Foschini : Condensed consolidated financial statements for the year ended 31 March 2022, ordinary & preference share dividends

THE FOSCHINI GROUP LIMITED

(Incorporated in the Republic of South Africa) (Registration number 1937/009504/06)

Ordinary share code: TFG

ISIN: ZAE000148466

Preference share code: TFGP

ISIN: ZAE000148516

("TFG" or "the Company" and together with its affiliates "the Group")

SHORT-FORM ANNOUNCEMENT

Condensed consolidated financial statements for the year ended 31 March 2022, ordinary and preference share dividend declarations

SALIENT FEATURES:

• • Record group revenue up 29,7% to R46,2 billion;
  • Strong growth in Group retail turnover to R43,4 billion (up 31,6%) with all territories performing above expectation;
  • Group online retail turnover growth of 11,7% to R4,4 billion, contributing 10,2% to total Group retail turnover;
  • Gross margin expanded strongly to 48,5% (March 2021: 45,5%) as a result of an increasing proportion of full price sales and lower inventory markdowns due to strong consumer demand for our products and an increasingly efficient, localised supply chain supporting TFG Africa;
  • Continued investment in growth through organic investments (including over 300 store openings for the Group in FY2022), an increase in omnichannel penetration and investment in all territories and the expansion of quick response local manufacturing capacity in Africa through strategic acquisitions, as previously announced.
  • Headline earnings per share of 1 009,0 cents up 409,9% (March 2021: 197,9 cents per share);
  • Basic earnings per share of 901,9 cents up 246,9% (March 2021: loss of 614,0 cents per share);
  • Operating profit before finance costs of R4,8 billion (March 2021: loss of R719,2 million);
  • Continued strong cash generation from operations of R8,2 billion;
  • Net debt (pre-IFRS 16) of R1,0 billion* at historic low levels (March 2021 pre-IFRS 16: R1,3 billion). Gross debt pre-IFRS 16 to pre-IFRS 16 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) ratio reduced to 1.3**;
  • Final dividend of 330 cents per share declared. An interim dividend of 170 cents was declared at half year while no dividend was declared in the 2021 financial year.
• Pro forma information used to calculate net debt pre-IFRS 16.
• Pro forma information used to calculate gross debt pre-IFRS 16 to pre- IFRS 16 adjusted EBITDA ratio.

This short-form announcement is the responsibility of the Company's directors and is only a summary of the information in the full announcement. The reviewed provisional condensed consolidated financial statements for the year ended 31 March 2022 were approved by the Board of Directors on 10 June 2022 and the information in this announcement has been correctly extracted from the reviewed provisional condensed consolidated financial statements. Any investment decisions by investors and/or shareholders should be based on consideration of the full announcement, which has been published on the JSE Stock Exchange News Service ('SENS') and is available at: https://senspdf.jse.co.za/documents/2022/JSE/ISSE/TFG/FY2022.pdf

and on the Company's website at

https://tfglimited.co.za/investor-information/financial-reports-and- presentations/.

Copies of the full announcement may also be requested by contacting the Company Secretary (company_secretary@tfg.co.za) and are available for inspection at the Company's registered office at no charge, weekdays during office hours.

This announcement has not been reviewed or reported on by the Group's external auditors. The Group's auditors, Deloitte & Touche, have reviewed the full announcement and expressed an unmodified conclusion thereon.

COMMENTARY

STRONG PERFORMANCE WITH SIGNIFICANT MARKET SHARE GAINS AND INCREASED PROFITABILITY

The Group delivered a robust post-COVID-19 recovery during the past financial year. The Group's retail outlets delivered a strong trading performance as economic activity resumed in the wake of reduced restrictions on movement and travel. In South Africa, the restrictions were eased to adjusted Level 1 from 1 October 2021. The restrictions remained at adjusted Level 1 during the fourth quarter and the National State of Disaster was terminated on 4 April 2022. In Australia, the vaccination rate has reached almost 90% which has led to the easing of restrictions by most state governments. In respect of New South Wales and Victoria, two financially significant states in Australia, stores reopened on 11 October 2021 and 30 October 2021 respectively after severe lockdown restrictions were experienced in the second quarter. On 24 February 2022 the UK Government ended all legal COVID-19 restrictions in England.

As previously announced on SENS, 198 South African stores were looted and damaged to varying degrees by the civil unrest experienced in the KwaZulu- Natal province and parts of the Gauteng province during July 2021. The Group reopened 176 of these stores by the end of May 2022. The remainder of the stores will only reopen from June 2022 onwards and 2 stores will not be reopened. SASRIA payments of R541 million (VAT inclusive) have been received to date, while the Business Interruption claim submitted is expected to be finalised by the insurers by December 2022.

Despite the continued challenging trading environment, the Group continues to invest in growth opportunities. As announced on SENS previously, the Company entered into a sale and purchase agreement to acquire the entire issued share capital of Tapestry Home Brands Proprietary Limited ('Tapestry'). Tapestry is a prominent direct-to-consumer, vertically integrated designer, manufacturer and omnichannel cash retailer of home furnishings serving consumers' living and sleeping needs, targeting the middle to upper LSM markets. The transaction will provide TFG with exposure to new products and categories as well as new customers that will complement the current TFG customer base in existing categories. The transaction is in line with TFG's stated strategy of vertical integration in key product categories, to protect and improve margins, and the continued development of its import substitution and quick response initiatives through expanded local manufacturing capability. The transaction is subject to the fulfilment of a number of conditions precedent, one being approval from the relevant competition authorities and the Takeover Regulation Panel.

