The Foschini Group Limited (TFG) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to our TFG FY '22 Interim Results Presentation. As usual, in addition to myself and Bongiwe, we have a number of our most senior leadership team members presenting this morning to ensure that we give you the most accurate read of what is happening in all the key segments of our business. I'm going to begin with an overview of our operating environment over the first half of the year, together with a summary of the progress that we've made in respect of our key group strategies and how these are helping support our recovery and positioning us for future growth. Bongiwe will take us through the detailed group results, balance sheet, cash flows and key operating metrics. Jane, Gary, Dean and Justin will give us some flavor in respect of Credit, TFG Australia and TFG London. I'll then wrap up the presentation with our outlook for the rest of the year and our most recent trading, and we'll then have some time for questions and answers. Let's begin with an overview of the first half of our FY '22 financial year. Whilst we are now hopefully starting to see the end of the worst of the impacts of COVID-19, it's clear that our first half trading has continued to be impacted by COVID-19 store closures, the negative economic consequences of the pandemic, the unrest that we experienced in South Africa during July as well as the most recent high levels of load shedding that we've experienced in South Africa. To put the impact of these disruptions into some perspective that we can understand, we lost approximately 270,000 trading hours in TFG Africa, which equates to about 7% of the available trading hours in the first half. We lost approximately 104,000 hours in TFG London, equating to approximately 9% of the available trading hours, and we lost more than 1 million trading hours in TFG Australia, which equates to slightly more than 25% of their trading hours. Despite all of these headwinds, we still generated a very strong recovery after the negative impact that COVID had on our results last year, with a nearly 52% increase in turnover, a 64% increase in gross profits and a 641% increase in headline earnings. In addition to this very strong operational recovery, we both continue to reap the dividends in respect of a number of our previous strategic investments as well as to make further progress on our key strategies. We continue to invest organically and maximizing and rolling out our brands in stores and to this end, we recently opened our 3,000th store for TFG Africa during the month of September. Jet has now been part of the TFG family for just over 1 year and continues to meet our ambitious expectations for the business and to provide a significant addition to our group turnover and profitability. For me personally, it feels like Jet has been part of the TFG family for a lot longer than just 1 year. And I this bears testimony as to how smoothly the transition and the integration has actually gone. It's worth remembering that just a year ago, Jet was on its knees and on life support. Over and above the financial results of the existing Jet business that we acquired, we've also launched Jet Home. Firstly, an evolved new store-in-store format across 50 of our existing Jet stores, and then more recently as 5 stand-alone test stores. Now it's obviously very early days for Jet Home, but initial trading has been well ahead of any of our budgets and plans, and this gives us confidence that we'll have a real business in the value homeware segment which, as we all know, has got some real tailwinds behind it. Our localized quick-response manufacturing has delivered great benefits for TFG Africa over the last 5 to 7 years, but even more so, as we've scaled this to the point where we now manufacture just over 72% of our apparel locally. However, the real advantages of having a robust, agile, local quick-response supply chain have never been more apparent and evident than they are right now, when every single retailer in the world is being negatively impacted by supply chain delays and steeply elevated shipping costs. Several years ago, we took a strategic decision to shift our focus to driving our rand's gross profit instead of obsessing on our gross margin percentages. TFG has had the steepest selling price deflation in this market over a number of years, and we've remodeled our pricing architecture to ensure that we offer value and remain relevant to our entire customer base. This was important even pre-COVID, given the negative per capita GDP scenario that South Africa has been suffering through, but again, has never been more relevant than now. It's thus very gratifying to have seen our 52% growth in group turnover convert into a 64% increase in our rand's gross profit. That's a 1.2x positive leverage to gross profit. As part of our transition to becoming the market-leading omnichannel retailer in Africa, we launched TFGLabs during the 6 months under the leadership of Luke and Claude. TFGLabs already houses 96 software engineers and tech specialists, and this will grow to close to 180 software engineers and tech specialists by year-end. Even though we're still very much in the build phase of TFGLabs, we're already seeing some very positive developments across an array of omni and e-commerce metrics. From a balance sheet perspective, we've never been in a stronger position and this gives us the confidence to know that we can continue to invest aggressively in both organic and inorganic growth opportunities. I guess the even better news here is that we have no shortage of either. Our job now is to prioritize our capital allocation wisely and to ensure efficient execution. Pulling all of this together in terms of metrics that demonstrate the extent of our recovery despite all of these headwinds that we faced in the first half, we ended the first half with a 641% growth in headline earnings, as I mentioned, which is 3.4% higher than our peak headline earnings as of 31 (sic) 30 September 2019 pre-COVID, and we generated ZAR 3.9 billion in cash from operating activities. Taking all of this into account, we have announced this morning the recommencement of dividend payments, and we've declared an interim dividend of ZAR 1.70 per share. We previously indicated that in light of both the prevailing economic uncertainty as well as the extent of our organic and inorganic investment opportunities that we would be raising our dividend cover to allow for both of these factors. In addition to this, we took an even more conservative view for the interim dividend to give us scope to move up for the final dividend should conditions allow for this. Again, just to put the scope and scale of the recovery into context, it's clear that we faced a number of very significant challenges over this period that go well beyond just the physical direct impact of the COVID-related lost trading hours, including the unrest and looting, the supply chain disruptions that I've referenced and load shedding. Fortunately, our group strategies and the way that we've set our business up allowed us to ride through this period and face these challenges without too much of a negative impact on our overall results. I mentioned the lost trading hours on my previous slide, and I'm not going to repeat these hours, but I do think that these pie charts really do demonstrate the potential upside for our trading and our results once things normalize. Given the tough trading conditions that persisted during the period, I think the key story behind our strong recovery has been the extent of our market share gains, both in terms of store and online sales. Looking at the bar chart on the top of this slide, we compare TFG Africa's total growth to the market and to our key competitors. The Stats SA numbers, which represents all retailers in South Africa, show a growth of 26% for the 5 months that the results are available for. The RLC numbers, which represent our key competitors, grew slightly ahead of that at 27% for the 5 months. TFG Africa excluding Jet, grew by 35% and if we include Jet, we grew by 63%. Focusing on our core men's and womenswear segments, TFG increased its market share by an unprecedented 480 bps or nearly 5% compared to the same period last year. From an e-commerce perspective, we also gained further market share, and we now have a leading 45% online web traffic market share compared to our traditional retail competitors and a 39% market share when compared to the pure plays, second only to Takealot. Now to unpack the online growth and market share gains in a bit more detail. Both our bricks and our online turnover growth has been underpinned by the very strong brand equity that each of our individual brands have and the power that our collective brand portfolio has in totality. The bar chart on the left here shows the extent of the daylight between the aggregate social media following of TFG's brands and the social media followings of our retail competitors. All of this translates into some very