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Our approach to reporting

Truworths International is committed to the principles and philosophy of integrated reporting, and through our 2017 Integrated Report we aim to continue to provide a balanced view of our ability to create value in the short, medium and long-term.

Our Integrated Report is aimed primarily at our shareholders, who are the providers of financial capital, as well as the investor community locally and abroad. While other stakeholder groups influence our business, most notably our customers, employees, suppliers, financiers and regulators, their needs and interests are addressed through other forms of targeted communication.

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Material issues

Since the introduction of integrated reporting seven years ago we have disclosed the material issues which the directors believe could have the most significant impact on the Group’s ability to create sustainable value for our stakeholders. In determining these material issues the directors consider several internal and external factors, including the Group’s strategy, the needs, expectations and concerns of our main stakeholders and the economic and trading environment.

The risks relating to the material issues are also disclosed together with medium-term opportunities to provide our shareholders with insight into the growth drivers of the business. (See Material issues, risks and opportunities.)

These material issues are reviewed annually during the course of the board’s strategic planning process. Following the 2017 review the board confirmed that fashion risk, supply chain efficiency, retail presence and managing the risk of the book remain the material issues for Truworths. Owing to the significant impact of Office on the Group, specific material issues have also been identified for this business. These are fashion risk, supply chain efficiency and retail presence.

Materiality

We continue to apply the principle of materiality in determining the content and disclosure in our Integrated Report. Management’s judgement has been used in determining the issues that could substantively affect the Group’s revenue, profitability and its ability to create value over time. The disclosure therefore excludes information which could lead to loss of our competitive advantage or is considered price sensitive.

Reporting scope and boundary

This report covers the integrated performance of the operations of Truworths International and its subsidiaries for the 53-week period ended 2 July 2017.

Results are reported for the Truworths and Office operating segments. Truworths operates primarily in South Africa and has a retail presence in eight other African countries. Office operates principally in the United Kingdom, with a small store base in Germany and the Republic of Ireland, and a fast-growing e-commerce presence.

All Group financial reporting complies with International Financial Reporting Standards, the South African Companies Act and the JSE Listings Requirements. The information in the summarised financial statements included in the Integrated Report has been extracted from the Group’s 2017 annual financial statements. The summarised financial statements have been prepared in compliance with International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, IAS 34: Interim Financial Reporting, the South African Companies Act (71 of 2008, as amended) and the Listings Requirements of the JSE. Management has applied the guiding principles of the King Code of Corporate Principles 2009 (King lll).

The Group is only required to apply and report according to the King lV Report on Corporate Governance (King lV) in the 2018 financial period. Substantial progress has been made in aligning governance practices with King IV and selective disclosures in terms of King lV have been applied in the Integrated Report.

Integrated Reporting Framework

We continue to apply the guiding principles of the Integrated Reporting Framework of the International Integrated Reporting Council (IIRC). The framework recommends reporting in terms of the capital resources applied in the creation of value.

The most significant forms of capital relevant to the Group are financial, intellectual, human, manufactured, and social and relationship capital, and to a lesser extent, natural capital. The impact of these six capitals on the Group and their role in value creation is covered in the relevant sections of this report.

The board believes that the Integrated Report complies in all material respects with the IIRC’s Integrated Reporting Framework.

Assurance

The Group’s external auditor, Ernst & Young Inc. (EY), has provided assurance on the annual financial statements 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.

The content of the Integrated Report has been reviewed by the directors. Accredited service providers have measured and provided assurance on selected non-financial metrics included in the Integrated Report, while management has verified the processes for measuring all non-financial information.

Our Integrated Report is independently evaluated each year to ensure we continue to report in line with best global practices.

Directors’ approval

The directors accept full responsibility for the Integrated Report and confirm that the Integrated 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 that have, or could have, a material impact on the Group’s ability to create and sustain value for our stakeholders.

The Audit Committee has oversight responsibility for the integrity of the Integrated Report and recommended it for approval by the directors. The board unanimously approved the Integrated Report for release to shareholders.

Hilton Saven
Independent Non-executive Chairman

Michael Mark
Chief Executive Officer


Measuring value creation for our key stakeholders

Our value statement

We recognise our responsibility to create and sustain value for our stakeholders over the short, medium and long-term by transforming the inputs from the six capitals through our business activities and interactions into the outcomes identified in Our Vision for our shareholders, our customers and our employees. Importantly, we recognise that value creation is not limited to financial value, which principally benefits our shareholders, but includes the functional, economic and emotional utility value derived by our customers, our employees and other stakeholders. Ultimately we believe that value creation is interdependent and that shareholders’ value is the outcome of creating value for our customers, employees, suppliers, financiers, regulators and the communities in which we operate.

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Stakeholder Shareholders are the principal providers of financial capital, which underpins our entire business operation Customers are the consumers of our products and our primary source of revenue, enabling us to create financial value for our shareholders Employees represent our human capital applied in the creation of quality internationally inspired fashion to fulfil the needs of our customer, and in the provision of all business support services needed to achieve this objective
Key outcomes
  • Increase total shareholder return
  • Delivering sustainable growth in value
  • Exceeding customer expectations for fashion, quality and service
  • Employee satisfaction
  • Employees being proud to work at Truworths and Office
  • Transforming our workforce through employment equity and gender equality
Measurement
  • Share price appreciation and growth in dividends
  • Long-term growth in diluted headline earnings per share
  • Truworths: Measure the customer experience in-store
  • Office: Net Promoter Score (measures customers’ likelihood of recommending Office)
  • Annual turnover rate of permanent employees
  • Percentage of employees proud to work at Truworths and Office (based on employee satisfaction survey)
  • Percentage of employees from designated groups (South Africa only)