GROUP ANNUAL RESULTS for the 52 weeks ended June 2015 Agenda - - PowerPoint PPT Presentation

GROUP ANNUAL RESULTS

for the 52 weeks ended June 2015

2 2

Agenda

• Business overview
• Strategic distinction
• Review of the financial period
• Credit management
• Strategic focus areas
• Outlook
• Questions

Business overview

4

Impact of credit on Truworths in the current economic climate

• Truworths targets mass middle income consumers - the market currently

under the most financial pressure.

• But the credit environment is steadily improving after one of the longest

credit contractions in many years.

• Truworths credit customer base exceeds 3.2 million customers (2.7 million
• f which are active credit customers).
• We can communicate with approximately 13 million people of which 3.2

million are account customers.

• Truworths owns its own aspirational brands and uses credit as ‘an enabler of sales of

quality fashion at medium to premium prices’ to its customers.

• This exposure to credit means Truworths is susceptible to periodic swings in the

credit cycle and will underperform cash retailers in downward cycles, especially in prolonged ones such as the current one, a trend which is likely to reverse as the credit environment improves.

• While credit is seen as risky in downward credit cycles the opposite is valid when the

credit cycle improves and Truworths is in the ‘sweet spot’ instead of in ‘the eye of the storm’.

5 5

Improving credit environment

Industry:

• Credit market is improving.
• National credit regulator shows slightly improving book

quality across the industry with the credit industry total book sizes growing but new credit granting flat to reducing.

• TransUnion’s Consumer Credit Index indicates a very

positive improvement in credit health.

• Principa’s benchmarking of credit retailers indicates

improvement of credit books across the industry (year-on- year).

6 6

Customer Income

Current Monthly Income

Truworths Group (Customers who’s credit limits have changed) South African Population Less than R10 000 73% 83% R10 000 to R25 000 21% 13% R25 000 plus 6% 4% Total 100% 100%

Monthly Income

South African Population Year-on-year growth 2012 2013 2014 Less than R10 000 (1.5%) (1.4%) (1.2%) R10 000 to R25 000 12.3% 4.6% 6.4% R25 000 plus (1.4%) 23.2% 5.5%

*South African Advertising Research Foundation AMPS research

7

Industry: TransUnion SA Consumer Credit Index

(Source: TransUnion SA Consumer Credit Index)

• The clear break above 50 indicates

consumer credit health improved in 2015 at its fastest pace since Q1 2012.

• Q1 and Q2 2015 are at 54.4

This index measures consumer credit health where 50 is the break-even level between improvement and deterioration.

2012 Q1 2014 Q4

8

Industry: Good/Bad balance ratio

(Source: Principa)

Year-on-year movement Retailer Total Good (0-1)/Total Bad (2+) balance ratio

2007-02 2007-05 2007-08 2007-11 2008-02 2008-05 2008-08 2008-11 2009-02 2009-05 2009-08 2009-11 2010-02 2010-05 2010-08 2010-11 2011-02 2011-05 2011-08 2011-11 2012-02 2012-05 2012-08 2012-11 2013-02 2013-05 2013-08 2013-11 2014-02 2014-05 2014-08 2014-11 2015-02 2015-05

• 0.2
• 0.15
• 0.1
• 0.05

0.05 0.1 0.15 0.2 0.25 Improvement slows from Nov 2010 to Dec 2011 Improvement from early 2015

%

Good = Current or missed one payment, Bad = Consumer overdue for 2+ payments Deterioration starts during Jan 2012 and slows down from Nov 2014

9 9

Growth in national credit granted

(Source: National credit regulator statistics, Credit Bureau Monitor, first quarter 2015 statistics)

%

Growth in credit granted increased from 2015 Q1 Slowdown in growth from 2011 Q3 to 2013 Q1

(40) (20)

• 20

40 60 80 2008-Q4 2009-Q1 2009-Q2 2009-Q3 2009-Q4 2010-Q1 2010-Q2 2010-Q3 2010-Q4 2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 2013-Q4 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 Credit facilities Unsecured credit

