Good afternoon, everybody. Welcome to our Truworths International half-year results presentation. With me, I've got my colleagues: Mannie Cristaudo and Sarah Proudfoot, the joint deputy CEOs, and Reon Smit, who's the director in charge of finance. We'll go through our normal presentation in the normal format that most of you are used to, and I'll try and do it as quickly as I can so that we have time for questions. I'm going to try and finish at 2:00 PM . if we can. It's just on 1:00 PM at the moment. There's much more content in the presentation than I'm going to talk to, but you're going to be able to see it online after the presentation, and you'll get more information from that.
If there's questions, as usual, I will say to you: send questions on the web, firstly, onto the chat group so we can respond during the question time, but also you can always email our investor relations email address, and we respond, as you all know, but within 24 hours. So, normal format. Some summarized principles, which are the long-term ones, which really never change. We always apply a business philosophy. And we try and keep our business focused. We've got really 2 businesses. If you think about it, we've got Truworths Africa, and we've got Office in the UK. We intentionally don't want to diversify too far away from those 2 core businesses because it gives us the ability to focus, concentrate, and do what we need to do to keep the businesses in healthy state.
You know, we've got a long-term track record of managing costs and margins, and we've done that again in this half-year. A very robust balance sheet. We've built our new DC. It's nearly finished. It'll be ready to operate in January 2025. So it's this last year. And I think we've spent about ZAR 700 million or so over the last 2.5 years. It will cost us ZAR 1 billion by the end. So we finance that in our own cash flow. And our net cash flow, our net debt at the moment is only ZAR 124 million. Net asset value per share went up 19% because of retained earnings growth. We've now got much more diversified earnings and customer base because of the growth of Office in the UK.
So we've got this emerging market, which has all the challenges and opportunities that one has in an emerging market country like South Africa. And then we can match it now in a nice balanced way with a hard currency in a developed economy such as the U.K. through Office. So we feel the balance is much better and is improving all the time. We've got a nice mix of aspirational better-end fashion. That is what Truworths is. Clothing together with Office, and Truworths also has a significant investment in footwear. So both businesses are footwear and clothing, and all the brands in both businesses are aspirational. And our business has become a truly omnichannel business because Office is so strong in the omnichannel space. With well over 40% of the sales on e-commerce. And Truworths growing, still only 4%, but growing significantly every year.
That e-commerce is becoming much more talked about in our business. And of course, now we've got the counterweight to the declining South African currency in the UK pound. So this just this pie chart or the series of pie charts shows you the mix. And if you want to go and look back a year and two years, you'll be able to see how it's changed, but from a profit contribution point of view. Truworths Africa is 67%, two-thirds, but Office is now one-third of our group profits. Which is really quite exciting, and we're hoping that it over time will grow, even though we, of course, want Truworths profits to grow as well. We just think Office is likely to continue to grow faster for the next couple of years. Sales is slightly lower, 31%. Our group is now cash 48%.
It's roughly 50/50 because Office is so significant, is a big part of the business, and it's all cash. Truworths is 70/30. And omnichannel e-commerce is 18% because of Office is 47%. You know, when we were preparing this presentation, we often talk to the analysts, and I talk about the concept of my job, and our job is like a spaceship with asteroids coming our way. So we sort of had a look at South Africa and the world, actually, over the last couple of years, and we decided to summarize it. Because we've been talking a lot about it lately. In 2020, we had COVID. Then in 2021 in July, we had civil unrest in KwaZulu-Natal. Which was a massive problem. I mean, it impacted 58 of our stores, and we closed another 100 at the time for a couple of weeks.
Then there was the South African rand, massive depreciation. Since March 2022, it's really been a problem with the currency declining. There's flooding in KwaZulu-Natal. KwaZulu-Natal seems to have these crises every now and again. In April 2022, it was a big problem again in quite a big business operating sector of ours. Then there's been load shedding since September 2022. It's been aggressive in Africa, in South Africa. We had a few months which were a bit better, and then lately it got quite bad again. We've had port strike in Durban in October 2022. Disruptive taxi strikes where things were really not going well in August 2023 for anywhere in the Cape. Then we've had, since October last year, port congestion in South Africa. Which is a big problem. And we've got these. The Middle East's war is causing shipping delays.
Since October, November, December, and it has affected us in January and February. I'll tell you more about that. So there's a lot coming our way, but notice we say perseverance in adversity because we're actually quite proud of the fact that we sort of see all these challenges, and we had many years in South Africa during the apartheid era where we faced tons of challenges, and I'm not saying only Truworths, the whole of South Africa. And yet we are proud of how we, throughout all these adverse times and occasions, we retain our philosophy, sticking to what we say is our business philosophy. We keep our balance sheet strong. We stick to this principle of high margin and aspiration. Despite quite a lot of, let's say, challenges to that by some of our community. I'm talking about the shareholders.
