INTRODUCING OUR 2023 INTEGRATED REPORT
WE HAVE PLEASURE IN PRESENTING THE INTEGRATED REPORT FOR TRUWORTHS INTERNATIONAL AND ITS SUBSIDIARIES (THE GROUP) FOR THE 52-WEEK PERIOD FROM 4 JULY 2022 TO 2 JULY 2023. THROUGH OUR REPORTING, WE AIM TO DEMONSTRATE IN A BALANCED MANNER HOW THE GROUP HAS ADAPTED AND RESPONDED TO THE CURRENT CONSTRAINED ECONOMIC CONDITIONS TO CREATE AND PRESERVE VALUE OVER THE SHORT, MEDIUM AND LONG TERM.
The trading landscape in South Africa and the United Kingdom has been dominated by the deteriorating financial position of consumers as rising energy, fuel, food and borrowing costs, together with a weak labour market, growing social instability and persistent and disruptive electricity load shedding in South Africa, have undermined growth and confidence. As always, we have continued to be guided by our Business Philosophy, focusing on creating long-term, sustainable value for stakeholders.
Our 2023 Integrated Report is again targeted primarily at our shareholders who are the principal providers of the Group’s financial capital. We also recognise and acknowledge the role of our key stakeholders, being our customers, employees, suppliers, lenders and regulators, in the value creation process.
REPORTING FRAMEWORKS AND COMPLIANCE
The IFRS Foundation’s Integrated Reporting Framework (January 2021) has again been applied in preparing our Integrated Report, together with the JSE Sustainability Disclosure Guidance (June 2022) that has been applied for the first time. The application of these reporting frameworks was proposed by management and approved by the board.
The Integrated Reporting Framework recommends reporting in terms of the capital resources applied in the creation, preservation and erosion of value. The impact of these six capitals on the Group’s business activities and their role in creating, preserving or eroding value are covered in the relevant sections of this report.
Financial capital relates to the financial resources raised and available to the Group from the providers of capital.
Human capital deals with the skills, capabilities, experience and development of the board, management and employees.
Manufactured capital is the physical infrastructure used in the distribution and selling of merchandise, including distribution centres, retail stores and online platforms.
Social and relationship capital covers stakeholder relationships and engagement, corporate reputation and values.
Intellectual capital focuses on the knowledge across the business, systems, processes, trademarks, intellectual property and brands.
Natural capital relates to the environmental resources applied and utilised in the operations of the business.
For ease of understanding and navigation of the report, the above visual icons have been included throughout the report to indicate where these capitals are addressed in the commentary.
All Group financial reporting complies with International Financial Reporting Standards, the South African Companies (No. Act 71 of 2008, as amended) and the JSE Listings Requirements.
The King IV Report on Corporate Governance™* for South Africa, 2016 (King lV) has been applied throughout the reporting period and the directors confirm that the Group has, in all material respects, applied the principles of the code. The application of King lV is detailed in the Report on Corporate Governance and application of King IV Principles 2023 on the Group's website.
Shortly before the end of the reporting period, we welcomed the release of the inaugural sustainability reporting standards by the International Sustainability Standards Board. The introduction of IFRS S1, which covers sustainability-related risks, opportunities and financial disclosures, together with IFRS S2 on climate-related disclosures, will create a much-awaited global standard that will benefit companies and investors alike. The Group is required to adopt the new standards from the 2025 financial reporting period. The board has delegated responsibility for the adoption of these standards to the Group’s finance function, supported by the Sustainability Committee.
REPORTING SCOPE AND BOUNDARIES
The report covers material information relating to the business model, strategy, material issues and risks, governance and the performance of the Group for the
52-week period from 4 July 2022 to 2 July 2023. The report is supplemented by the Group Audited Annual Financial Statements 2023, available on our website at www.truworths.co.za/reports.
The financial reporting boundary covers the results of the Truworths and Office operating segments. Truworths operates primarily in South Africa and Office operates principally in the United Kingdom.
The integrated reporting boundary has been set so that the report covers risks, opportunities and outcomes relating to the Group’s operating environment, its retail businesses, capital resources and engagement with key stakeholders that could influence the Group’s ability to create and sustain value, and also the extent to which the Group’s objectives have been achieved.