10 10

Industry: Credit facilities book quality

(Source: National credit regulator statistics, Credit Bureau Monitor, first quarter 2015 statistics)

76.4 78.2 80.0 82.0 81.2 80.1 81.6 82.5

• 10

20 30 40 50 60 70 80 90 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 Current 30 Days 31-60 Days 61-90 Days 91-120 Days 120+ Days

Credit facilities book is improving, more customers are current year-

• n-year

%

Credit facilities: Credit and store cards, bank overdraft

11 11

Industry: Unsecured credit book quality

(Source: National credit regulator statistics, Credit Bureau Monitor, first quarter 2015 statistics)

73.9 72.6 73.4 76.2 78.2 74.0 70.1 71.1

• 10

20 30 40 50 60 70 80 90 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 Current 30 Days 31-60 Days 61-90 Days 91-120 Days 120+ Days

Unsecured credit book is improving, more customers are current year-on-year

%

Unsecured facilities: Micro-lending and personal loans

12 12

Improving credit metrics

• Credit metrics in the Truworths book have improved and are

now in line with targeted norms and improving faster than the Industry.

• Truworths continues to gain share of the balance.
• Credit granting criteria in the Identity book has been

tightened as the book has deteriorated over the past year and is lagging the Industry.

• This brings the Group’s total debtors’ book in line with our

targeted norms at the end of the period. (The doubtful debt allowance was reduced from 13% in December 2014 to 12.5% in June 2015.)

• If this scenario continues the debtors allowance percentage

could be reduced and bad debt could continue to improve during the 2016 financial period.

• Group active account base growth of 3%.
• Gross trade receivables growth of 11%.
• Good expected sales (next 12 months) from new accounts

and quality of the book in line with our target.

13

Industry compared to the Group’s book

(Source: Principa Credit Compass)

( 30) ( 20) ( 10)

• 10

20 30 40 Industry year on year Truworths year on year Identity year on year

Industry Identity

Total Good (0-1) Total Bad (2+) Balance Ratio

% Truworths Industry, Truworths and Identity improving

14

% 4+ Cycle balances (Retail clothing industry benchmark)

(Source: Principa Credit Compass)

• 2

4 6 8 10 12 14 16 Feb 2007 May 2007 Aug 2007 Nov 2007 Feb 2008 May 2008 Aug 2008 Nov 2008 Feb 2009 May 2009 Aug 2009 Nov 2009 Feb 2010 May 2010 Aug 2010 Nov 2010 Feb 2011 May 2011 Aug 2011 Nov 2011 Feb 2012 May 2012 Aug 2012 Nov 2012 Feb 2013 May 2013 Aug 2013 Nov 2013 Feb 2014 May 2014 Aug 2014 Nov 2014 Feb 2015 May 2015 Industry Truworths Group

Industry is getting worse Truworths is improving

This shows the percentage of the book balance that is badly (4+) delinquent. 4+ accounts are 90 days or more behind in payments.

%

15

Share of balance (Clothing retailers)

(Source: Total Bureau Solution (TBS))

• 5

10 15 20 25 30 35 Mar 2013 Apr 2013 May 2013 Jun 2013 Jul 2013 Aug 2013 Sep 2013 Oct 2013 Nov 2013 Dec 2013 Jan 2014 Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014 Aug 2014 Sep 2014 Oct 2014 Nov 2014 Dec 2014 Jan 2015 Feb 2015 Mar 2015

Retailer 6 Retailer 7 and YDE Identity Retailer 5 Retailer 2 Retailer 3 Retailer 4 Retailer 1

Truworths share of balance with its’ customers is growing

Truworths

Balance is a better indication of sales, as retailers have different instalment calculations %

16

Impact of the credit environment

.