FINANCIAL PERFORMANCE

The robust recovery in trading performance for the year ended 31 March 2022 is evident in the Group's retail turnover growing by 31,6% to R43,4 billion, which was above expectation. Group cash retail turnover grew by 33,6% compared to the same period in the previous financial year, contributing 79,9% (FY2021: 78,7%) to total Group retail turnover for the

12 months to 31 March 2022. Group online retail turnover grew by 11,7% (12 months to 31 March 2021: 33,4%) to R4,4 billion for the 12-month period, coming off a high COVID-19 base, contributing 10,2% (FY2021: 12,0%) to total Group retail turnover evidencing the continuing strong online demand for all our brands.

Gross margin for the Group increased to 48,5% as a result of a higher proportion of full price sales and lower markdowns due to the strong demand for the Group's products as well as an increasingly efficient localised, quick response supply chain supporting TFG Africa. Locally and regionally sourced products now contribute 72% of total apparel purchases in TFG Africa on an increasingly quick response basis, leading to increased stock turns and consequently improved stock newness and lower markdowns.

At year end, trading expenses were 41,4% of retail turnover, the ratio materially down on 2020 pre-COVID-19 levels (March 2020: 44,8%) despite the continued investment in a number of strategic initiatives, which is in line with the growth strategy of the Group. Expense management remains a significant focus area for management teams whilst driving growth and our fit-for-the-future strategy.

Headline earnings per share and basic earnings per share increased by 409,9% and 246,9% respectively. Earnings performance was impacted by the post COVID-19 recovery, as well as inter alia, by the following non- comparable events:

• The acquisition of certain commercially viable stores and selected assets of Jet in South Africa (effective 25 September 2020) and in Botswana, the Kingdom of Eswatini, Lesotho and Namibia (effective on various dates in December 2020 and January 2021). The inclusion of a bargain purchase gain on acquisition of R709,0 million in the year ended 31 March 2021 specifically affected basic earnings per share and diluted earnings per share;
• The R2,7 billion after tax non-cash impairment of the carrying values of TFG London's goodwill and intangible assets in year ended 31 March 2021 specifically affected basic earnings per share and diluted earnings per share; and
• The civil unrest experienced in the current period in South Africa in July 2021, as previously reported, where the Group suffered an estimated loss of turnover in excess of R700 million.

STRONG STATEMENT OF FINANCIAL POSITION

The Group generated cash from operations of R8,2 billion for the year ended 31 March 2022 through the strong trading performance and careful management of working capital. This allowed the Group to maintain healthy reduced gearing with net debt (pre-IFRS 16) of R1,0 billion* at the end of 31 March 2022.

* Pro forma information used to calculate net debt pre-IFRS 16.

Focussed working capital management resulted in inventory days decreasing from 169 days to 153 days while stock freshness improved. Gross debtor book growth was 3,6% while credit turnover grew 24,2%.

SEGMENTAL PERFORMANCE UPDATE

TFG Africa's retail turnover growth/(decline) (ZAR) when compared to the same period in the previous financial year in the respective merchandise categories was as follows:

Cash retail turnover, contributing 71,1% to TFG Africa retail turnover, grew by 35,9% when compared to the same period in the previous financial year. Credit retail turnover grew by 24,2% for the year ended 31 March 2022.

TFG Australia's retail turnover grew by 24,0% (AUD) when compared to the same period in the previous financial year, and now contributes 15,8% to Group retail turnover. Retail turnover in TFG London grew 57,3% (GBP) in the same period and now contributes 14,4% to Group retail turnover.

The retail turnover growth when compared to the same period in the previous financial year in each of our business segments in local currency was as follows:

STORE PORTFOLIO

As at 31 March 2022, the Group traded out of 4 351 outlets across 26 countries. During the year, 377 outlets were opened and 310 outlets closed, with outlet movement in the respective business segments as follows:

The Group continued its focus on space rationalisation and the renegotiation of rentals. Since year end, TFG Africa has opened a further 98 new outlets.

CREDIT

Given the strong cash turnover growth and the prevailing economic conditions we remain cautiously conservative with our credit lending criteria and the retail debtors' book remains conservatively provided. Average approval rates for new accounts increased to c.25% as customer payments and therefore credit book performance continued to exceed expectations. For the year ended 31 March 2022 credit retail turnover grew by 24,2% compared to the same period in the previous financial year on the back of better than expected payments from our credit customers and continued improvements in the quality of the book. Credit sales now contribute 28,9% (March 2021: 30,7%) to total TFG Africa retail turnover.

The retail net debtors' book of R7,0 billion increased by 5,7% year-on- year. Provisioning levels have been retained given the ongoing pressure on the South African consumer with the total allowance for impairment as a percentage of the debtors' book declining slightly to 19,1% (March 2021: 20,7%).

PRO FORMA INFORMATION

Pro forma information for net debt pre-IFRS 16 and the gross debt pre-IFRS 16 to pre-IFRS 16 adjusted EBITDA ratio is used in this announcement, as these are key metrics within the Group's debt reporting. These key metrics are Non-IFRS measures.

This pro forma information is prepared for illustrative purposes and because of its nature, may not be a fair reflection of the Group's results of operations, financial position, changes in equity or cash flows. There are no events subsequent to the reporting date which require adjustment to the pro forma information.

The pro forma net debt pre-IFRS 16 numbers were calculated using reviewed numbers from current and audited numbers from previously published results as follows:

^ Reviewed.