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Unaudited Group results and interim cash dividend declaration for the 26 weeks ended 27 September 2014
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 27 SEPTEMBER 2014
PRESS RELEASE
MR PRICE GROUP LIMITED'S CASH-BASED FASHION-VALUE MODEL PRODUCES
STRONG RESULTS (26 weeks to 27 September 2014)
[Durban, 17 November 2014] Despite the headwinds facing the local
retail environment, Mr Price today announced diluted headline
earnings per share of 349.0c, up 23.0% and dividends per share
(DPS) of 211.5c, up 25.9%. In line with the intention to more
closely align the dividend payout ratios at each reporting date,
the interim dividend payout ratio has increased from 55.1% to
57.0%. No change is expected to the annual payout ratio of 63.0%.
The Group has achieved a 10-year compound annual growth rate in
interim headline earnings per share (HEPS) of 28%.0 and DPS of
32.0%.
Retail sales increased by 14.4% (comparable stores 10.6%) to R7.9
billion. Cash sales grew strongly, recording growth of 17.5%, and
constituted 80.9% of total sales. South African sales growth of
13.4% was well ahead of the market (STATS SA Type D retailers),
which grew by 7.1% for the five months to August. Retail selling
price inflation was 9.6% (price 5.6%, mix 4.0%) and units sold
increased by 4.8% to 102.2 million. The opening of 38 new and the
closing of 2 stores resulted in weighted average trading space
increasing by 5.3% and the Group operating 1 115 corporate-owned
and 14 franchise stores.
"We are pleased that we are achieving good sales growth in all
markets and new channels. This is in line with our strategy of
entrenching and growing our position in South Africa and building
the foundations necessary to enable our international goals," said
CEO Stuart Bird.
"Two years ago we launched our online offer under the branding
MRP.com and in August this year Mr Price Apparel opened a new
generation MRP store at the V&A Waterfront in Cape Town. This new
format is a big step forward in our strategy of integrating our
store and online channels to ensure that customers receive a
seamless experience," said Bird. "Importantly, this is not a 'one-
up' concept – we're offering the same merchandise at the same
prices as our other stores," he added. Group online sales in South
Africa (SA) grew by 195.3% to R44.7 million. The Group also
launched MRP Mobile, a 55% held subsidiary, offering cellular
products to customers. As a MVNO (mobile virtual network
operator), no investment in network infrastructure is required.
Sales to customers outside SA grew by 25.4% to R690.9 million and
now represents 8.8% of Group sales. Growth in Nigeria and Ghana
was 26.1% and, during the period, the Group acquired the Zambian
franchise operations. International online sales were up 142.3%,
albeit off a low base.
Other income rose by 23.0% to R345.0 million mainly due to
increases in debtors' interest and the sale of insurance products.
The merchandise gross profit margin increased from 41.7% to 41.8%
of retail sales. After accounting for airtime sales, which attract
a lower GP%, and MRP Mobile, which is impacted by recognising
customer acquisition costs upfront relative to the subscription
period, the Group GP% was unchanged at 41.4%. Selling and
administration expenses grew by 11.0% and comprised 28.2% of
retail sales and other income, an improvement on last year's
29.2%. These costs were impacted by inflation, space growth, and
the investment in people and systems in key areas such as fashion
trending, online and MRP Mobile.
Profit from operating activities increased by 22.6% and the
operating margin (calculated on a revised basis in both periods of
operating profit / retail sales and other income) improved from
14.1% to 15.1%.
The Apparel chains increased sales and other income by 16.4%
(comparable 12.5%) to R6.0 billion. Operating profit rose by 21.5%
to R1.0 billion and the operating margin increased from 16.8% to
17.5% of retail sales and other income. Mr Price Apparel, which
constitutes 58.7% of Group sales, had a very good first half and
once again achieved market share gains in its target market.
Double digit growth was achieved in all major merchandise
departments, and the division's growing online presence also had a
positive impact on store performance. Sales were up 19.7%
(comparable 15.1%) to R4.6 billion and operating profit was
significantly ahead of budget and the prior year. Mr Price Sport
grew sales by 15.3% (comparable 3.4%) to R497.3 million and an
improved markdown performance contributed to a significant
increase in operating profit. Miladys was impacted by the tight SA
credit environment, which was anticipated, and incorrect
merchandise calls in the casualwear department. Sales decreased by
0.8% (comparable 0.0%) to R659.3 million. Excellent cost control
was insufficient to offset the reduction in sales and gross profit
margin, with the result that operating profit was lower than last
year.
