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Unaudited group results and interim cash dividend declaration for the 26 weeks ended 29 September 2012
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)
UNAUDITED GROUP RESULTS AND INTERIM CASH DIVIDEND DECLARATION FOR
THE 26 WEEKS ENDED 29 SEPTEMBER 2012
OPERATING PROFIT UP 21%
HEADLINE EARNINGS PER SHARE UP 35%
INTERIM DIVIDEND PER SHARE UP 42%
INCLUSION IN JSE TOP 40 INDEX
RESULTS
Despite unstable economic conditions both locally and internationally,
the Groups resilient fashion-value retail model has resulted in
solid improvements in sales, operating profits, earnings and dividends
per share. Retail sales for the 26 weeks ended 29 September 2012
increased by 13.9%. Growth in the retail sector for the five months
to August 2012, as reported by Statistics South Africa, was 9.3%.
Group sales in like-for-like locations (comparable sales) were up
by 8.5%. Retail selling price inflation of 4.3% was recorded and
92.2 million units were sold - an increase of 9.0%. The opening of
34 new and the closing of 7 stores resulted in weighted average
trading space increasing by 3.7%. The Group ended the period with
989 stores and employed 20 464 associates.
Interest on trade receivables, impacted by an increased debtors
book but lower interest rates, rose by 42.9% and premium income
on the sale of financial services products was up by 43.3%.
Combined, this resulted in other income increasing by 40.8%.
Total costs and expenses increased by 13.5%, a rate lower than
sales growth. Cost of sales rose by 14.0% and the gross profit
margin remained in line with the prior year at 41.3% of retail
sales. Selling expenses grew by 12.2% as a result of inflation,
space growth and higher bad debts, and comprised 23.3% of retail
sales, an improvement on last years 23.7%. Administrative
expenses increased by 14.5% and comprised 7.3% of retail sales,
consistent with the prior year. Costs associated with the expansion
of corporate-owned stores in Nigeria and Ghana, which are trading
ahead of feasibility, as well as the successful launch of an
online sales platform, www.mrp.co.za, impacted both selling and
administrative expenses.
Profit from operating activities increased by 21.2% and the
operating margin improved from 12.9% to 13.7% of retail sales.
Net finance income was up by 34.3% as a result of higher average
cash balances, while the decrease in the effective taxation rate
was largely due to the fact that there was no STC levied on the
2012 final dividend which was paid in the current period.
Headline earnings per share increased by 35.2% to 253.2 cents
and now reflects a 10 year CAGR of 26.8%. Sustained strong
performance resulted in the Company being included in the MSCI
Emerging Market Index, the JSE Top 40 Index and being a finalist
in the World Retail Awards 2012 - Emerging Markets category.
TRADING
The Apparel chains increased sales and other income by 13.8% to
R4.4 billion, with comparable sales up by 7.5% and retail selling
price inflation of 4.1%. Operating profit grew by 16.2% to R727.9
million and the operating margin increased from 16.5% to 17.0% of
retail sales. Mr Price Apparel recorded sales growth of 11.2%
(comparable 4.7%) to R3.3 billion (54.4% of Group sales) and
recorded the highest weighted average space growth in the Group
at 7.3%. Comparable sales, including expanded stores in like-
for-like locations, were up by 7.2%. The divisions performance
was affected by higher markdowns in order to clear excess stock
from the previous summer, the impact of the late winter season
and delays in deliveries in spring. However, despite this, and
the expansion related costs detailed earlier, operating profit
increased over the prior year. Mr Price Sport increased sales
by 27.0% (comparable 15.5%) to R372.8 million and exceeded
prior year and budgeted profitability levels. Miladys recorded
sales growth of 17.5% to R604.8 million, with comparable sales
growth of 18.5%. Lower markdowns and continued sound cost control
resulted in a significant increase in operating profit.
The Home chains increased sales and other income by 16.3% to
R1.8 billion, with comparable sales up by 10.9% and retail
selling price inflation of 4.6%. Operating profit rose by
36.5% to R178.1 million and the operating margin increased
from 8.8% to 10.3% of retail sales. Mr Price Home increased
sales by 16.6% (comparable 11.5%) to R1.2 billion. Sheet Street
opened a net 11 new stores and increased sales by 15.4%
(comparable 9.7%) to R540.9 million. Expenses in both chains
were tightly controlled and operating profits were well ahead
of prior year and budgeted levels.
FINANCIAL POSITION
The Groups business model of selling predominantly for cash
(79.1% of total sales) has enabled it to maintain its healthy
balance sheet. Despite increased dividends, higher capital
expenditure and purchasing treasury shares to the value of
R59.0 million (at an average price of R121.18 per share), the
Group ended the period with cash resources of R1.0 billion.
