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Summary of audited group results and final cash dividend declaration for the 52 weeks ended 28 March 2015
MR PRICE GROUP LIMITED
Registration number 1933/004418/06
Incorporated in the Republic of South Africa
ISIN: ZAE 000026951
JSE share code: MPC
(“Mr Price” or “the Company” or “the Group”)
SUMMARY OF AUDITED GROUP RESULTS AND FINAL CASH DIVIDEND
DECLARATION FOR THE 52 WEEKS ENDED 28 MARCH 2015
PRESS RELEASE
MR PRICE GROUP LIMITED’S CASH-BASED FASHION-VALUE MODEL PRODUCES
STRONG RESULTS (52 weeks ended 28 March 2015)
[Durban, 2 June 2015] Mr Price today announced diluted headline
earnings per share of 865.1c, up 21.0% and dividends per share
(DPS) of 580c, up 20.3%. The Company has achieved a 29-year
compound annual growth rate in headline earnings per share (HEPS)
of 23.3% and DPS of 25.0%.
Total revenue grew by 13.9% to R18.1 billion and retail sales
increased by 13.5% (comparable stores 9.2%) to R17.3 billion. Cash
sales grew by 14.9%, ahead of credit sales of 7.5%, and
constituted 81.9% of total sales. Retail selling price inflation
was 7.7% (price 4.3%, mix 3.4%) and units sold increased by 5.5%
to 228.9 million. The opening of 76 new and the closing of 5
stores resulted in weighted average trading space increasing by
5.1% and the Group operating 1 150 corporate-owned and 15
franchise stores. The positive earnings growth of the first half
of the year continued and the Company achieved a 22.4% increase in
profit attributable to shareholders in the second half of the
year. “While we have identified opportunities for improvement, we
are very satisfied with the results achieved in an environment in
which the economy and consumers are struggling,” said CEO Stuart
Bird.
Sales to customers outside SA, including the acquired Zambian
franchise operations, grew by 24.8% to R1.5 billion. Trading in
Nigeria and Ghana in the second half was challenging as a result
of their weakening currencies and increasing inflation, however
all territories contributed positively to Group earnings and are
considered good long term prospects.
Other income, derived mainly from the financial services business,
mrpMoney, rose by 20.7% to R726 million. Insurance premium income
rose by 20.5%, mobile (cellular) revenue by 34.3% and debtors’
interest and fees by 14.8%. Bad debts improved from 7.6% to 6.2%
of the debtors’ book, assisting the division to deliver another
strong performance despite tightening credit limits and limiting
new account growth. “Our collections performance shows the healthy
state of our internal credit environment relative to the industry,
however, recognising the headwinds facing consumers, we have set
the impairment provision at 8.9%,” said Bird.
Despite an improved markdown performance, the merchandise gross
profit margin declined from 42.2% to 42.0% of retail sales, mainly
as a result of the weakening Rand. After accounting for airtime
sales, which attract a lower GP%, and mrpMobile, which is impacted
by recognising customer acquisition costs upfront relative to the
subscription period, the Group GP% of 41.6% was 0.4% lower than
last year. Selling and administration expenses grew by 8.3% and
represented 26.4% of retail sales and other income (RSOI), an
improvement on last year’s 27.7%. Profit from operating activities
increased by 21.3% and the operating margin improved from 16.0% to
17.1% of RSOI.
The Apparel chains increased RSOI by 15.4% to R13.2 billion.
Operating profit rose by 20.6% to R2.5 billion and the operating
margin increased from 18.4% to 19.2%. Mr Price Apparel, branded
‘mrp’ in its new concept stores and new markets, had a very good
year and once again achieved market share gains. A growing online
presence also stimulated store sales, consistent with the
increasing trend of shoppers planning their purchases online.