June 2015 % June 2014 % June 2013 % June 2012 % June 2011 % Retail sales growth 7 7 13 10 14 Like-for-like sales growth 1 1 8 6 9 Cash sales growth 6 11 16 5 9 Credit sales growth 8 5 9 16 16 Credit sales growth to customers with more than 24 month old accounts 9 12 13 10 14 Credit sales growth to customers with less than 24 month old accounts 4 (5) 8 23 19 Trade receivable growth 11 12 11 14 18 New account growth 7 1 6 10 11 Account acceptance rate 30 26 31 38 38 The above numbers exclude Earthchild and Naartjie

9% 4%

17 17

Credit sales growth 1st half compared to 2nd half

Credit sales growth: all accounts Credit sales growth: 24 months and older Credit sales growth: less than 24 months Full period % Full period % 1st half % 2nd half % Full period % 1st half % 2nd half % June 2015 8 9 9 9 4 (4) 8 June 2014 5 12 12 12 (5) (1) (4) June 2013 9 13 12 13 8 17 (9) June 2012 16 10 11 9 23 21 2

18 18

Trading for the 1st 7 weeks of 2016

1st 7 weeks

• f 2016

June 2015 2nd half June 2015 1st half Credit sales growth 17% 11% 5% Cash sales growth 11% 8% 5% Group retail sales growth (excl. Earthchild and Naartjie) 15% 10% 5% Gross profit growth 18% 11% 3% Retail sales for the first 7 weeks of the 2016 period have increased by 15% over the corresponding 7 weeks in the prior period with gross profit increasing 18% due to markdowns decreasing 0.2%.

Strategic distinction

20 20

Strategic distinction – Our DNA

Our learnings; Our Strategic Distinction is an awareness of what makes us different and unique –

• ur own DNA

Truworths’ Purpose is to serve the youthful, fashionable South African to enable them to feel confident. We do so with:

– Aspirational brands all owned by Truworths – High quality merchandise by competitive standards – Authentic fashion but not too young and not too sophisticated – Good value but never cheap – Fashion styling of international standard but modified to cater for our unique offering appropriate for our customers – Aggressive promotional activity

21 21

Truworths’ Purpose

“The youthful, fashionable South African wants to look attractive and successful and feel enthused with confidence. To this end, Truworths entices them into the most exciting and visually appealing real and virtual retail environments where they can shop effortlessly for an innovative and adventurous blend of colour, fabric, value and fashion styling of an

international standard.”

22 22

Truworths business overview/uniqueness

• Current strategy sustainable and unique for mass mainstream customers in South Africa.
• Excellent real estate with prime locations in the top malls.
• Aspirational and desirable ‘owned’ brands.
• Best of breed systems and processes.
• Truworths credit customer base exceeds 3.2 million customers (2.7 million of which are

active credit customers).

• We can communicate with approximately 13 million people of which 3.2 million are account

customers.

• Follow rigorous credit management processes with best of breed systems.
• Well positioned for further expansion into Africa.
• Ladies, men's and kids emporiums are unique because of unique emporium store and

‘owned’ brands.

• Credit environment starting to turn positive for first time in 3 years.
• Lessons learned in product and merchandise processes which auger well for future

success.

23 23

Our uniqueness: ‘One of a kind’

BEST OF BREED

Department Stores

• Many ‘International’

Brands and Master Brand (Store) – Consignment or wholesale

• Extremely Wide

Variety - better end

• Best seller on trend

available in many brands, items and categories

• Adventure and Interesting
• Exciting
• Variety of fixtures and

design

TRUWORTHS is unique -“One of a Kind” – We are seen by customers as a Specialty Store with Best of Breed Specialty and also some Best of Breed Department Store features.

ONE OF A KIND TRUWORTHS

• Many Brands all
• wned (International

Image) and Master Brand (Truworths)

• Quite Wide Variety

‘Designed’ Better end Fashion

• Best seller on

trend available in many brands, items and categories

• ‘Single focused

answer to “Who is the Customer’”

• Unique Business

model

• Unique store design
• Adventure, variety of

themes in store;

• Unique metrics

BEST OF BREED Specialty Stores

• Master Brand
• wned (Store)
• Reasonable Variety

yet specialized and focused

• Interesting
• Exciting
• Consistent Fixtures

and design

• ‘Single focused

answer to “Who is the Customer’”

Review of the financial period

25 25

Review of financial performance

• Sale of merchandise growth much stronger in the

second half.

• Increased markdowns and therefore reduced gross

margin for the full year.