Cash generated by operating activities increased by 80.6%.
Inventories at a gross level increased by 7.8% (against the
sales increase of 13.9%) and stock turn decreased from 6.9
times to 6.7 times.
Gross trade receivables increased by 41.6% from R954.0 million
to R1.4 billion with a significant portion of the growth taking
place in the second half of the 2012 financial year. The net bad
debt to book ratio has increased from 4.1% to 6.1%, largely as a
result of the festive season campaign conducted in October to
December 2011 not performing according to expectations. Pleasingly
however, the remainder of the accounts, which represent
approximately 90% of the total debtors book value, have
performed very well.
PROSPECTS
Although both business and consumer confidence increased slightly
in the third quarter of 2012, the Group expects retail trading
conditions to remain challenging in the short term. Growth in
credit sales (which constitute approximately 20% of total sales)
in the second half of the year is expected to be lower due to the
high base set in the prior year, particularly in the third quarter,
and a generally tighter approach to credit.
The current economic situation is uncertain, however the Group has
successfully dealt with volatility in the past and the many growth
initiatives underway allow it to remain positive about long-term
performance and prospects. History has shown that during tough
economic times the Group gains shoppers who are attracted by the
fashion-value merchandise offer, and that these customers are
retained when trading conditions improve.
The Groups cash generative business model and strong balance
sheet will be important in funding investments in information
systems and a new distribution centre over the next few years,
which are necessary to build a strong platform for future growth,
both locally and internationally.
Approximately 40 new stores will be opened in the second half of
the year.
INTERIM CASH DIVIDEND DECLARATION
The interim dividend cover has been reduced from 2.0 to 1.9 times,
in order to be more closely aligned with the annual cover, which
was 1.6 times at the previous year end.
Notice is hereby given that an interim cash dividend of 133.0
cents per share has been declared, an increase of 42.1%. As the
dividend has been declared from income reserves and no STC credits
are available for utilisation, shareholders, unless exempt or who
qualify for a reduced withholding tax rate, will receive a net
dividend of 113.05 cents per share, an increase of 20.8%.
The issued share capital at the declaration date is 250 750 410
listed ordinary and 13 878 538 unlisted B ordinary shares. The tax
reference number is 9285/130/20/0.
The salient dates for the dividend will be as follows:
Last date to trade cum the dividend Friday 7 December 2012
Date trading commences ex the dividend Monday 10 December 2012
Record date Friday 14 December 2012
Payment date Tuesday 18 December 2012
Shareholders may not dematerialise or rematerialise their share
certificates between Monday 10 December 2012 and Friday
14 December 2012, both dates inclusive.
On behalf of the board
SI Bird - Chief executive officer Durban
MM Blair - Chief financial officer 14 November 2012
DIRECTORS
LJ Chiappini* (Honorary chairman), SB Cohen* (Honorary chairman),
NG Payne* (Chairman), SI Bird (Chief executive officer), MM Blair
(Chief financial officer), N Abrams*^, TA Chiappini-Young*^,
SA Ellis^, K Getz*, MR Johnston*, RM Motanyane*, D Naidoo*,
Prof. LJ Ring*^ (USA), MJD Ruck*, WJ Swain*, M Tembe*
* Non-executive director ^ Alternate director
On 30 August 2012, Ms SEN Sebotsa resigned from the Board.
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
SPONSOR
Rand Merchant Bank (a division of FirstRand Bank Limited)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2012 2011 2012
29 September 1 October % 31 March
Rm 26 weeks 26 weeks change 52 weeks
Revenue 6 226 5 444 14.4 12 122
Retail sales 6 015 5 283 13.9 11 767
Other income 186 132 40.8 296
Retail sales and other income 6 201 5 415 14.5 12 063
Costs and expenses 5 376 4 735 13.5 10 321
Cost of sales 3 532 3 099 14.0 6 843
Selling expenses 1 404 1 252 12.2 2 646
Administrative and other
operating expenses 440 384 14.5 832
Profit from operating
activities 825 680 21.2 1 742
Net finance income 22 16 34.3 44
Profit before taxation 847 696 21.7 1 786
Taxation 242 243 (0.2) 569
Profit attributable to
shareholders 605 453 33.5 1 217
Other comprehensive income:
Currency translation adjustments - 1 - (3)
Defined benefit fund net
actuarial gain - - - (5)
Total comprehensive income 605 454 33.1 1 209
Earnings per share (cents)
- basic 247.8 186.6 32.8 500.9
- headline 253.2 187.3 35.2 503.0
- diluted basic 227.5 172.5 31.9 462.5
- diluted headline 232.5 173.2 34.3 464.5
Dividend cover (times) 1.9 2.0 1.6
Dividends per share (cents) 133.0 93.6 42.1 314.0
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.