interesting key metrics. We now have 15 million social media followers. We've had a 25% increase in our site visits and a 16% increase in the number of items ordered over the last 6 months. Our online turnover growth was 16% for TFG Africa, 22% for TFG Australia, 24% for TFG London and after converting all the various exchange rates, this rolled up to a 13% online growth for the group off an obviously COVID-inflated base for last year. I mentioned in my introduction that our strong recovery over the period has been supported by the realization of some of the benefits that flow from our previous strategic investments. This is especially in relation to technology, local quick-response manufacturing and the continued investment in our brands and stores. Rest assured, we didn't allow ourselves to rest on our laurels over the last 6 months, and we have continued to invest meaningfully behind each of these strategies. In terms of technology, as I mentioned, we launched TFGLabs under the leadership of Claude and Luke. We then completed our first-ever aquihire when we bought Flat Circle, the best mobile shopping app developers in South Africa who are helping us to develop a new world-class TFG shopping app as the foundation for our TFG Super App and to replatform our dotcom website during the course of the next year. We could never have achieved these sorts of things in these time frames without having these sorts of skills in-house. We also concluded a very strategic financial services partnership with TymeBank, which ushers in a new set of digital opportunities for the group. TFG TT is now well on its way to becoming a true leading omnichannel retailer. Digital adoption has more than doubled in South Africa over the past 2 years, and this is not going to slow down. Many of our true competitors in the future are likely to be pure players. Hence, our strategic ambition is to become the most reliable, most profitable e-commerce destination on the African continent. Our short-term ambitions include raising our e-commerce contribution for TFG Africa above 10%; generating world-class mobile conversion rates; cementing our current competitive advantage as already the leading fashion and lifestyle destination in Africa; and using our omnichannel investments to drive up our store trading densities. Ultimately, though, this is not a pure e-commerce play. This is all about utilizing both our key existing physical assets together with our newly enhanced digital capabilities. These assets include: 26 million plus South African customers; South Africa's largest quick-response manufacturing capability; market-leading in-house credit capabilities; 13 million social media followers in South Africa alone; 3,000 physical fulfillment centers, which we used to call stores; unrivaled fashion and lifestyle choice with 22 proudly South African TFG brands; more than 200 individual brands; and more than 180,000 styles across our South African brands. We've made a significant investment in our digital transformation over the past 5 years to create a formidable moat. We will continue to invest in these areas in the future to ensure that we retain and expand these advantages. The good news here is that a lot of the heavy lifting has already been done. For example, we have invested in a number of market-leading customer-enabling technologies and we've shared this with you in previous presentations, things like RFID, OneStock, OneX, our new point of sale, which is currently being rolled out, our CDP or customer data platform, which will provide us with a true single view of our 26 million customers for the very first time in our history. We've also invested in technology to enable our back office to drive efficiency and to underpin a lot of the cost optimization benefits that Bongiwe has been driving. These are technologies such as Yoobic, workforce management, conversion counters and TFG's digital learning platform, TFGLearn. Our TymeBank partnership ushers in an entire new digital financial services ecosystem. TymeBank kiosks in our stores will provide near instant debit cards, personal loans, a full suite of value-added services as well as a market-leading buy now, pay later offering called MoreTyme. Buy now pay later is probably the hottest area in fintech in the world right now, and this offering will both replace an integrated Lay-Buy system that exists in South African retail and also provide our customers, especially our younger customers, with a much more GenZ-appropriate alternative purchasing option. TymeBank has already grown to more than 4 million customers, having launched just 32 months ago and has currently grown its customer base by more than 140,000 new customers every month, and that's before the partnership with TFG. Strategically, this partnership will allow TymeBank and TFG to design and bring new fintech offerings to the market faster than ever before. We've also continued our investments into localized quick-response manufacturing. And during the first half of the year, we made a number of manufacturing acquisitions in the Western Cape, KwaZulu-Natal and in Gauteng to increase both our manufacturing capabilities as well as capacity. We have proven and shared the economic advantages of our quick-response manufacturing with you in the past and over the last 6 months, the measurable tangible benefits included a gross margin benefit of ZAR 52 million and a markdown saving of ZAR 105 million. What is harder to quantify, but actually much more important is the in-stock availability and sell-through and sales advantages that come on the back of our quick-response model. All of these quick-response advantages were clearly important again in the past, but never more relevant than now, particularly as Far East supply chains are in total disarray and disrupted and international shipping rates have risen by more than 400% compared to just a year ago. Looking forward, we are aiming to manufacture more than 30 million units a year by FY '26, and 100% of these will be manufactured on a quick-response basis. We are also increasingly looking to expand our quick-response capabilities into nonapparel products and on a conservative basis, we will be sustaining more than 7,500 manufacturing jobs at a time when every job is critical in South Africa. Our brands and stores remain absolutely core to our strategy and to our success. During the first half of the year, we rebuilt, restocked and reopened 145 of the 198 stores that were looted during the July unrest in South Africa. We also opened 183 brand-new stores during the period. In addition, we acquired the Granny Goose business and their various brands to further strengthen our homewares business. Investment in stores and brands is fundamental to our business model, and this needs to be maintained throughout the cycle. For interest, looking back during the period from 2012 through to 2016, we added 865 new stores and 4 new brands for TFG Africa. During the period 2017 to 2021, we added a further 981 new stores and 5 new brands. Now over these 2 periods, this allowed us to add ZAR 11 billion to our TFG Africa turnover and helped us create more than 12,500 new jobs on a cumulative CapEx investment of just ZAR 3.6 billion. Looking forward over the period from 2022 to 2025, we have a pretty well formulated and locked in plan to open more than 1,000 new stores for TFG Africa alone. As you can see from the CapEx estimations, our build rates are clearly lower than in the past and this is as a result of a combination of building smaller, more value-orientated stores as we expand further into more rural areas as well as the result of greater procurement efficiencies that we are now realizing through our newly established group procurement function. Looking back over the first half of the year, I think we have enjoyed a lot of commercial successes and strategic milestones that I'm proud of. But the things that I'm actually the most proud of is how we've conducted ourselves from an ESG perspective. ESG is obviously comprised of the environmental, social and governance pillars and whilst each of these pillars is of equal importance and gets a lot of attention at TFG, the tragically high persistent structural unemployment in South Africa and the impact that this has on our economy and society has elevated this to a very critical focus area for us. During the first half of the year, TFG employed 850 people in manufacturing jobs. We partnered with St. Vincent School of the Deaf to open our new Prestige Johannesburg factory, which only trains and employees deaf learners. We employed approximately 1,500 learners, apprentices and interns in our business and we employed 475 young South Africans into their first jobs through the YES program. I can go on, but I think these examples show just how strongly we feel about job creation and employment opportunities. Before I hand over to Bongiwe, let's enjoy a short video that showcases some of the progress that we've made through our latest manufacturing acquisitions. [Presentation]