Sales were up 17.9% (comparable 12.8%) to R10.1 billion and now
constitute 59% of Group sales. Operating profit, impacted by a
slightly lower GP% and expenses growing at a slower rate than
sales, was significantly ahead of the prior year. mrpSport grew
sales by 16.2% (comparable 4.5%) to R1.1 billion. Lower markdowns
contributed to an improved GP% and a significant increase in
operating profit. Miladys struggled due to a below-par merchandise
performance and a trading environment that was not conducive to
higher margin credit businesses. Sales increased by 0.9%
(comparable 0.9%) to R1.4 billion. Operating profits were down on
the previous year despite tight cost control.
The Home chains increased RSOI by 8.7% to R4.7 billion. Operating
profit rose by 19.4% to R705.2 million and the operating margin
increased from 13.8% to 15.1%. mrpHome, which targets customers in
the upper LSM 8-10 range, delivered results that were well ahead
of budget and the prior period. Results were driven by sales
growth of 10.2% (comparable 6.6%) to R3.2 billion, an improved
gross profit margin and costs being maintained in line with
inflation. Sheet Street’s customers, who are more susceptible to
the current economic environment, curtailed their spending on
discretionary purchases. Sales grew by 4.9% (comparable 0.9%) to
R1.4 billion and operating profit was down slightly on the prior
year.
The annual dividend payout ratio of 63.1% is consistent with the
prior year. The final dividend of 368.5 cents per share to be paid
in June 2015 reflects an increase of 17.4%. This is lower than the
increase in the interim dividend and second half HEPS growth due
to the ongoing gradual alignment of interim and annual dividend
payout ratios. In the current year, the interim payout ratio was
increased from 55.1% to 57.0%.
The factors impacting the local economy and consumer environment
are expected to endure for the forthcoming financial year and the
Group is anticipating tough trading conditions. As a value
retailer selling predominantly for cash to customers in the mid to
upper LSM categories, the Group is comparatively well positioned
to withstand these challenges, however it is not immune. Every
effort will be made to keep prices low during these tight economic
times, and to remain the destination of choice for our target
customers.
The issues which affected performance that are under our control
have been identified and addressed and are seen as improvement
opportunities in the year ahead. We will focus intently on the
various aspects of our proven business model, anticipate
challenges and be responsive to opportunities.
“We have been focused on identifying new markets for expansion of
our mrp and mrpHome chains. Based on online testing and detailed
desktop and on-the-ground research, we believe that there is an
opportunity for a fashion-value retailer in Australia. Our plans
there will commence with mrp opening test stores this year in time
for peak festive season trade,” Bird added.
In support of the growth strategy, capital expenditure of R3.5
billion is expected over the next 5 years, which will be funded by
current cash resources and the Company’s cash generative business
model. This includes new ERP and merchandise planning systems and
a new distribution centre.
This is the beginning of an exciting new chapter for the Group and
in particular the mrp divisions, which account for 84% of Group
sales and contributed 96% of the increase in sales during the
year.
The 2016 financial trading period will incorporate a 53rd week.
The above forecast information has not been reviewed and reported
on by the Group’s external auditors.
About Mr Price Group Limited
A high-growth, omni-channel, fashion-value retailer:
-Targeting younger customers in the mid to upper LSM categories
-Retail predominantly own branded merchandise
-82% of sales are for cash
-1 150 stores and online channels offering full product
assortments
-29-year CAGR in HEPS of 23.3% and DPS of 25.0%
-Market capitalisation of R64 billion, ranked 32nd on JSE
-Included in MSCI Emerging Markets Index
-International shareholding of 53%
-4th in Business Times Top 100 Companies, highest ranked retailer
-Ranked 6th in Financial Mail 2014 Top Companies
-Included in JSE Top 40 and Socially Responsible Investment Index
ENDS
Contact
Investor Relations
Helen Grosvenor
Mr Price Group Ltd
+27 31 310 8000
FINANCIAL COMMENTARY
Highlights 2015 2014 % change
Revenue (R’m) 18 099 15 892 13.9
Profit from operating
activities (R’m) 3 076 2 537 21.3
EBITDA (R’m) 3 291 2 728 20.6
Profit attributable to
shareholders (R’m) 2 293 1 868 22.8
Group operating margin (%) 17.1 16.0
Headline earnings per share
(cents) 919.7 765.1 20.2
Diluted headline earnings
per share (cents) 865.1 715.1 21.0
Dividend per share(cents)
annual 580.0 482.0 20.3
final 368.5 314.0 17.4
Dividend payout ratio (%) 63.1 63.0
Return on shareholders’
equity (%) 51.4 52.2
Accounting Policies
The Board believes that appropriate accounting policies, supported
by sound management judgments and estimates, have been
consistently applied. During the year, the Group adopted all new
or amended accounting standards and interpretations, which did not
materially impact accounting policies or results.