And we stick to it, and the result of all of these things coming our way, these asteroids, if you want to call them that. Is that we ended up with a really good business. In good nick, good condition, and good position going forward. That's how we see it. We are cautiously optimistic about South Africa. And about our business in Truworths for a few reasons. I've said we have highly regarded market-leading aspirational brands. In our Truworths stores, mostly owned by us. Strong retail credits capability. 70% of our sales are on our own store card. We manage our own in-house credits. We don't want to be beholden to banks. To decide our destiny, so we finance our book ourselves. And we have great expertise internally in doing so. There's a strong demand for our credit offering.
I mean, we've probably got about 3 million active account customers because that was money. That's how we define active. There's another 20 million loyalty customers. That means these people who've either previously shopped at us. Or occasionally shopped at us. Or they wish to, in one way or another, all of them retain an ongoing relationship with us. So there's 20 million, and you can imagine we use that base of accounts to or customers to we know a lot about them. We know. We can score them on the score cards. We know who they are, where they shop, etc. So we use that as a means to open new accounts frequently. And then what is interesting, in the last two years. We've had 5 million account applications per year.
Now, obviously, we don't open all those accounts because many of them are not creditworthy, but in a country that's got 50-60 million people. About 25% of whom are too young to have any form of, you know, their school goers and kids. So we've got about 80 million, perhaps, potential shoppers. Who knows, you know, we're adult enough, and we've got jobs, and we get 5 million applications per year to open accounts with us. And I'll tell you more, over 40% of them are in their twenties and below. We all think we are. Why we are feeling cautiously optimistic. We're doing quite a lot of things internally in Truworths with our merchandise, which we're quite excited about. It's sort of rediscovering opportunities.
I'm not going to go much into that because it's intellectual capital and strategic, but we are finding quite a number of opportunities. But then, on top of it all, the credit environment does seem to be slowly stabilizing. I mean, the TransUnion Credit Index, which many of you are familiar with. When it's under 50, it is declining and worsening the credit environment. But it was at 47, which, compared to the 39 a couple of months ago, shows that, although it's still declining, the relative decline is only minor. So we are hoping next time the TransUnion Index is published, it will be over 50. And we actually are expecting that, which is why we feel more positive. And I think those of you who are familiar with our business model.
When credit is healthy in the country, even reasonably healthy with an economy that's just growing greater than 0.6%, 1.5%, 2%. Our business tends to do really well. Then our in-house design capability. We have a sample set of a couple of 100 people in our head office now who make samples with fabric. It looks like a factory in all ways for our buyers who are in the same building. So it's quite an amazing operation. We've got buyers and the whole creative business in our head office together with the sample set and the manufacturing side where we hand out the product because we buy our own fabric and our own trims. So we completely vertically integrated internally now in a way we never. We always wished we would be able to be, and now we are.
But having bought BBarrie Cline and Bonwit over the last couple of years, and they integrated in our head office now. Of course, looking at Office UK, wonderful turnaround since COVID. It's really been. We like to say that COVID, the COVID era turned the business around. To talk about that, I have with many of you in the past, but Office is a strategic partner of the world's most desired brands. Office and Offspring both cater to the fashion end of the market of the sneakers and shoe brands. We have some small value of our own in-house brands. But what's good about Office, of course, it's a ladies' fashion sneaker business. It's really a ladies' fashion business, shoe business that sells a lot of sneakers. Which is the appeal to the brands where most of the competitors are more masculine sports stores.
And then, of course, we've got Offspring, which is the epitome of sneakerheads, men and ladies. So we've got these 2 niches, which are not mainstream, but they are highly appealing to the brands and to our customers. And sneakers have and branded shoes and boots have done well in challenging economic environments. And because our Office business has done so well compared to its competitors in its environment. It's sort of standing up now as a business to do business with the brands. So we've got a ton of support now from the brands. And the business, as you've seen, is much more profitable. The new modernized stores are performing really well. Well above expectations. We've got 3 new stores and 7 modernized stores planned for the second half.
There's at least 15 opportunities right this second, which we're busy with at the moment, which, you know, we're evaluating them, and they'll come on stream next 12-18 months. And the way we see it, there's about three years of pretty predictable, good quality runway with modernization and new stores in the U.K., which is very exciting for us. So it's almost like the U.K. is low-hanging fruit. Which is a strange thing to say, but that's as it's turning out to be the truth. And then inventory and cost management in Office is now completely aligned with Truworths. I mean, the MD and his capable directors in the U.K. are working absolutely fantastically with the Truworths people and the reverse. We have a synergy that helps both businesses in both ways, and it couldn't be better. Group results.