Thanks, Anthony, for the strategy of overview. Listening to you, I cannot help but marvel at what the group has achieved in the first half of this financial year amidst of all COVID restrictions, lockdown, civil unrest and lately the escalation of Eskom load shedding, which continue to impact on trade, staff, customers and their families. Good morning to everyone who has joined us on the call today, our investors, analysts and all our key stakeholders and importantly, to all our staff in all our regions of operation. A quick pause there deliberately to give all the ladies an opportunity to admire the stunning stone from American Suisse, which is available, by the way, in-store and on myTFGworld.com. Starting with our income statement. We pulled out a few key metrics. The detailed income statement is included in the appendix. Reported retail turnover of ZAR 19 billion was 52% ahead of the same period last year, showing a very robust recovery on last year and even more pleasing is a 12% growth on the 2020 financial year. We estimate that Africa lost ZAR 400 million as minimum from the civil unrest from the 198 stores looted and from the more than 1,000 stores we closed that week as precaution. The numbers in the bottom block represent the approximate normalized result if there had been no riots. The next slide will unpack how much riot business interruption income we have accrued for in the first half of the year. This normalized turnover excludes the turnover lost from the second quarter closures in Australia, where we approximate a turnover loss of $60 million as approximately 55% of our stores were closed. New South Wales and Victoria have since reopened and trading ahead of plans. I will not steal Dean's and Gary's time there, who will take you through Australia's performance and the outlook for the remainder of the year. TFG London's performance has been exceptional and closed half year with turnover up 50% last year. Justin will take us through their performance and outlook later on. We are very proud of what the U.K. team has achieved. While turnover growth talks to our market share gains, the gross profits we bank are equally important. The reported ZAR 9.3 billion gross profit is a 64% improvement on last year and a 3% growth on 2020. I will unpack the gross profit in the next few slides. Growth in EBITDA of 430% was driven by improved operating leverage underpinned by GP margin and tight cost control. Consequently, our headline earnings of ZAR 1.3 billion are significantly up on last year, and more pleasing, 3.4% above those of 2020 first half. We have had a lot of queries regarding how we are accruing for our business interruption claim. We have taken a conservative view and have accrued for ZAR 100 million pretax income, representing a GP loss of approximately ZAR180 million, offset by any rental savings we anticipate achieving. For Stats SA losses or balance sheet impact, we have assumed no income segment effect, but simply a replacement of assets lost like-for-like. To date, ZAR 460 million has been received against a circa ZAR 700 million claim that inclusive from Stats SA; and we expect further payment during the second half. Our teams have worked tirelessly to get us back to trading and to date, 154 stores of the 198 stores are open and trading and are largely in line with the forecast. We are working with our brokers to finalize the claim and we'll give an update at year-end. The 3.4% headline earnings growth on 2020 was achieved despite a ZAR 280 million shortfall in credit EBIT, which is driven by a lower interest rate environment and a smaller debtor book. We have included this slide to show the impact, the reduction interest rates since March 2020 has had on income. This, together with the deliberate reduction in the book size has led to interest income reducing by 35.2% from the first half of 2020. For context, and assuming all remains equal, a 100 bps improvement in interest rates yields ZAR 110 million increase on interest income on an annualized basis. Cash sales continue to grow with 57% growth on last year, bringing cash sales for the group to approximately 80% for the period. And for context, Africa cash sales now contributes 70% of our sales in Africa. The total inverse of where we weigh a decade ago. Credit remains an enabler for retail turnover growth. Gross profit. Gross profit banked of ZAR 9.3 billion is up 64% on last year and more pleasing, 3% up on first half of 2020. For every 1x improvement in turnover, the pace of improvement has grown gross profit being by about 1.2x. I suppose this speaks to product attractiveness, demand for products, which leads to a greater proportion of full price sales. Africa has banked ZAR 5.7 billion with GP percentages recovering to 43.4% and excluding debt up to 45 -- they are 45%. The gross margin evolution over the period is strongly linked to the lower sales markdown achieved and just to give you a perspective, markdowns on just clothing category alone improved 5% during the first half and a lot of this improvement is attributable to our quick-response local manufacturing led by Graham and his team. The continuous investment in price, working with local and international suppliers has resulted in us operating average price deflation year-on-year for the past 4 years at least as we saw the continued pressure on the consumer wallet and the need to give the customer value for money. The gross profit cost percentage is also influenced by product mix with a significant growth in homeware and technology product sales which, by nature, obviously attract a lower -- much lower margin. Our latest acquisition, Jet, as a value retailer trades at a lower margin as well as we've previously guided. Having said all of this, margin expansion will continue to be our focus, especially with input margins under pressure as logistics and shipping costs are significantly up globally. This is partially mitigated depending on met category by our large proportion of locally sourced products. The U.K. improvements have been marvelous. Very solid margin recovery where we've seen some product categories selling at same margins as in 2020, and we expect this trend to continue to improve in the second half as trade restrictions continue to ease. Australia, margins largely intact. In fact, for some brands, GPs are running at margins above those of 2020. As a group, we are still carrying provisions at similar levels to year-end, which might appear to be conservative in light of the reported trade, while we are cognizant of the threat of further COVID lockdowns, supply chain disruptions worldwide that impacts all our countries of operations. I will elaborate further on provisions in the inventory slide. Trading margins. For me this is one of the key highlights of our performance to date as it evidences the tight control of costs and the significant optimization work achieved to date, especially in our back office functions, which together with other operational savings has yielded a reduction in base cost of 6% when compared to 2020. I'm using 2020 comparison as 2021 was largely flattered by the government and landlord COVID relief assistance received. In 2020, our expenses at ZAR 7.7 billion were running 45.4% of turnover. The business optimization has loaded in excess of ZAR 400 million sustainable savings and coupled with the negative rental reversions achieved year-on-year as well as reduction in other expenses has rebased our cost to ZAR 7.3 billion -- our base cost to ZAR 7.3 billion, which is 6% down on 2020 as I've said. And this represents probably 43.2% expenses to turnover. This has allowed TFG to invest in growth opportunities like Jet, e-commerce, where we are reinventing our IT platforms and applications to support the transformation of our customers' omnichannel experience. As a consequence, we impaired some legacy IT costs to support the innovation within TFG as led by Luke and Claude. Even with these new costs though, our trailing expenses remained down on 2020 at 43.7% to turnover. A few presentations back, I talked of the key KPI Anthony had given me when I joined and what we thought we could achieve as a team over a 5-year period was achieved within a 3-year period. As I have said before, we did not waste the crisis imposed by COVID. I have included this summary to close off the income statement and showing that every key metric has come back quite strong on 2021 and actually for many key metrics, the recovery beyond pre-pandemic levels is evident, which is even more satisfying. Moving on to the balance sheet. Net debt has further reduced by ZAR 500 million from year-end. Inventory is up ZAR 200 million due to tight continued control in purchases and improved rate of sales resulting in higher stock turns. Debtors. Debtors are down by ZAR 100 million due to a continued tight acceptance criteria in the higher quality book. And due to strong operating profit, cash on hand is up ZAR 900 million from year-end. Covenant testing was resumed and in all territories and comfortably met. Debt-to-equity ratio has come down nicely over the past few years as per the graph on the right. Consequently, the Board approved the resumption of dividends with an interim dividend of ZAR 1.70 per share declared. Inventory. Inventory, as mentioned earlier, well under control, with provisions sitting at about ZAR 1.1 billion, largely at the same levels as last year as I said. This equates to a 12% gross inventory provision. The U.K. stock has come down nicely as well as trade has resumed. Australia has been in lockdown, as I've said, for most of Q2, which obviously has led to a little bit of stock buildup, but this has put them in very good stead as the lockdowns lifted, they have had the stock to trade hard. Pleasing is that nearly 80% of our stock is less than 26 weeks old, which talks to freshness of our stock. Operating profits of ZAR 4 billion was generated by operations coupled with the improvement in collections and tight stock management as per my power slide, has led to a net increase of ZAR 900 million in cash. Even with debt repayments during the period and increased CapEx spend in the past 6 months, which leads on into my next slide. Last year, we cut CapEx spend significantly. The forecast was on cash preservation. This year, we've taken advantage of opportunities, especially post lockdowns, to expand our footprint in areas where we're not represented, or areas where competition exited. As a result, Africa grew space by 3%, and that's largely been in the expansion of our value brands, including another value stores and sports brands and total sports amongst other brands. As part of our capital allocation strategy, I spend a lot of time with Stuart, our Retail Director, in approving all store CapEx and any planned expansions. And what we're probably hoping for the sale of about a 200 store increase, which will bring an additional ZAR 1.2 billion in annualized turnover. The opportunity that remain are significant and based on a very considered location and planned expansion strategy. I'll quickly touch on Africa, obviously, being our largest area of operation. All the numbers are in the appendix. Trade has been strong, turnover up 60% on last year. And excluding Jet, turnover is 84% up on last year. And when compared to 2020, Africa was flat. However, as you might remember, 2020 was a record year for Africa. Gross profit of ZAR 5.7 billion has been banked to date, which is 68% up on 2021, which is a remarkable performance especially in light of the constrained consumer environment compounded by the civil unrest and ongoing load shedding. Stock is fresh. As I've said, 80% and less than 26 weeks old, really a big, big thank you to all our retail, e-commerce and customer teams for delivering such strong performance. Moving on to Jet. This will be the last time I'm showing the Jet brand separately. As communicated at the year-end, Jet is set to deliver turnover in excess of ZAR 5.5 billion for the year. This is slightly lower than the approximate ZAR 6 billion probably we guided at year-end, and it's largely attributable to the direct impact of civil unrest in Africa, which impacted turnover and stock availability. All in all, 36 Jet stores were unfortunately looted and represents the largest brand impacted in the group. We estimate a conservative ZAR 100 million loss in turnover to date, which is partly mitigated by the several continuous improvement initiatives in the business as they work with TFG management and leverage of the TFG group scale. What the team led by Shane has achieved is nothing short of a miracle and in a very short space of time. All trading metrics are well in line with our expectation. As Anthony mentioned as well, Jet Home launched successfully and thus far is trading in line with expectation. We estimate to have grown Jet's footprint by a further 20 stores by the end of the year. Well done Jet team. In closing, no doubt, we have had a very successful first half. Equally, the second half is critical with key events such as Black Friday, Christmas trade and January back to school and work, hopefully, and at the same time, we remain cautious as we continue to experience load shedding disruptions, a threat of a potential fourth wave in Africa as well as global chain supply disruptions, especially on branded items, which are sourced offshore. However, I know our teams are resilient and continually set themselves high targets and no pressure, everyone listening. I know, as usual, we will work as a team to deliver a strong second half. Regarding costs and other operating metrics, I can assure you a lot of the operating philosophies imposed on us by COVID are now well embedded in our operations with opportunities for further optimization in the future. Look, a lot of work still to be done, but I'm pretty confident that as an organization, we have emerged much stronger and fit for purpose. Thank you all. I'm now handing over to Jane to take us through financial services. Over to you, Jane