Financial performance
The Group has produced a strong set of results against a high base
in the prior year, despite:
-The continued challenging retail environment which has a specific
impact on:
-higher price-point credit retailers such as Miladys, which has
a 54% credit sales contribution
-sales of ‘discretionary’ merchandise such as homewares
(mrpHome and Sheet Street)
-companies targeting mid-income households (Sheet Street)
-Business interruption caused by power outages
-A weak currency, which increased the landed cost of imported
merchandise for all retailers
-Start-up losses in online and mrpMobile, the 55% held MVNO which
was launched in June 2014.
Revenue
Total Group revenue increased by 13.9% to R18.1 billion
primarily due to increases in:
-Retail sales of 13.5% (comparable 9.2%) to R17.3 billion;
-Other income of 20.7% to R726 million, mainly as a result of
financial services growth;
-Finance income of 40.1% to R88.0 million
As planned, credit sales growth of 7.5% continued to grow at a
slower rate than cash sales growth of 14.9%. Cash sales now
constitute 81.9% of total Group sales.
Growth in both existing and new markets delivered pleasing
results:
-In South Africa, sales from traditional bricks stores grew by
12.2%, while online sales grew by 110.6%. Combined, sales were
R15.8 billion, up 12.6%. Group sales exceeded market growth. The
two largest divisions, mrp and mrpHome, which constitute 77% of
Group sales, both grew market share to January 2015, after which
RLC data was no longer available.
-Total online sales (RSA and International) were up by 107.3% to
R112.3 million.
-International sales (excluding RSA) increased by 24.8% and
accounted for 8.6% of Group retail sales. The Zambian franchise
operations were acquired in June 2014, and together with the other
southern African territories, which constitute 84% of corporate-
owned store sales outside South Africa, produced very good
results. Sales were up by 26.5%, accompanied by good operating
margins. Ghana and Nigeria’s performance declined in the second
half of the year after a good first half. Depreciating currencies
and inflation impacted these economies, particularly Ghana, which
fortunately has little impact on the Group at this stage.
The number of units sold increased by 5.5% to 228.9 million.
Retail selling price (RSP) inflation of 7.7% comprised like-for-
like input cost inflation of 4.3% and product mix inflation of
3.4%.
New weighted average trading space expanded by 6.1% as 76 stores
were opened (33 906 sqm) and 27 expanded (4 370sqm). Space
reductions included 5 store closures (1 293sqm) and 26 stores
being reduced in size (8 168sqm). Net weighted average trading
space increased by 5.1%. At year end there were 1 150 corporate-
owned and 15 franchise stores.
Divisional and segmental performance was as follows:
Mr Price Mr Price Miladys Apparel
Apparel Sport segment
Retail sales and
other income (R’m) 10 532 1 132 1 511 13 175
% of total retail sales and
other income (%) 59.0 6.3 8.5 73.8
Growth in retail sales and
other income (%) 17.6 16.2 1.9 15.4
Comparable sales growth (%) 12.8 4.5 0.9 10.9
RSP inflation (%) 8.2 6.9 2.3 6.6
Units sold (million) 149.0 12.1 9.1 170.2
Growth in units sold (%) 9.0 8.7 -1.5 8.4
New stores opened during year 35 11 7 53
Weighted average space growth (%) 8.3 11.2 -0.4 7.2
Mr Price Sheet Home Total
Home Street segment
Retail sales and
other income (R’m) 3 268 1 397 4 665 17 840
% of total retail sales and
other income (%) 18.4 7.8 26.2 100.0
Growth in retail sales and
other income (%) 10.3 5.2 8.7 13.6
Comparable sales growth (%) 6.6 0.9 4.8 9.2
RSP inflation (%) 13.7 4.7 10.8 7.7
Units sold (million) 39.9 18.8 58.7 228.9
Growth in units sold (%) -3.1 0.6 -1.9 5.5
New stores opened during year 8 15 23 76
Weighted average space growth (%) 0.7 2.2 1.1 5.1
Retail sales and other income in the table above excludes other
income reflected in central services.