• Improved performance on the debtors’ book and slower

growth in trade receivable costs.

• Continuing signs of improving credit metrics in the

Truworths book and the slight deterioration seen in the Identity book has been addressed.

• Strong cash generation from operations.
• Continued investment for growth in stores and systems.
• Earthchild and Naartjie integrated into the business.

26 26

Financial targets

June 2016 Targets June 2015 Actual June 2015 Targets June 2014 Actual Gross margin (%) 54 - 57 55.2 54 - 57 55.9 Operating margin (%) 32 - 36 30.5 32 - 36 32.1 Return on equity (%) 37 - 42 35 37 - 42 37 Return on assets (%) 41 - 46 38 41 - 46 42 Inventory turn (times) 5.5 - 6.0 4.7 5.5 - 6.0 5.3 Asset turnover (times) 1.2 - 1.5 1.2 1.2 - 1.5 1.3

27 27

Financial performance

June 2015 Full year June 2015 2nd half June 2015 1st half Retail sales growth on prior period (excl. Earthchild and Naartjie) 7% 10% 5% Retail sales growth on prior period (incl. Earthchild and Naartjie) 8% 12% 5% Gross margin 55.2% 55.1% 55.3% Headline earnings per share growth on prior period 3% 8% (0.4%) Fully diluted headline earnings per share growth on prior period 4% 8% 1%

28 28

Divisional retail sales

June 2015 Rm June 2014 Rm Full period growth (incl. Earthchild and Naartjie) %

Full period growth (excl. Earthchild and Naartjie) % 2nd half growth % 1st half growth % Truworths ladieswear 4 387 4 258 3 3 5 1 Truworths menswear 2 386 2 168 10 10 13 8 Truworths designer emporium* 1 464 1 417 3 2 6 (2) Truworths kids emporium** 457 289 58 31 34 29 Other*** 999 911 10 10 12 8 Truworths emporium 9 693 9 043 7 6 8 4 Identity 1 951 1 719 13 13 17 11 Group retail sales

11 644 10 762 8 7 10 5

YDE agency sales

297 305 (3)

* Daniel Hechter, LTD and Earthaddict ** LTD Kids, Earthchild and Naartjie *** Cellular, Truworths Jewellery and Cosmetics

29 29

Load Shedding Index

%

• Approximately R125 million lost in retail sales from November 2014 to July

2015.

• Average % retail sales lost is 1.4% from November 2014 to July 2015.
• Highest % retail sales lost per week was 6.3%.
• 1

2 Nov 2014 Dec 2014 Jan 2015 Feb 2015 Mar 2015 Apr 2015 May 2015 Jun 2015 Jul 2015

Estimated monthly retail sales lost due to load shedding

30 30

Retail sales growth analysis

Retail sales Rm Retail sales growth LFL store growth Product inflation Unit growth June 2015* 11 539 7% 1% 6% 1% 1st half* 6 232 5% (1%) 6% (1%) 2nd half* 5 307 10% 4% 5% 5% June 2014 10 762 7% 1% 9% (2%) June 2013 10 074 13% 8% 2% 1% June 2012 8 921 10% 6% 8% 2% June 2011 8 080 14% 9% 4%

• June 2010

7 118 11% 4% 4% 7%

* 2015 excludes Earthchild and Naartjie

31 31

Group number of stores

June 2015 Stand- alone stores Dept’s within stores Total

Truworths 334

• 334

Identity 230

• 230

Uzzi 52 174 226 Earthchild and Earthaddict* 41

• 41

Truworths Man 34 319 353 Naartjie* 28

• 28

YDE 21

• 21

Daniel Hechter 3 352 355 LTD 2 146 148 Ginger Mary 2 262 264 Total 747

* 62 stores acquired through acquisition of Earthchild, Earthaddict and Naartjie and 7 stores opened subsequently.

