Our material

matters

TFG’s material matters are a combination of risks, opportunities and issues that can, directly or indirectly, affect the Group’s ability to create sustainable value in the short, medium and long term.

With our expanding footprint and changing dynamics in our external operating environment, we casted a wider net among our business units for input into the material matters, following an externally facilitated workshop with key internal stakeholders. This included revisiting our previously identified material matters and running two further workshops with a range of specialists and senior managers, including TFG International.

As a result of these workshops, the material matters below were identified as most relevant to the 2017 financial year and these were evaluated against our strategic risk register.

Matters were identified using the <IR> Framework’s process guidance and apply to both TFG Africa and TFG International, albeit with different levels of likelihood and impact. The material matters, set out below, are grouped according to their nature and indicate the following:

  • an increasing or constant level of likelihood and impact; and
  • the applicable term for the material matter.

OPERATIONAL

FINANCIAL LOSS DUE TO CRIME AND SHRINKAGE

TREND
TERM* S – M

Retailers over the world battle with continued high levels of crime. South African retailers in particular battle with shoplifting, burglaries and armed robbery. These are operational security challenges, mainly at store and warehouse level, and are best managed through a culture of zero tolerance and high awareness among employees.

Read more about our risk management response to this material matter in the Risk Committee report.

EXCHANGE RATE VOLATILITY

TREND
TERM* S – M

Exchange rate volatility has a significant impact on profitability for TFG and affordability for customers. The global financial instability therefore impacts purchasing power and could limit our ability to remain price competitive. The geographic diversification of revenue streams, currencies and supply chain initiatives assist in mitigating this. Our policy in respect of purchasing forward cover is reviewed regularly to ensure it remains relevant and provides the best possible protection against currency fluctuations for committed and future orders.

Read more about the impact of a volatile exchange rate in the Chief Financial Officer’s report.

* S – M (short to medium term) and M – L (medium to long term).

STRATEGIC

UNCERTAINTY OF ECONOMIC AND POLITICAL CLIMATE

TREND
TERM* M – L

TFG is predominantly exposed to uncertain and, at times, unstable economic and political environments in South Africa and the United Kingdom. This typically results in constrained growth and, in the case of South Africa, consumers are facing rising debt costs following the country’s sovereign downgrade. A stagnant economic climate negatively affects TFG’s customers’ purchasing power and influences their ability to settle accounts.

Brexit and acts of terrorism impacted investor confidence in Europe while youth unemployment and social inequality remain concerning in South Africa as the country prepares for elections in 2019. These factors all impact interest rates, inflation and our ability to raise and afford capital.

Read more about our operating environment as context to this material matter here.

FASHION TRENDS AND SUPPLY CHAIN

TREND
TERM* S – M

As we aspire to be the leading fashion lifestyle retailer in Africa whilst growing our international footprint, our ability to offer, predict and deliver according to the latest trends is essential for value creation. Our fashion-forward brands are premised on our market-leading in-house capabilities in clothing and store design. Our ability to generate profits furthermore relies on being able to quickly interpret fashion trends – supported by a quick response capability in our supply chain. This is increasingly enabled by localisation, further supported by our local supply chain division TFG Design which includes our Prestige clothing factories in Maitland and Caledon.

Read more about quick response, localisation and our supply chain in the Sustainability overview report.

GROWTH ACROSS OUR VARIOUS MARKETS AND CHANNELS

TREND
TERM* M – L

Growing our international footprint and delivering an integrated, secure omnichannel customer experience across our various brands are all strategic objectives for TFG. Changing retail trends demand that we are flexible in the ways in which we engage with our customers, and that we are able to meet their expectation of positive experience and value. Group turnover increased by 11,6% since 2016, which is an indication of healthy growth.

Read more about growth and performance in the Chief Executive Officer’s report.

TALENT MANAGEMENT: ATTRACTING, RETAINING AND DEVELOPING KEY TALENT

TREND
TERM* S – M

We realise that our ability to create value depends on our people. The Group has to retain and develop its core and critical skills pool, but also has to attract the best talent in the industry. The South African-specific imperative is to ensure that we attract and retain employment equity candidates through the TFG culture and employee benefit offering.

The highly competitive retail market requires a strong focus on talent management, which includes talent acquisition by way of proactively identifying future incumbents for leadership positions in the pipeline, and talent development programmes developing our future leaders.

Read more about talent management in Our people and in the leadership section in the Strategy performance review.

* S – M (short to medium term) and M – L (medium to long term).

REGULATORY

COMPLEXITY OF THE REGULATORY ENVIRONMENT

TREND
TERM* M – L

The regulatory environments we operate in is becoming increasingly complex and costly, which heightens the compliance and risk profiles for the Group. We have to understand, interpret and apply differing regulatory requirements in multiple jurisdictions.

We recognise that non-compliance can lead to fines, business interruption, financial loss and reputational damage.

Read more about legal compliance in the Corporate governance report.

* S – M (short to medium term) and M – L (medium to long term).