The Apparel chains increased retail sales and other income (RSOI)
by 15.4% to R13.2 billion. Operating profit rose by 20.6% to R2.5
billion and the operating margin increased from 18.4% to 19.2% of
RSOI. mrp, which constitutes 59% of Group sales, had a very good
year and once again achieved market share gains. The division’s
growing online presence also had a positive impact on store
performance. Sales were up 17.9% (comparable 12.8%) to R10.1
billion and operating profit, impacted by a slightly lower GP% and
expenses growing at a slower rate than sales, was significantly
ahead of the prior year. mrpSport grew sales by 16.2% (comparable
4.5%) to R1.1 billion. Lower markdowns contributed to an improved
GP% and a significant increase in operating profit. Miladys had a
poor year with sales increasing by 0.9% (comparable 0.9%) to R1.4
billion. External factors affecting performance included a decline
in the sale of outsized merchandise, a trend consistent with the
rest of the market. Operating profits were down on the previous
year despite excellent cost control.
The Home chains increased retail sales and other income by 8.7% to
R4.7 billion. Operating profit rose by 19.4% to R705.2 million and
the operating margin increased from 13.8% to 15.1%. mrpHome, which
targets customers in the upper LSM 8-10 range, delivered results
that were well ahead of budget and the prior period. Results were
driven by sales growth of 10.2% (comparable 6.6%), an improved
gross profit margin and costs being maintained in line with
inflation. Sheet Street’s customers, who are more susceptible to
the current economic environment, curtailed their spending on
discretionary purchases. Sales grew by 4.9% (comparable 0.9%) to
R1.4 billion and operating profit was down slightly on the prior
year.
The financial services division, mrpMoney, delivered another
strong performance despite tightening credit limits and limiting
new account growth. Revenues increased by growing insurance
premium income by 20.5%, mobile (cellular) revenue by 34.3% and
debtors’ interest and fees by 14.8%. Bad debts were very well
controlled and contributed significantly to the division recording
excellent profit growth.
Costs and Expenses
Cost of sales as disclosed in the statutory income statement
includes that relating to the sale of merchandise, airtime and
mrpMobile. The merchandise gross profit margin (merchandise gross
profit / retail sales) decreased by 0.2% to 42.0% mainly as a
result of the weakening Rand. The gross profit margin has not
increased over time. In that way the Group is able to keep on
delivering value to its customers by keeping prices low. The GP%
on airtime sales is low, while mrpMobile’s gross margin is
impacted by customer acquisition costs being recognised upfront
and due to it being in the start-up phase. Margins will improve
with scale. The overall Group gross profit margin decreased from
42.0% to 41.6%.
Selling expenses increased by 7.4% and constituted 20.0% of retail
sales and other income compared with 21.2% in the prior year. A
significant improvement in the net bad debt expense, together with
the Employment Tax Incentive (ETI) have resulted in a lower than
expected growth in overall selling expenses. If the impact of these
two items is excluded, the increase is 10.5%, which is in line with
weighted average space growth plus inflation.
Administrative expenses increased by 11.3% and comprised 6.4% of
retail sales and other income, an improvement on last year’s 6.5%.
Higher computer license fees and running costs (which included the
new Oracle ERP system planned), staff costs relating to training
and recruitment and increased share-based payments costs were the
significant movements.
The effective taxation rate for the year was 27.8%, lower than the
prior year (28.2%) primarily due to the ETI being exempt from
taxation.
