[PDF] - 2018 RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018 AGENDA PDF Document

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH

2018

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

AGENDA

OPERATING CONTEXT Doug Murray BUSINESS OVERVIEW Doug Murray FINANCIAL REVIEW Anthony Thunström TFG FINANCIAL SERVICES Jane Fisher TFG LONDON Ben Barnett TFG AUSTRALIA Gary Novis OUTLOOK Anthony Thunström

Doug Murray Chief Executive Officer Anthony Thunström Chief Financial Officer Jane Fisher Group Director Gary Novis TFG Australia Ben Barnett TFG London

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RESULTS PRESENTATION

FOR THE YEAR ENDED 31 MARCH 2018

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

GEOGRAPHIC TURNOVER CONTRIBUTION

TFG Africa 70,3% TFG London 18,7% TFG Australia 11,0%

CASH VS CREDIT TURNOVER CONTRIBUTION ONLINE TURNOVER CONTRIBUTION

Credit turnover contribution 34,1% Cash turnover contribution 65,9% Outlet turnover contribution 93,5% Online turnover contribution 6,5%

OUR OPERATING CONTEXT

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OPERATING CONTEXT

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Political and economic uncertainty relating to outcome of Brexit negotiations continues. − Economic growth slowed during 2017 as growth in consumer spending moderated and consumer price inflation increased. − UK growth rated slowest of G7 countries in 2017, and had the weakest consumer confidence of major EU countries − The interest rate increased to 0,5% from 0,25% in November 2017, the first increase in more than a decade, with further increases likely in 2018. − The Pound remains weak and volatile compared to its pre-Brexit levels, particularly against the Euro. − UK retailers face increasing headwinds as a number of high street brands fall into administration (e.g. Jacques Vert, EAST, Jones the Bootmaker, Agent Provocateur, Jaeger) as well as increased threats of store closures from larger retailers (New Look, Mothercare, Carpetright, Homebase etc).

OPERATING CONTEXT – UK

Latest period Comparative period CPI % 2,5 2,3 GDP 1,8 1,9 GfK Consumer Sentiment

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CBI Business Optimism

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Source: Office for National Statistics, GfK, Tradingeconomics.com

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Political uncertainty in South Africa continued to impact the economy for most of the financial year. Outlook has however improved with the inauguration of President Ramaphosa mid February 2018. − Foreign and local credit ratings affirmed – outlook revised from negative to stable (Moody). − Rand remained volatile for most of the year, strengthening in early 2018. − Outlook for SA economy:

Improved outlook for consumer spending – growth forecast at 2,3% for 2018.
Interest rate expected to remain flat.
Inflation outlook stable averaging just below 5% for 2018.
GDP forecast 1,9% for 2018 and 2% for 2019.

OPERATING CONTEXT – SOUTH AFRICA

Latest period Comparative period CPI % 3,8 6,1 GDP 1,3 0,6 Consumer Confidence Index +26

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Business Confidence Index 45 40

Source: Stats SA, BER

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BUSINESS OVERVIEW

RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Consumer confidence in Australia is slightly more optimistic. − The level of unemployment remains low and unchanged. − Within the retail sector, declining traffic in shopping centres partially attributable to changes in consumer behaviour as customers shift to online sales channels. − Recent retail results indicate tough trading conditions in Australia.

OPERATING CONTEXT – AUSTRALIA

Latest period Comparative period CPI % 1,9 2,1 GDP 2,1 2,8 Consumer Sentiment 3,2 0,6 Business Confidence 7 6

Source: Australian Bureau of Statistics, Westpac-Melbourne Institute, Tradingeconomics.com, National Australia Bank, Reserve Bank of Australia

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

SIGNIFICANT CHANGES DURING THE YEAR

CHANGES IN GROUP STRUCTURE

− TFG London

Phase Eight: buy-out of c.15% minority interest completed December 2017
Hobbs: 4 months‘ trading included in current year, no trading included in prior

year (effective date 25 November 2017) − TFG Australia

Retail Apparel Group: 8 months‘ trading included in current year, no trading

included in prior year (effective date 24 July 2017)

CAPITAL RAISE

− R2,5 billion accelerated bookbuild launched 31 July 2017 to fund acquisition of RAG

17,2 million ordinary shares issued at R145 per share
Shares issued at 0,9% premium to 30-day VWAP
Offer 3 times oversubscribed

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

BUSINESS OVERVIEW: TFG

− Diverse group with a successful portfolio of 28 leading fashion retail brands − Diversification through:

Cash and credit turnover
Geography – 4 034 outlets in 32 countries on 5 continents
Full OMNI offering – brick and mortar, concessions and online
Broad product offering across various merchandise categories:
Clothing, jewellery, homeware & furniture, cellphones and cosmetics

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

FY 2018: SALIENT FEATURES

Headline earnings growth (excl acquisition costs) + 9,6% (constant currency = +10,2%) HEPS growth (excl acquisition costs) + 3,4% (constant currency = +4,0%) HEPS (cents) (excl acquisition costs) 1 136,5 Interim dividend (cents per share) 325,0 Final dividend (cents per share) 420,0 Growth in final dividend +5,0% Total dividend (cents per share) 745,0 Growth in total dividend +3,5%

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

SIGNIFICANT CHANGES DURING THE YEAR (CONTINUED)

CHANGES IN E-COMMERCE

− Launched online selling of @homelivingspace, Exact, Foschini and SODA Bloc brands

20 of our 28 brands now trade online

CHANGES IN INTEREST RATE ENVIRONMENT

− TFG Africa:

