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TRUWORTHS INTERNATIONAL LIMITED - Voluntary update - annual general meeting / remuneration policy implementation report

Release Date: 16/10/2018 17:40
Code(s): TRU     PDF:  
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Voluntary update - annual general meeting / remuneration policy implementation report

TRUWORTHS INTERNATIONAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1944/017491/06)
PO Box 600, Cape Town, South Africa, 8000
JSE code: TRU; NSX code: TRW
ISIN: ZAE000028296
(“Truworths” or “the Group”)

Voluntary update

Annual general meeting / remuneration policy implementation report

Shareholders are referred to the announcement published on the JSE news
service SENS on 25 September 2018 advising that Truworths’ 2018
integrated annual report, as well as its 2018 preliminary report and notice of
annual general meeting had been published on the Group’s website:
www.truworthsinternational.com.

Subsequent to such publication, certain shareholders have engaged with
Group management requesting clarification and further information on certain
aspects of the Group’s remuneration policy implementation report that was
published in the 2018 integrated report and in relation to which shareholders
will be voting at the annual general meeting.

Accordingly, Truworths provides the following information in relation to the
performance share awards made during the 2018 financial period:

   -   the performance targets applicable to such awards, and
   -   the basis for making such share awards to executive directors.

Long term incentive performance targets:

Truworths acknowledges that it should be disclosing annually in its
remuneration policy implementation report the long term incentive financial
performance targets applicable to share awards and plans to do so in its 2019
integrated report.

Truworths notes that its Remuneration Committee’s practice has been to set
challenging targets for long term incentive (LTI) purposes. The resultant 2018
disclosed vesting of only 52% in respect of the March 2016 share award
serves to illustrate this point well. Since the implementation of the Group’s
2012 share plan, only one award has achieved vesting at the 100% target
level, this being the September 2014 award. Truworths believes the validity of
its methodology has been confirmed by historic performance criteria resulting
overall in an average percentage vesting of below 100%.

The Remuneration Committee also takes into account the economic
environments in which the Group operates and that Truworths’ financial
metrics in many instances are regarded as being industry leading.

The targets applicable to the performance shares awarded during the 2018
financial year are as follows:
                                                                            
F2021 LTI Targets for March 2018 Award
                               50%           100%           150%        Published
                   Weight     Vesting       Vesting        Vesting       Group
Metric              %         Target        Target         Target        Target

ROA                   25%       20%           23%            25%          20-25%
ROE                   10%       23%           26%            28%          23-28%
EBIT growth           20%       CPI       CPI + 1pp pa   CPI + 2pp pa
Gross Margin          15%       51%           53%            55%          51-55%
                                              Good
Strategic                       Good      Performance      Excellent
Projects              30%   Performance       Plus       Performance


F2020 LTI Targets for August 2017 Award
                               50%           100%           150%        Published
                   Weight     Vesting       Vesting        Vesting       Group
Metric              %         Target        Target         Target        Target

ROA                  25%       20%            23%            25%          20-25%
EBIT growth          20%       CPI        CPI + 1pp pa   CPI + 2pp pa
                                              Good
Strategic                       Good      Performance      Excellent
Projects             30%    Performance       Plus       Performance

Note 1: CPI means the Consumer Price Index as published by Statistics SA.
Note 2: The awards vest in years 3, 4 and 5, and performance measurement
takes place at the end of year 3.
Note 3: No shares vest at all if performance falls below the 50% vesting
target, whilst performance above the maximum 150% vesting target does not
increase the vesting percentage above 150%.
Note 4: ROA means return on assets; ROE means return on equity, and EBIT
means earnings before interest and taxation.

The Strategic Projects selected by the Remuneration Committee for LTI
purposes for both the August 2017 and March 2018 awards have been
disclosed in the remuneration policy implementation report in our 2018
integrated report, and are as follows:

   -     Response to the affordability regulations in South Africa
   -     Introduction of Office London into South Africa
   -     Integration of Office in the Group
   -     Implementation of an updated brand vision for each buying division
   -     E-commerce implementation and roll-out
   -     Loads of Living’s integration in Truworths
   -     Introduction of lay-bys across all relevant countries
                                                                                  
Basis for performance shares awarded:

As regards the number of performance shares awarded to the executive
directors in the 2018 financial year, Truworths advises that various
considerations were taken in account by the Remuneration Committee.

The awards made to the CEO are likely to be the final allocation ahead of his
envisaged retirement within the next few years, and it is noted the shares
awarded vest over a five year period. It is also to be noted that the CEO’s
annual guaranteed pay had not been adjusted for three years, and
accordingly the share award value to pay ratio appears disproportionately
high.

The awards made to the other two executive directors were in pursuance of
the CEO succession plans being implemented by the board, and
acknowledged increased strategic responsibilities assumed by them in the
year following a re-allocation of portfolios and the acquisition of a homewares
business. The awards also served to give effect to the board’s intention to
create a new Chief Operating Officer role, to which David Pfaff was appointed
in September 2018, and build the stable senior leadership team that will be
necessary to support the effective execution of the CEO succession plans.

Although the Remuneration Committee does not have a disclosed policy for
annual share awards per executive level, it does have guiding shareholding
levels per executive director. These levels are aimed at ensuring substantive
alignment between the interests of directors and shareholders, and are
reviewed bi-annually. The share awards in the 2018 financial year were made
having regard for these shareholding levels, and no executive director‘s
holdings exceed his guideline level.

Truworths trusts that the above additional disclosures are useful to
shareholders and will enable them to vote in an informed manner in relation to
the resolution to approve the Group’s 2018 remuneration policy
implementation report, which resolution is to be considered under agenda
item 8.2 at the annual general meeting.

Shareholders are reminded that the said annual general meeting is scheduled
to be held in the auditorium at its registered office, being No.1 Mostert Street,
Cape Town, South Africa on Wednesday, 24 October 2018 at 09h30, to
transact the business set out in the notice of the meeting, which notice is
contained in the Group's 2018 audited preliminary report and published on the
Group’s website: www.truworthsinternational.com.

Shareholders are encouraged to participate in the voting on all resolutions,
and are advised to make the necessary arrangements to attend or be
represented at the annual general meeting and, where required, to furnish
voting instructions to their CSDP or broker in good time. The record date for
the purposes of participating and voting at the annual general meeting is
17:00 on Friday, 19 October 2018.
                                                                              
Shareholders are reminded that in order for forms of proxy (which are
contained in the Group's 2018 audited preliminary report and published on the
Group’s website: www.truworthsinternational.com) to be valid for the purposes
of the meeting, these are requested to be lodged at the offices of Truworths'
transfer secretaries, Computershare Investor Services (Pty) Limited,
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196, South Africa (or
mailed to be received by them at P O Box, 61051, Marshalltown, 2107, South
Africa) by no later than 48 hours before the appointed time of the meeting.
Forms of proxy may thereafter however be submitted, to the chairman of the
meeting, up to the scheduled time for holding the meeting.




By order of the board


Chris Durham
Company Secretary

Cape Town
16 October 2018

Sponsor in South Africa
One Capital Sponsor Services (Pty) Limited

Sponsor in Namibia
Merchantec Capital Namibia (Pty) Ltd




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Date: 16/10/2018 05:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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