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INTEGRATED REPORTING PROCESS
The Group’s integrated reporting process is managed by a working group led by the Chief Financial Officer (CFO). The process commences each year with an evaluation of the previous year’s Integrated Report and detailed feedback from an independent integrated reporting specialist to identify opportunities to enhance disclosure and continually align with best reporting practices.
The individual reports included in the Integrated Report are prepared based on discussions with executives, written submissions, internal presentations, and board and committee papers. Draft reports are initially reviewed by divisional executives, followed by a panel of executives, including the CFO, and finally by the Chief Executive Officer.
The board has delegated responsibility to an integrated reporting sub-committee, including members of the Audit Committee, which provides the final approval of the report before it is published.
We continue to apply the principle of materiality in determining the disclosure in the report. In aligning our reporting with the JSE Sustainability Disclosure Guidance, we are introducing the double materiality approach for the first time this year and plan to refine this in subsequent years.
Reports targeted at shareholders and providers of capital, which deal with the Group’s financial performance and are used by investors in assessing the future value of the Group, also referred to as enterprise value, apply the principle of financial materiality. The primary report in this case is the Annual Financial Statements.
Multi-stakeholder reports covering the Group’s environmental, social and governance (ESG) reporting apply the impact materiality approach. This relates to reports including the Environmental, Social and Sustainability Governance Report 2023 and the Report on Corporate Governance and Application of King IV Principles 2023.
The Integrated Report is based on the principle of double materiality as it covers content and disclosures that are material to investors and other providers of capital (financial materiality) as well as the impacts on the economy, environment and society (impact materiality).
Each year, the directors together with management identify the issues that could have the most significant impact on the Group’s ability to create sustainable value for stakeholders. In determining these material issues, the directors consider potential positive and negative impacts internally and externally, including the Group’s strategic objectives, key risks, the needs, expectations and concerns of our main stakeholders and the economic and trading environment.
The material issues have been broadened this year and include an additional issue relating to human capital. The risks and opportunities relating to these material issues provide shareholders with insight into the factors that create, preserve or erode value (refer to Material issues, risks and opportunities).
EXCELLENCE IN INTEGRATED REPORTING AWARDS
Our commitment to consistently high standards of reporting is reflected in the Group’s 2022 Integrated Report being ranked 8th in the Ernst & Young (EY) 2023 Excellence in Integrated Reporting Awards. This is the 16th consecutive year that the Group has attained a top 10 ranking in these awards and it is the only JSE-listed company to have achieved this honour.
The application of the double materiality approach is reflected in the components of our annual reporting suite:
- Group Audited Annual Financial Statements 2023
- Summarised Audited Group Annual Results 2023
- Annual Results Presentation 2023
- 10-Year Review 2023
Reporting on matters that impact on financial performance and the assessment of enterprise value
Reporting on matters that are material from both a financial and impact perspective
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTING
- Report on Corporate Governance and Application of King IV Principles 2023
- Social and Ethics Committee Report 2023
- Environmental, Social and Sustainability Governance Report 2023
Reporting on matters that reflect the Group’s impact on the economy, environment and society
|The Integrated Report has been reviewed by the directors and management; it has not been independently assured.
|The Group’s external auditor, EY, has provided assurance on the Group Audited Annual Financial Statements 2023 and expressed an unmodified audit opinion. EY has also reviewed the accuracy of the financial information extracted from the Annual Financial Statements that appear in the Integrated Report.
|Accredited service providers have
measured and provided assurance on
selected ESG metrics disclosed in the
Integrated Report, including:
– AQRate independently reviewed and verified the Group’s B-BBEE rating in terms of the
Broad-based Black Economic Empowerment Act 53 of 2003
– Verify CO2 undertook an independent review of the scope 1, 2 and 3 carbon emissions
– Global corporate governance and remuneration consultants, consulting to the Remuneration Committee, reviewed the remuneration policy and implementation report contained in the Remuneration Comittee report
RESPONSIBILITY OF DIRECTORS
The board acknowledges its responsibility for ensuring the integrity of the Integrated Report. The directors confirm that the report fairly represents the Group’s performance for the period under review, as well as the growth strategies, material issues, risks and opportunities, and prospects of the Group.
The directors confirm that the Integrated Report has been prepared in accordance with the Integrated Reporting Framework and the JSE Sustainability Disclosure Guidance.
Chief Executive Officer
Joint Deputy Chief
Executive Officer and
Chief Financial Officer
Joint Deputy Chief
Lead Independent Director