Current financial year: repo rate in South Africa reduced by 0,25% to 6,75% in

July 2017 with a further 0,25% reduction in March 2018

Prior financial year: no changes to repo rate

− TFG London:

Current financial year: Interest rate in UK increased to 0,5% in November 2017
Prior financial year: Interest rate in UK reduced from 0,5% to 0,25% in August 2016

− TFG Australia:

Unchanged at 1,5%

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Turnover growth pleasing in difficult trading environment − Gross margin improvement – good performance in a deflationary product price environment and high levels of discounting in market − Focus on cost control continued, although increased marketing and promotional spend was required to drive turnover in tough retail market − Space growth of 3,5%

4,9% new space added
2,3% space closed
Balance – enlargements and relocations

SEGMENTAL PERFORMANCE: TFG AFRICA

TFG AFRICA March 2018 TFG AFRICA March 2017 TFG AFRICA % change Retail turnover (Rm) 20 111,7 18 912,8 6,3 Gross margin (%) 47,8 46,4 EBITDA excl acquisition costs (Rm) 4 074,9 3 823,0 6,6 New outlets 146 206 Closed outlets 83 79 Total outlets at end of year 2 652 2 589

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

FY 2018: SALIENT FEATURES (CONTINUED)

GROUP March 2018 GROUP March 2017 Net bad debt as a % of debtors‘ book (TFG Africa) 10,0 11,3 Free cash flow (Rm) 1 880,6 1 298,8 Debt / equity – recourse (%) 54,6 53,6 Debt / equity – total (%) 61,4 65,3

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− 8 months‘ trading of RAG and 12 months‘ trading of G-Star included − Turnover growth in AUD 8 month comparative period c.14% − Gross margin and EBITDA ahead of expectation − Strong performance despite pressure on consumer spend and increased competitive behaviour in Australian market

SEGMENTAL PERFORMANCE: TFG AUSTRALIA

TFG AUSTRALIA March 2018 Retail turnover (AUDm) 312,1 Gross margin (%) 65,5 EBITDA excl acquisition costs (AUDm) 39,6 New outlets 44 Closed outlets 11 Total outlets at end of year 447

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Inclusion of Hobbs for four months in current financial year − As expected, tough trading conditions continued during 2018 driven by the shift in consumer spend from offline to online − Gross margin slightly down, reflective of trading conditions as well as shift to online − Phase Eight concession partners online sales negatively impacted in H1 by system platform changes in the UK and adverse weather in February of H2 − Underlying EBITDA:

As reported at interim, adverse forex impact in 2018 (loss of £0,7m) compared to 2017 gain (£1,4m) due to Brexit exchange

rate movements

Proactively managing the store estate given the shift in consumer spend (March 2018: £2,5m and March 2017: £0,3m)

SEGMENTAL PERFORMANCE: TFG LONDON

TFG LONDON March 2018 TFG LONDON March 2017 TFG LONDON % change Retail turnover (GBPm) 310,9 251,8 23,5 Gross margin (%) 61,9 63,0 EBITDA excl acquisition costs (GBPm) 24,8 28,9 (14,2) Underlying EBITDA (GBPm) 28,0 27,8 0,7 New outlets 91 125 Closed outlets 83 49 Total outlets at end of year 935* 739

* Includes 188 outlets acquired with Hobbs

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− TFG London and TFG Australia – cash turnover only − TFG Africa cash turnover growth coming off a high base (March 2017: 14,1%) − Credit turnover growth driven in part by growth in active account base

TURNOVER: TENDER TYPE CONTRIBUTION

GROUP March 2018 (Rm) GROUP March 2017 (Rm) GROUP % change TFG AFRICA % change ZAR

Cash turnover 18 848,8 14 294,3 31,9 7,3 Credit turnover 9 744,2 9 254,4 5,3 5,3 Total 28 593,0 23 548,7 21,4 6,3

GROUP March 2018 GROUP March 2017 TFG AFRICA March 2018 TFG AFRICA March 2017

Cash turnover contribution 65,9% 60,7% 51,5% 51,1% Credit turnover contribution 34,1% 39,3% 48,5% 48,9%

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Pleasing H1 turnover growth followed by strong H2 performance − Clothing: strong turnover growth in difficult trading environments − Jewellery, a discretionary product sensitive to economic conditions and consumer confidence levels, continues to gain market share in a tough environment − Cellphones: turnover growth coming off a high base (March 2017: 15,3%) and impacted by product price deflation and availability − Homeware & furniture and cosmetics both impacted by significant discounting in the market

TURNOVER: MERCHANDISE CATEGORY CONTRIBUTION

GROUP March 2018 (Rm) GROUP March 2017 (Rm) GROUP % change TFG AFRICA % change ZAR TFG AFRICA % same store growth

Clothing 22 642,7 17 578,7 28,8 9,4 4,8 Jewellery 1 499,4 1 490,5 0,6 0,6 (1,7) Cellphones 1 923,8 1 927,7 (0,2) (0,2) (3,2) Homeware & furniture 1 436,1 1 434,0 0,1 0,1 (2,3) Cosmetics 1 091,0 1 117,8 (2,4) (2,4) (3,8) Total 28 593,0 23 548,7 21,4 6,3 2,2

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

FY 2018: FINANCIAL HIGHLIGHTS

Strong H2 performance Further improvement in free cash flow Like-for-like expense control