So if you look at the very right column, we've tried to exclude the unusual items, such as forex losses, IFRS 16 impairment reversals, and the big insurance claim from the riots. So our diluted HEPS was 7% growth. If you look at our history on the left bar graphs, you'll see there's a continuous trend of increased dividends per share and diluted HEPS growth over the last 2019. Return on equity has dropped over the last three years. It's now at a very healthy 48%, I might say, so nothing to be ashamed about. But it's dropping because of the retained earnings growth. So there is an argument, and I see one of our shareholders who we know well has already asked a question about share buybacks. I will try and answer that in a minute.
But basically, we are undergeared, and our balance sheet is strong, and so return on equity is declining, despite investment in Office real estate. And then return on assets. Also a healthy 33% return on total assets. It is impacted by the new DC, where we've invested a couple of ZAR 100 million so far this last couple of years. And the growth in the right-of-use assets, as we conclude new and existing leases, and we extend them. And reverse impairments, and then the significant cash balance in Office is all making the return on assets decline. And that's all part of a strong balance sheet. We are aware of it, and of course, capital utilization is an issue that we always think about. Inventories in total 2% down on last year.
Debtors 1% up, so our working capital is incredibly well managed, just so I can deal with it right up front. Truworths stock at the end of December was roughly equal to last year. At the end of January, similarly, roughly equal to last year, but we would have wanted it to have a couple of ZAR 100 million more. So even though we were equal to last year, we were short of stock of new goods delivered in January, particularly. And then again in February, because of the port issues, a couple of ZAR 100 million short. So although stock is nice and clean, which is great. We did suffer a couple of % in sales for sure in the month of January and February. That problem gets dealt with, we believe, during the month of March quite well.
So I'm hoping, I can't promise, but I'm hoping that with all the shipping problems from the Middle East, it seems to be about a 2-2.5-week lag in our stock flow. There are some cancellations which we wouldn't have wanted, but whatever it is, we're thinking during the month of March things come much better. So by the end of March for the peak winter season in Africa, things should be much better. In Office, it's a simpler story. In Office, there were 15% less stock at the end of December than the year before. Intentionally, so Office's stock level is great. It's nice and clean, just like Truworths. That, of course, made a big difference to sales in January with much less markdown activity.
I'm always telling you, be careful about interpretation of the first 6, 7 weeks of each half year, because you know, January, February, July, and August, you've got to worry about the fact that there's a dislocation depending on the stock excess and how aggressive you are in markdown. In Office's case, we had far less to markdown in January, so sales were down on last year. February, when it normalized a bit, sales are up in double digits, low double digits. So Office is looking very positive. And then, of course, you can see we've got no debt. We've got debt in Truworths. And we've got cash in Office. They offset each other roughly. Since January 2020, we bought back 52 million shares, 12% of the company. We spent ZAR 2.5 billion, ZAR 48 per share.
Probably the best investment we've ever made, if you think about it in that way. Well, one of the best. Office is the best. But then leave that aside. There's a question, as I said, about why we aren't buying back shares. We could have bought back shares. We've sort of taken a view. We're building the DC. We're investing in real estate a lot in Office. We were in overdraft, or let's say a net borrowings. So we just decided for the year we were not going to buy back shares. I'm sure if we can't use the capital internally and no major acquisitions come our way, our share buyback program will start again in the next few months. We've got a funding facilities of ZAR 3.5 billion left. And we cancelled the 20 million RCF because in the UK we just don't need it.
We've got so much cash there. Our balance sheet's very good. We are very aware of the opportunity to buy back shares if we can't use the money. Cash flow. Group cash flow is as good as ever. I saw a report which was incorrect of one of the analysts who said cash flow was worse, and their numbers are confused for some reason, but we generated ZAR 1.7 billion in the group. Paid dividend of ZAR 935 million. Net cash ZAR 800 million. The cash realization rate is 93%. In the prior period, it had dropped. The 56% was related to trade receivable growth, high inventory levels, and the timing of monthly payments. You almost got to ignore the December 2022. The 93% is closer to our norm. Why it's not as high as the 100%, 120% in excess. That's mainly because of the book.
So we have a net realization rate of 93, which we're quite happy with. Looking at Truworths' financial performance. You do know these numbers. We've already published them, but I'll focus on the right there. The gross margin improved 0.6. You know we focus on that a lot. Our EBITDA margin also pretty the same as last year. 32% value, very respectable trading margin. Dropped because the sales growth was so low, unfortunately, so expenses growth is higher than sales. It's still a healthy 17.4%. And operating margin, because of interest and other factors, operating margin was actually slightly up at a very healthy 25.5%. That's Truworths. We're talking about Truworths Africa now, not group anymore. Truworths income statement. You'll look at this in your own time, but the problem, of course, is the top line. Sales growth was poor.
The interest and dividend income made the trading profits of ZAR -9 change to profit before finance costs of ZAR 1+. The problem is really top line because expenses are under very good condition, and I'll show you a bit later. But it was across the board the tough times. I mean, ladies was not good. Men was tough. Kids was tough. And the other, these other things we're doing, Office London South Africa, which is doing nicely. Loads of Living Sync the new brand. Truworths Jewelry, cosmetic, cellular, all of those actually did quite nicely. But I mean, our core business did battle in the six-month period, and you can see Identity the same. And YDE is small. I told you we're feeling more optimistic, cautiously so, because the credit environment definitely seems to be stabilizing.