The Home chains increased sales and other income by 9.9%
(comparable 5.7%) to R2.2 billion. Operating profit rose by 19.5%
to R270.3 million and the operating margin increased from 11.6% to
12.6% of retail sales and other income. Despite homewares
purchases being more discretionary in nature, Mr Price Home, 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 11.8% (comparable 7.6%), an improved
gross profit margin and costs being maintained in line with
inflation. Sheet Street's sales grew by 5.8% (comparable 1.5%) to
R621.6 million which was affected by its customers, who are in the
mid LSM 5-8 range, being more impacted by the current economic
conditions. Elements of their product offer did not fully meet
their customers' tastes, with the result that operating profit was
below the prior year.
Gross trade receivables increased by 7.5% to R1.8 billion. Net bad
debt increased from 6.8% to 7.2% (September on September) as a
percentage of the debtors' book, but reflected an improvement from
the 7.6% achieved at March 2014. The provision for impairment,
currently 9.3% of book, will continue to be conservatively set
during a period where consumers' disposable income is under
pressure.
Despite increased dividends and higher capital expenditure, the
Group ended the period with cash resources of R2.1 billion and a
debt-free balance sheet.
Although consumer confidence increased slightly in the third
quarter of 2014, retail trading conditions are expected to remain
challenging in the medium-term. The Group has some dependency on
lower LSM's (Sheet Street) and credit (Miladys). In addition, the
sales growth of 15.2% (comparable 11.3%) in the second half of last
year has set a high base. Although October sales grew by 17.6%
(comparable 13.1%), this was aided by a shift in school holidays
from September in the prior year to October in the current year.
However, the resilience of the Group's fashion-value formula and
the many growth initiatives underway allow it to remain positive
about long term prospects. The Group will continue to enhance
systems and infrastructure, often incurring costs ahead of
benefits derived therefrom. Approximately 41 new stores are
planned to open in the second half of the year.
Mr Price Group Limited is high-growth, omni-channel, fashion value
retailer:
- Targeting younger customers in the mid to upper LSM categories
- Retailing predominantly own-branded merchandise
- 81% of sales are for cash
- 1 115 stores and online channels offering full product
assortments
- 28-year CAGR in HEPS 23% and DPS 25%(to March 2014)
- Market capitalisation of R52 billion, ranked 35th on JSE
- Included in MSCI Emerging Markets Index
- 54% of shares held by international investors
- Ranked 4th in Business Times Top 100 Companies, highest ranked
retailer and JSE Top 40 Index company
Contacts
Public relations Investor Relations
Tamra Veley Mark Blair, CFO
Corporate Image Mr Price Group Ltd
Tel +27 (0)21 426 1233 +27 (0)31 310 8000
FINANCIAL COMMENTARY
Highlights 2014 2013 % change
Revenue (R'm) 8 266 7 204 14.7
Retail sales (R'm) 7 883 6 892 14.4
Merchandise gross margin (%) 41.8 41.7
Group gross profit margin (%) 41.4 41.4
Profit from operating
activities (R'm) 1 242 1 013 22.6
EBITDA (R'm) 1 342 1 105 21.4
Profit attributable to
shareholders (R'm) 921 747 23.3
Group operating margin (%) 15.1 14.1
Headline earnings per share
(cents) 371.1 305.0 21.7
Diluted headline earnings
per share (cents) 349.0 283.6 23.0
Dividend per share (cents) 211.5 168.0 25.9
Dividend payout ratio (%) 57.0 55.1
Economic and retail environment
Factors such as the dramatic slowdown in unsecured credit
extension, waning disposable income growth and rising inflation
and interest rates have weighed heavily on South African retail
sales growth over the last two years. The impact of these factors
was compounded by the record-long strike in the platinum sector in
the first half of 2014. In such economic conditions, the Group's
cash based fashion-value model has proven resilient.
Financial performance
Revenue
Total Group revenue increased by 14.7% to R8.3 billion due to
increases in:
- retail sales of 14.4% (comparable 10.6%) to R7.9 billion;
- other income of 23.0% to R345.0 million (mainly as a result of
financial services growth of 22.4%); and
- finance income of 24.2% to R38.2 million.
The Group has achieved these results against a high base in the
prior year, despite:
- The challenging retail environment currently being experienced
by consumers;
- A planned curtailment of credit sales growth, which increased by
only 4.2% compared to cash sales which were up by 17.5%. Cash
sales now constitute 80.9% of total Group sales; and
- Incurring costs that will position the Group to realise its long
term growth goals.