Strong 2nd half performance

across the Group

Acquisitions are

performing ahead of management‘s expectation

Positive contribution to

current year bottom line earnings

17% contribution to Group

EBITDA

Like for like expense control

5,1%

Positive performance from acquisitions

Free cash flow increased

by 44,8% - 77,2% of profit for the year

TFG Africa stock growth

contained to 3,3%

Turnover growth H1 H2 TFG Africa (ZAR) 5,0% 7,6% TFG London (GBP) (excl Hobbs acquisition) 4,1% 4,4%

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FINANCIAL REVIEW

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Retail turnover +21,4% – refer previous slides − Interest income

Two interest rate cuts in South Africa during the current financial year (July 2017 and March 2018) – no

interest rate movements in prior financial year

Gross book growth of 5,5% (March 2017: +2,9%)

− Other revenue

Growth of 5,3% (March 2017: + 2,0%) despite tough economic environment and Affordability Regulations

constraining new account growth

REVENUE

GROUP March 2018 (Rm) GROUP March 2017 (Rm) GROUP % change TFG AFRICA % change ZAR Retail turnover 28 593,0 23 548,7 21,4 6,3 Interest income 1 755,8 1 736,9 1,1 1,1 Other revenue 1 187,7 1 128,0 5,3 5,3 Total 31 536,5 26 413,6 19,4 5,9

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

INCOME STATEMENT HIGHLIGHTS

GROUP March 2018 GROUP March 2017 GROUP % change Revenue (Rm) 31 536,5 26 413,6 19,4 Retail turnover (Rm) 28 593,0 23 548,7 21,4 Gross margin (%) 52,5 49,7 Total trading expenses (Rm) 13 779,0 10 757,2 28,1 Net bad debt (Rm) 837,5 896,1 (6,5) Operating margin (%) 14,6 16,2 Headline earnings growth (excl acquisition costs) (%) 9,6 6,8 HEPS (excl acquisition costs) (cents) 1 136,5 1 099,2 3,4

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

TRADING EXPENSES

GROUP March 2018 (Rm) GROUP March 2017 (Rm) GROUP % change TFG AFRICA % change ZAR Depreciation and amortisation (745,5) (540,3) 38,0 16,6 Employee costs (4 948,0) (3 669,8) 34,8 10,3 Occupancy costs (3 411,5) (2 431,8) 40,3 11,3 Other net operating costs (3 836,5) (3 219,2) 19,2 9,4 Trading expenses before net bad debt (12 941,5) (9 861,1) 31,2 10,7 Net bad debt (837,5) (896,1) (6,5) (6,5) Total trading expenses (13 779,0) (10 757,2) 28,1 8,8

− Group includes non-comparable TFG Australia and TFG London (Hobbs) expenses − Depreciation and amortisation: 3,1% movement excluding impact of useful life change in FY 2016 TFG AFRICA − Occupancy costs

Normal lease escalations on renewals average 5,8%

(prev 7,2%)

– Rent reversion average -2,5% (March 2017: +4,0%)

5,5% non-comp enlargements and net new stores

− Employee costs

Annual salary and promotional increase approx 7,5%
Continued investment in e-commerce, analytics and

forensics TFG AFRICA continued − Employee costs continued

Minimum ZAR increase for Bargaining Unit employees

resulted in an increase of just under 10% for many of our lower paid employees which drove the above inflationary increase − Other costs – focus on cost control continued

Branch level comp expense growth well contained at

4,2% (March 2017: 5,6%)

Increased marketing and promotional spend including

Black Friday required to drive turnover in tough retail market

Excluding additional marketing investment and

non-comparable stores – expense growth of 5,1%

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Improved performance of Group gross margin at 52,5% (March 2017: 49,7%) − TFG Africa

Gross margin increased to 47,8% (March 2017: 46,4%)
Improved gross margin across all merchandise categories with the exception of cosmetics
Merchandise price deflation of 3,5% (clothing merchandise price deflation of 3,8%)

− TFG London

Gross margin 61,9% (March 2017: 63,0%)

– Slightly down, reflective of trading conditions as well as shift to online

− TFG Australia

Gross margin 65,5%

GROSS PROFIT

GROUP March 2018 (Rm) GROUP March 2017 (Rm) GROUP % change TFG AFRICA % change ZAR Gross profit (Rm) 15 001,1 11 703,5 28,2 9,5 Gross margin (%) 52,5 49,7

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Overall improvement in Group gearing due to capital raise and strong cash generation − TFG London net debt down due to repayment − Consolidated level of finance cost remain within management‘s expectation

BORROWINGS

GROUP March 2018 (Rm) GROUP March 2017 (Rm) Interest-bearing debt 9 350,6 7 749,2 Less: cash (1 206,1) (878,5) Net borrowings Group 8 144,5 6 870,7 Less: TFG Australia net borrowings (non-recourse) (99,0) 130,5 Less: TFG London net borrowings (non-recourse) (800,4) (1 368,2) TFG Africa borrowings 7 245,1 5 633,0 TFG Africa (recourse debt) gearing 54,6% 53,6% Group gearing 61,4% 65,3%

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Strong credit turnover growth of 5,3% (March 2017: +2,3%) supported growth in net debtors‘ book of 8,2% (March 2017: +4,6%) − Stock levels well controlled

WORKING CAPITAL MANAGEMENT

GROUP March 2018 (Rm) GROUP March 2017 (Rm) GROUP % change TFG AFRICA % change ZAR Trade receivables 7 573,8 7 000,7 8,2 8,2 Other receivables 1 118,6 1 017,1 10,0 3,7 Stock 6 773,6 5 511,2 22,9 3,3 15 466,0 13 529,0 14,3 6,1 Trade and other payables (3 608,2) (2 751,3) 31,1 9,2 11 857,8 10 777,7 10,0 5,4

