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

Good morning, everyone. Welcome to our TFG 2023 Annual Results Presentation. Our presentation will follow a familiar format. An overview of the year presented by myself, a review of our financial performance presented by our CFO, Bongiwe, segmental performance, reviews for our credit, TFG London and TFG Australia businesses, and update on our strategic focus, priorities and outlook for the year ahead. We'll then have a short comfort break followed by a Q&A session. Let's get straight into the overview for the year. The last year has been an incredibly challenging year for the retail sector, both globally and domestically. All of our businesses were negatively impacted by the war in Ukraine. We saw a steep rise in interest rates, energy and food prices, which led to a cost of living crisis that eroded consumer confidence and spending power. In South Africa, still the largest part of our group, our business was significantly impacted by the dramatic increase in the extent and the levels of load shedding during the second half of the year. In this context, I was pleased that we were able to continue our growth momentum, continue to grow market share and still deliver positive growth. At a group level, we achieved a 19.4% increase in turnover, underpinned by strong performances across all of our businesses. These ranged from a 17.2% growth for TFG Africa, a 9.4% growth for London and a 29.8% growth for Australia. This 19.4% turnover growth converted into an 18% growth in gross profit, a 4% growth in net profit and a 4.1% increase in earnings per share. Despite the strong gross margins in our 2 international businesses, the impact of load shedding weighed on our group gross margin, which softened from 48.5% to 47.9%. This in turn impacted our EBIT margin for the year, which at 10.5% was lower than where we had planned it. I'll talk later about how we are working to bring this back into a higher range. As you will have seen, we declared a final dividend of ZAR 1.50 per share, which was at a higher 3x cover. We do believe that the higher cover is appropriate at this point, given both the prevailing economic uncertainty as well as the scale of investment that we've made in our business over the last year, which I will elaborate on further during the presentation. Diversification, not putting all of our eggs in one basket has been a key part of the TFG strategy for many years. This strategy served us well in the past. However, the benefits of diversification have never been as clearly demonstrated as they were over the past year when the record results of our international businesses helped to largely offset the worst of the load shedding impacts. TFG Australia grew turnover by nearly 30%, strengthened their gross margin on the back of pent-up demand for their dressy product and leveraged this into a record AUD 127 million EBIT, 56% up on the prior year. TFG London were also able to demonstrate the benefits of their refreshed, increasingly direct-to-consumer business model. They grew turnover by 9.4% and their high gross margin structure, together with their reduced platform operating costs, helped them leverage this into a record GBP 26.6 million EBIT, which was up over 10% on the prior year. On a combined basis, our international businesses accounted for 31% of our turnover for the year and 37% of our group EBIT. These strong trading performances, together with the relative strength of their currencies provided a valuable hedge, given all of the headwinds we faced in South Africa. Despite all of the challenges that impacted our South African business, we continue to outtrade the rest of the market and made further market share gains across all of our key categories, both through our organic business as well as through our recent strategic acquisitions. In the general apparel category, which consists of men's, women's, kids and babies apparel, we grew total market share from 13.7% to 14.1%. Our sports business, this includes Sportscene, Totalsports, Archive and Sneaker Factory, grew their market share from 36% to 39% over the calendar year. Our Homewares business grew market share from 10.2% to 11.5%, and this was further increased to 17.2% following the acquisition of the Tapestry businesses effective August '22. Our furniture business increased its market share from a relatively insignificant 2.6% to a far more meaningful 10.2% share of the market, also following the Tapestry acquisition. Now standing back from the actual trading results for the year, which will be covered in more detail in the rest of the presentation, we also made significant progress in terms of delivering on our group's strategy. We opened 381 new stores across the group, which added ZAR 1.7 billion in additional turnover. This was a massive undertaking and in any other context would constitute an entire retail chain. We also expanded our local quick response clothing manufacturing capacity by some 45% during the year on the back of increased demand from a number of our brands for this more flexible supply chain model. We made significant progress in terms of our DC consolidation project, where we're moving from 13 subscale DCs in South Africa to fewer, larger, far more sophisticated and efficient DCs. Here, we added 20,000 square meters to our Midrand DC, and are well on our way to completing and commissioning our new 75,000 square meter Riverfields DC. We added 2.8 million new customers to our TFG Rewards program, which continues to drive an uplift in basket size and shopper frequency, provide the insights for our targeted marketing campaigns and drive traffic to our new online platform, BASH. Speaking of BASH, we successfully launched what is already fast becoming South Africa's favorite fashion and lifestyle shopping brand and app, as we continue to both future-proof and transform TFG into a true omnichannel business. We believe that this will be a key differentiator for TFG as shopping habits increasingly shift to online and omnichannel, and as the arrival of international online players, such as Shein and Amazon further accelerate digital adoption. BASH has already achieved incredible customer traction and proven the power of having all of our brands on a single shopping app. Prior to the launch of BASH, our biggest online site was ranked #22 in South Africa in terms of web traffic. After only a few months, BASH has already ranked #6, way ahead of all other South African fashion retailers. This combination of greater customer traffic and significantly improved conversion rates has meant that BASH has been able to grow sales far faster than the rest of the market and our direct competitors. From an economic perspective, the BASH team has continued to reduce online marketing and fulfillment costs, and these performance efficiencies will improve even further as soon as we are able to utilize our new Riverfields DC. Very importantly, I believe that we've delivered our trading results as a responsible corporate citizen. We've made good progress on a number of our product sourcing and traceability goals. And most importantly for me, brought more than 8,000 new jobs to our group in South Africa during a period when unemployment continued to reach record highs. We have made several acquisitions since the beginning of COVID and I thought it would be helpful to put these into context, why we've acquired them, the returns we are already generating from them and how they fit into our broader strategy and vision. We have well-developed and clear criteria for our acquisitions. They are in key strategic categories for the group, where they will either anchor or help build out key market segments for us. They have clearly defined growth paths of their own, which we can further supplement through our TFG platform and customer base, and they have strong intact management teams to continue to run these businesses without any disruption to their momentum. Reflecting on our most recent acquisitions, we acquired the Jet business for ZAR 385 million. Jet generated a load shedding impact to turnover this year of ZAR 5.6 billion and an EBIT of ZAR 560 million. As to the why, Jet provides us with a meaningful scaled anchor for our TFG value segment, which is increasingly important given the realities of the South African market. This has also opened up the opportunity for us to build out a significant value homewares offering and Jet Home, which we know is a massive market where we haven't played before. Including Jet, with our other value brands, we've already built a ZAR 9 billion turnover value stack and have a well-defined ambition to grow this to ZAR 20 billion over the next 5 or so years. This year, we acquired Tapestry Home Brands for ZAR 2.2 billion. It has produced ZAR 2.6 billion in annualized turnover for the 12 months to 31 March, and an annualized EBIT of ZAR 350 million for the same period. Tapestry has already doubled the scale of our existing home business to almost ZAR 5 billion, and provides us with the base and the synergies to build out what should become a ZAR 10 billion home business over the next 5 years. Following post-year-end Competition Commission approval, we acquired 99 Street Fever stores for ZAR 150 million. These stores have already been rebranded and are trading at Sneaker Factory stores to allow us to rapidly scale our value-orientated sneaker business. Our sports brands already produced nearly ZAR 11 billion in turnover. And here, again, we have a clear vision for this to become a ZAR 20 billion sports business over the next 5 or so years. In aggregate, these acquisitions cost us ZAR 2.7 billion, but they have added ZAR 8.2 billion in annualized turnover and the best part of ZAR 1 billion in EBIT to the group. Strategically, each of them will play a key role in building out significant segments of our business in the ZAR 10 billion to ZAR 20 billion range. Earlier, I highlighted the incredible performance of TFG Australia this year. In fact, their results have been pretty incredible since we acquired them for ZAR 3 billion in 2017. In the 12 months to June 2017, the effective date of our acquisition, their turnover was AUD374 million and the EBIT, AUD28 million. Since then, their turnover has grown to AUD810 million and the EBIT to AUD127 million this year. There aren't many retail businesses anywhere, let alone in Australia that have enjoyed this level of success over the past 5 or so years. Now throughout this period of extraordinary success, the business has been led by Gary Novis. Effective 1 April, in line with our internal succession planning, Gary has handed over the position of CEO to Dean Zanapalis, who's partnered Gary throughout this period. I've absolutely no doubt that the transition will be flawless, and I would like to take this opportunity to both recognize and thank Gary for his sterling contribution to RAG and TFG, for the value he has helped to create for everyone and for his personal support throughout. Thankfully, this doesn't mark the end of an incredible career in retail, as Gary will remain as a Director of TFG Australia, with a specific focus on growth opportunities for the business going forward. Gary, congratulations, and thank you. Bongiwe will now take us through the financial results for the year.