Growth in both existing and new channels delivered encouraging
results:
- In South Africa, bricks and online retail sales grew by 13.4% to
R7.2 billion, ahead of the market
- Online sales were up by 185.2% to R53.2 million
- International sales increased by 25.4% and now account for 8.8%
of Group retail sales. Sales growth in the key African markets,
outside of South Africa was as follows (R'm):
2014 2013 % change
Nigeria 66.6 55.0 21.1
Ghana 27.9 20.0 39.7
Zambia 25.1 - NA
The Zambian franchise was acquired on 2 June 2014.
Divisional and segmental performance was as follows:
Mr Price Mr Price Miladys Apparel
Apparel Sport segment
Retail sales and
other income (R'm) 4 790 504 713 6 007
% retail sales and
other income (%) 58.7 6.2 8.7 73.6
Growth in retail sales and
other income (%) 19.4 15.3 0.1 16.4
Comparable sales growth (%) 15.1 3.4 0.0 12.5
RSP inflation (%) 10.3 7.8 2.7 8.3
Units sold (million) 65.9 5.2 4.3 75.4
Growth in units sold (%) 8.5 7.1 -2.7 7.7
New stores opened during period 17 6 2 25
Weighted average space growth (%) 8.1 10.8 -1.3 6.8
Mr Price Sheet Home Total
Home Street segment
Retail sales and
other income (R'm) 1 512 638 2 150 8 157
% retail sales and
other income (%) 18.6 7.8 26.4 100.0
Growth in retail sales and
other income (%) 11.5 6.1 9.9 14.7
Comparable sales growth (%) 7.6 1.5 5.7 10.6
RSP inflation (%) 16.9 5.5 13.3 9.6
Units sold (million) 18.4 8.5 26.8 102.2
Growth in units sold (%) -3.9 0.5 -2.6 4.8
New stores opened during period 2 11 13 38
Weighted average space growth (%) 2.3 2.2 2.3 5.3
The Apparel chains increased sales and other income by 16.4%
(comparable 12.5%) to R6.0 billion. Operating profit rose by 21.5%
to R1.0 billion and the operating margin increased from 16.8% to
17.5% of retail sales and other income. Mr Price Apparel, which
constitutes 58. % of Group sales, had a very good first half and
once again achieved market share gains in its target market.
Double digit growth was achieved in all major merchandise
departments, and the division's growing online presence also had a
positive impact on store performance. Sales were up 19.7%
(comparable 15.1%) to R4.6 billion and operating profit was
significantly ahead of budget and the prior year. Mr Price Sport
grew sales by 15.3% (comparable 3.4%) to R497.3 million and an
improved markdown performance contributed to a significant
increase in operating profit. Miladys was impacted by the tight SA
credit environment, which was anticipated, and incorrect
merchandise calls in the casualwear department. Sales decreased by
0.8% (comparable 0.0%) to R659.3 million. Excellent cost control
was insufficient to offset the reduction in sales and gross profit
margin, with the result that operating profit was lower than last
year.
The Home chains increased sales and other income by 9.9%
(comparable 5.7%) to R2.2 billion. Operating profit rose by 19.5%
to R270.3 million and the operating margin increased from 11.6% to
12.6% of retail sales and other income. Despite homewares
purchases being more discretionary in nature, Mr Price Home, 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 11.8% (comparable 7.6%), an improved
gross profit margin and costs being maintained in line with
inflation. Sheet Street's sales grew by 5.8% (comparable 1.5%) to
R621.6 million which was affected by its customers, who are in the
mid LSM 5-8 range, being more impacted by the current economic
conditions. Elements of their product offer did not fully meet
their customers' tastes, with the result that operating profit was
below the prior year.
Costs and Expenses
Cost of sales as disclosed in the statutory income statement
includes that relating to the sale of merchandise, airtime and MRP
Mobile. The merchandise gross profit margin (merchandise gross
profit / retail sales) increased slightly from 41.7% to 41.8%. The
GP% on airtime sales is low, while MRP Mobile's gross margin is
impacted by customer acquisition costs being recognised upfront
and due to the start-up phase. Margins will improve with scale.
The overall gross profit margin was maintained at 41.4%.
Selling expenses increased by 11.3% and constituted 21.7% of
retail sales and other income, compared with 22.4% in the prior
year. Significant factors driving this expense growth were:
- Employment costs up 6.4% (8.9% prior to employee tax
incentives);
- Rentals up 12.2% on weighted average space growth of 5.3%; and
- Improvement in performance of debtors' book (2.6% decrease in
bad debts less recoveries); and
- Ongoing focus on operating efficiencies.
