OFFICER’S report



R28,6 billion

Group turnover


Growth in headline earnings excluding acquisition costs

+3,4% to 1 136,5 cents

HEPS (excluding acquisition costs)


+5,0% to 420,0 cents

Final dividend per share

+3,5% to 745,0 cents

Total dividend per share


Share price at 31 March

(March 2017: R154,49)


Price earnings ratio at 31 March

(March 2017: 13,94)

R52,9 billion

Market capitalisation at 31 March

(March 2017: R33,9 billion)

I am pleased to present my 11th and last report as Chief Executive Officer of TFG. After 33 years with the Group, I will step down as CEO at our AGM on 3 September 2018 and retire from the Group at the end of September 2018. I do, however, look forward to continuing to be involved in the Group, initially as a consultant through to September 2019 and thereafter as a non-executive director.

The 2018 financial year marked a very challenging trading environment, with political and economic uncertainty clouding both the South African as well United Kingdom economies, two of the three major economies in which we trade. High unemployment and low GDP growth continued to constrain South Africa’s growth while the country remained politically unsettled for the majority of the year with corruption continuing to negatively impact business and consumer confidence.

While we are encouraged by the recent political events which are positive for the country, we acknowledge that the economic fundamentals of a country do not change overnight and continued effort is required both by government as well as business to restore the country’s economy.

Against the backdrop of these challenging trading circumstances, we are pleased with the good results produced by the Group for the year, which come on the back of several years of good turnover and earnings growth. The salient features of the year are highlighted above, with further detailed information on our financial performance provided in our Chief Financial Officer’s report.

Significant changes during the year

The following significant changes occurred within the Group during the year:

  • As was announced on SENS on 25 May 2017, with a further update on 14 July 2017, the Group acquired, through a wholly owned subsidiary, the entire issued ordinary and preference share capital of Retail Apparel Group (RAG). The effective date of the acquisition was 24 July 2017 and as a result, eight months’ trading of RAG has been included in the Group’s 2018 performance.
  • A R2,5 billion accelerated bookbuild was successfully launched on 31 July 2017 to fund the acquisition of RAG. As a result, 17 241 380 ordinary shares were issued at R145 per share, a 0,9% premium to the 30-day VWAP of R143,68 as at the close of trade on 31 July 2017.
  • In addition, and as was announced on SENS on 7 November 2017, the Group acquired, through its United Kingdom subsidiary TFG Brands (London) Limited, the entire issued share capital of Hobbs. The effective date of the acquisition was 25 November 2017 and four months’ trading of Hobbs has been included in the Group’s 2018 performance.
  • The Group accelerated the put/call arrangement to acquire the remaining c.15% shareholding owned by management in TFG Brands (London) Limited. The transaction was effective 15 December 2017.


The consistency of and the ongoing focus on our strategic objectives and the strong desire both by management as well as employees to execute these strategies, continues to benefit the Group.

The key highlights of our strategic performance during the past financial year were the following:


  • The Group’s continued investment in analytics created further opportunities to improve our customer experience and customer engagement levels.
  • Our customers were provided with additional online brand offerings as we continued the e-commerce roll-out during the year.
  • Our loyalty programme, TFG Rewards, was further entrenched with both our existing customers and new customers acquired during the year.
  • The Group’s Voice of Customer (VoC) programme was expanded to include all TFG Africa’s brands.


  • The succession for the Chief Executive Officer position was finalised in March 2018 with the appointment of Anthony Thunström, our current Chief Financial Officer, as CEO Designate.
  • The process to recruit a new Chief Financial Officer is currently well advanced.
  • The Group received accreditation status as a training provider offering a retail qualification for customer-facing employees.
  • Our Voice of Employee (VoE) platform was introduced during the year, encouraging employees to freely share their ideas and feedback for business improvement.


  • Gross margin was expanded in TFG Africa as well as in the Group despite tough trading conditions.
  • The Group’s free cash flow significantly improved coming off a high base in the previous year.
  • Quick response units within TFG Manufacturing grew by 50% to 3,6 million units for the year.


  • The acquisition of RAG enabled the Group to establish an Australian TFG platform.
  • The iconic British brand Hobbs was acquired, complementing the current brands in the Group’s TFG London platform.
  • An additional four brands launched their online selling during the year, bringing the total number of brands available online to our customers throughout the Group to 20.
  • Trading space within TFG Africa grew by 3,5% net (4,9% new) during the year.
  • The Group now trades through 4 034 outlets in 32 countries across five continents.

The strategic achievements listed above cannot be achieved without good communication throughout the business, quality management teams and quality employees executing the strategy. A key enabler and focus area for the Group going forward will be continued investment in digital transformation, to ensure that the Group is well positioned to continue to deliver on its strategic pillars and objectives.

Performance review TFG Africa

TFG Africa had pleasing turnover growth during the year in a difficult trading environment. We are particularly satisfied with the performance of clothing, growing at 9,4% for the year on the back of 8,6% turnover growth in the previous year. Overall, TFG Africa achieved turnover growth of 6,3% for the year with same store turnover growth of 2,2%.

Gross margin also improved to 47,8% from 46,4% at March 2017, a good performance in a deflationary product price environment and in a market categorised by high levels of discounting.

Performance review TFG London

As has been well publicised, retail trading conditions in the United Kingdom have been extremely tough against a background of difficult Brexit negotiations and constrained economic growth. Against this backdrop, we consider the performance of TFG London to be satisfactory.