Thank you, Anthony, and Good morning to you all. Our income statement is a tale of 3 record quarters, plus 1 slow last quarter, which was impacted by several macro factors locally and internationally, albeit at different degrees, weighing down on the consumer and consequently on our growth strategy. Despite the headwinds, the group delivered a strong turnover of ZAR 51.8 billion, which represents 19.4% growth on last year. If you exclude Tapestry, a growth of 15.2% was delivered. This top line growth translated to an 18% gross profit growth, and excluding Tapestry, a 13.8% growth. Trading expenses grew 19.1%, driven by inflationary pressures, non-comp store growth, acquisitions and excluding Tapestry, grew 15.6%. I will unpack that in my next slide. At an EBIT level, we grew 12.4% and 6.9%, excluding Tapestry, and closed the year with a satisfactory earnings per share growth of 4.1%, which should be the forecast, as you will recall, last year's headline earnings were boosted by the [ 280 million ] add-backs of IT CapEx impairments and the U.K. deferred tax write-offs. We will unpack the drivers of each of the income statement key metrics in the subsequent slides. The 19.4% turnover growth was driven by exceptional 9 months of trade, including a record Black Friday and Cyber Monday, which delivered a growth of 20.8%, which was then followed by a slower Q4, which grew only 14.3%. As reported, Q4 for our international businesses was against a high COVID recovery base. And in Africa, the unprecedented levels of load shedding had a negative impact on our turnover. Despite this slowdown, like-for-like growth of 8.2% at group level was achieved. And regionally, Africa achieved like-for-like growth of 5.1%, the U.K. 8.9% growth and taking the crown was Australia's 12% like-for-like growth in a very buoyant market. Another key metric to highlight is the group's strong cash sales growth of 21.5%. Africa's cash sales growth, in particular, was impressive at 19.7%, which is a ZAR 4 billion additional cash sales against credit sales growth of 11%. Once again, customers voting with their wallets in an environment where the customers' discretionary spend is under enormous pressure. Cash now accounts for 81% of our group sales. Reflecting on the performance over the last 5 years and all its challenges, including the impact of COVID lockdowns, continuous load shedding and other disruptions in Africa, we are proud to have achieved a 5-year CAGR of 12.8%, all of which can be attributable to the strength of our brand, our product and remarkable execution in stores and online. I previously highlighted to the market at our 2022 financial results that we had a gap of some ZAR 700 million in credit income due to the decline in interest rates during COVID. I'm pleased to report that the gap is narrowing, driven by the 350 basis points rise in interest rates during the financial year. The book is managed conservatively, and we have chosen to tighten acceptance rates to an average of 19% against a 25% acceptance rates last year. Credit remains a lever in our African business, but in the current environment, we're taking a prudent approach to extending credit. VAS growth is directly linked to new accounts, and we are working on a few different initiatives that enable growth beyond just our credit book, and I look forward to sharing more on these initiatives as we start making meaningful progress. We achieved gross profit growth of 18% and without Tapestry, 13.8%. In our Africa business, gross profit were impacted by our decision not to pass on all cost inflation to an already under pressure consumer. That together with product mix, lost turnover as a result of load shedding and above planned markdowns and provisioning resulted in compressed margins. On the contrary, the UK and Australia margins reached their record IFRS gross profit levels at 58.7% and 66.3%, respectively, driven by robust demand for our brands, return to work in public occasions following the very tight COVID measures in the prior 2 years. Trading expenses to turnover ratio achieved 41.3%, was a record low. This was achieved despite the strategic investment spend, organic store growth and the inflationary pressures. We are relentless in our forecast to expand bottom line through leveraging of the group scale and our platforms, working with all our key stakeholders, landlords, suppliers of merchandise and non-merchandise to achieve sustainable cost of doing business. We will continue to be very focused on cost containment and we'll be cutting the costs further to match the challenging operating environment we find ourselves in, particularly over the next 12 months. This will ensure we drive more efficiencies in our operating model and expand leverage to our bottom line. Anthony will expand on our cost containment strategy and our targets a little later on, which leads to EBIT. Group EBIT grew 12.4% on last year despite all the aforementioned challenges in investments. EBIT growth was impacted negatively in the second half by the slowdown in trade. We estimate that EBIT margin pre-investment costs and lost sales due to load shedding would have been a conservative 13.4% for the year 2023. Moving on to our balance sheet. Inventory grew 40% on last year, inflation being the biggest driver, and there was a lot of comp growth in the number as well. Firstly, the inventory for the 381 new stores we opened; secondly, Tapestry inventory of some ZAR 600 million; and thirdly, ZAR 150 million inventory ahead of the acquisition of the 99 Street Fever stores, which became effective 26 April, 2023. I'm glad to report that this inventory has traded well to date. The debtors book grew 10.5%, which was below credit sales growth of 11%, and part of the growth was driven by non-comp Jet and Tapestry credit sales. The extra debtor days for the whole book were down 7 days. Jane will be expanding on the debtors book performance shortly. Our net debt increased to ZAR 7.1 billion, with pre-IFRS 16 net debt-to-EBITDA comfortably at 1.2x. And if we exclude Tapestry acquisition, we achieved 0.9x, which was well below our targets. Covenants in all our regions have been met. The cash flow, which I'll be addressing shortly will clearly depict these movements. The highlight of this slide is the freshness of stock. 56% of our stock is less than 2 months old. We purposely dealt with slow moving stock in Q4, which reflected in the gross margin impact and effect of the reduction in units per store, especially in Africa as at the end of the financial year. 2023 financial year was a year of CapEx catch-up for us with ZAR 3.1 billion spend, which was a historical high. It is important to note that this includes ZAR 200 million spend on unplanned load shedding backup batteries for our high-growth stores across the country. The group opened 381 stores. 80% of the stores were in Africa. The new Africa stores contributed ZAR 1.3 billion in sales, realizing an EBIT margin of 15% in the [ FSTM ]. About 60 of these stores were in sports value brand, Sneaker Factory, and another 100 between men's and ladies, largely value brands. In total, 70 of the 318 Africa stores -- new stores were from old space optimization. Hence, the net space growth of only 5%. This excludes stores we've acquired through Tapestry acquisition. On the IT front, we had a bit of catch-up there as well, particularly when it came to infrastructure and enhanced data security and storage capabilities. At a store level, we rolled out RFID further, an additional new point of sales to enhance the ease of transacting and overall customer experience. On the logistics side, we have further spent ZAR 250 million on the expansion of our DCs as part of our DC optimization strategy. On the cash flow, the group generated a record ZAR 10.6 billion in operating profit, which was up 12% on last year. The waterfall shows how it was absorbed prudently, taking into consideration working capital, CapEx, acquisitions and full-year dividends. In Africa, we successfully raised another ZAR 2.8 billion in additional facilities to support the expanding business we are today. I want to highlight that we restructured our debt facilities as well to replace some of the short-term debt with longer-term debt and on better terms and locking in very good rates due to our pro forma rating. We thank all our banking partners, and it speaks to the confidence the funding community has on TFG. In closing the group section and despite all the challenges, the group delivered a robust performance in 2023 and has clearly defined focus areas for the oncoming year 2024. I have explained Africa's performance in detail in my prior sections. The key point I would like to highlight is that we were set for a strong growth in margin and EBIT until we experienced severe load shedding in Q4. This is evidenced by the EBIT margin growth of 6.3% in the first half, which then contracted in the second half. Margins in the second half were impacted by the lost trade and consequently had planned markdowns as we chose to do with slow-moving stock in the quarter and additional provision as precaution. Despite these ongoing challenges, we still achieved a 5% like-for-like sales growth for the year, closing the year with lower stock units per store. I thought it would be opportune to give an update on the performance of our recent acquisitions, Jet and Tapestry. Jet achieved turnover growth of 9.7% and like-for-like sales of 6%, driven by strong demand in market share gains, especially in the kids segment. Trading densities improved another 9.6%. Jet's performance would have been even more impressive, however, was impacted by a severe load shedding and due to their store locations. Consequently, we had to drive clearances and sacrificed a bit of margin and hence, the EBIT margin of only 10%. We have every intention to get the EBIT margin back to the 12% we achieved last year and then driving efficiencies even harder in the next 2 years to 3 years. Tapestry acquisition has been immediately accretive for us at EBIT margins of 13.2%, and they achieved GPs of approximately 50% for the year despite the impacts of load shedding. The [ other ] brands grew 10% over 11% and achieved strong like-for-like sales of 7%. The highlight being the Volpes business, which grew 19.1% on prior year. We look forward to growing this business even further as we integrate it and extract further synergies. My last slide is on the outlook for our Africa business. While we, along with many other retailers are dealing with intense load shedding challenges and our consumers are suffering with increasing financial pressures, our African business is focused on our strategy to grow market share and leverage our unique infrastructure and platforms. We see 2024 as Africa's year of consolidation with a focus on improving operating leverage. Operationally, there will be continued focus on controlling inventory purchases, so as to defend our gross profit margins and reduce the absorption of working capital. There are lot of cost-saving initiatives planned for the year ahead and over the next 18 months, and our CapEx budget for the year has been revisited. And thank you all for listening. And I now hand over to Jane to take us through Africa's financial services performance.