Administrative expenses increased by 10.2% and comprised 6.6% of
retail sales and other income, an improvement on last year's 6.8%.
Significant factors driving this expense growth were:
- Salary cost increases of 15.7% - investment in trend, online and
100% of MRP Mobile teams, increase in incentives (short and long-
term); and
- Profit from foreign exchange transactions of R7.4 million (LY:
R2.9 million).
The effective taxation rate for the year was 28.3%, slightly lower
than the prior year's 28.4%.
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 22.6% and the operating margin was up from
14.1% to 15.1%, which can be explained as follows:
Operating margin – September 2013 14.1%
Other income 0.1%
Gross profit 0.0%
Selling expenses 0.7%
Administrative expenses 0.2%
Operating margin – September 2014 15.1%
The Apparel chains' operating profit rose by 21.5% to R1.0 billion
and the operating margin increased from 16.8% to 17.5% of retail
sales and other income. The Home chains' operating profit rose by
19.5% to R270.3 million and the operating margin increased from
11.6% to 12.6% of retail sales and other income.
Earnings and dividends per share
The number of shares in issue at period end increased by 3.5
million due to the decreased number of treasury shares held. The
movement in shares is as follows (000):
Shares in issue at September 2013 245 639
Second half F2014 2 134
Treasury shares sold due to options vesting 3 882
Treasury shares purchased (1 748)
First half F2015 1 322
Treasury shares sold due to options vesting 1 322
Treasury shares purchased -
Shares in issue at September 2014 249 095
Headline earnings per share increased by 21.7% to 371.1 cents. The
dilution impact has increased slightly from 21.3 cents last year
to 22.1 cents as a result of the increase in the weighted average
share price for the period (R184.79 versus R128.21) more than
offsetting the reduced number of shares and options outstanding.
Diluted headline earnings per share increased by 23.0% to 349.0
cents.
The interim dividend payout ratio has increased from 55.1% to
57.0%, resulting in a dividend of 211.5 cents per share,
increasing by 25.9%. The increase in the payout ratio is in line
with the previously communicated strategy to more closely align
the interim and annual payout ratios. The annual payout ratio is
expected to be maintained at 63%. Dividend withholding tax of
15.0% will be applicable to shareholders who are not exempt.
The 10-year compound annual growth rate at the interim stage is
28.0% for HEPS and 32.0% for DPS.
Financial position
Additions to property, plant and equipment for the period amounted
to R142.1 million, of which furniture, fittings, equipment and
vehicles constituted 81.6% and computer equipment 18.0%. Disposals
totaling R5.0 million related primarily to the scrapping of store
fixtures due to revamps, size changes or closures. The
depreciation charge for the period was R86.9 million.
Intangible asset additions amounted to R88.5 million and related
primarily to e-commerce and ERP systems, and goodwill of R27.8
million (R24.0 million paid and R3.8 million currency revaluation
adjustment) which arose on the purchase of the Zambian franchise.
The amortisation charge for the period amounted to R13.0 million.
Gross inventories increased by 23.4% over last September or 16.8%
from March 2014 and Group stock turn decreased from 6.7 to 6.4
times. With input inflation of 9.6% and space growth of 5.3%,
inventories would be expected to increase by approximately 14.9%.
The additional increase is a result of the below par sales
performance of Sheet Street, increased direct importing
(particularly in Mr Price Apparel) and the shift in school
holidays from September last year to October this year. Overall,
inventory ageing is slightly better than the prior year and the
divisions are well placed for the approaching festive season.
Trade and other receivables increased by 8.7% to R1.8 billion.
Gross trade receivables increased by 7.5% to R1.8 billion. Net bad
debt increased from 6.8% to 7.2% (September on September) as a
percentage of the debtors' book, however reflected an improvement
from the 7.6% at March 2014. External benchmarking has reflected
the Group's book to be one of the best performing in the industry.
The provision for impairment (currently at 9.3%) will continue to
be conservatively set, particularly during a period where consumer
disposable income is under pressure. Other receivables increased
by 52.7% to R68.4 million driven by increases in FEC assets,
receivables relating to MRP Mobile and customs VAT receivables.
Prepayments remained in line with the prior year.