Thanks, Bongiwe. So how is the world of credit looking right now? Well, we've seen significant demand for our in-house credit with nearly 1.2 million applications this half year which is the highest volume of applications we have ever seen, and it really shows the pent-up demand for credit as the country learns to deal with the pandemic. By year-end, we expect to have over 2 million applications. Now demand for our credit product is due to 2 main reasons. Firstly, we have actively started marketing our credit products and have run new accounts drives with initiatives for customers and staff. These are always hugely successful campaigns, and this half year has been no different whatsoever. And secondly, we have started to slowly increase our accept rates. During the hard lockdown, we dropped our accept rates to less than 10%. But given the resilience of our customers and the ability for our customers to keep paying their accounts, we have slowly increased accept rates back up to 25% during this half year. And by year-end, we expect our overall accept rate to be circa 30%. So our account base now stands at 2.5 million customers, and the credit contribution to turnover in South Africa is 30%. Given the strength of cash turnover and as part of a prudent risk management strategy, we expect to keep our credit contribution at these levels going forwards. There's just simply no need to take more risk than necessary. So demand for our product is up, but the natural question to ask is what about the quality of our book. All of our statistics are showing an improvement in the quality of our book. The number of customers in a buying position is back to pre-pandemic levels sitting at 79%, which is the highest it's been in the last 2 years. The overdue balances have improved, which is now at 14%, down from 18% this time last year. And our provision ratios have improved, down to 20% from 25% this time last year. And our net bad debt statistic, which is our write-off, recoveries and our provision movement combined, as a percent of the book, has resulted in an improvement now down to 12% from 16% last year. The reason for this improvement in our debtors book is twofold. Firstly, we tightened our credit lending criteria during the pandemic in order to reduce any risk in our portfolio as controlling the front end is the fastest thing you can do to limit any potential losses. But probably more impressive is the customers' resilience to keep paying their accounts. And to show this, I've included a graph which shows the amount of cash collected as a percent of last year as well as the cash collected as a percent of the book. Both metrics have improved. The amount of cash we have collected is nearly 8% higher despite the gross book being 11% smaller. And cash collected as a percent of book balance is higher in this financial year, which clearly shows the improvement in the quality of our debtors book. However, we are still in an incredibly low interest rate cycle, which is the biggest reason for the subdued EBT (sic) [ EBIT ]. For this half year, it's ZAR 72 million, which is obviously much better than the loss of ZAR 91 million last year, but it's still significantly down when compared to 2 years ago. But interest rates are down 325 basis points for 2 years ago and that roughly 100 bps interest rate increase equates to ZAR 110 million income per annum. Hence, until the interest rates increase again, the EBIT for credit will remain subdued. However, the reason we run store card credit is to enable merchandise sales, which is a hugely successful strategy for TFG. But that doesn't mean financial services shouldn't innovate beyond store card credit. As Anthony mentioned in his slide, we have literally just entered into a partnership with TymeBank, which we believe is a great strategic partnership. This partnership will allow us to accelerate our digital offerings and expand our financial services offerings. The first product to be launched will be the MoreTyme product, which is a buy now, pay later product. And the customer is able to take the product immediately, pay half upfront and the remaining amount over the next 2 months with no fees and no interest. This service is being tested as we speak literally and should be live in our Jet stores by the end of this month. Now this is seen as complementary to our store card credit as this typically appeals to customers who want a greater variety of payment options as opposed to taking out credit. But unlike the current layby offering, they get to take the product immediately. However, the most exciting part of this partnership is the launch of a greater suite of financial products, and we are starting with a co-branded debit card. Customers will be able to open up a bank account in-store via one of our new TFG money kiosks or online and in less than 5 minutes, they will be able to have a personalized printed debit card in store. The first kiosk has literally landed in the country and it is being tested, and we expect the first kiosk to be in-store and live for our customers during quarter 1 next year. We will be the only fashion retailer with this offering in store. We will then look to launch personal loans during the course of next year as well as assessing other financial products and services that would appeal to our customers. We are literally about to start training our staff and our customers on these new financial products and to bring the start of this journey to life, I'd like to show you some of the training material that is being developed. [Presentation]