Thanks, Bongiwe. So how is the world of credit? Well, in this financial year, we have seen a record number of customers apply for a TFG store card with nearly 4.5 million customer applications, which is a 58% increase on last year. This growth in the number of applications is seen across all of our brands as customers want TFG credit to buy our merchandise, but it's also as a result of taking over the credit granting process for Jet. Now roughly 1/4 of our applications are from Jet customers. As we take on new brands, this is a huge opportunity for them to be part of the TFG family and have access to our TFG store card. But given such an increase in demand and in order to control for concentration risk of new accounts as well as economic conditions, we have tightened our accept rates further, and it now sits at 19% for the year overall. We expect to keep our accept rates at around the 17% to 19% mark for the forthcoming year. Now the reason to control concentration of new accounts is because new accounts naturally attract a higher provision rate and will have higher bad debts than existing accounts. So you want to control for this within your portfolio. However, we are still growing our book and our account base, and we are now up to 2.8 million customers who have a store card. The credit sales growth for the year is 11%, and our gross book is ZAR 9.7 billion, which is an 11.7% increase. Given that our credit sales growth of 11% is still well below our cash sales growth of 19.7%, credit is being managed responsibly to enable merchandise sales. Obviously, credit is a huge lever for our organization, and we choose to run it conservatively as we are not in the business of buying turnover. But then you're going to ask, what about the quality of the book? Well, during the course of this last financial year, we have grown our book by over ZAR 1 billion, both from our existing brands and the launch of new brands such as Jet and more recently, the launch of credit into Tapestry. But just to put the growth of the debtors book into context, whilst we grew the book by ZAR 1 billion, we grew our credit sales by ZAR 1.1 billion, and the contribution of credit for TFG Africa sits at 27%. But as a result of COVID and significant tightening of credit during this period, we have had big changes in the size of our book, which you can see on the graph I've shown. This means a lot of our bad debt statistics have large elements of non-comp whilst they work their way through the portfolio, a bit like a pig in a snake. It's just got to work its way out. For example, we know that new accounts have a higher risk than an existing account as you've got less information on a new account. So you have to provide more in terms of provisioning for a new account. Therefore, if your percentage of new accounts as a proportion of your total base increases, this will increase your absolute quantum of bad debt. And it's effectively a non-comp element until your new account contribution normalizes. Also, if you are growing the size of your debtors' book, this will also grow your absolute bad debt. You can't grow your book without growing your bad debts. But by managing our risks, we are controlling the overall impairments ratio at 20%. Now when our book significantly decreased during COVID, this obviously also dropped our absolute level of write-offs. And in the previous financial year, this was a negative 21%. Whereas in this financial year, it was 5.4%. That is still artificially low as it takes circa 18 months of peak write-off to occur. I would expect for this forthcoming financial year write-offs to increase, which is perfectly normal given the growth in our book. Our net bad debt statistic is the combination of write-offs recoveries and provision movements, and this has increased to 13.9%, which is primarily due to the additional provisions required for a growing debtors book. But I want to talk you through the bad debt figures in a little more detail to illustrate why this isn't a concern. Overall, our net bad debt has increased by 37%. And you might have seen some of our competitor numbers quoting significant bad debt growth, but our growth is nowhere near some of the figures quoted by others, which are north of 70%. As explained, write-offs are still artificially low at 5%, as the peak of write-offs will only come through in this financial year, but we are particularly pleased about the growth of recoveries of 7%, which is the amount of money recovered after an account is written off. Provisioning is the real reason our net bad debts have increased. And as explained, our book is over ZAR 1 billion larger, so you would expect absolute provisions to increase. The majority of additional provisioning requirement is due to the growth of our book and not as a result of a deterioration in the underlying quality of our debtors book, and we have split out these 2 aspects on our graph to illustrate this fact. So how do all these numbers for credit come together from an EBIT perspective? Well, I'm pleased to say that credit has significantly increased its EBIT as interest rates have started to come back again. Credit primarily makes money for interest income. So when interest rates are slashed as during COVID, then credit just struggles to cover at cost. But during the last financial year, we have seen repo rates increase by 350 bps, which means for the credit portfolio, our income has increased by 31%. Costs are still well contained at 6% and under inflation. So this means our EBIT is ZAR 312 million, which is a big increase on last year. And during the next financial year, even with a higher percentage of write-offs and according to my finance guy, we expect our EBIT to be around ZAR 500 million, which is back in line with pre-COVID levels. And finally, just to note, TFG credit is run to maximize profit at a group level through enabling good merchandise sales, and we purposely run credit at a conservative level. Thank you. And it's over to London to take us through the numbers.

