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Managing Stakeholder Engagement

Management is proactive in responding to the needs, expectations and concerns of stakeholders, recognising that several groups impact on our ability to create value over the short, medium and long-term.

These stakeholders include shareholders, financiers, the broader investment community, customers, employees, regulatory bodies, property landlords, trade unions and the communities in which we operate, as well as our suppliers of merchandise and services.

Stakeholder engagement focuses primarily on the five key stakeholder groups that management believes are most likely to influence the delivery of the Group’s strategy and to impact on the material issues within the business:

1 2 3 4 5
SHAREHOLDERS CUSTOMERS EMPLOYEES SUPPLIERS REGULATORS
Reasons for
engaging
Principal providers of financial capital Buyers of merchandise; source of revenue Providers of talent and skills Providers of merchandise and other goods and services (including financiers and landlords) Custodians of legislative and regulatory requirements, and providers of licences to trade
Source of
engagement

GROUP

TRUWORTHS AND
OFFICE

TRUWORTHS AND
OFFICE

TRUWORTHS AND
OFFICE

TRUWORTHS AND
OFFICE

Primary
contact with
stakeholders
CEO and CFO, together with senior finance management Store management and employees, call centre and customer relationship employees Line management, co-ordinated through the Human Resources Department Executives, merchandise buyers and management Executive directors and finance, legal and account risk executives
The board has overall responsibility for stakeholder engagement and monitors its application across the business.
The Group is proactive in responding to the needs, expectations and concerns of stakeholders. The level and frequency of engagement with each stakeholder group, and with different stakeholders in each group, differ according to the needs of the business and the expectations, concerns and preferences of each stakeholder.

STAKEHOLDER ENGAGEMENT

1

SHAREHOLDERS

Local and international institutional and private investors as well as fund managers and analysts

More about our stakeholders

5 113 shareholders

62% of shares held outside South Africa

Refer to the Shareholder Information section of the Group Audited Annual Financial Statements 2017 for further information

Engagement issues in 2017

  • Tough trading in current economic climate
  • Impact of affordability assessment regulations on account sales and revenue growth
  • Product pricing strategy and margin impact in environment of high product inflation
  • Progress and synergies with integration of Office in the UK
  • Capital management
  • CEO succession
  • Trading outlook and earnings growth prospects

Addressing engagement issues in 2017

  • Five trading updates provided to investors
  • Key investor concerns extensively covered in results announcements and presentations
  • Participation in broker-hosted conferences to reach wider range of investors
  • Ongoing engagement with investment analysts on request

STAKEHOLDER ENGAGEMENT

2

CUSTOMERS

Account and cash customers in South Africa and in the rest of Africa

3

EMPLOYEES

All full-time and flexi-time employees

More about our stakeholders

Youthful, fashionable consumers

2.5 million active account customers

2.0 million non-account TruRoyalty and iDream loyalty programme members

More about our stakeholders

11 563 employees

73% female; 27% male

93% black; 7% white (in South Africa)

Refer to the Human capital report and Social and Environmental report for further information

Engagement issues in 2017

  • Fashion appeal
  • Product quality
  • Customer service and experience
  • Merchandise pricing

Engagement issues in 2017

  • Opportunities for advancement and career progression
  • Consistent and equitable rewards
  • Effective communication from senior management
  • Training and skills development
  • Financial performance of the business, business strategy and trading outlook
  • Policies and procedures

Addressing engagement issues in 2017

  • Focused on well-established merchandise strategy to provide fashion that is youthful and fashionable but not ‘fringe fashion’
  • Ensured fashion is aligned with international trends, but with the South African customer in mind
  • Focused on using excellent quality fabrics and detailed styling to bring added value and differentiation to the range
  • In-store customer interaction
  • Electronic and social media communication, including targeted e-mail communication, SMS, fashion blog, Facebook, Twitter and Instagram
  • Advertising and promotions
  • Monthly account customer billing and marketing communications
  • Engagement with account and loyalty customers by the call centre to assess customer satisfaction
  • Customer focus groups

Addressing engagement issues in 2017

  • CEO Talk
  • Employee roadshows, results presentations and in-store broadcasts
  • Electronic staff communications
  • Employee magazine
  • Employment equity forums