Cash balances ended the period at R2.1 billion, which was impacted
by substantial trade creditor payments being made after the period
end cut-off date. Creditor and SARS payments in the subsequent
week amounted to R0.8 billion. The Group seeks to strike a balance
between:
- Maintaining a strong balance sheet by having adequate cash
resources to fund the working capital and capital expenditure
requirements to maintain and expand its operations, 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 to ensure that there is no impact on the
share price; and
- Returning funds to shareholders in the form of dividends.
Equity attributable to shareholders has increased to R4.1 billion.
The treasury share transactions contained therein include:
The net credit on vesting of options R20.0m
Taxation relating to grants from the
Company to share trusts R19.2m
Long-term lease obligations comprise the long-term portion of
straight line lease liabilities.
Current liabilities increased by 25.8% from September 2013 (5.2%
from March 2014). The drivers of the increase were:
- Provisional tax payment of R297 million paid subsequent to
period end (LY: paid prior to close);
- Reinsurance liabilities up 15.6%;
- Current portion of lease obligations up 29.9%; and
- Trade and other payables up by 11.2%.
Outlook
Although consumer confidence increased slightly in the third
quarter of 2014, retail trading conditions are expected to remain
challenging in the medium-term. The Group has some dependency on
lower LSM's (Sheet Street) and credit (Miladys). In addition, the
sales growth of 15.2% (comparable 11.3%) in the second half of last
year has set a high base. Although October sales grew by 17.6%
(comparable 13.1%), this was aided by a shift in school holidays
from September in the prior year to October in the current year.
However, the resilience of the Group's fashion-value formula and
the many growth initiatives underway allow it to remain positive
about long term prospects. The Group will continue to enhance
systems and infrastructure, often incurring costs ahead of
benefits derived therefrom. Approximately 41 new stores are
planned to open in the second half of the year.
UNAUDITED GROUP RESULTS AND INTERIM CASH DIVIDEND DECLARATION
FOR THE 26 WEEKS ENDED 27 SEPTEMBER 2014
INTERIM CASH DIVIDEND DECLARATION
As previously communicated, the Company plans to more closely
align the interim and annual dividend payout ratios over time. As
a consequence, the increase in dividend per share at the interim
stage is higher than the increase in headline earnings per share.
No change to the annual payout ratio of 63.0% is expected.
Notice is hereby given that an interim gross cash dividend of
211.5 cents per share has been declared, an increase of 25.9%.
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 179.775 cents per share.
The issued share capital at the declaration date is 251 183 867
listed ordinary and 13 445 081 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 Friday 05 Dec 2014
Date trading commences 'ex' the dividend Monday 08 Dec 2014
Record date Friday 12 Dec 2014
Payment date Monday 15 Dec 2014
Shareholders may not dematerialise or rematerialise their share
certificates between Monday 08 December 2014 and Friday 12
December 2014, both dates inclusive.
On behalf of the board
NG Payne – Chairman Durban
SI Bird - Chief Executive Officer 17 November 2014
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*, 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.
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2014 2013 2014
27 Sep 28 Sep % 29 Mar
R'm 26 weeks 26 weeks change 52 weeks
Restated
Revenue 8 266 7 204 14.7 15 892
Retail sales 7 883 6 892 14.4 15 227
Other income 345 281 23.0 602
Retail sales and other income 8 228 7 173 14.7 15 829
Costs and expenses 6 986 6 160 13.4 13 292
Cost of sales 4 663 4 068 14.6 8 907
Selling expenses 1 784 1 603 11.3 3 354
Administrative and other
operating expenses 539 489 10.2 1 031
Profit from operating
activities 1 242 1 013 22.6 2 537
Net finance income 38 31 24.2 63
Profit before taxation 1 280 1 044 22.7 2 600
Taxation 362 297 22.1 733
Profit after taxation 918 747 22.9 1 867
Loss attributable to non-
controlling interests 3 - 1
Profit attributable to equity
holders of parent 921 747 23.3 1 868
Other comprehensive income:
Currency translation adjustments 5 2 (1)
Defined benefit fund net
actuarial gains 1 - 13
Total comprehensive income 927 749 23.8 1 880
Earnings per share (cents)
- basic 370.5 303.8 21.9 757.1
- headline 371.1 305.0 21.7 765.1
- diluted basic 348.4 282.5 23.3 707.4
- diluted headline 349.0 283.6 23.0 715.1
Dividend payout ratio (%) 57.0 55.1 63.0
Dividends per share (cents) 211.5 168.0 25.9 482.0
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.