So thank you, Jane, and a big hello from London. Matt and I are here to present the TFG London results for the year. We're in the Phase 8 office, which is one of our amazing brands and these results obviously present a record year. So over to Matt.

Thank you, Justin, and good morning, everybody. Delighted to present the key takeaways for fiscal year '23. As Justin says, a record year for TFG London and delivered against very challenging market conditions in the UK. I'd just like to say a big, big thank you to all our teams here for all your efforts during the year for making this happen. So looking at the numbers. Overall, sales for the year came in just shy of GBP338 million. That was 9.4% up from prior year, with a similar level of like-for-like growth. Within that, I think what was very pleasing was the resurgence we saw in our offline channel. As one would expect in the UK with high inflation and rising interest rates, we saw a much more considered purchasing behavior from our customers last year and being able to offer an in-store environment that allows us not only to inspire with great product, but also engage with a personalized 5-star experience that was extremely important. So during the period, we opened 21 new stores, including concessions, and we also closed some sites as we continue our program of optimizing and future-proofing our store portfolio. Within our non-core markets, also very encouraged to see double-digit like-for-like growth, driven by strong performance in both stores and online. Our non-core markets or what we refer to as international here in TFG London, represent now around 15% of our sales with an ambition to improve that mix going forward. Moving on to margin. We've talked about reengineering our business model to a more profitable, high-quality core business. Very pleased to report that we are continuing on that journey in fiscal year '23. As one can see that sales growth we delivered came in parallel with a higher gross margin mix percentage that was up 1.9% on prior year as we increased our full-price mix and reduced reliance on promotions. From a cost perspective, as one would expect, we naturally faced into some headwinds during the year given the environment. But despite that, TFG London delivered a record EBIT of GBP26.6 million, up 10.4% on prior year. Looking at the balance sheet. So from a stock perspective, we naturally saw a year-on-year increase last year as we will reset our buys to more normalized levels. Very clear from the chart, as you can see that fiscal year '22 was quite an exceptional year in that regard. Overall, though, the TFG London balance sheet remains in very good shape. And as one can see, we've maintained a somewhat conservative approach to our stock provisioning given the continued level of uncertainty in the market. Both stock aging and margin in stock, though, remain healthy and our KPIs that we regularly monitor. It's fantastic that we're facing into the coming seasons with plenty of newness and fresh product for our customers. So for my closing remarks, I guess, looking ahead to this year, clearly, we remain cautious in our outlook, noting the market uncertainty. But looking back overall, we can feel very, very pleased with these set of results. I'll now hand over back to Justin to walk you through the outlook for this year.

Thanks, Matt. Some really great numbers there. However, fair to say that some significant challenges remain in our key markets and particularly planning for a more normalized customer demand. There is also a high level of uncertainty. But the key focuses for this year for the team are really delivering a personalized 5-star customer experience across the brand's touch points, and then continuing to realign the business model to more direct-owned channels. Efficiency is clearly key this year, and we're looking at all the areas of the P&L to optimize. And then as Matt just touched on, optimizing stock productivity across the brands. As always, it's a huge team effort, and I would also like to sincerely thank our dedicated and talented team at TFG London. You are amazing. So thank you very much from London. And we're now handing over to Gary and Dean in Australia. Thank you.

Thanks, Justin. Hello, everyone. Dean and Gary will give a full year update from TFG Australia. Firstly, on performance. At the half, we talked about maximizing the opportunity in the current market, and we're pleased to report that we did exactly that. The boom in dressy product continued. Sales grew 29.8%, and we expanded our margins. As a result, EBIT increased by 56%, a massive AUD45.6 million growth to AUD127.1 million, a spectacular financial result. On top of this, we also continued to deliver on our strategic initiative to replatform the business. During 2023, we completed the following transformational projects, a new ERP software platform across all brands and head office and a new online platform for all brands. We'd like to take this opportunity to congratulate the entire team on completing both major projects with no loss of trade. A superb result. Thank you so much for your dedication and commitment to the business. Now to inventory. Over the last 3 years, inventory management has been increasingly challenging with worldwide issues in supply chain and changes in consumer spending patterns from health restrictions. As you can see in the graph at the bottom of the page, our year-on-year movement is a substantial increase. However, this is a result of being understocked in the previous year due to supply chain delays. On a comparable basis, inventory is about 15% up. However, the quality is very good. In fact, 88% is current season inventory and over 40% of that is core, which essentially means products not linked specifically to a season. So we're comfortable with the current inventory balance. To the next slide. First, to the economic challenges. As some of you will recall, 6 months ago, we said we could not be happier. We had just experienced our best ever half year results. There was heightened consumer demand and a post-COVID boom in events-driven sales. Since then, the second half has certainly started to show signs of weakening. However, in perspective, this is off a phenomenal period of heightened demand, which outperformed all of our expectations. 2024 will be more challenging. Essentially, the headwinds remain largely the same; high inflation, rising costs, cost of living pressures and low consumer confidence. But on this occasion, we expect to be navigating these challenges without the post-COVID sales boom or excess consumer savings. However, before we get too negative on the outlook for 2024, whilst we expect the following 12 months to be substantially more challenging, we're still planning to have a good year. I'll hand over to Gary for the outlook. But before I do, I just want to say congratulations to Gary on his tenure as CEO, which was nothing short of brilliant. Over to you, mate.