If that turns out to be true, and it continues, although it's a slow process, it doesn't happen suddenly, then we do think that the winter, hard winter period, having recovered from the shortage of new goods, should be a bit better, we're hoping. And then next year, from July 2024 onwards, we are expecting a much better year with a lower base. Some great initiatives internally and better credits. So the stores and trading space, not much change there in Truworths. The density is not bad. Admittedly, there's an inflation factor that should be taken into account here, but ZAR 39,000 a meter is not bad in South Africa compared to many of our competitors. Inflation kicked up enormously because of the crash of the rand in 2023, but it's dropped down to 5.7% at the moment, and it's becoming more normalized again. Great gross margin. Good stock management.
Not excessive markdowns. Where we battled the bidders with the top line and body growing. We had depreciation 4%. Not much we can do about that. We have to write off our assets. We keep on refurbishing our Truworths stores. We watch that carefully, but we do do it. Employment costs went up by 8% and trade receivables by 9%. Those were the two real factors. Occupancy costs we can't do much about. So depreciation. You'll see the note there. We can't do much about that. Employment costs, if you excluded the incentives and other non-comparable costs. Share schemes and so on. The increase in employment costs was 6%, but we have to manage that tighter. We understand that in tough times it's a little too high, and we have to bring that back. Occupancy costs. Actually increased by 2% if you take out all the extraneous factors.
The true growth that we would say is accurate, summarizing everything, is about 5%. Trade receivables is the big one. That grew by 9%. And again, I've seen a report today that I think is confused. Remember how the provision works. The provision works. It's a forward-looking tool called Markov that is commonly used by all the retailers, or most of them, as far as we're aware. And the provision tool tells us that our future bad debt, or the future debt risk, has improved slightly, which is why the provision has dropped from 20.7% to 19.7%. But the bad debt went up significantly in the period 54%. That's because the provision last year and at the end of June was high. The provision was saying that last year's December we had very good sales, and there was a consequent bad debt.
Flow through over the next six-nine months, even a year to a year. Which is a consequence. So bad debt is historical, right? Provision is future. So we are expecting future bad debt to stabilize now that the bad bulk of the bad debt has been written off. This is a review of the credits generally. Sorry, I've moved that too fast. Just move this out of the way for me so I can see the screen properly. So there's the gross bad debt increasing, which reflects the growth of the written off accounts in the credit environment. We had the prior period. We had really good sales growth of 16%, and the book grew by 19%. And the book, the credit risk worsened in the economy. You saw the 37% or 39% TransUnion index I mentioned from a few months back in that environment. We took.
Quite a beating in the bad debt side. But the ECL allowance as a percentage of gross trade receivables has now improved slightly. And it's due to the fact that we've written off so much of the unhealthy accounts. Which is why, again, our book is looking healthier now than it has for quite a while. So there's a profit before finance costs and tax. You can see our EBITDA. Compared to that, both very healthy numbers. And pretty clear pattern. Our CapEx. We spent quite a lot less this year on store renovations and development. It's just how it turned out. It wasn't intentional. It just we did some big stores, and they're taking longer, and it should go back to the average of ZAR 200 million this year. Computer infrastructure, as you see, and then the new DC we spent so far.
ZAR 800 million, 780 million, and there's about another ZAR 250 million to go. That's all been part of our cash flow. Truworths Africa still very cash generative, generated ZAR 952 million. And most of the dividend of the group was paid from Truworths Africa. So that's why there's very little cash left over, but the business generated almost ZAR 1 billion. And that's after spending about ZAR 200 million on the new DC in the year. So you could say it generated about ZAR 1.1 billion, but then, admittedly, we spent less on store refurbishment, so it evens out at about ZAR 1 billion cash generation. Looking at Office UK.
This is a lovely story. If you look at the percentages on the right. Gross margin's gone from 46.6% to 47.4%. That compares. We've just put it in for comparison purposes. Truworths Africa gross margin. This is after markdown in both cases. 56.6%.
So Truworths does start off with its higher margin of about 10% higher than Office. But then it comes to EBITDA. And Office has grown to 27% EBITDA, which is really great, and Truworths is 32%. So great high margin businesses. Trading margin. Truworths is now lower than Office's trading margin, which is interesting. After the credit side has been taken off on all the rest of it. And Office is a well-run, frugal business. It does. We work together with Truworths a lot, so that helps it quite a lot. But either way, its trading margin is really healthy, as is its operating margin, which is now almost caught up to Truworths. Its operating margin 23.5 from Truworths is 26. So we've got these 2 amazing businesses, one in the U.K., one in South Africa. Both high margin, both operating really well and efficiently.