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Excluding non-comparable TFG Australia, capex down by 12,2% − Store capex:

146 new TFG Africa outlets vs 206 new outlets in the prior year
Mall expansion / revamp such as Mall of Africa, Eastgate, Menlyn in the base
Tight control over build rates

− IT capex cyclical based on major developments − Other:

Prior period included costs related to Caledon factory
Capex of R5,0 million invested in sustainable water-saving and water-efficiency initiatives

CAPEX

GROUP March 2018 (Rm) GROUP March 2017 (Rm) TFG Africa 652,8 742,7

Stores

389,7 438,9

IT

196,9 222,8

Other

66,2 81,0 TFG London 122,6 140,8 TFG Australia 121,2 896,6 883,5

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Free cash flow increased by 44,8%

77,2% of profit for the year

FREE CASH FLOW

GROUP March 2018 (Rm) GROUP March 2017 (Rm) GROUP % change Operating profit before acquisition costs and finance costs (EBIT) 4 165,6 3 811,2 Add back: depreciation and amortisation 745,5 540,3 EBITDA 4 911,1 4 351,5 12,9 Less: taxation* (1 157,6) (1 012,7) Operating profit before depreciation and amortisation after taxation 3 753,5 3 338,8 Less: capex (896,6) (883 5) Less: working capital cash movement (976,3) (1 156,5) (15,6) Free cash flow 1 880,6 1 298,8 44,8

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

TFG FINANCIAL SERVICES: INDUSTRY REVIEW

The TransUnion SA Consumer Credit

Index (CCI) declined marginally in the fourth quarter 2017 to 53,4 from 53,7 in the third quarter 2017

Credit health has improved since

2016 mainly due to tighter lending standards, relatively soft inflation and stable-to-lower interest rates

Household cash flow declined by

0,8% year on year in Q4 2017

Tax increases, such as the increase

in the rate of VAT and the fuel levy, will place added pressure on households, but relief comes in the form of lower food price inflation, rand appreciation and potential interest rate cuts by the Reserve Bank

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TFG FINANCIAL SERVICES

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Active accounts increase by 1,1% (March 2017: -5,4%) due to an increase in new accounts activated as a result of higher demand and improved accept rates − Positive active account growth resulted in an increase in credit turnover growth to 5,3% (March 2017: +2,3%)

1st half growth: 6,2% (1st half March 2017 financial year: +1,4%)
2nd half growth: 4,5% (2nd half March 2017 financial year: +3,3%)

− Credit turnover as a % of total turnover in line with strategic objectives

TFG FINANCIAL SERVICES: CREDIT BOOK

Key indicators TFG AFRICA March 2018 TFG AFRICA March 2017 TFG AFRICA % change Number of active accounts (‗000) 2 450,0 2 422,8 1,1 Credit turnover (Rm) 9 744,2 9 254.4 5,3 Credit turnover as a % of total retail turnover (TFG Africa only) 48,5 48,9

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Income growth of 1,8% (March 2017: +11,7%)

Flat rate environment during the 2017 FY, but 25 bps repo rate cuts during July 2017 and March 2018
Recovery of credit turnover has resulted in gross book growth of 5,5% (March 2017: +2,9%)

− Net bad debt decreased further by 6,5% (March 2017: -5,4%)

Growth in bad debt write off slows to 2,9% (March 2017: +10,2%)
Strong recoveries growth at 10,6% (March 2017: +18,7%)
Improved book construct necessitates a lower impairment charge

− Credit costs increased by only 2,0% (March 2017: +2,2%) whilst increasing analytical investment and in spite of additional costs to comply with Affordability Regulations

Collection costs reduced by a further 9,6% (March 2017: -9,2%)
Mailing costs reduced by 5,6% (March 2017: -16,7%) due to increased use of electronic media

TFG FINANCIAL SERVICES: CREDIT PERFORMANCE

TFG AFRICA March 2018 (Rm) TFG AFRICA March 2017 (Rm) TFG AFRICA % change Income 2 072,0 2 035,3 1,8 Net bad debt (837,5) (896,1) (6,5) Credit costs (578,4) (567,3) 2,0 EBIT 656,1 571,9 14,7

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

TFG FINANCIAL SERVICES: VALUE ADDED SERVICES

TFG AFRICA March 2018 (Rm) TFG AFRICA March 2017 (Rm) TFG AFRICA % change Insurance net income 212,5 196,0 8,4 Publishing net income 181,0 180,6 0,2 Mobile one2one airtime net income 66,2 67,4 (1,8) EBIT 459,7 444,0 3,5 Number of new product / service launches 3 4

− Insurance income

Expansion of existing products to include spouse and family options has strengthened our customer propositions
Optimisation of resource allocation in our sales channels delivering good returns

− Publishing income

TFG remains the largest monthly magazine publisher in South Africa
Increased the number of titles sold in selected retail stores
Value Magazine was successfully launched increasing total publications to 16

− One2one

Fierce market competition, coupled with low margins has made the environment challenging

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

− Strong turnover growth and improved provision level results in net debtors‘ book growth for the year improving to 8,2% (March 2017: +4,6%) − Overdue values as a % to debtors book continue to decline reflecting improved book quality − Increased ratio of customers able to purchase reflect improved delinquencies − Net bad debt write off and net bad debt as % of debtors‘ book improve as bad debt growth decrease below book growth, coupled with strong recovery yields requires a lower level of provisioning