Thanks, Dean. Firstly, I want to thank Dean for his massive contribution to RAG's success and congratulate him on becoming CEO. Dean and I have worked together for the past 11 years and will continue to do so. In my new role of Executive Director, I'm available as constant support. And as far as Dean and I are concerned, it's business as usual. Dean's transition to CEO has been planned for quite some time, and we've been making all decisions together for at least 2 years. I was CEO of RAG for 16 years, and I know that Dean is the right person to lead RAG into the future. So just to reiterate what Dean said earlier, what a phenomenal year it was, in part, driven by post-pandemic shopping boom, especially in dressy product, as our customer return to the races, weddings, school formals, restaurants, parties and other events. The so-called dressy product will not be repeated, and we have [ guided ] this financial year 2024 to be down on our record result. RAG is a strong business, and we are a better business post COVID. We will continue to deliver for the group and expect to show growth on our previous record year, financial year 2022. We have a sound growth strategy that has been very clear and consistent for many years and an incredible team to execute. On a personal level, I want to thank our RAG family, now TFG Australia as well as Anthony and his team for the support and friendship I've enjoyed as CEO. The past 6 years working with TFG has been the best time of my working map, and I know that this will continue in my new role. Over to you, Anthony.

Gary and Dean, thanks for your presentation. We now move to the strategy and outlook presentation. Earlier, I shared how we think about the capital that we've spent on the businesses we've acquired, the returns they are really generating for us and how they're going to help create big parts of our business in the future. Capital allocation has increasingly become a significant focus for TFG and obviously extends well beyond just the businesses we've acquired. We allocate our capital deliberately in line with our strategy and for the ultimate benefit of our shareholders. 2023 was a year of significant investment in the group. Starting with our organic business. We invested ZAR 1 billion, building 381 new stores across the group and a further ZAR 1 billion in inventory to run them. We measure and we know the returns that we generate from our stores, and this remains a key organic and growth lever. We invested a further ZAR 225 million in the development and launch of Bash this year, which will become transformative for our business over the next couple of years. Unfortunately, we had to invest ZAR 200 million in backup power for our store network. Given the extent of load shedding, this investment has already paid back as it gives us approximately a 4% sales advantage per store. We invested ZAR 360 million in significantly expanding our local quick response manufacturing capacity and a further ZAR 405 million in rationalizing, modernizing and expanding our DC network. This will start to have a positive impact on both product margin and fulfillment costs once we are up and running by the end of this year. We also acquired Tapestry, which I've already spoken about. Importantly, we returned ZAR 1.6 billion in cash dividends to our shareholders. We've invested significantly and consistently throughout the cycle over the past number of years, and we now have all of the building blocks in place that underpin our strategy. 34 market-leading brands, a 4,700 store footprint, leading digital capabilities, material international diversification and increasingly vertical supply chain and a 30 million-plus customer base. Looking at the year ahead, we can now start to scale back from this level of investment and really sweat the assets that we have. This doesn't reflect a change in strategy, but rather an opportunity to consolidate the assets that we have built up. Store CapEx will reduce to in the region of ZAR 600 million. We'd like to see Bash breakeven over the next 3 years. We need to spend a further ZAR 70 million in backup power solutions for our stores. Our DC projects will be completed, and it's unlikely that we are going to be pursuing any significant M&A activity over the next 12 months, although we always remain alert for opportunistic situations. We expect the year ahead to remain challenging, especially during the first half when load shedding and further inflationary pressures, together with rate hikes are expected to peak. As a result, our priorities need to be very clear. We're confident that our top line growth will continue to excel. We have experienced, talented and driven management teams driving each part of our market-leading brands, and they all continue to out-trade most of their competitors. We will, however, be further tightening our belt. This means further reducing our cost of doing business on top of all the progress we've made over the last couple of years, bedding down our recent acquisitions, sweating our assets and working capital and using the cash generated to reduce debt and interest costs. The result that we're looking for is greater leverage to the bottom line and expanding our EBIT margin back into a 14% to 15% range, which we believe is appropriate for our current business with a far larger value contribution. Whilst there are clearly a number of variables that are totally outside of our control, we are taking all the steps necessary to deal with the current market conditions and to ensure that we are best placed to benefit when the cycle turns. In terms of most recent post year-end trade and starting with TFG Africa, we saw a significant improvement over the last 2 months, especially into May with the year-to-date turnover growth to the end of May of 15.4% or 5.8% if you exclude Tapestry. In the U.K., year-to-date turnover contracted by 10.8%, very much in line with our expectations and planning, given last year's high-base effect on the back of back to work and pent-up demand for functions as the country came out of COVID. As we've moved further into summer, turnover levels have however improved. In Australia, turnover contracted 4.9%, which is also in line with our expectations, given their incredibly high prior year base. However, they remain well ahead of pre-COVID levels. This concludes the formal part of our presentation. We will take a 5-minute comfort break and then be back for Q&A.