Operating profit
The basis of computing operating margin has been amended from
previously being calculated as operating profit / retail sales to
operating profit / retail sales and other income. Group operating
profit increased by 21.3% and the operating margin increased to
17.1% of retail sales and other income, compared with last year’s
16.0%.
Earnings and dividends per share
The number of shares in issue at year end increased by 4.7 million
due to the decreased number of treasury shares held. Treasury
shares sold (4 823 452 shares) as a result of share options
vesting exceeded treasury shares purchased during the year (161
817 shares at an average cost of R239.25 per share totaling R38.7
million).
Headline earnings per share increased by 20.2% to 919.7 cents.
Diluted headline earnings per share increased by 21.0%. The Group
is pleased to have performed in line with its long-term
performance, which is a 29-year CAGR in HEPS of 23.3%.
The annual dividend payout ratio has increased slightly to 63.1%,
resulting in a dividend of 580.0 cents per share, an increase of
20.3%, in line with HEPS growth. The final dividend to be paid in
June 2015 will be 368.5 cents per share, an increase of 17.4%,
which is lower than the increase in the interim dividend and
second half HEPS growths due to the closer alignment of interim
and annual dividend payout ratios. In the current year, the
interim payout ratio was increased from 55.1% to 57.0%. Dividend
withholding tax of 15.0% will be applicable to shareholders who
are not exempt.
Financial position
Additions to property, plant and equipment for the year amounted
to R311.8 million. Furniture, fittings, equipment and vehicles
constituted 83% (2014: 83%) and computer equipment 15% (2014:
13%). Disposals and impairments totaled R11.0 million and the
depreciation charge was R180.8 million (2014: R162.2 million).
Intangible asset additions amounted to R145.2 million and related
primarily to the e-commerce and ERP systems and goodwill arising
on the purchase of the Zambian franchise. The amortisation charge
for the year amounted to R27.2 million (2014: R29.1 million).
Gross inventories were up 23.9% due to the significant increase in
goods in transit at year end. This is a result of the Group’s
strategic decision to increase direct/FOB purchases. Certain stock
purchases were brought forward due to Chinese New Year and for
Easter which was the first weekend in the new financial year. As a
result, the Group stock turn slowed to 6.4 times (2014: 6.8
times). Excluding the impact of goods in transit, gross
inventories were up by 12.5% which is lower than sales growth of
13.5%.
Trade and other receivables increased by 12.0% to R1.9 billion.
Prepayments and other receivables increased over the prior period,
while gross trade receivables increased by 9.1% to R1.9 billion.
Net bad debt decreased from 7.6% to 6.2% of the debtors’ book
which was an excellent performance. External benchmarking
continues to reflect the Group’s book to be one of the best
performing in the industry. The continued improved ageing profile
of the Group’s debtors is encouraging, however, the provision for
impairment of 8.9% is reflective of the financial headwinds facing
South African consumers.
Cash balances ended the year at R2.8 billion. Cash sales remained
high at 81.9% of total sales. The Group seeks to strike a balance
between:
-Maintaining a strong balance sheet by having adequate cash
resources to fund the requirements of a growing business, without
the need to incur debt
-Hedging its obligations to participants in the various share
schemes. An ongoing repurchase programme is in place that spreads
the purchase of shares over an extended period and limits the
percentage of daily trade, ensuring there is no impact on the
share price. During the year treasury shares to the value of R38.7
million were purchased and the hedged ratio at year end was 56.7%
-Returning funds to shareholders in the form of dividends. The
current payout ratio policy is 63.1% of HEPS.
Equity attributable to shareholders has increased to R5.0 billion.
The treasury share transactions contained therein include:
The purchase of treasury share to partially
cover options granted (R38.7m)
The net credit on vesting of options R94.1m
Taxation relating to grants from the
Company to share trusts R27.5m
R82.9m
Long-term lease obligations mainly comprise the long-term portion
of straight line lease liabilities.
Current liabilities increased by 8.8%. The drivers of the increase
were:
-Trade and other payables of 6.8%, lower than the increase in
inventory as a result of the move to direct importing, which
required earlier supplier settlement;
-Reinsurance liabilities of 35.1%;
-Current portion of lease obligations of 17.7%; and
-The taxation liability of 15.4%.