32 32

Trading space

Trading m2 000 June 2015 June 2014

Truworths 268 253 Identity 65 60 Uzzi 4 4 Earthaddict and Earthchild 3

• Naartjie

2

• Total (excl YDE)

342 317 YDE 7 7 Total 349 324 Growth on prior period 7.7% 10.3% Growth excl. Earthchild and Naartjie 6.1%

33 33

Rest of Africa corporate stores

Retail sales June 2015 Rm Retail sales June 2014 Rm Growth on prior period

• No. of

stores June 2015

• No. of

stores June 2014

Namibia 219 196 12% 16 12 Botswana 75 63 19% 8 8 Swaziland 71 68 4% 5 5 Zambia 24 20 20% 5 3 Ghana 22 17 29% 4 2 Lesotho 15 12 25% 2 2 Mauritius 12 10 20% 2 2 Nigeria 8 7 14% 2 4 Total 446 393 13% 44 38

• Retail sales from the rest of Africa contributed 3.8% to Group retail sales (2014: 3.8%).
• The sales above exclude stores closed in both Lesotho and Nigeria.

34 34

24 719 28 802 29 965 29 307 30 462 32 979 34 849 35 656 34 586 34 857 20 000 22 000 24 000 26 000 28 000 30 000 32 000 34 000 36 000 38 000 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun 2010 Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015

Sales densities trend

R per m2 Compound growth rates: Sales density Jun 10 year 5%, Jun 5 year 3% * The above trading density excludes Earthchild and Naartjie

*

35 35

Analysis of trading expenses

June 2015 Rm June 2014 Rm Growth on prior period Depreciation and amortisation 221 184 20% Employment costs 1 186 1 024 16% Occupancy costs 1 102 954 16% Trade receivable costs 960 916 5% Other operating costs 647 590 10% Trading expenses 4 116 3 668 12%

36 36

Analysis of trading expenses (continued)

Trading expenses increased 12% compared to the prior period as follows:

• Depreciation and amortisation (20% growth):

– Capital expenditure of R 380 million in the period mainly due to store expansion.

• Employment costs (16% growth):

– Excluding non-comparable store costs, incentive bonuses, special payments and expenses relating to the various share schemes, comparable employment costs increased by 8%.

• Occupancy costs (16% growth):

– A net 106 (37 excluding Earthchild and Naartjie) stores opened between Jun 2014 to Jun 2015. – Trading space growth of 7.7% on Jun 2015 (excluding Earthchild and Naartjie: 6.1%). – Excluding non-comparable store costs, comparable occupancy costs increased 9%. – Normal rental escalations averaged 7% during the period. – Electricity increase of 18%, excluding non-comparable store costs, increase of 8%.

37 37

Analysis of trading expenses (continued)

• Trade receivable costs (5% growth):

– The doubtful debt allowance remained unchanged at 12.5% of gross trade receivables. – Net bad debt increased by 7% (excluding debt sold 8% increase). – The interest income earned (including notional interest) on the debtor’s book during the period = R969 million (2014: R828 million) – Trade receivable costs = R960 million (2014: R916 million) – Surplus = R9 million (2014: Deficit = R88 million).

38 38

HEPS, DPS and dividend cover

Compound growth rates: HEPS: June 10 year 15%, 5 year 9% Compound growth rates: DPS: June 10 year 19%, 5 year 15% HEPS / DPS (cents) Dividend cover (times) 262 326 362 385 405 456 527 571 577 594 1.7 1.6 1.6 1.5 1.5

• 0.2

0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0

• 100

200 300 400 500 600 700 Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 DPS (cents) HEPS (cents) Dividend cover (times)

39 39

Statements of financial position

June 2015 Rm June 2014 Rm Growth on prior period % Non-current assets 1 876 1 360 38 Cash and cash equivalents 1 462 1 588 (8) Trade and other receivables 4 637 4 182 11 Inventories 1 074 863 24 Other current assets 108 83 30 Total assets 9 157 8 076 13 Total equity 7 504 6 642 13 Non-current liabilities 192 88 118 Current liabilities 1 461 1 346 9 Total equity and liabilities 9 157 8 076 13 Net asset value (cents per share) 1 791 1 605 12

40 40

Increase in inventory

June 2015 Rm June 2014 Rm Growth on prior period Inventory 968 838 15.5% Add: fabric and work-in-progress (manufacturing) 39 25 56.0% 1 007 863 16.7% Add: Earthchild and Naartjie 67

• 100.0%

Total inventory 1 074 863 24.4%

• Excluding the inventory of Earthchild and Naartjie, strategic fabric held and work in progress, gross

inventory increased 15.5%.