TFG FINANCIAL SERVICES: CREDIT STATISTICS

Key debtors statistics TFG AFRICA March 2018 TFG AFRICA March 2017 Net debtors‘ book 7 573,8 7 000,7 Overdue values % to debtors‘ book 12,4 13,9 % able to purchase 83,0 81,8 Net bad debt write off as a % of credit transactions 7,9 8,2 Net bad debt write off as a % of debtors‘ book 13,2 13,9 Net bad debt as a % of debtors‘ book 10,0 11,3 Doubtful debt provision as a % of debtors‘ book 9,5 11,8

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

FOCUS APPROACH Customer acquisition − Increase in active account base through acquisition and targeted reactivation strategies − Continual focus on growth of cash rewards base in order to increase the % of trackable transactions − Increase the number of new-to-group customers to our e-commerce sites Leverage data science to improve customer experience − Collect Data : Further optimisation of the TFG Rewards program will enable us to collect valuable customer data in order to deepen our customer insights − Connect Data : Single view of customer project well underway to ensure all customer information is able to be leveraged across all consumer touchpoints − Use Data : Personalised and relevant customer engagement strategies will help us to attract, grow and retain customers in line with each brand strategy − Analyse Data : Deep analysis of customer behaviour to assist Retail Divisions Accounting and reporting − Preparatory work for the implementation of IFRS 9 well advanced − Impact of Debt Intervention legislation on provision requirements to be assessed

TFG FINANCIAL SERVICES: STRATEGY

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

TFG FINANCIAL SERVICES: REGULATION

REGULATION UPDATE Affordability Court Case − The favourable court ruling on the 16th of March removed the onerous requirement for credit applicants to provide documented proof of income when applying for credit − The NCR have recently released Affordability Guidelines requesting that credit providers collect documented proof of income. Credit Providers are asked to submit comments on these Guidelines by 31st May Debt Intervention − Expectations are that the Debt Intervention legislation will be finalised imminently and no clarification provided if it will be circulated for public comment − Difficult to assess the impact of this legislation until it is published

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

TFG LONDON IS BUILDING A PORTFOLIO OF HIGH QUALITY BRANDS

British contemporary fashion brand.
Loved for its confident, modern attitude to

style and its curated edit of both casual and

ccasionwear.
Great designs that are modern, effortless and

accessible.

Affordable luxury brand with impeccable British

heritage in tailoring and smart daywear.

Provides wardrobe solutions to smart and busy

women with a focus on luxurious fabrics and quality craftsmanship.

Delivers collections with timeless style.

Concessions Stores Online Wholesale / Other Concessions Stores Online Wholesale / Other Concessions Stores Online Wholesale / Other

Premium British brand with a global following.
Dedicated to dressing women of all ages, for

all occasions, in high quality and versatile clothing.

Well-known for modern florals, exclusive

designs and contemporary details.

UK Europe Europe Europe ROW

SALES BY CHANNEL SALES BY REGION

UK ROW ROW UK

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TFG LONDON

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

INTERNATIONAL AN INCREASINGLY MATERIAL CONTRIBUTOR TO SALES

Note:

1. Refers to actual numbers per financial year
2. January year end until FY 15, 14 mth period to March 2016, and March year ends thereafter

International has been and will continue to be a key engine of growth for TFG London as we leverage deep existing international Phase Eight department store relationships SALES EVOLUTION¹ (GBPm)

Opened Hong Kong IFC

pop-up

Entered Mexico with 4

concessions in El Palacio del Hierro

Launched in Singapore
Launched further

concessions in Netherlands and Germany

Launched wholesale in US
Grew Mexico to 12

concessions

Further rollout in Hong

Kong and Singapore

Whistles acquired with

nascent US department store business

SPLIT BETWEEN EUROPE AND REST OF WORLD…

Entered Japan
Launched in Spain with El

Corte Ingles

Further rollout in Germany

across multiple fascias

Launched Whistles in

Hong Kong

Hobbs acquisition and

expansion of US presence

Launch with Hudson Bay

in Canada

Wholesale entry to Russia
Launch of Whistles in

Middle East and SE Asia

Further rollout in USA,

Germany and Japan 20 24 29 34 10 15 21 29 30 39 50 63 2015 2016 2017 2018

ROW Europe

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

TFG LONDON IS FOCUSED ON DELIVERING THE ONLINE OPPORTUNITY

Note:

1. Refers to actual numbers per financial year
2. Partner websites include House of Fraser, John Lewis Partnership, Debenhams, Next and Amazon
3. January year end until FY 15, 14 mth period to March 2016, and March year ends thereafter

SALES EVOLUTION¹ (GBPm)

Collect from store introduced
Launch of Inno, Manor, De

Bijenkorf and Breuninger

Single stock pool project completed
Bloomingdales online launched
Studio 8 launched online in the UK,

Germany and the Netherlands

Whistles acquired (Mar‘16)

SPLIT BETWEEN OWN SITE AND OTHER/MARKETPLACE SITES…

Current Director of Marketing &

Online Trading appointed

Launched segmented e-mail

marketing to online database via Adobe Campaign Manager

Launched personal styling online

booking

Hobbs acquired
Hudson Bay: partner launch
Focus on database growth through

e-receipt capture

New shipping options launched

(e.g. weekend delivery)