And as you can see, I got the opportunity to test drive the first TFG Mini TymeBank kiosk in our Jet store in Rosebank. And I opened my account and got my personalized debit card in less than 5 minutes. So watch this space as financial services at TFG just got super exciting. [Presentation]

So hello from London, and thank you very much, Jane. So TFG London, just to cover the market, we've seen, on the whole, a really encouraging recovery over the last 6 months and that recovery has come from all brands. And that follows obviously what was a very tough year to March. The recovery has been driven through sales, obviously, but also with margin and down to the EBIT level. In terms of the retail market then, we've seen the gradual ending of lockdown and with that, a real step change in how the consumer confidence has come back, which is really positive. Footfall onto the high street's been better and better, shopping centers, high street, albeit that there has been some regional variations. In terms of online then, online had a significant boost during lockdown, obviously, without the bricks-and-mortar estate being opened. And the online channel has retained some of that gain with the change -- permanent change in customer shopping habits. And in effect, if one looks at it, that's just accelerated a trend, which was in place before the pandemic hit. And then against those trends, we've had -- we've not been immune, unfortunately, to the impacts on the global supply chain that have been coming through and which continue. If we move on then to TFG London and looking at our performance, it has mirrored that. So footfall has improved, albeit that London being a key market for us, has lagged the rest of the U.K. and has lagged the overall recovery trend, obviously driven there by a lower level of tourism and a slower return to what will be normal working patterns. But encouragingly, in the key categories, occasion wear and then obviously wear to work, over the last 6 months, we've seen some really positive signs and some increasing mixes in those key categories. The colder weather has now started. And again, in terms of the layering categories, across all 3 brands, we're seeing good lifts on year minus 1 or a good comparative year. If we look at the online mix for TFG London, that has now got over 40% of the total mix in the first half and if one compares that to year minus 1 or comparative year pre-COVID, we were just over 30%. So a material increase in the online penetration. And also then looking at our international markets, they have been varied and the recovery on the whole has been slower as lockdowns and restrictions generally have been moved forwards. If we then look at margin and cost improvement in the organization over the last 6 months, it's been really encouraging. Margin stepped up across the board, both on last year and on the comparative year pre-COVID, and that's really been driven by fewer days on promotion. Cash generation has been strong. We've generated GBP 33 million of cash in the first half, both from working capital gains and then also cash from operating profit. So really successful on those. There's been a lot of work that we've done in terms of our overhead cost base. And really, I suppose the one to drill into here is the property costs where the property team have been working with our landlord base very successfully. If we look at our leases held at April 2020, some 38% of those are now being renegotiated and across those leases that have been renegotiated, we've achieved an average cost reduction of 43%. If then one looks at the estate as it is today, we've got 45% of our stores on flexible terms, which is a material change and a material improvement from where we were. So just on to the next slide. And looking forwards, the U.K. market is -- has made a really significant step forward in terms of the booster jabs. We've now got 18% of our population that have that jab complete, and that booster program for vaccination continues. On an overall basis, over 80% of the population who are over 12 have had their vaccine. So there is a significant level of vaccine and jabs that have been delivered in the U.K. market. Schools have gone back, and offices are increasingly asking their workers to return to a normal pattern, at least a few days a week, which again is all really positive for recovery. And then since the half year, we've seen the trends that we saw in the first half continue. So we've continued to exceed expectations across all 3 brands, and that gives us a good degree of confidence of where we'll end up for the remainder of the season and for the full year. There's also, I think, in terms of backdrop been a material change in the consumer offer with the likes of Debenhams and the Arcadia brands disappearing from the high street. And that has changed many of the shopping environments that the consumers have come back to. We view that overall as extremely positive for us, and we then view our presence and our authority in our key categories as having been enhanced. We are cognizant, however, that the pandemic is still having a huge effect globally and in the U.K. market with an infection rate, which is still higher than we would like. And as I mentioned earlier, the impacts on the supply chain are ongoing. Our product availability is probably the key element there that we're measuring and if we look at where we are in mid-November, we've got gaps in the September launch packs and also in the October, some significant ones in the October launch packs as an example of how that's impacting our product offer and therefore, our potential recovery. If we look at the future then, I think we've made -- I'm really pleased with the progress we've made in terms of our overall digital strategy and putting Digital First in all our organizations, and we'll continue to build out our capability and our service proposition from a digital perspective. But that said, our retail estate remains really key to us, and we're focusing on doing a better job for our retail customers and bringing a better experience and a better service offer for them. And then on top of that, we continue to leverage the technology that we have as the core of TFG London and also of our team to allow TFG London to grow both organically and also then focusing on growth by -- also by acquisition. So that's TFG London. Thank you very much, and I'm going to hand you over now to Gary and to Dean in Australia. Thank you.

Good morning, everyone, and good evening in Sydney. Gary and I are here once again, to provide a brief overview of the first half for TFG Australia. In many ways, the first half has been similar to the prior year. There were substantial impacts from COVID, ongoing challenges at the constantly opening and closing stores and ongoing government restrictions. Unfortunately, the differences this half year were no government JobKeeper funding and minimal assistance from landlords. However, on a positive note, there was opportunity. Consumers behaved with far better confidence and had a higher propensity to spend when they got the chance. So operationally, it was a challenging half. One moment stores are closed, the next moment, they are reopened with sales beyond expectation. The result of the half, very pleasing, a 48% lift in EBITDA profitability at a 10.6% margin. This is comparable with a normal trading result, which is amazing given the circumstances. Gary and I credit this result to the entire team who have been very responsive and extremely resilient, and we thank them. So moving forward from the half. Since the end of September, when over 50% of our stores were closed, Australia now has over 80% of the eligible population vaccinated. And both New South Wales and Victoria have reopened with gradually reducing restrictions. And despite opening with restrictions, the economy, from a consumer perspective, is positive. Unemployment is lower, savings are at record levels, so consumer confidence is good. As a result, consumers are showing their willingness to spend and the second half has opened with over 10% comp store growth. An excellent start. Now I will hand over to Gary for more on the outlook and opportunities.

