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Chief Financial Officer’sReport (continued)FINANCIAL TARGETSFinancial and operating targets are published to provide shareholders with a guide to the Group’s performanceobjectives for the financial period. These targets are benchmarked against the performance of listed local competitorsand best-in-class international fashion retailers. The targets are reviewed annually based on performance and theoutlook for the year ahead. Performance relative to the 2011 targets is covered in more detail throughout this report.TargetTarget2012Actual2011Target2011Actual2010Localbenchmark*Internationalbenchmark**Gross margin¹ (%) 54 – 57 56.7 54 – 55 55.3 42 61Operating margin² (%) 33 – 36 36.4 32 – 34 34.0 18 20Return on equity³ *** (%) 40 – 45 41 35 – 40 40 35 37Return on assets³ *** (%) 44 – 48 46 40 – 45 44 29 33Inventory turn³ (times) 6.0 – 6.5 6.4 6.0 – 6.5 6.9 4.9 3.9Asset turnover³ (times) 1.2 – 1.5 1.3 1.2 – 1.5 1.3 1.9 1.6* Based on the average ratios for comparable South African listed apparel retailers for the 2011 period.** Based on the average ratios for H&M (Hennes & Mauritz) (Sweden) and Inditex (Spain) for the 2010 period.*** Targets are materially influenced by high retained earnings and cash holdings.¹ Combination of clearance of merchandise, sales mix and tight inventory management.² Based on the assumed gross margin and the ability to manage operating expense growth below growth in sales.³ Combination of returns achieved and capital management strategies.RS:aRU!\U!100S:0!1U_!100S:!:aRU\^SRRS:aRU!\U!Sea@:'!1U_!O1T@:1V:-;&,N9JN9GG9JN9KN9LN9LN9MN9J N9J N9JN9KN9LN9LIGJGKGLGMGT&23&.$+=&T&23&.$+=&FGHGIGJGKGLGKPLMKFLKJKLFJPLPIIKKHJJGHNKFIJKKIGKGINKNELM LG LI LH KH KF KF KH KK KIMGGM MGGL MGGK MGGJ MGGI MGGH MGGF MGGP MGNG MGNNNGEMGNGEMGGM MGGL MGGK MGGJ MGGI MGGH MGGF MGGP MGNG MGNN!!R&$(2.!".!+,,&$,!!1,,&$!$(2."6&2!!R&$(2.!".!&A(-$>!!R&$(2.!".!3+?-$+)44Truworths International Limited Integrated Annual Report 2011