11 19 29 45 16 23 44 58 27 42 73 103 2015 2016 2017 2018

Partner websites Own Sites

E-commerce has scaled in recent years to form a key part of TFG London’s multi-channel strategy

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

TFG LONDON IS WELL POSITIONED FOR SUSTAINABLE GROWTH (CONTINUED)

TFG London has developed a strong track record in the identification, acquisition and management of new brands

› TFG London is confident of successfully embedding its operating model and strategic relationships into both Whistles and Hobbs

Our focus is on leveraging central functions to deliver sustainable and scalable profitability and to build the TFG London platform

› Consolidated back office functions including Finance, Logistics, Legal, Property and Procurement in place by YE 2019 BRAND DEVELOPMENT / ACQUISITION

Market conditions continue to be challenging in the UK, which creates opportunity for market share growth

› Jacques Vert Group and EAST entered administration in April/May 2018

Landlords and department store partners are actively proposing new stores and concessions on favourable terms

› The Group are trialling mat extensions in selected locations to drive share of floor spend MARKET SHARE GROWTH 42

RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

TFG LONDON IS WELL POSITIONED FOR SUSTAINABLE GROWTH

TFG London operates a retail model focused on sustainable growth where costs are substantially flexed with sales

› Retail sales are predominantly generated Online (33%) and through turnover rent based concessions (35%) › Staffing costs increasingly flexed with sales, and further enhanced through the introduction of Shared Staffing › Physical store estate benefits from short average lease lengths › Clothing and accessories sourced on a ‗test and repeat‘ model, with c.45% near sourcing in Europe and Turkey

Incumbent management have a strong track record, and have been retained in the business since acquisition in January 2015

TRADING MODEL & MANAGEMENT

TFG London’s brands are outperforming the broader market through the delivery of a true omni-channel proposition

› Online represents 33% of TFG London brand sales, versus 17% on the acquisition of Phase Eight in January 2015 › Delivery of OneStock project has provided ‗full enterprise‘ availability to online and offline channels

The focus remains on delivering sustainable growth across own and third party channels to market

› New online partners and marketplace launches › Increased focus on international online sales (+250% since January 2015) E-COMMERCE

The market potential remains significant for our brand portfolio, building on the profitable platform that has been established

› International grown by 112% since January 2015 (59% excluding acquired brands) › Focus is now on growing Key Markets where we can achieve scale through our brand portfolio › TFG London‘s international model mimics the successful retail approach designed in the UK › International operating profitability continues to grow across all brands at limited capex risk › Significant growth opportunity for Hobbs and Whistles INTERNATIONAL 41

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

#1

CONTENT

Business Overview Current Performance Strategic Focus & Next Steps #2 #3

44

TFG AUSTRALIA

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

RAG IS 5 SPECIALTY BRANDS

Differentiated value,

n-trend women’s

athleisurewear A leading mid-market,

n-trend menswear

brand One of the fastest growing value,

n-trend

menswear brands The only known mono brand mid-market,

n-trend big and tall

menswear retailer A leading mid-market, fashionable menswear brand

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

RAG IS AMONGST AUSTRALIA‘S BEST PERFORMING RETAILERS

Sales +14%(8 mths) Stores 431 Omni-Channel 5 Specialty Brands +10 years

f continuous

growth Targeted Product strategy

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

Typical customer: — He wants to look smart and up to date without standing out from the crowd — He is often shopping for dressy attire or an occasion — 18-35 year old males Product positioning: Smart casual, on-trend sharp designs Stores (Mar-18) 116 Price point Mid-market 48

RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

Fashion Price

Zara Cotton On Just Jeans Ed Harry Lowes GAZMAN Rodd & Gunn Ben Sherman Oxford Calibre Politix Saba GAP Topshop H&M Menswear Only Menswear and Womenswear Factorie

Discount department stores Department stores

Country Road Jeans West Jay Jays Marcs Trenery MJ Bale Herringbone

Sportscraft

Witchery Uniqlo Fletcher Jones Ron Bennett

FOCUSED ON FASHIONABLE ―MID-MARKET‖ & ―VALUE‖ SEGMENTS

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

Stores (Mar-18) 145 Price point Value Typical customer: — He wants to look good when going out and he appreciates value — Average Australian 18-40 year old males Product positioning: Affordable on-trend menswear 50

RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

`

Stores (Mar-18) 100 Price point Mid-market Typical customer: — He has an urban, fast-paced lifestyle and is usually shopping for a night out or an occasion where he likes to stand out — Fashion conscious 14-27 year old males Product positioning: Fashionable mid-market menswear for going out 49

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

Stores (Mar-18) 32 Price point Value Typical customer: — She wears fashionable, high performance athleisurewear at a great price — Active 18-40 year old females Product positioning: Athleisure with a focus on value but with high performance technical fabrics 52

RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

Stores (Mar-18) 38 Price point Mid-market Typical customer: — He is the previously underserved bigger, broader, and taller man who wants to look good when he goes out — He is willing to spend more per unit and buys more units per transaction — 18-45 year old males requiring large sizes Product positioning: One-stop-shop for the big and tall Australian male 51

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

CONTINUED… PHYSICAL STORE ROLLOUT STRATEGY

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Note: 1. Store numbers pre 2004 are indicative 2. Store numbers exclude online stores , temporary stores and Rockwear stores identified for closure on acquisition Created Founded First store opens Acquired Acquired Founded Founded

1 2 3 4 6 7 9 10 11 13 16 18 21 24 21 24 27 41 57 74 86 177 230 209 248 274 325 302 342 362 400 50 100 150 200 250 300 350 400

Store Numbers

431

2018: 31 Net New stores 10 expansions 431 stores

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

#1

CONTENT

Business Overview Current Performance Strategic Focus & Next Steps #2 #3

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

ACQUISITION REVIEW…

Information above is based on management accounts.