Thank you, Dean, and good day to everyone in South Africa. As Dean mentioned, there are many similarities to 1 year ago, but there are also many differences. Last year, all our stores closed at the beginning of the financial year in April 2020 and we had a very poor first quarter, followed by a good future. This year, we had a very good first quarter. While there were rolling lockdowns, they were short, sharp circuit breakers. And then the Delta strain arrived, our 2 biggest and most profitable states locked down, and we had all of Victoria, New South Wales and New Zealand close for July, August and September. But the recovery from lockdown this year is quite different and exceeding expectation as fully vaccinated rates hit 80% nationally, 85% in Victoria and 90% in New South Wales. So looking forward to Christmas and the New Year, consumer confidence is high and households have saved an additional $200 billion this year, as lockdowns kept us at home. The big difference to this time last year is that events are on and rag is, to a degree, an events-based business. Races are back on, school formals are happening, weddings are taking place without restrictions as are sporting and cultural events, parties, lots of action everywhere with more certainty that your big event will not get canceled. This states have indicated that further statewide lockdowns will not happen given the high vaccination rates. Over the past few weeks, with all states trading, sales continued to exceed expectation, and we are enjoying consistent double-digit live store growth. Digital sales also continued to impress and grew 22.4% for the half off an already high pass. While we have aggressively reduced our cost of doing business in lockdown, we did not stop strategic investment. In fact, we accelerated this. We continued to open new stores in Queensland, South Australia, Tasmania and Western Australia and continued to negotiate new store opportunities in the locked down states while accelerating our store optimization strategy. The digitalization of rag is central to our strategic growth plan and in June COVID lockdown, we accelerated investment in 3 key areas: our digital hub, which is our center of excellence for all things online; we replatformed Tarocash's digital website with more brands to follow in the new year; and upped investment in our Johnny Big U.S. online business. I feel positive. We have strong momentum and a strong balance sheet and are well placed to both grow our existing business and actively look for an acquisition. I know I've said this many times over the past 18 months, but I do hope that I see you all in person at our full year results. Thank you.

Thanks, Gary and Dean, as well as Bongiwe, Jane and Justin for sharing your insights and your commentary with us. Moving on to the outlook and what we think the next 6 months will hold for TFG. Our strategy has continued to deliver strong growth and commercial success over a number of years. Just looking back to 2015. Since 2015 onwards, we've added 15 new brands to our portfolio. We've substantially increased our quick-response local sourcing. We've increased the number of people that we employ by more than 14,000. We've improved our B-BBEE rating by 3 levels. We've grown our customer base to be in excess of 26 million customers. We've taken 22 of our brands online. We've added 1,560 physical outlets. We've grown our turnover by more than 100% and our cash turnover by more than 240%. These strategies have delivered success in the past, and they remain just as relevant going forward. But like all things, we continue to refresh and enhance them every year. Looking forward for the rest of this year and into next, we will continue to invest in our own high-brand equity businesses to continue to grow our turnover and our margins. We will be working hard to further optimize our sourcing mix and supply chain efficiencies also to improve our margins. We are going to be leveraging all of our assets, I mean, our brands, our customer data, our store footprint, our product assortment and our talent to lead and outcompete. And we will continue to transform into a true omnichannel retailer and platform business to further grow market share. Now if you had to ask me which of these I think is going to be the most challenging, without any doubt in my mind, it is going to be our transformation into becoming a leading omnichannel retailer. We clearly have some of the best BRICs retail talent and experience available and with the addition of TFGLabs, we now have the best fashion pure-play talent at TFG as well. The true value and magic lies in aligning all of this talent and experience behind a single uniting purpose. To make sure that we achieve this alignment, we recently took our entire senior leadership team through a collaborative process to reimagine, rethink and redesign TFG's purpose, vision and values. Now we didn't ignore the vision and values that have got us to where we are today. Rather, we used these as a base to rethink what will bring us collective success in the future. Our purpose is, in fact, very simple. We inspire our customers to live their best lives. We inspire our customers to live their best lives. As a large multi-brand and multi-segment fashion and lifestyle retailer, every single product that we sell does help to inspire our customers and in some way, make them feel better about themselves, whether it's a pair of new sneakers, a diamond engagement ring, a new beauty product, or perhaps a new dinner service from @home. Importantly, we also asked ourselves whether this purpose would still be applicable and relevant if the group were to move into other new retail verticals in the future. The answer very simply is yes. Our vision is to create the most remarkable omnichannel experiences for our customers. Again, this may sound deceptively simple and obvious but it really goes to the heart of how we are going to bring our traditional BRICs and our new digital worlds together to offer truly seamless customer experiences. This is the future of retail. We reduced our values to just 3. These need to be clear, succinct and something that every single person at TFG can remember and act on in their daily lives. Our values are: we put our customers first; we work smart and fast; and we do the right thing. Collectively, everybody at TFG will be guided and inspired by our refreshed purpose, vision and values, and we are in the process of rolling this out throughout our group. This short video should help bring to life our new purpose, vision and values. [Presentation]

Welcome back, everyone, and I really hope you enjoyed that video as much as I did. Moving on to our outlook for the second half of the year. Clearly, trading conditions and consumer confidence remain under pressure, I think, particularly in South Africa. Having said that, we will, however, continue to invest behind our strategic pillars. Examples of this include the hiring of a further 80 software engineers and tech specialists for TFGLabs as well as Jet continuing to open more stand-alone Jet Home stores as just an example of our store rollout. We have a very strong balance sheet to allow us to capitalize on organic and inorganic growth opportunities. Having said all of this, the second half, as always, is obviously very dependent on Black Friday and Christmas trade. The good news is we have the stock, the stores and the staff that we need to trade well. There are certain things we can't control, load shedding and COVID, et cetera, but we're as well prepared as we can be. Having been very happy with our overall trade in the first half, October trade has also been pleasing with growths as follows: TFG Africa grew by 12.5%, with Jet now firmly in the base, and that's despite the intensified load shedding in South Africa; TFG London grew by 33% and continues to track well ahead of plan; and TFG Australia grew by 5.7% against the backdrop that Gary and Dean shared where almost half of our stores were closed for roughly half of the month. As always, I'd like to end by thanking every single TFG team member, our suppliers and business partners as well as our customers and shareholders for all of their efforts and all of their support during these extraordinary times. We'll now have a short 5-minute comfort break and be back in 5 minutes' time to answer some of your questions. Thank you. [Break]

Welcome back, everybody. I hope you've enjoyed the presentation. It's now the Q&A session. We've received a lot of questions during the course of the presentation. and we'll endeavor to answer many of them as possible. Quite a few of them are similar in nature and where that's the case, we'll try and group those together for brevity. I'm joined, obviously, by Bongiwe on my right, Jane on my left. And electronically, we've got Gary and Dean in Australia and Justin in the U.K., all available if there are any questions directed to them.