Outlook
The external factors impacting the South African economy are
expected to endure for the forthcoming financial year. We are,
therefore, anticipating tough trading conditions. Our target
customers are primarily in the mid to upper LSM categories, who
are generally less impacted by the constraints mentioned above.
However, this could change if inflation and interest rates spike.
As a fashion value retailer selling predominantly for cash, the
Group is comparatively well positioned to withstand these
challenges, however, it is not immune. Every effort will be made
to keep prices affordable during these tight economic times, and
to remain the destination of choice amongst our target customers.
Although sales growth was lower in the second half of the year,
this is not wholly due to the market factors mentioned earlier.
The internal factors which affected performance have been
identified and addressed and will be seen as improvement
opportunities in the year ahead. We will focus intently on the
various aspects of our proven business model, anticipate
challenges and be responsive to opportunities.
The Group remains positive about its long term prospects:
South Africa - we will continue with our approach of opening
stores that meet our stringent requirements, expanding stores that
have proven performance and shedding unproductive space. Credit
will be cautiously approached, and all areas will be subject to
scrutiny for improved processes and efficiencies. Online and
mrpMobile, both in the start-up phase, incurred combined losses of
R39.4 million in the current period and are targeting improved
performances as they increase scale.
Africa – in our view, this is as an important region to be
invested in for the long term. Territories we operate in have had
varying degrees of success, however all are contributing
positively to Group earnings. Although growth is not expected be
explosive, and certain markets can be volatile, we are not over
invested in any one market. As a combined unit, good future growth
is expected.
International – The Group is actively seeking new markets to take
our proven concepts to. Following online testing and detailed
desktop and on-the-ground research, mrp will open its first test
store in Australia in the second half of the new financial year.
Once again, we will approach this sensibly on a test basis prior
to committing to substantial expansion. mrpHome is progressing
their international strategy while, in time, mrpSport will do
likewise.
In anticipation of this continued growth, capital expenditure of
R3.5 billion is expected over the next 5 years. This includes new
ERP and merchandise planning systems and a new distribution
centre.
This is the beginning of an exciting new chapter for the Group and
in particular the ‘mrp’ divisions, who account for 84% of Group
sales and contributed 96% of the increase in sales during the
year.
The 2016 financial trading period will incorporate a 53rd week.
The above forecast information has not been reviewed and reported
on by the Group’s external auditors.
SUMMARY AUDITED GROUP RESULTS AND FINAL CASH DIVIDEND
DECLARATION FOR THE 52 WEEKS ENDED 28 MARCH 2015
FINAL CASH DIVIDEND DECLARATION
Notice is hereby given that a final gross cash dividend of 368.5
cents per share has been declared, an increase of 17.4%. As the
dividend has been declared from income reserves, shareholders,
unless exempt or who qualify for a reduced withholding tax rate,
will receive a net dividend of 313.225 cents per share.
The issued share capital at the declaration date is 253 183 867
listed ordinary and 11 445 081 unlisted B ordinary shares. The
tax reference number is 9285/130/20/0.
The salient dates for the dividend are as follows:
Last date to trade 'cum' the dividend Thursday 11 June 2015
Date trading commences 'ex' the dividend Friday 12 June 2015
Record date Friday 19 June 2015
Payment date Monday 22 June 2015
Shareholders may not dematerialise or rematerialise their share
certificates between Friday, 12 June 2015 and Friday, 19 June
2015, both dates inclusive.
On behalf of the board
NG Payne – Chairman Durban
SI Bird - Chief Executive Officer 22 May 2015
DIRECTORS
SB Cohen* (Honorary Chairman), NG Payne* (Chairman), SI Bird
(Chief Executive Officer), MM Blair (Chief Financial Officer), N
Abrams*^, SA Ellis^, K Getz*, MR Johnston*, RM Motanyane*, D
Naidoo*, MJD Ruck*, WJ Swain*
* Non-executive director ^ Alternate director
Mr M Tembe retired by rotation at the Annual General Meeting on 3
September 2014 and did not offer himself for re-election. Mr LJ
Chiappini retired from the Board on 27 February 2015, as did his
alternate, Mrs TA Chiappini-Young.