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

DRIVEN INVESTMENT IN… ―DIGITAL‖ CHANNELS

April May June July August September October November December January February March Sales 8,724,597 9,070,146 9,420,309 10,026,152 10,263,402 10,774,575 11,319,731 11,889,293 12,462,912 13,104,144 13,698,310 14,243,761 % of RAG 2.4% 2.5% 2.5% 2.6% 2.7% 2.8% 2.9% 3.0% 3.1% 3.2% 3.3% 3.4% 2.0% 2.2% 2.4% 2.6% 2.8% 3.0% 3.2% 3.4% 3.6% 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000

+65% growth in Digital revenues Steady growth as a % of Group Sales

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

#1

CONTENT

Business Overview Current Performance Strategic Focus & Next Steps #2 #3

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

ACQUISITION REVIEW…

Information above is based on management accounts.

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

STORE FOOTPRINT…. STRATEGIC GROWTH TARGETS

700+ Target stores ~110 220+ 80+ ~120 100+ 100+ Tarocash yd. Connor Johnny Bigg Rockwear 117 99 157 53 37 463 Store roll-out 114 116 98 100 137 145 38 25 26 32 400 431 FY2017 FY2018 FY2019 B TFG Africa brand 59

RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

RAG – LONG TERM STRATEGIC GOALS

BRANDS Continue to add Growth Brands to the portfolio LEVERAGE Shared Services – managed as a strategically efficient – standardisation OPTIMUM Store Optimisation – testing of the optimal store

GROWTH COSTS

STORES Maximise store portfolio in Australia & New Zealand CUSTOMER Uniqueness of Brands maintained at all times – Target unique markets STORES Increase store sizes as opportunity evolves CHURN Churn low profitability stores INVEST Invest for scalability and leverage COSTS Cost Management – key metrics maintained – % wages % rent % Mkt % DIGITAL Double % Growth and investment in Digital Channels

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

TFG AFRICA − Cautiously positive around SA outlook − Credit – outlook more positive given recent court ruling however uncertainty around future legislation − Gross margin to be maintained

Product price deflation anticipated at similar levels to last year

− Ongoing focus on our existing key strategic initiatives

Superior customer experiences
Cost control
Working capital management
Capital optimisation

− Additional focus - strategic investment in digital transformation TFG LONDON − Continuing uncertainty around Brexit − Building TFG London platform − Back office integration − Continued implementation of business model into Whistles and Hobbs

OUTLOOK

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OUTLOOK

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THANK YOU

RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

TFG AUSTRALIA − Outlook remains stable − Continued strong growth − Test launch TFG Africa brand − Continuing store roll out of existing brands GROUP − Gross margin to be expanded − Retail turnover for first 7 weeks:

TFG Australia and TFG London ahead of management expectation.
TFG Africa experienced volatile trading in first 7 weeks largely driven by move of Easter, shift in

school holidays and introduction of VAT increase. Despite these factors, turnover is in line with management‘s expectation.

OUTLOOK (CONTINUED)

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APPENDICES

RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

THIS ANNOUNCEMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE FOSCHINI GROUP LIMITED AND ITS SUBSIDIARIES, WHICH BY THEIR NATURE INVOLVE RISK AND UNCERTAINTY BECAUSE THEY RELATE TO EVENTS AND DEPEND ON CIRCUMSTANCES THAT MAY OCCUR IN THE FUTURE.

DISCLAIMER

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TFG MISSION AND VALUES

MISSION

To be the leading fashion lifestyle retailer in Africa whilst growing our international footprint by providing innovative products, creative customer experiences and by leveraging our portfolio of diverse brands to differentiate our offering. Our talented and engaged people will always be guided by our values, social conscience and customer-centric mindset.

VALUES

TFG believes that teamwork coupled with professionalism in all aspects of retailing will continue to be the foundation for the future. PASSIONATE ABOUT SERVICE We passionately and truly believe that the customer comes first RESILIENCE We have the courage of our convictions and the boldness to constructively challenge INTEGRITY Our word is our honour, we are honest and ethical DIGNITY AND RESPECT We treat everyone the way we want to be treated EMPOWERMENT We embrace diversity and create equal opportunity for all in a supportive environment EXCELLENT PERFORMANCE We are accountable and drive performance in a creative and innovative way

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

ECONOMIC SOURCES

Operating context – South Africa

Latest period Comparative period CPI % y-o-y (March 2018 vs March 2017) 3,8 6,1 GDP (2017 y-o-y growth vs 2016 y-o-y growth) 1,3 0,6 FNB/BER Consumer Confidence Index (Q1 2018 vs Q1 2017) +26

5

RMB/BER Business Confidence Index (Q1 2018 vs Q1 2017) 45 40

Source: Stats SA, BER

Operating context – United Kingdom

CPI % y-o-y (March 2018 vs March 2017) 2,5 2,3 GDP (2017 y-o-y growth vs 2016 y-o-y growth) 1,8 1,9 GfK Consumer Sentiment Barometer (March 2018 vs March 2017)

7
6

CBI Business Optimism Indicator (Q2 2018 vs Q2 2017)