4

SUPPLIERS

Local and international suppliers of merchandise and other goods and services

5

REGULATORS

Government departments, regulatory bodies and local authorities in all countries of operation

More about our stakeholders

Diversified base of many local and foreign merchandise suppliers

45% of clothing produced in South Africa

65% of merchandise imported, mainly from China, India, Mauritius and Madagascar

More about our stakeholders

National Credit Regulator (NCR), SA Revenue Service, government departments including Department of Trade and Industry and Department of Labour, and regulatory authorities outside South Africa

Engagement issues in 2017

  • Supplier lead times
  • Security of supply
  • Supplier performance
  • Ethical procurement standards
  • Compliance with health and safety standards
  • Fair and transparent pricing

Engagement issues in 2017

  • Legislative and regulatory compliance
  • Tax compliance and being a responsible taxpayer in all jurisdictions
  • Submission of statutory returns
  • Participation in industry associations

Addressing engagement issues in 2017

  • Audits of supplier manufacturing facilities
  • Supplier scorecard to measure key supplier performance
  • Truworths code of conduct incorporated in all supplier agreements
  • Web-based portal to enhance communications with suppliers

Addressing engagement issues in 2017

  • Together with two other major listed retailers, instituted legal action against the NCR and the Minister of Trade and Industry in 2016 to have the affordability regulations reviewed.
    The matter was heard in August 2017 with judgment pending.
  • Submission of quarterly NCR statistical returns
  • Formal and informal engagement with revenue authorities on tax compliance and industry matters
  • Submission of returns and payment of taxes by relevant due dates
  • Responding to tax queries within required deadlines
  • Filed employment equity progress reports with Department of Labour
  • Co-operated with Department of Labour’s store and regional office inspections

STAKEHOLDER ENGAGEMENT

2

CUSTOMERS

Customers in the United Kingdom, Germany and the Republic of Ireland, and both national and international online customers

3

EMPLOYEES

All full-time and part-time employees

More about our stakeholders

Targeting youthful UK and European customers

More about our stakeholders

954 full-time and 2 077 part-time employees

61% of employees are female

Engagement issues in 2017

  • Offer in-demand leading-fashion footwear
  • Continue to offer merchandise of high quality
  • Remain competitive
  • Offer a wide range of merchandise
  • Offer a world-class store experience
  • Offer quick e-commerce delivery

Engagement issues in 2017

  • Want to feel rewarded
  • Opportunities for advancement and career progression
  • Want to feel engaged with Office’s performance

Addressing engagement issues in 2017

  • Focused on well-established merchandise strategy to provide leading-fashion footwear to the youthful UK and European customer
  • Provide a curated range of latest trend and ‘in-demand’ footwear of high quality and at competitive prices
  • Provision through online portal for both ‘click & collect’ and next day delivery
  • Collaborated on the launch of many branded products to appeal to our target customers
  • In-store customer interaction
  • Electronic and social media communication, including targeted e-mail communication, SMS, fashion blog, Facebook, Twitter and Instagram

Addressing engagement issues in 2017

  • Employee engagement survey conducted across both stores and head office
  • Introduced regular communication
  • Informer, Commercial and Opportunist weekly newsletters regarding performance, operations and vacancies




4

SUPPLIERS

International suppliers of branded and own-label merchandise

5

REGULATORS

Government departments, regulatory bodies and local authorities in all countries of operation

More about our stakeholders

A large portfolio of key branded suppliers, including Nike, Adidas, Converse, Vans, Ugg, Timberland, Birkenstock, Reebok, Puma, Toms and Ted Baker

More about our stakeholders

Most significant regulatory body is the UK tax authority, HMRC

Engagement issues in 2017

  • Maximise sales opportunities
  • Maximise brand exposure
  • Obtain feedback on product performance and fashion trends
  • Annual audits of own-branded supplier manufacturing facilities
  • Office code of conduct incorporated in own-branded supplier manual

Engagement issues in 2017

  • Ongoing compliance
  • Filings made by due date

Addressing engagement issues in 2017

  • Sales of branded product increased 3.6% to £226 million
  • Customer polling started in June 2016

Addressing engagement issues in 2017

  • Remained abreast of legislative and regulatory requirements
  • Submitted all material filings and payments by relevant due dates
  • Engagement with relevant tax authorities as and when required