Income statement UK, 19% profit growth, 21%. After before income tax. So Office is really looking good. Most stores in the United Kingdom and Ireland. We closed the German stores. They're all losing money. So our stores are really. I don't think there are any stores losing money as far as I can remember now. So Office is really looking good, and there's quite a lot of new stores. As I've said in the offering. Because they're new opportunities and remodernizations. Modernizations in our language means a beautiful new store, which happens to usually find extra space, trading space. So you add those 2 things together. New store, great brand. Amazing location. Lovely design, and a bit of extra trading space. It's a nice formula. Sales density in Office is through the roof. I mean, look at that. It's fantastic. Gross profit.
Lovely improvements since December 21, and much better than December 19, which is the previous highest. But we have to watch expenses in Office. They are increasing. Depreciation, employment costs. Particularly depreciation is going to continue because we're doing all these stores, so that is going to cost money, and we are investing in computer systems. We have to do that. So we're being careful, and we watch return on investment per project very carefully, and they're all very productive, but still that you can expect the depreciation to continue to grow. Employment costs have grown by 15%. That is mainly because of increased hours. We're growing stores, so there's more stores, and we're trading better. And the U.K. national minimum wage has went up quite a lot. So the ability to manage the employment costs in Office is a challenge for us.
And we are aware of it. We don't want to depend only on the fact that the sales growth is going to be good. So the management team there is aware that employment cost is a factor they have to consider carefully, and then other operating costs are predominantly driven by e-commerce and delivery costs. So that's quite hard to change, because most of that is productive expense. All in all, profit before finance costs and tax in Office looks fantastic, as you can see from these numbers. And capital expenditure: store renovations, GBP 1.7 million; and computer software, GBP 591,000. Those two are going to continue to grow in the future years. And that we need the cash, in other words. But the net result is the cash flow Office generated GBP 32 million. So it was a very, very successful year.
Looking at account management in Truworths. 3 million active account customers who are indebted to us. So this is 3 million who are indebted to us. Customers able to shop means they are indebted to us, but they're not in arrears is up by 3.4%. So I'm trying to give you a picture why we feel cautiously optimistic. We've got 3.4% customers more able to shop as a number. Besides the active accounts, the growth in accounts is very good. The credit environment is looking better. We're doing some internal initiatives on our merchandise in Truworths that are exciting. Those are the reasons we feel cautiously optimistic over the next 12 months and 18 months in Truworths. As I said, we've got 20 million loyalty customers. We've spoken about the bad debt. We've spoken about the 5 million credit account customers who applied for credit.
So that is the picture of Truworths credit, and if you look at some of the statistics. The ones to note are the number of active accounts has grown by 5%, but 3.5% is shoppable. They can. They're more loaded shop. Opened accounts as a percentage applications has grown from 14%-18%. That does not mean we've opened up the taps. It means we've got better at and more refined. It's sifting out the good from less good credits who we want to give credit to. So more percentage of accounts who have applied were opened this year. 25% risk approved versus 20% last year. And the conversion rate is slightly up. So even that's getting better, but that's because of technology and intellectual capital stuff that's going on internally. The bad debt.
is worse other than the provision, and the forward-looking one is the provision. Again, looking forward. It looks like it could be better. I'm not going to spend time on this, but as you see, TransUnion index has gone back to 47 from quarter 4 in 2022, 48. Quarter 2 was the disaster, the 39. So the macro environment did look very bad. It's starting to show signs of improvement. And if you look at the 4+ cycle balances, these are the ones that are likely to be written off. The industry, excluding Truworths, is sort of being slightly worse. Truworths on its own is improving, as you can see. And this is the number of accounts that are approved. You could see I already have mentioned it's gone to 18% and risk approved 25%, but you can see how it's improved since December 2021.
Strategically, some of the things we're focusing on, review merchandise opportunities have been sort of alluding to it. I'm not going to tell you much more, but we're doing a lot of internal work. On our brand and reposition our product and our merchandise, which is making us quite optimistic about summer 2024, which is October to December. It's September to December this coming year. We're rolling out what we call a differentiation and elevation strategy across our brands. Refine our product offering and Fuel that new brand and Sync. Both are doing nicely. Really good. They look exciting. We want to grow the ladies, men's, kids ranges in Office U.K. own brands. We're busy with a lot of product extensions there. So that's also quite interesting and exciting. And the relationship with suppliers in the U.K. is fantastic, but continue to build it.
Then there's increasing involvement in the lifestyle life cycle stock management process in Truworths by Office. Supply chain. You know about a new DC we're building. The investment in local design in our head office, I referred to before, and the local manufacturing industry own our own factory now near Cape Town, and we're quite involved in the local side, and it's becoming more and more exciting. There will always be a 50/50. We think 50 local, 50 imported, because there's product that you need to import because that's what the customer demands, and that's what we can get. But we've got the balance right, and we're very happy with how we're running the local supply chain now. I mentioned our integrated design department. Our Office UK warehouse is being re-evolved and reorganized. So there's a lot of work going on there as well.
