controlling interest  16  5 
  Profit for the period  3 067  1 956 
Basic earnings per share  (cents) 794.1  480.2 

Headline earnings per share (HEPS) and diluted HEPS increased 49.9% and 49.2% to 779.8 and 770.8 cents, respectively, compared to the prior period’s HEPS of 520.3 cents and diluted HEPS of 516.7 cents. Excluding the impact of the 53rd week, on a pro forma basis, HEPS and diluted HEPS increased 42.4% and 41.7%, respectively.
Headline earnings per share  (cents) 779.8  520.3 

Headline earnings per share (HEPS) and diluted HEPS increased 49.9% and 49.2% to 779.8 and 770.8 cents, respectively, compared to the prior period’s HEPS of 520.3 cents and diluted HEPS of 516.7 cents. Excluding the impact of the 53rd week, on a pro forma basis, HEPS and diluted HEPS increased 42.4% and 41.7%, respectively.
Diluted basic earnings per share  (cents) 784.9  476.9 

Headline earnings per share (HEPS) and diluted HEPS increased 49.9% and 49.2% to 779.8 and 770.8 cents, respectively, compared to the prior period’s HEPS of 520.3 cents and diluted HEPS of 516.7 cents. Excluding the impact of the 53rd week, on a pro forma basis, HEPS and diluted HEPS increased 42.4% and 41.7%, respectively.
Diluted headline earnings per share  (cents) 770.8  516.7 

Headline earnings per share (HEPS) and diluted HEPS increased 49.9% and 49.2% to 779.8 and 770.8 cents, respectively, compared to the prior period’s HEPS of 520.3 cents and diluted HEPS of 516.7 cents. Excluding the impact of the 53rd week, on a pro forma basis, HEPS and diluted HEPS increased 42.4% and 41.7%, respectively.
Gross margin  (%) 53.5  51.0 

Truworths’ gross margin increased to 56.7% (2021: 54.1%), mainly due to lower markdown activity. The gross margin in Office increased 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 to sale of merchandise  (%) 36.9  39.4 
  Trading margin  (%) 20.2  13.8 
Operating margin  (%) 24.7  18.5 

The Group recorded profit before tax of R4.2 billion in the current period, while the operating margin increased to 24.7%.
  Reconciliation of headline earnings per share:  Cents  Cents 
  Basic earnings per share  794.1  480.2 
  Insurance recoveries in respect of plant and equipment  (9.4) – 
  Net (impairment reversal)/impairment of right-of-use assets  (6.7) 38.2 
  Loss on write-off or disposal of plant and equipment  2.1  1.2 
  (Reversal of impairment)/impairment of property, plant and equipment  (0.3) – 
  Loss on write-off of intangible assets  –  0.5 
  Impairment of property, plant and equipment  –  0.7 
  Bargain purchase gain on acquisition of Barrie Cline  –  (0.5)
  Headline earnings per share  779.8  520.3 
  Reconciliation of diluted weighted average number of shares:  Millions  Millions 
  Weighted average number of shares  384.2  406.3 
  Add: Dilutive effect of share options, unvested restricted shares and share appreciation rights  4.5  2.8 
  Diluted weighted average number of shares  388.7  409.1 

SUMMARISED GROUP STATEMENTS OF CHANGES IN EQUITY

3 Jul 
2022 
Rm 		 27 Jun 
2021 
Rm 
  Balance at the beginning of the period attributable to equity holders of the company 6 191  6 008 
  Total comprehensive income for the period 3 056  1 979 
  Profit for the period 3 067  1 956 
Other comprehensive (loss)/ income for the period (11) 23 

Other comprehensive loss/(income) comprises the movement in the foreign currency translation reserve, the fair value adjustment in respect of financial assets held at fair value through other comprehensive income and gains on defined benefit plans.
  Dividends declared (1 646) (1 086)
Shares repurchased (1 588) (768)

Repurchased 29.4 million shares during the period at an average price per share of R54.13. These shares were cancelled against share capital and premium, as well as retained earnings.
  Share-based payments 107   83 
Movement in put option liability (14) (25)

Increase in the present value of the amount payable on exercise of the put options granted to the non-controlling management shareholders in Office as a result of the increase in the Office segment’s profitability.
  Balance at the reporting date attributable to equity holders of the company 6 106  6 191 
  Comprising
Share capital and premium –* 521 

Repurchased 29.4 million shares during the period at an average price per share of R54.13. These shares were cancelled against share capital and premium, as well as retained earnings.
  Treasury shares (2 186) (2 259)
  Retained earnings 8 144  7 778 
  Non-distributable reserves 148  151 
  Total equity attributable to equity holders of the company 6 106  6 191 
  Dividends (cents per share)
  Cash final - payable/paid September 205  118 
  Cash interim - paid March 300  232 
Total 505  350 

Annual dividend per share increased by 44% to 505 cents. Dividend cover maintained at 1.5 times.
* Zero due to rounding

SUMMARISED GROUP STATEMENTS OF CASH FLOWS

53 weeks 
to 3 Jul 
2022 
Rm 		 52 weeks 
to 27 Jun 
2021 
Rm 
CASH FLOWS FROM OPERATING ACTIVITIES 
  Cash flow from profit before tax  4 838  3 870 
Working capital movements  (946) 196 

Net outflow in respect of working capital due to an increase in inventories, increase in trade and other receivables and a decrease in trade and other payables.
  Cash generated from operations  3 892  4 066 
  Interest and dividends received  801  771 
  Interest paid  (236) (301)
  Tax paid  (909) (687)
Cash inflow from operations  3 548  3 849 

The cash inflow from operations of R3.6 billion was utilised to fund dividend payments of R1.6 billion, capital expenditure of R340 million and share buy-backs of R1.6 billion (29.4 million shares bought back).
  Dividends paid  (1 646) (1 086)
  Net cash from operating activities  1 902  2 763 
  CASH FLOWS FROM INVESTING ACTIVITIES 
Acquisition of property, plant, equipment and computer software  (340) (320)

The cash inflow from operations of R3.6 billion was utilised to fund dividend payments of R1.6 billion, capital expenditure of R340 million and share buy-backs of R1.6 billion (29.4 million shares bought back).
  Loans advanced  (11) – 
  Net acquisition of business  –  (36)
  Other investing activities  55  (6)
  Net cash used in investing activities  (296) (362)
  CASH FLOWS FROM FINANCING ACTIVITIES 
Shares repurchased by subsidiaries and the company  (1 588) (768)

The cash inflow from operations of R3.6 billion was utilised to fund dividend payments of R1.6 billion, capital expenditure of R340 million and share buy-backs of R1.6 billion (29.4 million shares bought back).
  Borrowings repaid  (743) (1 694)
  Borrowings incurred  1 096  – 
  Lease liability payments  (1 134) (1 107)
  Net cash used in financing activities  (2 369) (3 569)
  Net decrease in cash and cash equivalents  (763) (1 168)
  Cash and cash equivalents at the beginning of the period  923  2 150 
  Net foreign exchange difference  (22) (59)
NET CASH AND CASH EQUIVALENTS AT THE REPORTING DATE    138  923 

Net cash and cash equivalents of R138 million (net of overdraft of R930 million).
  Key ratios 
  Cash flow per share  (cents) 923  947 
  Cash equivalent earnings per share  (cents) 1 155  883 
Cash realisation rate  (%) 80  107 

The cash realisation rate averaged 105% over the past five years. In the current period, the cash realisation rate was impacted by the timing of month-end and tax payments due to the 53rd week . Excluding these, the cash realisation rate in the current period would be approximately 93%.
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INTEGRATED
REPORT
’22
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