Okay. To kick off, the first question, gross profit and local manufacturing, please clarify how you are able to monitor the success of increased local manufacturing on gross profit generation? If you aren't focusing on profit margin, is it market share gain? Very good question. I think just to be absolutely clear, we absolutely focus on profit margins. We look at it at a SKU level, we look at it at a brand level. It's absolutely built on discipline in how we run the business. I think the point I was making earlier on is you can obsess so much about percentages and kind of forget the rands that you bank. And ultimately, the success of what we're doing is measured in the number of rands of gross profit that we generate. We pay dividends in rands. we invest in rands. Rands runs the business, not percentages. But the 2 are obviously clearly important. I think the other part of the question really refers to the [ harsh ] part, do we measure the success of local manufacturing. We -- and if you go back into the slide deck, and it's not just this presentation, over the last 3 or 4 presentations at least, we've shared a number of the metrics around lower markdowns, higher gross margins that have been achieved. And those are the easily measurable ones and on the basis of those alone, we're very happy with the investment that we've made in local manufacturing. If you then kind of cast it a bit wider, mentioned the massive disruptions in global supply chains, the more than 400% increase in shipping rates out of the Far East. To be honest, if we didn't have local manufacturing to the extent that we have it here, I think we'd be in a spot of bother and sweating a bit at the moment. We're going into Black Friday, going into Christmas with very few holes in any of our stock and particularly virtually nothing in clothing, which we manufacture it out. And I guess when you put it all together, there's absolutely no question in our mind that this is important. And I think if you just look globally at the most successful retailers, whether it's Inditex you know is an absolute world leading retailer or in the digital space, if you look at Shein, for example, the core success of both of those businesses is their ability to respond in real time to trade in the season. South Africa, just given where we're located at the tip of Africa, if you don't have that capacity in-house here in your own country, bringing in product from the other side of the world even at the best of times isn't the answer. So hopefully, that provides enough of an answer to the first question, but it was a really good one. The second question is with 1,000 new stores, what does this translate to in terms of net store or net space growth on a per-year basis? I think the number of stores, it's -- we do this bottom up. So we go to each of our brands. It's a discipline that we follow every year. We take a look at where the group trades across the country. We've got all the comparative trading data. So in some ways, without oversimplifying it, it does become a little bit of a plug-and-play exercise. We know how we trade literally in each precinct and pretty much every town/city across South Africa. We take a look at what brands we have represented in each of those nodes, hubs, cities, towns, and we've got a pretty good idea of which brands are complementary. For example, if you've got an exact somewhere, will Jet trade well there? The answer is obviously, yes. And we're able to do a bottom-up plan that we typically run 5 years into the future. But for the purposes of what we shared today, we've taken, I think, a much more closer look at the next 3 years. So I think we're pretty comfortable with the 1,000 new stores. The caveat to all of that, though, is getting sensible rental deals. So we're not opening stores for the sake of opening stores. They've got to be profitable. And that's the kind of to and fro that goes into the negotiations that we have with landlords. Can't really give an answer in terms of the actual space. That's very variable; depends on the size stores that we choose to open. We also have got a big drive to increase store trading densities. I mentioned that in the presentation. And that means if we've got stores that are potentially oversized, we're going to shrink those as well. And if we've got stores that have kind of outlived their purpose, in other words, a particular shopping node has perhaps regressed or died because of economic reasons or whatever, we're not going to trade on those going forward. So it's very much a bit of a mix. But I think the point is we'll trade -- in all likelihood trade through another 1,000 doors over the next 3 years. And I think that's just an indication of the conviction we've got in the brands and the strategy. Then the next question, oh, this is a nice one. Thanks for a good presentation and a good set of results. That's a nice way to lead into one. The RLC data indicates that you're gaining market share. From whom do you think it's been gained from? Nice question, but again, almost impossible to answer. We've had gains, obviously, we disaggregate that RLC information into the different sectors, men's, women's, et cetera. We've had gains in pretty much all of them. And if you go back to the stats that we shared against the Stats SA numbers and the RLC numbers, it's been a pretty consistent picture throughout. So again, almost by definition, it's against the market as a whole. And yes, pretty much most of our competitors, very difficult to drill it down. I think that that's an assessment you have to try and make yourself. Okay, Jane, I think this one is for you. With buy now, pay later coming in, will you still record the buy now, pay later purchase as a cash purchase? And does TymeBank assume credit risk on these sales?

Yes. So by buy now, pay later will be deemed as a cash purchase. And TymeBank does assume the credit risk on these sales. So they advance the money. The customer gets to take the product immediately. And I see there's another question as well about how does the buy now, pay later fit with our core credit products? Well look, we see these as complementary to the existing store card product that we have. As Anthony said in his presentation earlier, we think this will unlock a new and younger customer who maybe doesn't want to open credit just yet, but wants more payment options to be able to pay for their products.

Thanks, Jane. I think that's a very clear answer. Yes, as a question, and there are a couple, I think, on the dividends, I'm going to try and link these together. Please, can you clarify the updated dividend policy going forward? Is the 2x cover still intact for the full year? And are there prospects to reduce the cover in the future? Again, I think if I just take us back to what we communicated prior to today and then again earlier in the presentation, we were running at quite a low cover, I think, for retail. And I guess, absent of COVID, it was a fairly comfortable place to be. I think COVID has just reinforced the -- really the idea in our own minds that given the economic uncertainty that's likely to persist for some time, a higher cover is sensible. I think, linked to that, I mentioned we've got a very, very strong pipeline of both organic and inorganic potential investment opportunities. It was very much, I think, a theme of today's presentation just to show how that's really underpinned our growth and success over I guess, our history, but particularly more recently. And those organic and inorganic opportunities need to be funded. By far the cheapest, simplest and most efficient way to do that is through internal cash as opposed to just paying cash out and dividends. As I mentioned as well, we've taken a far more conservative view on the dividend cover for the first half. And again, that's because we're sitting in load shedding; as much as we're feeling that we passed the worst of COVID, the reality is nobody really knows. So I think it's unlikely that we would be dropping the cover anytime soon. And I think around about the 2x is likely where it's going to sit at for the foreseeable future. Okay. Bongiwe, I think it's -- this is one for you. Capital allocation and cash. Basic calculations indicate that by the end of the year, you'll be in a net cash position, absent of any acquisitions. How do you feel about the optimal capital structure for the group?

Great. Thanks, Anthony. Good question. I think also there's another one about the net debt to EBITDA reaching 1.3x to 1.5x that we also guided. With the rates we're trading today and the higher cash conversion cycles, I think definitely we'll be below what was previously guided as 1.3x to 1.5x in the absence of any, obviously, significant acquisitions or other. And in terms of also capital allocation, it's not only just acquisitions, it's also organic growth opportunities. I think I earlier spoke of the opportunities we see in the market in my presentation, as well I showed opportunities to see in the market in terms of either stock growth or brand growth in different sectors or the new brands coming on stream. So yes, I think what is important for us is the returns, getting the right returns on wherever we put our cash. Thanks.

Thanks, Bongiwe. Good answer as well. Jane, I think this is back to you. It's quite a technical question. 12.2% fewer credit customers year-on-year and a 20.9% increase in gross bad debt expense perhaps indicates a tougher debtor collection experience. Please can you reconcile these metrics to a reduced provision?

Sure. Okay. Thank you. So the 20.9% gross bad debt expense, of course, is the amount of write-off that we have taken in this half year versus the last half year. Now, in the last half year, of course, we were in the middle of the hard lockdown and the pandemic and we gave a number of our customers payment holidays. So we gave them an extra 2 months to be able to pay their accounts. And that effectively meant that we didn't write off any accounts for a 2-month period. So when you look at the write-offs for this half year versus last half year, of course, it's artificially higher because of that payment holiday that we gave. And if I actually have a look at the write-offs in the second half of the year and how I think I'm going to end the year overall, it will be negative. It will be a negative growth. So we're going to reduce our bad debt by the end of the year. Now given that I can see the performance of these accounts and I can see the amount of cash collected, and I can see the write-offs of the second half of last year, that feeds into my provision models and my provision models automatically say you need less provision because you've got a better quality of book already. And that's why the provision ratios are down whilst you're seeing an artificially high write-off for this half of the year.