Encouragingly, our online turnover continued to grow at a fast pace, enabling us to largely offset the declining footfall in standalone outlets. The ongoing implementation of Phase Eight’s business model into Whistles, underpinned their continuing positive turnaround while the acquisition of Hobbs in November last year has now created a substantial retail platform for TFG London.

The focus going forward will be on creating a shared service structure, similar to that of TFG Africa and TFG Australia, and the continued implementation of the business model into Whistles and Hobbs.

Performance review TFG Australia

We were delighted to acquire RAG during the year which we believe is a quality asset with a quality management team. Despite the perceived negativity around Australian retail, RAG produced a good result for the year with consistent strong growth, ahead of our expectation and ahead of peer groups.

The transition of the business into TFG has gone well and we are confident about the future growth prospects of the five brands: Connor, Johnny Bigg, Rockwear, Tarocash and yd.

Furthermore, we are excited that we will be testing one of our TFG Africa brands in Australia later this year.


We continued to position our sustainability strategy in the shared value space, with a strong focus on supply chain development. This enables us to focus on the creation of shared value – in both financial and social terms – within our core supply chain operations.

Our strategy is underpinned by four pillars:

  • Local Supply Chain Development
  • Environment Efficiency
  • Accountability, Ethics and Governance
  • Drive Empowerment

The links between our business strategy and sustainability strategy are highlighted in strategy overview. Further information on our sustainability initiatives, progress and approach can be found in our sustainability overview report, which is available on our website.


The most significant risks to the Group, identified in the 2018 report, are similar to those identified in previous years and are listed in the Risk Committee report. The following risks increased in significance during the year:

  • Threat of cyber attacks: Globally, the risk related to IT environments continues to increase with the introduction of further legislation, threat of cyber attacks and the increased reliance on technology. TFG continues to invest in and improve IT processes, providing regular updates to the Operating Board and Risk Committee.
  • The change in the VAT rate and the limited transitional period: The increase in the VAT rate was identified as a significant risk to TFG Africa. The risk was successfully reduced through establishing dedicated project teams to handle the transition.

Managing the risk of fashion and ensuring the desirability of merchandise remain key risks for all retailers. The Group’s buying processes, in-house design and manufacturing capability, and focus on quick response and replenishment, are key differentiators in the mitigation of these risks.

Further information on our risks, risk methodologies and combined assurance process can be found in our Risk Committee report.

Our people

A key strength and differentiator for TFG remains our culture and our people. We recognise the talent and commitment of our more than 27 800 employees without whom the Group’s performance this year would not have been possible.

We continue to invest in the development of our people through training, both externally as well as through our TFG Retail Academy, in order to develop the appropriate skills at every level of employment within the Group.

Employment equity and transformation remain key focus areas for TFG Africa with 93,9% of our South African employees, as at March 2018, being from designated groups.


We remain cautiously optimistic around the outlook for South Africa given the inauguration of President Ramaphosa in February 2018. While the recent court ruling with regard to the Affordability Regulations signals an improved outlook for the credit environment within South Africa, caution is required regarding future regulatory developments in this sector.

In the United Kingdom, the uncertainty relating to the outcome of Brexit negotiations remains and this, among other factors, continues to impact consumer and business confidence. Through the consolidation of the back office functions of the respective brands in the United Kingdom, and the continued implementation of Phase Eight’s business model into Whistles and Hobbs, the Group will continue to build the TFG London platform to enable sustainable profitability.

The Group’s TFG Australia platform will be strengthened through the continued store roll-out of existing TFG Australia brands, as well as through the test launch of a TFG Africa brand in October 2018.

Our continued commitment to our strategic pillars of Customer, Leadership, Profit and Growth together with our diversification across cash and credit turnover, our portfolio of brands, geographies and sales channels, will support the Group’s future resilience and success. In particular, our focus on existing strategic initiatives – superior customer experiences, cost control, working capital management and capital optimisation – will continue in the year ahead. A key driver and focus for the Group will be our ongoing investment in digital transformation. This will ensure that we are able to provide a complete retail experience for our customers according to their preferred channel, while delivering quality product.

I am delighted to hand over the CEO reigns to Anthony Thunström, our current CFO. It is gratifying that an appointment of this importance and stature has come from within the Group given our focus on executive development. He is an extremely capable leader and inherits outstanding management teams in Africa, London and Australia. I believe the Group is well positioned to achieve continued growth well into the future in the ever-changing retail environment.


In concluding my final CEO report, I would like to record my sincere appreciation and thanks to every member of staff whom I have had the pleasure of interacting with over my 33 years with the Group and in particular the last 11 as CEO.

I would also like to thank our Chairman, Michael Lewis, for his invaluable input, wisdom and support over many years and my colleagues on the Supervisory Board for their guidance and direction.

To my colleagues on the Operating Board, a massive thank you. Together we have achieved much success over the past years, and I have no doubt this will continue under Anthony’s leadership.

In addition, a heartfelt thank you to our executive and operating teams in TFG London, lead by Ben Barnett, and in TFG Australia, lead by Gary Novis, who have played a pivotal role in the ongoing diversification and success of our Group.

Lastly, to our customers, shareholders and stakeholders, thank you for your continued support of our Group. I trust your loyalty will continue to be rewarded.

Doug Murray
Chief Executive Officer

29 June 2018