• The Group’s net inventory balance increased by 24.4% to R1.1 billion.

41 41

Cash flows for the period

2 654 476 1063 3 1 099 61 2 084 1 698 319 270 65 4 134 ( 500)

• 500

1 000 1 500 2 000 2 500 3 000 3 500 Cash flows EBITDA Working capital movements Interest received Other Tax paid CAPEX to maintain

• perations

Free cash flows Dividends paid CAPEX to expand

• perations

Investment in subsidiaries Financing activities Other Net cash

• utflow

270

42 42

Capital expenditure

June 2016 Committed Rm June 2015 Actual Rm June 2014 Actual Rm Growth

• n

prior period Store development 322 280 232 21% Distribution facilities, land and buildings 333 28 5 n/a Computer infrastructure 34 27 26 4% Head office refurbishment 21 6 6

• Motor vehicles

5 4 6 (33%) Fixed assets 715 345 275 Intangible assets: computer software 52 53 14 n/a Total assets 767 398* 289 * June 2015 includes R18 million relating to acquisitions

43 43

Capital management

• Share buy-backs:

– During the current period the Group did not repurchase any shares. – Since inception of the share buy-back programme in 2002, 95 million shares (R2.9 billion) have been repurchased at an average cost of R30.85. – The balance of 10.4 million shares (2.4% of total shares in issue) are held as treasury shares.

Credit management

45 45

Key trade receivable statistics

June 2015 June 2014 Number of active accounts (000’s) 2 672 2 586 Growth in active accounts 3% 1% Gross trade receivables (before doubtful debt allowance) (Rm) 5 229 4 720 Growth in gross trade receivables (before doubtful debt allowance) 11% 12% Credit sales as a % of retail sales 70% 71% Qualifying payment 90% 90% Applicants granted credit 30% 26%

46 46

Key trade receivable statistics (continued)

June 2015 June 2014 Active account holders able to purchase at period-end 83% 83% Overdue values as a % of gross trade receivables 14% 14% Net bad debt as a % of credit sales 7.9% 8.0% Net bad debt as a % of gross trade receivables 12.5% 12.9% Doubtful debt allowance as a % of gross trade receivables 12.5% 12.5% Trade receivable interest as a % of gross trade receivables 18.5% 17.6%

47 47

30% 2 672 500 1 000 1 500 2 000 2 500 3 000 20 25 30 35 40 45 50 55 60 65 70 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun 2010 Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 Acceptance rate Number of active accounts (000's)

Active accounts vs. acceptance rate

Acceptance Rate %

• No. of active

accounts '000

48 48

New account applications

954 1 225 1 374 1 527 1 664 1 803

• 200

400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 Jun 2010 Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 Number of applicants (000's)

Number of applicants ‘000

49 49

257 318 488 549 491 543 630 724 828 969 156 280 464 432 385 390 533 739 916 960

• 200

400 600 800 1 000 1 200 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun 2010 Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 Trade receivable interest (Rm) Trade receivable costs (Rm)

Trade receivable costs vs. interest received

Rm

2006 to 2012: Surplus on trade receivable interest over costs 2013 to 2014: Deficit on trade receivable interest over costs 2015: Surplus on trade receivable interest over costs

50 50

87 85 83 84 85 86 84 82 83 83 13 15 17 16 15 14 16 18 17 17

• 10

20 30 40 50 60 70 80 90 100 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun 2010 Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 Shoppable Delinquent

Active account holders able to purchase

%

51 51

85 83 80 80 83 84 83 80 80 80 7 8 11 10 8 8 9 11 11 11

• 10

20 30 40 50 60 70 80 90 100 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun 2010 Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 < 30 days 30 - 59 days 60 - 89 days 90 > days

Ageing of debtors book

%

52 52

67.3 69.2 72.5 75.5 76.8

• 10

20 30 40 50 60 70 80 90 Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015

Interest bearing plans as a % of the total book

%

53 53

Group book quality index

As the quality of the book improves, so the line trends lower

Strategic focus areas

55 55

Strategic focus areas

• Kidswear expansion
• African expansion
• Omni-channel strategy incorporating E-commerce
• Loyalty programme
• Supply chain

56 56

Kidswear expansion

• Purchased Earthchild and Naartjie during the period, with

full integration being complete by early 2016.