This is a new DC, you see. Driving in from the airport in Cape Town. It's that. It's been built. It's up. It's not running yet. So they're still putting in the cranes and all the infrastructure. It will be up and running and built by December this year. Customers, Truworths Africa. Our online sales grew 41%. CRM capabilities improving all the time. Our online sales are only 4%, but it is by far bigger than our biggest store now. And if it carries on going at 40%, we expect it to 40%-50%. It's gonna hit 10% in a couple of years. So we didn't expect it to do that in South Africa, given the fact that we've got hundreds of stores in every location you can imagine, and people in South Africa like to shop in stores. Nevertheless, the e-commerce side is picking up a lot.
Office UK. Online offering is going to be enhanced with new customer-facing applications in Office and Offspring. And we're replacing the app in Office, and we are launching a new one in Offspring. There's a lot of other work that's going on. I don't want to spend too much time on credit using AI. Retail presence. Our new formats, Truworths ID Megastore and Kids Emporiums, are doing really nicely, and the re-imagined Truworths is also doing well. We've only got 2 proper re-imagined stores, Truworths. And they are both doing extremely well. So if that. It's early days, but if that carries on, and we roll out more of those, and they do well. That is another positive factor. That is slower, though, because it takes time to roll out in Truworths. Further rollout of Sync and Fuel brands in South Africa, for sure. And Office UK rapid expansion.
In modernization of stores. Extra space in existing stores, plus new stores. They listed there. Here's a picture of our new Constantia store. In Truworths re-imagined. It's doing extremely well. There's also another one at the Waterfront. Both of them are doing very well. Waterfront in Cape Town. This is the new Office frontage in the UK. This is what the stores look like. Southampton, Tottenham Court Road. And Reading. This is what a typical store looks like. This is Office Leeds in Briggate. It's upstairs. And then this is Southampton. It's a single floor operation. Beautiful stores. The customers are loving them. New apparel. A lot of work goes on environmentally in Truworths. I'm not going to spend time on that. You can read it in your own time. We spend. We're very focused on a clean environment. We spend.
We maintained our B rating in the CDP Climate Change Review. Our new DCs has received an EDGE Advanced green building certification, which we're very proud of. We focus on health education, social development, and empowerment of women in our social endeavors. Our charitable trusts for social endeavors now exceed ZAR 260 million. That's what's available. Our B-BBEE scorecard keeps on improving. We now reach level 5. So we're very proud of that. Governance, I think we even our detractors would be likely say our governance is very good. We've got succession for long-term non-execs, long-serving non-execs. We've appointed a couple of new non-execs recently. JSE sustainability disclosure guidance is now well received. Deloitte have now been appointed and have taken over auditors for the group. And once again, as you already know, we were in the top 10 of EY Excellence in Integrated Reporting.
For 16 consecutive years, we've been in that top 10. We are the only listed company in the JSE to do that. We've looked at United Nations Sustainable Development Goals. We are focusing on these 7 as part of our sustainability endeavors. Looking at the outlook. Truworths Africa. Yes, global shipping. Port congestion did impact deliveries of new goods, especially affected us in January and February. Should get better from March, especially late March. UK. I told you already, January was a healthy thing, because we had so little poor stock carryovers, so promotional activity much less, but already doing better in February. Net result. Truworths was -0.5% in the first 7 weeks. Office was +1.3% in rands. The average is +3.8%. Trading space is projected 1% up in Truworths, 12% in Office. So we summarize.
We're cautiously optimistic about South Africa in the medium term. We are. We've told you. I've told you about our initiatives. The global shipping is a problem. I mean, it's not going to go away, but. I think we've sort of caught up now. There is a lag of two-three weeks, but. If at the point you catch up. The lag becomes less important. And Office UK. I think you already know. There's a lot of stuff going on there. It seems to all be positive, and so we are. Much more positive about Office. Than one would have expected us to be at that point in time. So. With that, I'm ending the presentation. And I'm going to. Refresh my questions and see if there are any questions. Oh, there's a lot. So the first one. Capital allocation share buyback. I think I've answered.
The impact of the ongoing port congestion and the global Red Sea Office product. Oh, this one's quite a good one. What is the impact on Office? Well, it's similar. It's a similar thing. The port impact on Office has a similar impact to Truworths. But I'm not aware of as much a crisis as we've had in Truworths. There has been some delay, but at this stage, it doesn't seem to be as serious. Sarah, would you like to comment? Do you know anything different or Mannie on that with Office UK? I'm not talking about. I'm talking about MTO. I'm talking more of the brands.
I don't think there's indications at this stage of big impact on the branded product. I think there's different countries of origin. So, too, not. We're not seeing any evidence of that. Being significant at this stage, as far as I'm aware.