4

1

Source: Office for National Statistics, GfK, Tradingeconomics.com

Operating context - Australia

CPI % y-o-y (March 2018 vs March 2017) 1,9 2,1 GDP (2017 y-o-y growth vs 2016 y-o-y growth) 2,1 2,8 Westpac Melbourne Institute Index of Consumer Sentiment (y-o-y March 2018 vs March 2017) 3,2 0,6 NAB Business Confidence (March 2018 vs March 2017) 7 6

Source: Australian Bureau of Statistics, Westpac-Melbourne Institute, Tradingeconomics.com, National Australia Bank, Reserve Bank of Australia

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

FOOTPRINT: TFG AFRICA

2 458

12 104 22 35 04 05 441 211 96 153 282 199 743 190 143 12

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

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− TFG Africa: 8 countries

South Africa: 2 458 outlets
Rest of Africa: 194 outlets in 7 countries

4 034 OUTLETS IN 32 COUNTRIES: − TFG International: 24 countries

TFG London: 935 outlets
TFG Australia: 447 outlets

GROUP FOOTPRINT

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72

− Diversification across different merchandise categories strengthens the Group − TFG International contribution increased to 29,7% (March 2017: 19,7%) − Turnover contributions across other merchandise in comparison to prior year:

Clothing & footwear 79,3% vs 74,6%
Cellphones 6,7% vs 8,2%
Jewellery 5,2% vs 6,3%
Homeware & furniture 5,0% vs 6,1%
Cosmetics 3,8% vs 4,8%

Clothing & footwear

Fashion

21,0%

Clothing & footwear

Sport

19,6%

Clothing & footwear – TFG International

29,7%

Clothing & footwear

Value

9,0%

Cellphones

6,7%

Jewellery

5,2%

Homeware & furniture

5,0%

Cosmetics

3,8% 79,3%

Clothing & footwear

TURNOVER: MERCHANDISE CATEGORY CONTRIBUTION

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RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018

71

Stores Concessions Total outlets

Europe

Germany 2 65 67 Switzerland 11 31 42 Sweden 1 12 13 Netherlands

7

7 Belgium

4

4 Latvia

2

2 Estonia

1

1 Spain

17

17 UK & Ireland 206 467 673

Middle East

Kuwait

2

2 United Arab Emirates

8

8 Bahrain

2

2 Qatar

3

3 Saudi Arabia

6

6

North America

USA 2 35 37 Mexico

13

13 Australia 432 15 447 New Zealand 15

15

Australasia

FOOTPRINT: TFG LONDON AND TFG AUSTRALIA

Singapore

5

5 Japan

5

5 Hong Kong 8 2 10 Malaysia

1

1 Macau

2

2

Asia

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37 March 2018 Reviewed Rm March 2017 Audited Rm ASSETS Non-current assets Property, plant and equipment 2 861,9 2 469,0 Goodwill and intangible assets 7 667,2 4 675,9 Deferred taxation asset 620,6 483,6 11 149,7 7 628,5 Current assets Inventory 6 773,6 5 511,2 Trade receivables – retail 7 573,8 7 000,7 Other receivables and prepayments 821,8 771,0 Concession receivables 296,8 246,1 Cash and cash equivalents 1 206,1 878,5 16 672,1 14 407,5 Total assets 27 821,8 22 036,0 EQUITY AND LIABILITIES Equity attributable to equity holders of The Foschini Group Limited 13 267,8 10 515,3 Non-controlling interest 4,5 4,2 Total equity 13 272,3 10 519,5 LIABILITIES Non-current liabilities Interest-bearing debt 4 825,7 4 442,2 Put option liability 72,7 74,7 Cash-settled share incentive scheme – 6,8 Operating lease liability 335,1 255,7 Deferred taxation liability 829,4 337,9 Post-retirement defined benefit plan 215,8 233,1 6 278,7 5 350,4 Current liabilities Interest-bearing debt 4 524,9 3 307,0 Trade and other payables 3 608,2 2 751,3 Operating lease liability 30,7 15,2 Taxation payable 107,0 92,6 8 270,8 6 166,1 Total liabilities 14 549,5 11 516,5 Total equity and liabilities 27 821,8 22 036,0

Condensed consolidated statement of fjnancial position

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38 Year ended 31 March 2018 Reviewed Rm Year ended 31 March 2017 Audited Rm % change Revenue 31 536,5 26 413,6 Retail turnover 28 593,0 23 548,7 21,4 Cost of turnover (13 591,9) (11 845,2) Gross profit 15 001,1 11 703,5 Interest income 1 755,8 1 736,9 Other income 1 187,7 1 128,0 Trading expenses (13 779,0) (10 757,2) Operating profit before acquisition costs and finance costs 4 165,6 3 811,2 9,3 Acquisition costs (79,4) – Finance costs (696,6) (607,4) Profit before tax 3 389,6 3 203,8 Income tax expense (953,5) (851,3) Profit for the year 2 436,1 2 352,5 Attributable to: Equity holders of The Foschini Group Limited 2 434,8 2 351,4 Non-controlling interest 1,3 1,1 Profit for the year 2 436,1 2 352,5 Earnings per ordinary share (cents) Total Basic 1 082,6 1 108,0 (2,3) Diluted (basic) 1 072,3 1 098,6 (2,4) Earnings per ordinary share (excluding acquisition costs) (cents) Headline 1 136,5 1 099,2 3,4 Diluted (headline) 1 125,7 1 089,9 3,3

Condensed consolidated income statement

GREYMATTER & FINCH # 12303

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