2012 2011 % 2012
R'm 29 September 1 October change 31 March
Retail sales and other income
Apparel 4 435 3 897 13.8 8 673
Home 1 760 1 513 16.3 3 379
Central Services 6 5 11
Total 6 201 5 415 14.5 12 063
Profit from operating activities
Apparel 728 627 16.2 1 515
Home 178 130 36.5 374
Central Services (81) (77) (147)
Total 825 680 21.2 1 742
Segment assets
Apparel 2 208 1 821 21.2 2 102
Home 664 644 3.0 657
Central Services 1 413 1 191 1 536
Total 4 285 3 656 17.2 4 295
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2012 2011 2012
Rm 29 September 1 October 31 March
Assets
Non-current assets 796 645 743
Property, plant and equipment 584 486 539
Intangible assets 108 92 103
Long-term receivables and prepayments 9 - 10
Defined benefit fund asset 15 20 15
Deferred taxation assets 80 47 76
Current assets 3 489 3 011 3 552
Inventories 1 117 1 055 1 168
Trade and other receivables 1 342 1 056 1 183
Cash and cash equivalents 1 030 900 1 201
Total assets 4 285 3 656 4 295
Equity and liabilities
Equity attributable to shareholders 2 800 2 222 2 780
Non-current liabilities 199 185 194
Lease obligations 183 171 179
Deferred taxation liabilities 1 1 1
Post-retirement medical benefits 15 13 14
Current liabilities 1 286 1 249 1 321
Trade and other payables 1 240 1 204 1 235
Current portion of lease obligations 36 39 35
Taxation 10 6 51
Total equity and liabilities 4 285 3 656 4 295
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2012 2011 2012
Rm 29 September 1 October 31 March
Total equity attributable
to shareholders at beginning
of the period 2 780 2 394 2 394
Total comprehensive income for
the period 605 454 1 209
Treasury share transactions (56) (211) (201)
Recognition of share-based payments 23 21 48
Dividends to shareholders (552) (436) (670)
Total equity attributable to
shareholders at end of the period 2 800 2 222 2 780
CONSOLIDATED STATEMENT OF CASH FLOWS
2012 2011 2012
29 September 1 October 31 March
Rm 26 weeks 26 weeks 52 weeks
Cash flows from operating activities
Operating profit before working
capital changes 848 723 1 854
Working capital changes (109) (264) (518)
Net interest received 146 102 239
Taxation paid (274) (223) (517)
Net cash inflows from operating
activities 611 338 1 058
Cash flows from investing activities
Net receipts in respect of
long-term receivables 1 - (10)
Additions to and replacement of
intangible assets (30) (25) (49)
Property, plant and equipment
- replacement (83) (28) (126)
- additions (49) (85) (126)
- proceeds on disposal - 1 1
Net cash outflows from investing
activities (161) (137) (310)
Cash flows from financing activities
Decrease in lease obligations - (6) (10)
Net purchase of shares by staff
share trusts (46) (211) (153)
Deficit on treasury share transactions (23) (18) (80)
Dividends to shareholders (552) (436) (670)
Net cash outflows from financing
activities (621) (671) (913)
Change in cash and cash equivalents (171) (470) (165)
Cash and cash equivalents at
beginning of the period 1 201 1 369 1 369
Exchange gains/(losses) - 1 (3)
Cash and cash equivalents at end
of the period 1 030 900 1 201
SUPPLEMENTARY INFORMATION
2012 2011 2012
29 September 1 October 31 March
Weighted average number of
shares in issue (000) 244 059 242 839 242 996
Number of shares in issue (000) 243 746 241 603 243 922
Net asset value per share (cents) 1 149 920 1 140
Reconciliation of headline
earnings (Rm)
Attributable profit 605 453 1 217
Loss on disposal and impairment
of property, plant and equipment
and intangible assets 14 2 7
Taxation adjustment (1) (1) (2)
Headline earnings 618 454 1 222
Capital expenditure (Rm)
- expended during the period 162 138 301
- authorised or committed at
period end 202 216 311
Number of stores 989 944 962
Notes:
1. The results at 29 September 2012 are unaudited. The results at
31 March 2012 were audited by Ernst & Young Inc. 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 and are
consistent with those applied in the 2012 annual financial
statements. All new and revised Standards and Interpretations
that became effective during the period were adopted and did
not lead to any significant changes in accounting policies.
3. There have been no adverse changes to the contingent
liabilities and guarantees provided by the Company as disclosed
in the 2012 annual financial statements.
Date: 14/11/2012 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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