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2015 2014
28 Mar 29 Mar %
R’m 52 weeks 52 weeks change
Revenue 18 099 15 892 13.9
Retail sales 17 285 15 227 13.5
Other income 726 602 20.7
Retail sales and other income 18 011 15 829 13.8
Costs and expenses 14 935 13 292 12.4
Cost of sales 10 186 8 907 14.4
Selling expenses 3 602 3 354 7.4
Administrative and other
operating expenses 1 147 1 031 11.3
Profit from operating
activities 3 076 2 537 21.3
Net finance income 87 63 38.5
Profit before taxation 3 163 2 600 21.6
Taxation 878 733 19.7
Profit after taxation 2 285 1 867 22.4
Loss attributable to non-
controlling interests 8 1
Profit attributable to equity
holders of parent 2 293 1 868 22.8
Other comprehensive income:
Currency translation adjustments (26) (1)
Defined benefit fund net
actuarial (losses)/gains (8) 13
Total comprehensive income 2 259 1 880 20.2
Earnings per share (cents)
- basic 917.3 757.1 21.2
- headline 919.7 765.1 20.2
- diluted basic 862.9 707.4 22.0
- diluted headline 865.1 715.1 21.0
Dividend payout ratio (%) 63.1 63.0
Dividends per share (cents) 580.0 482.0 20.3
SEGMENTAL REPORTING
For management purposes, the Group is organised into business
units based on their products and services, and has three
reportable segments, as follows:
- The Apparel segment retails clothing, sportswear, footwear,
sporting equipment and accessories;
- The Home segment retails homewares; and
- The Central Services segment provides services to the trading
segments, including information technology, internal audit, human
resources, group real estate and finance.
Management monitors the operating results of its business units
separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
evaluated based on operating profit or loss. Net finance income
and income taxes are managed on a group basis and are not
allocated to operating segments.
2015 2014 %
R'm 28 Mar 29 Mar change
Retail sales and other income
Apparel 13 175 11 413 15.4
Home 4 665 4 290 8.7
Central Services 171 126
Total 18 011 15 829 13.8
Profit from operating activities
Apparel 2 535 2 102 20.6
Home 705 591 19.4
Central Services (164) (156)
Total 3 076 2.537 21.3
Segment assets
Apparel 3 239 2 760 17.4
Home 995 846 17.6
Central Services 3 633 2 957
Total 7 867 6 563 19.9
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2015 2014
R’m 28 Mar 29 Mar
Assets
Non-current assets 1 364 1 137
Property, plant and equipment 838 718
Intangible assets 328 215
Long-term receivables and prepayments 6 7
Defined benefit fund asset 40 45
Deferred taxation assets 152 152
Current assets 6 503 5 426
Inventories 1 741 1 403
Trade and other receivables 1 874 1 673
Reinsurance assets 124 98
Cash and cash equivalents 2 764 2 252
Total assets 7 867 6 563
Equity and liabilities
Equity attributable to shareholders 5 021 3 922
Non-current liabilities 213 220
Lease obligations 170 186
Deferred taxation liabilities 4 6
Long-term liabilities 15 6
Post-retirement medical benefits 24 22
Current liabilities 2 633 2 421
Trade and other payables 2 116 1 982
Reinsurance liabilities 46 34
Current portion of lease obligations 63 51
Taxation 408 354
Total equity and liabilities 7 867 6 563
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2015 2014
28 Mar 29 Mar
R’m
Total equity attributable
to shareholders at beginning
of the year 3 922 3 309
Total comprehensive income for
the year 2 259 1 880
Treasury share transactions 83 (247)
Recognition of share-based payments 105 75
Dividends to shareholders (1 340) (1 094)
Non-controlling interest (8) (1)
Total equity attributable to
shareholders at end of the year 5 021 3 922
CONSOLIDATED STATEMENT OF CASH FLOWS
2015 2014
28 Mar 29 Mar
52 weeks 52 weeks
R’m
Cash flows from operating activities
Operating profit before working
capital changes 3 039 2 548
Working capital changes (422) 343
Net interest received 442 374
Taxation paid (795) (403)
Net cash inflows from operating
activities 2 264 2 862
Cash flows from investing activities
Net receipts in respect of
long-term receivables 1 1