Welcome back, everybody. We are now into the Q&A session. Kicking straight off, I see we've got quite a lot of questions today. With the first question. What is the sales contribution expected to be for Tapestry to TFG Africa? I think we did share in the presentation that the annualized turnover over the last 12 months for Tapestry bearing in mind the effective date of their transaction was in August 2022 was about ZAR 2.6 billion. We obviously expect that to grow quite nicely in the year ahead. And as I spoke about, this is really allowing us to double our furniture and homewares business to roughly ZAR 5 billion business for the next 12 months ahead, and we see that as an anchor for a ZAR 10 billion business over the next 5 years. Second question reads, impressive market share gains, where did you see the gains coming from? Is this from listed competitors or smaller competitors falling over? I think the answer is probably both. The best way to look at this is ready to take a look at TFG's growth relative to the growth that pretty much all the listed retailers in South Africa are posted. There's quite a big gap there. I think even more importantly, if you take a 2-year view, that kind of arms-out the base effects of any variation in 1 year, that gap is even bigger. And that's pretty much across most of our core categories. I did share some of the RLC numbers and Euromonitor numbers in my presentation. What's harder to evaluate is the market share we've taken from smaller retailers, but undoubtedly, that is the case. Unfortunately, in tough times, you do see consolidation in the retail sector, and we have seen in all 3 territories, a number of smaller competitors, unfortunately, not make it through the last 12 months. Okay. This is a good question. Regarding your quick response manufacturing, I perceive TFG as being the market leader. However, at a recent -- I am not going to mention the retailer by name here, at a recent another retailer's presentation, they gave the impression that they're competing head on with TFG. Is that correct? No, it's not correct. TFG spent 10 years really building out a quick response manufacturing model. It's not just about factories. It's how you integrate factories with the planning cycle within the business. It's immensely complicated. It's not easy. We've paid big school fees in getting to where we've got to. We've also learned that it's impossible to run a quick response model with an outsourced manufacturing arm. The relationship doesn't work. The communication is not there, the responsiveness is not there. Without proper vertical ownership of your supply base, it simply doesn't work. TFG has become the largest clothing manufacturer in South Africa, and that includes both stand-alone manufacturers as well as any manufacturing arm that's linked to an existing retailer. We have the best experience and skill-set in South Africa, which is incredibly rare. That industry has been under-invested in for over a decade. I think it is a unique competitive advantage, which I wouldn't say it's impossible to replicate, but it's incredibly difficult to try and replicate it. And with the best will in the world, that simply wouldn't be possible in less than 5 years, and even that's probably a stretch. Next question is on our DC consolidation. How many DCs do you have now and what you ideally want to end with? How should we think about this in terms of efficiencies and costs? We currently have 13 DCs, all but one of them are subscale. They are not optimally situated across the country. They really came to be as we added businesses to the group. A lot of the individual businesses came with the DC capacity. Our plan is to reduce this down to 7. So it's a substantial consolidations effectively halving the number of facilities. More importantly, in terms of efficiency, this really allows us to change the model that we use to fulfill our stores. At the moment, we're unable, given that very small disintegrated model to really hold back stock, we send too much stock to stores initially. We can't react properly in terms of demand in terms of replenishment. This moves us forward into a much more flexible and agile logistics solution. And if you look at all big international retailers around the world, they pretty much followed a very similar pattern. In terms of cost efficiencies, our current fulfillment costs, including online, which are obviously more expensive, run at about 3% of turnover in South Africa. The aim is to get this much closer to 2%, which if you extrapolate that across our turnover is a massive lever. What is the power backup coverage in TFG Africa? And what will this be after the year-end? And what was the drop in footfall in the fourth quarter? And how did this affect your trading? I think we've covered the footfall piece. Bongiwe split-out the 3 quarters versus the last quarter. I think the other way to think about it is we were running at about 5%, 6% like-for-like growth up until mid-December. That went negative for the last quarter. So it's a very, very dramatic slowdown. And obviously, as we've shared, this has now picked up nicely post year-end. Next question. Inventory levels, what are they looking like in South Africa, given that you've had a strong reported May trading. Bongiwe, do you want to pick that one up?

Sure. Inventory actually have come down quite nicely. I think we're running at about 20% growth on last year now. That's down from the 40% we were at year-end, and that's driven by us opening obviously the sneakers factory stores in April, 99 and obviously trading quite strongly in May.

The next question is what was like-for-like revenue growth for TFG Africa. I think we've already answered that.

That is about 11.4%.

And then a question around product inflation and volumes. Product inflation, as we've spoken about, it varied quite a bit between our different commodities. But on core apparel averaged out around 14%, given the realities of the consumer wallet in South Africa, we weren't able to pass that full 14% on. On average, we passed on 9%. It's very difficult to make a call on inflation for the year ahead, given all the movements in the currency. Thankfully, the rand has started to come back. But our best estimate for the year ahead is probably around about a 9% inflation, which at this point, we'd anticipate being able to pass most of that on to consumers. Next question is what was cash sales growth in TFG Africa ex Tapestry. Bongiwe?

Cash sales growth in Africa without Tapestry was around 12%, 11.5% growth, and we continue to see that also in the new financial year.

And then I think another one for you. Can you comment on the change in inventory provisions method? How much did inventory increase on a like-for-like basis, excluding your acquisitions?

As somebody was listening. So we moved from a RIM accounting method for inventory into a WACC accounting. So previously, we measured the aging of our inventory only when it hits the store and then we then age the inventory from them. Now we've gone to be more conservative and said when inventory is a DC, when it hits the first time that's when we start aging it and obviously is a very conservative way of dealing with stock and obviously, it's forcing retail to just work on our stock efficiency even better. And the next question was on?

I'll pick up the next one. A question on how big was the overall impact of load-shedding in Q4, both from a top line perspective and an OpEx perspective? What do you think the total damage in inverted commerce was. So this is a really -- we did cover this, but I'm going to cover it in a bit more detail. Again, it's really important. If you looked at the year, we were trading at absolutely record levels. For the first 9 months, you would have seen in our SENS announcements and trading updates, we had a record November in and Black Friday. The first 2 weeks of December continued at that same kind of record growth trajectory. We didn't have any dip off really after that strong November and Black Friday. We then hit very significant load shedding from the second week of December onwards. This is obviously not just any month of the year. This is absolutely peak trading season. Your DC is a full of stock, your stores are full of stock, and you're anticipating trading at similar levels to your most recent couple of months. And at that point, the consumer got a massive shock. People stayed away from shopping malls. I think they went into a very negative space from a consumer spending point of view, and that's been borne-out by any of the indices that have been published. That carried on right through until pretty much the end of March. We've taken the most conservative view of the impact of that and we have shared these numbers. It translates into a minimum loss of turnover of about ZAR 1.5 billion over those 3.5 months. That translates roughly into a gross profit hit of about ZAR 800 million. We had to deal with that excess inventory that built up as a result of sales suddenly having hit a brick wall. That was the best part of another ZAR 600 million, ZAR 650 million. We had some other operational costs. But unlike the food retailers, we don't run a lot of generators. We invested about ZAR 200 million in CapEx on backup battery at head office. We spent more on diesel. There were some manual processes and overtime. If you wrap the whole lot up, the most conservative view, I think, in terms of bottom line impact this year was about ZAR 1.5 billion, very significant. If load shedding turns over the next 12 months, how should we think about achieving a higher EBIT margin of about 13.4%? A very good question. I think we were very set on achieving something in that range this year. The real hit is exactly what I've just explained, that unexpected load shedding. So I think very much on all things being equal. This is a question I think I'm going to ask firstly, Australia and then London to answer because I think there are a couple of similar questions, and it applies to both of you because you've had such strong years last year and such a strong base. No good deed goes unpunished, guys. So despite the base effects, what do we think about the sustainability of the TFG Australia and in this case, London business and profitability. Dean, Gary, if we can start with you.