• Kids emporiums have been developed which is unique in

SA retail (includes LTD kids).

• 1st Kids emporiums will open in October 2015

(Rustenburg and Zevenwacht) with further roll-out from November 2015.

• Plan to roll out 150 kidswear stores (both stand alone and

emporium) over the next five years.

• Earthaddict, acquired together with Earthchild, will fit well

into the Truworths designer emporium.

57 57

African expansion

• Currently 44 stores outside of South Africa.
• Plan to expand the store base to 120 by 2020.
• Large portfolio of owned brands enables Truworths to

accommodate local tastes and preferences of each country.

• Focus for the 2016 financial period will be to open

additional stores in Nigeria, Zambia, Namibia and Kenya and to open stores in Tanzania and Mozambique.

58 58

Omni-channel strategy incorporating e-Commerce

• Omni-channel retail has been identified as an area of

strategic focus.

• The ability for the customer to shop when, how and on

what platform they choose, is a core focus of this project.

• Working on full omni-channel capability, including non-

account customers purchasing, with the first phase being the relaunch of our website in early 2016.

• Responsive design mobile application and further brand

rollout in first half 2016.

• Key focus areas will increase the ability for customers to

shop effortlessly across their devices and physical stores, allowing for better transparency and greater logistical accuracy in the fulfillment process.

59 59

Loyalty programme

• Truworths has an on-going structured relationship with its

customers through the credit offering

– From this a unique understanding exists on customer behaviour and preferences.

• Launch during the second half of the 2016 financial period.
• The aim is to create a fashion-focussed mutually

financially beneficial relationship with our customers, increasing their basket size and frequency of shopping in Truworths and Identity.

• The expected number of loyalty cash and account

customers at the end of the 2016 period should be approximately 4 million.

60 60

Supply chain: Distribution centres

• Continue to achieve efficiency improvements of

between 5% and 8% year on year.

• Plans to significantly enlarge the current distribution

centres’ capacity.

• Acquired land adjacent to the main distribution centre

and plans to commence the development of a third distribution centre in 2016.

• Implementing a new warehouse management system

and will be operational in the first half of the 2016 reporting period:

• Facilitate new distribution methods
• Improve stock management and measurement
• Implement advanced labour management

techniques.

Outlook

62 62

Outlook

• Retail sales (excluding Earthchild and Naartjie) for the first seven

weeks of the 2016 financial period reflect an encouraging increase of 15% over the corresponding seven weeks in the prior period.

• This increase has been underpinned by very good sales growth on

current season merchandise with gross profit increasing 18%, whilst markdowns on prior season merchandise have decreased by 0.2%

• ver the corresponding seven-week period.
• The credit environment is steadily improving despite the current tough

economic environment.

• We are optimistic that the merchandise ranges for the upcoming

summer season are appealing to customers.

• The Group's business model has withstood the downturn in the credit

cycle well.

• Capital expenditure of R767 million committed for 2016.
• Product inflation is anticipated to average between 8% and 10% in

2016.

• Trading space is planned to grow approximately 4% in 2016 (including

Earthchild and Naartjie).

Questions

Disclaimer

65 65

Disclaimer

This announcement contains certain forward-looking statements with respect to the financial condition and results of operations of Truworths International Limited and its group companies, which by their nature involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: global and national economic conditions; growth in trading space; interest rates; credit and the associated risks of lending; merchandise clearance rates; inventory levels and stock turn; gross and operating margins achieved; and competitive and regulatory factors. The Group does not undertake to publicly update or revise any of these forward- looking statements, whether to reflect new information or future events or otherwise.