Purchase of Zambian franchise (30)
Additions to and replacement of
intangible assets (121) (151)
Property, plant and equipment
- replacement (138) (124)
- additions (172) (129)
- proceeds on disposal 4 22
Net cash outflows from investing
activities (456) (381)
Cash flows from financing activities
Increase in long-term liabilities 9 6
Net sale/(purchase) of shares by staff
share trusts 322 (102)
Deficit on treasury share transactions (267) (187)
Dividends to shareholders (1 340) (1 094)
Net cash outflows from financing
activities (1 276) (1 377)
Change in cash and cash equivalents 532 1 104
Cash and cash equivalents at
beginning of the year 2 252 1 150
Exchange losses (20) (2)
Cash and cash equivalents at end
of the year 2 764 2 252
SUPPLEMENTARY INFORMATION
2015 2014
28 Mar 29 Mar
Weighted average number of
shares in issue (000) 249 990 246 726
Number of shares in issue (000) 252 449 247 763
Net asset value per share (cents) 1 989 1 583
Reconciliation of headline
earnings (R’m)
Attributable profit 2 293 1 868
Loss on disposal and impairment
of property, plant and equipment
and intangible assets 8 24
Taxation adjustment (2) (4)
Headline earnings 2 299 1 888
Notes:
1. These preliminary consolidated results, for which the
Directors take full responsibility and which is not itself
audited, have been correctly extracted from the audited annual
financial statements upon which Ernst & Young Inc. has issued an
unqualified opinion. A copy of the opinion and the Group annual
financial statements are available for inspection at the
Company’s registered office. The results have been prepared
under the supervision of Mr MM Blair, CA(SA), Chief Financial
Officer.
2. The accounting policies and estimates applied are in
compliance with IFRS including IAS 34 Interim Financial
Reporting, as well as the SAICA Financial Reporting Guides and
Financial Pronouncements as issued by the Financial Reporting
Standards Council and are consistent with those applied in the
2014 annual financial statements. All new and revised Standards
and Interpretations that became effective during the period were
adopted and did not lead to any material changes in accounting
policies.
3. The financial statements have been prepared in accordance
with the Companies Act of South Africa.
4. During the 2009 financial year, the Company was advised by
SARS that it intended holding the Company accountable as the
‘deemed importer’ in relation to the underpayment of import
duties in 2005 and 2006 by one of its previous suppliers to the
value of R43.6 million. The Company submitted a formal response
to SARS’ letter on 18 September 2009. SARS responded to the
Company’s denial of liability on 24 April 2015, more than 5
years later. The SARS response failed to furnish any substantive
reply to the detailed reasons for denial of responsibility
furnished in the Company’s 2009 letter. SARS now demands that
the Company, by 9 June 2015, settles the alleged liability,
which has now been calculated at R74.4 million. The Company has
once again sought legal advice which supports its view to impugn
the Commissioner’s decision. As a result, no adjustments have
been made to the annual financial statements, as the Directors
are of the opinion that it is not probable that any liability
will be incurred.
5. As part of the Group’s expansion into Africa, it acquired the
net assets of five previously franchised stores in Zambia on 2
June 2014. Details of the transaction are as follows (R’m):
Fair value of assets at the date of acquisition
Property, plant and equipment 2
Inventory 5
Goodwill arising on acquisition 24
Purchase price 31
Amount payable (1)
Cash outflow 30
Goodwill of R24 million comprises the fair value of the
intangible assets that do not qualify for separate recognition,
and represents the growth and synergies that are expected to
accrue from the acquisition. The goodwill is not deductible for
taxation purposes.
2 June 2015
SPONSOR
Rand Merchant Bank (a division of FirstRand Bank Limited)
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