Thanks, Jane. Well, answered without any calculators in front of you. There are several questions, I guess, broadly asking how Jet has performed. And if it's in line with the expectations. I think both Bongiwe and myself tried to cover that in the slide deck. I think to summarize, very much on track to meet our expectations for the year. I made the comment that a year ago, Jet was on its knees and life support and that was literally the case when we bought it. What's underpinned their success is suppliers coming back on board the minute TFG was seen to stand behind them. In other words, they knew they'd get paid. The ability to get back into stock, which has been progressive across different categories. And certainly, now going into summer, I think we're pretty much back to exactly where we need to be from a stock point of view. They've had very tight cost control that leveraged very strongly off the TFG platform. And I think we've shared in previous presentations just what we've managed to take out of their cost base, particularly in areas like IT, HR, et cetera. And again, I think most pleasingly, has been as a subcategory within Jet, I mean, almost all of their categories have bounced back very nicely, but the one that's showing I think real potential is Jet Home, both as a store in store. We've got Jet Home as a modular offering based -- it's customized based on the size of the Jet store. It comes in 4 different sizes. Trading -- literally trading the light size. We, over the last couple of weeks have opened 5 Jet stand-alone home stores. They've also traded incredibly well, and we're in the process of just seeing which sizes work, which consumer nodes will be suited to Jet Home. We'll open another 5 to 6, I think, before the end of March, and that sets us up I think for next year. Then what else? This is a nice question. Can you discuss how the Chinese clothing exporters Shein has impacted the different geographies you operate in? And I guess, broadly, what we think about it? Very good question. I mentioned Shein earlier on. I mean, for those who -- anybody who doesn't know about Shein. Shein is one of the fastest-growing fashion retailers in the world. It's very much a hyper-speed quick-response model. They can manufacture and get product kind of shipped in less than 2 weeks. Again, I think it goes back to almost linking back to the first question, I answered around while we're in quick-response local manufacturing without that kind of ability to turn product on and off, Shein becomes, I think, a real issue. At the moment, Shein is mainly young ladies' wear; that's their primary focus. And from a South African portfolio perspective, we've got a very limited exposure there. But again, our product in that space is the most quick-response product of any of our areas because by nature, that fashion is very quick. And I think the other point, again, just going back to Shein, Shein's a pure play. They don't have physical stores. And again, I think if you cannot compete in a digital world, if you can't take a young GenZ's order efficiently in a way that they want or let them shop in a way that they want digitally off an app, off their mobile phone, if you can't fulfill quickly and I mean really quickly and get it to them without any friction, then I think you're going to be vulnerable to Shein. So I think in a way, I wouldn't take Shein lightly, but at the same time, I think what they really do is they reinforce a lot of the strategies that we've been putting in place. Okay. Here is a question on supply chains and stock. Are you well stocked for peak Black Friday and holiday trade and how early did you take delivery of important merchandise? It sounds like somebody was sitting in our boardroom when they asked that question. Yes, I think we -- with very few exceptions, we're pretty much at 100% of what we need for -- certainly for Black Friday and hopefully, for Christmas trade as well. Again, the majority of what we sell is -- and I'm talking South Africa firstly, the majority of what we sell here is clothing. And as I said earlier on, 72% of our apparel's locally produced. So we haven't really been impacted by supply chain issues, I think, to the extent that maybe others have. And then to the extent that we do import, we've got -- we were kind of given a warning months ago that these bottlenecks were likely to form. And we did import a lot of product early. So Bongiwe showed some of our stock metrics. They look absolutely fantastic, and I'm super pleased with them. The reality is they're somewhat inflated anyway because we're holding stock in advance more than we necessarily would have for Christmas already. So yes, we -- I think we're good there. And I think just touching on, I think, Gary and Dean and Justin all touched on their own stock positions. I think Australia is very well stocked. They again, very dependent on China and have built up stock to cope with all the kind of opening and closing that they've had to deal with. And we've had a bit of an impact on the U.K. But again, it's -- the U.K. is only coming on stream on a more gradual level. So it hasn't ended up in a situation where we've got stock shortages. It's just not quite where we'd want to be. Bongiwe, this is one for you. Please could you give some CapEx guidance for the first year?

Great. Thanks, Anthony. I think also, there's another one about space growth in the current period. We grew space in the current period. I think I said by 3% to 1.2 million square meters as Africa. And for the rest of the year, I think we spent about ZAR 740 million in CapEx as a group. I think by year-end, we should be just about ZAR 2 billion and slightly above ZAR 2 billion for the year and circa 200 stores as a group new stores.

Fantastic. Thank you very much. Okay. This is a -- I'll answer this one. You mentioned inorganic growth. Can we infer that TFG continues to look for further acquisitive growth should the opportunity present itself? Absolutely is the honest answer. If you go back and look at our group that exists today, probably just over 50% of our group came through acquisitions. And we typically look to find businesses that we can buy at a reasonable price that fit into our group strategy. There's got to be a good fit with the management team, the same kind of DNA, plug them into our platform and then scale them to a point where they become really profitable from a group perspective. We continue to, I guess, be approached by a number of potential sellers. We also have got some pretty good ideas in terms of the verticals that we want to be in and areas to expand in. So I can't -- I'm afraid I can't really be much more specific than that. But the short answer is that's part of our DNA. That's what this group is about a lot. Okay. Have you noted any normalization of homeware demand over the past few months? Actually, not really. I think if you just kind of go to the backdrop, even though things are opening up, people aren't really traveling internationally. People are still, by and large, working from home. I think people have realized that homes are actually quite important to most of their lives. I think that shift is probably semi-permanent. I don't think it's going to go away anytime soon. And actually, our trading has been nicely up in homewares, given that last year, in particular, we did have stock issues. There were some very severe, severe homeware supply chain issues kind of this time last year, but it continues to trade well. What else is here that we haven't really covered. How have your sales been impacted by load shedding, especially in October and November, and what you foresee the impact on revenues in the future? It's a really, really tough question to answer. So we do track the hours lost. And that fits with the slide I showed right in the beginning of the presentation showed the loss of trade in South Africa. That was really the combination of that week of unrest and looting, together with the load shedding that we've had more recently. What makes it difficult to estimate is that if you have a 2-hour load shedding in a shopping center, say, from, I don't know, 1 o'clock 'til 3 o'clock in the afternoon, the reality is we don't get a bounce back later in the afternoon. So whatever hours we calculate, it's bigger than that. We showed the October growth rates for South Africa, up 12.5%. That was with load shedding in there. So yes, we just hope it gets better and certainly hope it doesn't get any worse but it's -- unfortunately, it's become so recurrent in South Africa that in some ways, it's almost part of the base now. I think those are pretty much the questions. Yes, guys. I think that's it. Thank you very, very much. Thank you to my fellow question answerers. Thanks, guys. Gary, Dean, Justin, you guys did so well that no one had any questions for you. Apologies for that, but thanks for being on standby. And wishing everybody a happy and safe rest of the day. Thank you.