Thank you. Then it's the Office. They ask, how should we think about Office operating margins, given the normalization of sales growth implicates high cost growth. Especially employment costs. So I do think we, you know, now that Office is got going into like a productive phase. Sales growth probably will be less. A little bit more contained, I would think, even though we've got all these new store opportunities. So it is hard to tell, but I mean. We can't have unbridled growth forever, so I suppose that will be contained, and the management team is going to have to contain employment costs, which is the main one, but I can't see why we can't maintain our margins at roughly the level that they are. If not slightly improving in Office.
I really can't see that, and we do not believe that. You know, we expect management in the UK to deliver on the current margins. So I've already explained why Office slowed so drastically in the first 7 weeks of this month. I told you about January and February. How much will space growth in Office add to revenue growth? I'm not going to tell you that. I'm rather going to say to you that our modernized stores and new stores all have amazing return on investment capabilities. And in fact, when you look at our viabilities, which we do for every modernization for every new store, we are exceeding the sales that we put into our viabilities. So our viabilities were appealing, and our sales are beating those.
So I'm not going to tell you what it adds, but I but I am telling you that the new stores are viable, and the more we can do, the better, and the refurbishing of stores. How much stock is arriving later out of season? And what impact there was some stock that arrived post December that we would have rather had in the end of November, early December. So some of that we put into stores in January, because it is appropriate. A small amount of it we decided to keep for summer 2024. It's not a lot. It's I think it's ZAR 20 million or so, but it's appropriate, because it's stock we know will be okay for summer 2024. So unfortunately, we would have lost sales because some of that stock that we got in January we should have got in November to sell through December.
I would say there's a kind of a 2-3 week sort of lag thing that has happened. That is causing us to have new delayed stock, and that did impact us in January, February, as I've said. It's going to be less so in March, April, and May. Yeah, this other question's about the seasonality of stocking the U.K. Does winter season not impact U.K. residents the same as summer? So yeah, of course it does. You know, you remember that we have sneakers. So the Adidas, Nike, all of New Balance, all of those guys On Cloud. But then you also have got the brands like you've got Timberland, and you've got UGG. And you've got Doc Martens, and you know the sort of fashion branded shoes. So these are sort of a compensation winter, summer. Of course, you don't want to get UGG.
Which sort of tend to be more winter in summer, and you don't want to get Havaianas and Birkenstock in winter. But you know those brands are interesting. They're not fools. So you're finding that the winter brands like UGG trying to create some products that can sell in summer. And the summer brands like Birkenstock are trying to do some winter product. So yes, we have to get the right stock in the right time. We don't want boots in summer, and the U.K. is the same. People are people. They're not going to walk around in every winter product in the height of summer in the reverse. But we can manage that in both Office and in South Africa. We have good ways of managing our stock. And Office and Truworths think alike. There's no problem with it.
We just manage our stock very carefully and very, very thoroughly in both cases. Space growth in Office looks aggressive. How much is new store, and how much is current? I'm not going to tell you that, but I've told you a number of times now that all of the new stores and all of the remodernized stores, that if you saw those numbers, you'd say, do more of it. It's obvious to do them. The returns are fantastic. So, 12%. I hope it's more.
A nd you, as a shareholder, you should also. Office store closing Germany, new space opening coming. When was the German store closed? And when will the new space growth occur in HAT? I don't know. Mannie. Do you know, Reon, when the overlap? You know, when did the German like-for-like sort of end? I think it's soon. I don't think it's ended yet. Do either of you know? Neither. Mannie?
Michael, I do know there's German stores closed in the second half of the 2023 financial year. So we are sort of coming out of that period and becoming more comparable now again.
Yeah, so second half. Meaning. Again to June. Yeah, so. April or so. It's completely [inaudible] . Yeah, there's this question, which is a good one about why we're building up cash in the U.K. and not. Repatriating and paying off the overdraft in South Africa. That is a point, and we might do that. I suppose. Remember, the cash is built up quickly in Office's. Not. You know. So we may do that, but you know. I mean, it's a moot point. Firstly, Office needs money. For its new stores, but they are generating cash.
So it's not short of cash. There could be acquisition opportunities in the U.K., and if we can find something, and we are looking. That matches the customer of Office, but is maybe a different product category, clothing, for example, and we can use it on the back end. That would be an opportunity, and we're alert to that. And then just as it turns out, if we would have brought back all the cash. I mean, no one would suggest we do that, but if we would have. Because of the decline in the rand, we actually would have been worse off. So although you save interest, the decline of the rand, as it turns out historically has been in favor of leaving the cash in the U.K., but that wasn't why we did it. We did it because.