Look, there's no doubt we've had a one-off year. And as Gary said, we won't repeat that 2023 result. It was just phenomenal, 15.7% EBIT margins previously unseen levels and the GP of 66 was great. Look, however, once the base is corrected, we do expect to get back to normal growth. We've got a good strategy and a standard strategy of new stores opening about 10 to 20, expanding stores and digital optimization should hold us in good stead. So we're planning to grow off that 2022 year, and we're comfortable from that.

Justin?

I'm going to hand this one to Matt.

As we covered in the presentation, we obviously made strong gains last year, given, I think, somewhat unprecedented demand for full-priced product. I think looking ahead, we can expect to see some pressure there just given the more promotional environment that we're experiencing in the U.K. And obviously, there will be some inflation within the supply chain cost as well. FX also remains obviously a key unknown. But I think nevertheless, the team do remain very focused on delivering margin growth this year. As we look, I think, more to the bottom line, as we talked about inflation, obviously, very high here in the U.K., so we can expect to see some pressure, particularly within labor costs. But we've focused very much on efficiency initiatives within our property costs and also looking at that return on our spend as we manage our customer acquisition costs. So challenging conditions, but very focused on efficiency initiatives.

So I think you've heard it from the people in Australia and London. I think that really is the best view that we've got. And again, just to put it into context, remembering that in both cases, that's often an absolute record year. The next question is around costs, how much cost was taken out of the TFG Africa cost base in the last year and what would we expect for the year ahead. It's a very good question. The minute that load shedding became as big a problem as it did kind of December onwards, we pulled the cost lever, the cost hand brake very hard. We took out roughly ZAR 300 million worth of OpEx that would have existed otherwise. We've kept that hand brake very tight. I think we've shared that the outlook for the year ahead is uncertain. I think over the next 12 to 18 months, we would probably look to take out at least a similar amount. So we've got some work to do there. That's a good question. Next question is around capital allocation. I think we did spend quite a bit of time dealing with this in the presentation. And the question essentially is, are you open to further acquisitions, what are your criteria? I think largely answered, we do from time to time see very opportunistic scenarios play-out. I think Jet is a great example of that. At the same time, we've got a lot of value that we can extract from our more recent acquisitions. We've got the building blocks in place. Our primary concentration is really going to be around maximizing what we've got, but never say never if the right opportunity comes along. The second part of the question, Jane, I think, is probably for you. Given the pressure on consumers, what is the chance that your book could deteriorate somewhere north of 20% to 30%. Over to you.

Yes. I assume the question is about our provision ratio. Do I think it could deteriorate north of 20% to up to 30%? No. We control for risk. It's something that we monitor literally daily. The credit guys have built very detailed analytical models to literally forecast every single statistic in our portfolio. And just to put this into context, we collect circa ZAR 900 million to ZAR 1 billion of cash every single month through the door against our debtors book and we literally build for each day how much cash do we expect and where do we expect to get it. And right now, we are delivering against those forecasts. I think for last month, we were ZAR 12 million out. When you're predicting ZAR 1 billion, that's a phenomenal result to be that accurate with your calculations.

I really like the next question. It starts with congratulations on the results for the year given the challenging operating environment in all of your businesses. The real question, though, jokes aside is, please, can you share more about the vision for the Bash platform and the chances of it breaking even in 3 years and how you see this playing out in South Africa in the future. I think anybody who's familiar with pure plays in South Africa and globally, there are very few, if any, that breakeven or make profit. We've got a very different business model within TFG. This is very much around omnichannel, it's around utilizing our store network. We've got over 3,500 delivery points or fulfillment centers in effect across the country. Over-time, with Bombela, when that comes online, our delivery costs and fulfillment costs dropped dramatically. We can essentially move stock around the country from a central DC that's currently outsourced into stores for a couple of rand of units versus anywhere from ZAR 60 to ZAR 100 fulfillment cost per unit if you're using any kind of courier network. So it's a fundamental difference in relation to a pure-play business. We equally have a lot of our own brands. We've got a lot more gross margin in those brands. If you're a pure-play, you're often on the receiving end with very weak margins. So that makes a big difference in terms of the model as well. And then fundamentally, in South Africa, we keep speaking about our TFG rewards base. We have over 30 million people on our rewards base in South Africa. That's out of a population of roughly 60 million, pretty much half of the country. One of your big costs in online is obtaining new customer information. We've got pretty much the best customer base in South Africa. We don't have to pay to acquire a lot of additional customers. The real piece around how does this model breakeven and become profitable comes down to scale and volume. You've got a fixed cost base running the Bash platform. We've invested the CapEx and new platform is in place. There really isn't much more in terms of CapEx to come. Profit comes when you reduce your fulfillment cost, you reduce your online marketing costs, both which are already trending in the right direction and you add sufficient turnover to cover that fixed cost element. So we believe it's a challenge. Nobody else has really managed to do it to-date, but that's very much the internal goal, and we believe it's doable. But it was a great question. What are the medium-term gross and operating margin targets for Tapestry. Bongiwe, do you want to pick that one up?

Operating gross margins for Tapestry. And medium term, I think that if you look, quite, as I've said, accretive to us immediately in the first year with us, they've achieved about 50% in gross margin. We expect to see that probably to grow to 52% over the next probably 18 months. There's a lot of work the teams are doing to drive efficiency and also even trickle that into our at-home business as well. And then at EBIT margin level, I'm quite comfortable they'll be 14% to 15%, again over the next 14 to 18 months.

Yes. It's a great business and very additive to our @home business. In many ways, better metrics.

Yes.

What do you think is driving the improvement in retail sales in May. Other peers have also cited improved trading in May. I think there are probably a couple of factors here. The load-shedding has started to ease, thankfully. There are a number of different theories and reasons for that, but we've been in a more benign environment from a load-shedding perspective. I think there's also very much a consumer psyche piece to this. We've seen that every time load-shedding spikes and goes to significantly higher levels, consumers do lose a lot of confidence. They do become semi-depressed. They stay away from shopping and from shopping malls. It takes a couple of months to stabilize and then you kind of get back to a new normal base. We've seen that, as I said, after pretty much every spike in load-shedding. So I think there's a combination of all of those factors. If you went back to April, April was an almost impossible non-comparative month, we had movements in school holidays, religious holidays. There was almost nothing that was similar in terms of trading calendar to the previous year. From May onwards, I think we're a lot more stabilized. And I never ever like to talk about the weather. But for anyone in South Africa, the reality is winter came late. There was no winter really until the last 2 weeks. And certainly, as winters hit, there's been a huge demand for winter commodities. So I think early days, but certainly a lot better, I think, across retail as a whole and certainly for ourselves. The next question, Bongiwe, I think I'm going to pass this one to you. Can you provide some further color on the debt refinancing? And any thoughts around debt targets for the next 12 months?