The expansion and the needs in the UK, and the potential acquisition opportunities, which we're hoping for in the UK, mean that the cash is best left there. But if that doesn't come to fruition, we will certainly bring some of the cash back. Yeah, they're saying here, Sarah, this one's for you. You keep on talking. Okay, I'm paraphrasing. They say it more politely than I am. But you keep on talking about reinvigorating the Truworths brand. But your sales growth continues to be weak. Why are you confident it'll improve? Is it just cause of credit? They're trying to say, what else are you going to do internally to make the merchandise better? So, Sarah, you're going to be careful how you answer this for obvious reasons, but I think you must do your best.
I will do my best. So no, the answer is that we are not. Just depending on the credit. We do genuinely believe when we review our opportunities and relook at the various different brands in our business. We do find quite a number of opportunities that we still feel are untapped. And that's obviously over and above the new brands that we have of Sync and Fuel, which will grow in their normal way, but are still relatively small in the context of the business. But we also have a very well-established buying process, and there are certain elements of that that we are relooking. And we believe that they will have a very positive impact on our ability to differentiate and elevate our merchand ise.
Thanks, Sarah. There went some color on Shein, Temu, and Amazon in South Africa. So. Sure. That's always such a hard question to answer. I mean. You know, competition is competition, and as long as they all play by the rules, you know, and we all on level playing fields, paying appropriate import duties, and all the requirements legally of operating South Africa. Competition's competition. It affects everyone.
I wouldn't think that they are more likely to affect Truworths as much as some of our competitors. But you know, there's a pie. It's not growing that much in South Africa. The economy stuff. It's not looking great at the moment. Growing middle class, a lot of aspiration. So that'll change in time as it always does. But for the moment, it's not looking good. And now you've got big online Asian competitors who buy at extraordinarily cheap prices. Fortunately, as I keep on saying, Truworths positions itself with aspirational brands of high quality that are loved and admired by South Africans.
That protects us to some degree. I can't offer more than that. You know, Amazon's. They compete, they take a lot, and all the other online companies. We have our own online business. The thing that protects us has always got to be our business philosophy, our brands, our quality, our positioning, and our aspiration. Many of this question's for you. It says, what sort of gross book growth can you achieve if rates drop by 100 basis points this next year? So that's quite a hard question to answer. So I'll give it to you.
Thanks, Michael. Yeah, I mean, we can't really say. I mean, the book growth is largely dependent on the merchandise that's available. So you get the merchandise right, and the customers buy. So I know that historically, when rates have come down. We've tended to perform a little better. One would expect that we would perform a bit better, but it's really largely driven by the merchandise.
Thanks, Mannie. Then this other question on this. This is more about M&A, because I alluded to. You know, we've got the cash in the U.K. It's turned out that it's been better that it's been there. That wasn't our intention, but it was because of the store growth opportunities, but also perhaps an acquisition. So they're asking what kind of acquisition and what jurisdictions. So I think you can never tell. We have looked not long ago at opportunities in Australia, but we decided to. We just decided that we would prefer Northern Hemisphere. We like the fact that we're working in the U.K. We seem to be finding our feet there. We can control it.
We can get our hands around it. We're there frequently. We've got a fantastic team of management and staff capability there. A warehouse, an infrastructure, e-commerce, intellectual capital. So, U.K. appeals to us because we tend to like to be focused and get our hands around things. So that when they go wrong, which things do from time to time, we feel we can cope and deal with them. So, I would think that a great appeal to us would primarily be in the U.K. I can't exclude Europe or United States, but it would probably be U.K. And in the U.K., yes, it could be other shoe businesses, but it doesn't have to be, because if there's a customer affinity, a relationship with the customers that shop at Office, of which is millions now.
That also buy another category of product like fashion clothing that we would relate to. That would also be appealing to us for all the obvious reasons. So we are kind of focused in our M&A objectives. Even though we get offered many. Quite broad opportunities frequently in countries all over the world. It's our preferences, what I've just said. Can't see any other questions here. I'm new. Refresh again. I do think that's all. Many. You also have access to this, and Sarah and Reon. Are there any questions. That you think we should answer that I might have missed? Oh, they're all shaking their heads. This is an all-time record, then, because it's 3 min to 2. And if we're not going to get any other refresh one more time in case. Miss something. Let me do that.
No, nothing has been added as far as I can see, and everyone's shaking their head. So, I would say to you, thank you very much for joining us. We're going to end now. I will once again reiterate that. If you want to send us any questions, you can do it. I'm just looking it up here so I don't give you the wrong information. We've got an email address called investorrelations. One word. No spaces. Investorrelations with an S. At truworths.co.za. So if you want to write to us, you can do that. And we've got a panel. It's the four of us, but there's another four or so executives in Truworths who are on that panel. And we really, our goal is to answer it within the same day, but at most 24 hours.
And then we still, of course, see people who still want to see us. But frequently we're able to satisfy your queries very quickly. So thank you for joining us, and we look forward to seeing some of you in the next week or so, next week, and others in the next conferences. Goodbye to all.