Okay. And what I'm actually quite proud to talk to. We were successful in raising an additional ZAR 2.8 billion in facilities for our Africa business. And I think I mentioned that obviously at a much, much better rates. And today, as at year-end, we locked in rates that take us over to the next period and start reducing the interest charge in our P&L. So our target, I think we achieved 0.9 times net debt to EBITDA at year-end without Tapestry. I expect to maintain the same level. Actually if all goes well, trade and obviously, the impacts of load-shedding you never know, we might actually even reduce our debt even further to a net debt to EBITDA as a group of, say, ZAR 6 billion, ZAR 6.5 billion. But where we sit today at 0.9 times to EBITDA, net debt to EBITDA with no acquisition is actually well below our target and our previous guidance of about 1.3 times on an operating basis without an acquisition. I trust that help.

Yes, that's a very good answer. And it really was a significant achievement, something I think we're very proud of. The next question relates to Jet. What do we think the approximate timeline is for Jet to achieve EBIT margins of 14% or do you think that it's going to be lower than that going forward? If you take out, if you go back to Jet, again, you can't really look at the full 12 months. Jet was probably our most heavily impacted brand in terms of load-shedding. Their stores tend to be more rural. They had the least backup power when load-shedding hit them for the first couple of months. We really saw a very heavy hit in the last quarter. We've now got -- Jet has actually today got more backup power than really any of the other brands across the group have moved very quickly to fix that. 13%, 14% is absolutely doable for Jet. We've seen significant improvement in trading densities over the last year. We've right-sized a number of their boxes that were too big, and we're in the process to the extent that there are any boxes left that are still too big, and we're in the process of addressing that at the moment in terms of renewals. And I think really the other big piece, we've moved on significantly in terms of supply base when we bought the Jet business, it effectively didn't have a stable supply base. They had kind of lost that when they didn't pay for stuff as they were kind of circling in the headcount stable. That's been stabilized. We're seeing much better margins coming through the business if you kind of adjust for the load-shedding impact and all the metrics are now starting to look a lot more healthy. And again, with value, scale is everything. We spoke about earlier on in the presentation, having a value stack that's already doing about ZAR 9 billion worth of turnover. We're starting to consolidate supply base across Jet and our other value brands and are really seeing gross margin advantages, which obviously drops straight down to the bottom line. So no change in outlook for that. A question on inflation. I think we've already dealt with that. Inventory levels, I think Bongiwe answered that. Question of what does a year of consolidation mean? And I think we have answered that already. But again, just to reiterate, we've built up pretty much the assets that we need. I spoke about this in the presentation. We've got 4,700 stores. We've got leading digital capabilities. We've got proper international diversification, which has been super helpful this year. We've got a credit book that is very well managed, very well provided. It gives a huge advantage relative to retailers who don't have their own credit. We've made some significant acquisitions. We've got the quick response manufacturing. It's now really sweating those assets and getting the best returns out of it possible. Jane, there's another question on credit. Really provision are you well provided for. I think you've answered that. I don't know if there's anything you want to add?

I mean I believe the book is well provided. I did say, of course, in my presentation that I expect the write-offs to increase for this financial year coming up, which is perfectly normal given the growth of the debtors book. And the provision rate will stay there or there around, about 20% mark. So when you do look at the net bad debt as a percentage, it will increase slightly for the forthcoming year. There's no issues with that. It's well within our management's expectations.

Question around dividend reduction. Will this be applied to reducing debt. Again, I think we addressed this in the presentation. We've had a year of significant investment in the group. We're still in a situation where as much as load-shedding seems to have come back a bit. There's certainly no certainty over the next couple of months. So really, I think adopting a conservative attitude towards dividends. But absolutely, the intention is to -- from an operating cash flow perspective in aggregate to further reduce debt over the next 12 months. And that also has a very big multiplier down to the bottom line given where interest rates are at the moment. So it helps the P&L, not just the balance sheet. Then there's a question around, is it possible that some of the slowdown in Q4 could be attributable to lower disposable incomes rather than only load-shedding. I think that that's almost undoubtedly possible. There was an article printed this morning comparing disposable income for the average South African 2016 versus today, down about 38%. The reality is spending power has been eroded in South Africa for 5, 6, 7, 8 years. The economy hasn't grown. It plays exactly into why we've grown a value business, why we acquired Jet, why we've kept our price points appropriate throughout our brands. If we weren't doing that, we would have lost massive market share in South Africa under those circumstances. And I think absolutely the right strategy, it's now about optimizing that part of the business and making sure that we get the right margins out of it. So I think a combination of both. And we have seen lots of other retailers comment, I think, on similar trends. What have we not answered. Some peers have reported product availability issues from Tier 1 athleisure brands. Have you experienced any availability problems in your athleisure business? Absolutely not. I think we enjoy a very, very strong relationship with the brands. We are their premier partners in South Africa. We spoke about the size and the market share of our sports businesses. We've had no product availability issues actually at all. This is a very good ESG question. How does the company track and evaluate its progress in achieving its ESG objectives. Are there specific benchmarks or metrics that we report on? Absolutely. Absolutely fundamental part of our business has been for a number of years, but it's an increasingly important part of what we focus on. I touched on 1 or 2 in my presentation. The reality is you can't do justice in a 45-minute presentation. We do produce a separate ESG report, which provides a huge amount of detail in terms of what we're doing around responsible sourcing, traceability, carbon emissions, et cetera. As we've said in many occasions before, because we are based in South Africa and have a predominant part of our business here, probably the S, the social part in ESG is fundamental is probably the most fundamentally important part of ESG to us at the moment. For us, that's jobs and we've got record high unemployment in the country, however you define it. We brought over 8,000 new jobs into the group last year and we concentrate on the whole of ESG, but the jobs piece for me is probably the most important in the short term. Credit, I think, Jane, maybe just let's close on this one. You have answered it, but it's a really important one. Your acceptance rates appear very low at circa 19%. They were 25% last year. What would it take for you to want to increase this?

So obviously, we have such strong demand for our credit product. I mean, I think I said we had 4.5 million applications, which is huge, that is the highest number of applications we've ever had. Now you're exactly right when you apply that to your applications, of course, and that uses up an amount of funding. So in this last financial year, I've grown the book by ZAR 1 billion, ZAR 1.1 billion in the debtors book. And of course, that takes funding to do that. So what we also look at is what's the cash growth, what's the credit growth, what's the cash credit contribution, where do we want it to be. And quite frankly, we're more than happy with our credit contribution and where it is and where cash growth is that much higher than credit growth, that's where you want it to be. Why would I increase my accept rates? Why would I take on additional risk? I don't need to. We're in a very strong position right now, and we're very happy with where our accept rates are right now.

Jane, thank you. Guys, I think that wraps up pretty much the questions we've received. It's probably a record number of questions. We had a record number of people viewing this presentation today. Thank you again very much for your time and your interest and your support over the year. And to Bongiwe, Jane and our international guests, thanks guys very much for your participation today. I hope you all have a good day and a good weekend. Thanks for joining us.