2014 2013 % 2014
R'm 27 Sep 28 Sep change 29 Mar
Restated
Retail sales and other income
Apparel 6 007 5 161 16.4 11 413
Home 2 150 1 957 9.9 4 290
Central Services 71 55 126
Total 8 228 7 173 14.7 15 829
Profit from operating activities
Apparel 1 052 866 21.5 2 102
Home 270 226 19.5 591
Central Services (80) (79) (156)
Total 1 242 1 013 22.6 2 537
Segment assets
Apparel 3 076 2 664 15.5 2 760
Home 919 784 17.3 846
Central Services 2 897 2 117 2 957
Total 6 892 5 565 23.8 6 563
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2014 2013 2014
R'm 27 Sep 28 Sep 29 Mar
Restated
Assets
Non-current assets 1 245 1 025 1 137
Property, plant and equipment 770 681 718
Intangible assets 290 195 215
Long-term receivables and prepayments 7 7 7
Defined benefit fund asset 45 20 45
Deferred taxation assets 133 122 152
Current assets 5 647 4 540 5 426
Inventories 1 654 1 324 1 403
Trade and other receivables 1 771 1 630 1 673
Reinsurance assets 163 124 98
Cash and cash equivalents 2 059 1 462 2 252
Total assets 6 892 5 565 6 563
Equity and liabilities
Equity attributable to shareholders 4 126 3 335 3 922
Non-current liabilities 219 205 220
Lease obligations 180 184 186
Deferred taxation liabilities 9 4 6
Long-term liabilities 7 - 6
Post-retirement medical benefits 23 17 22
Current liabilities 2 547 2 025 2 421
Trade and other payables 2 164 1 945 1 982
Reinsurance liabilities 37 32 34
Current portion of lease obligations 60 43 51
Taxation 286 5 354
Total equity and liabilities 6 892 5 565 6 563
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2014 2013 2014
27 Sep 28 Sep 29 Mar
R'm Restated
Total equity attributable
to shareholders at beginning
of the period 3 922 3 309 3 309
Total comprehensive income for
the period 927 749 1 880
Treasury share transactions 39 (88) (247)
Recognition of share-based payments 39 31 75
Dividends to shareholders (798) (666) (1 094)
Non-controlling interest (3) - (1)
Total equity attributable to
shareholders at end of the period 4 126 3 335 3 922
CONSOLIDATED STATEMENT OF CASH FLOWS
2014 2013 2014
27 Sep 28 Sep 29 Mar
26 weeks 26 weeks 52 weeks
Restated
R'm
Cash flows from operating activities
Operating profit before working
capital changes 1 144 951 2 548
Working capital changes (168) 459 343
Net interest received 210 175 374
Taxation paid (372) (298) (403)
Net cash inflows from operating
activities 814 1 287 2 862
Cash flows from investing activities
Net receipts in respect of
long-term receivables - 2 1
Purchase of Zambian franchise (30)
Additions to and replacement of
intangible assets (64) (105) (151)
Property, plant and equipment
- replacement (63) (59) (124)
- additions (77) (65) (129)
- proceeds on disposal 1 23 22
Net cash outflows from investing
activities (233) (204) (381)
Cash flows from financing activities
Increase in long-term liabilities 1 - 6
Net sale/(purchase) of shares by staff
share trusts 88 (70) (102)
Deficit on treasury share transactions (66) (36) (187)
Dividends to shareholders (798) (666) (1 094)
Net cash outflows from financing
activities (775) (772) (1 377)
Change in cash and cash equivalents (194) 311 1 104
Cash and cash equivalents at
beginning of the period 2 252 1 150 1 150
Exchange gains/(losses) 1 1 (2)
Cash and cash equivalents at end
of the period 2 059 1 462 2 252
SUPPLEMENTARY INFORMATION
2014 2013 2014
27 Sep 28 Sep 29 Mar
Restated
Weighted average number of
shares in issue (000) 248 560 245 845 246 726
Number of shares in issue (000) 249 095 245 639 247 763
Net asset value per share (cents) 1 656 1 358 1 583
Reconciliation of headline
earnings (R'm)
Attributable profit 921 747 1 868
Loss on disposal and impairment
of property, plant and equipment
and intangible assets 2 4 24
Taxation adjustment (1) (1) (4)
Headline earnings 922 750 1 888
Notes:
1. The results at September 2014 and 2013, for which the
Directors take full responsibility, have not been audited. The
abridged consolidated results at March 2014, which are not
itself audited, have been correctly extracted from the audited
annual financial statements upon which Ernst & Young Inc. issued
an unqualified opinion. The results were 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 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. The September 2013 results have been restated in
accordance with the change in accounting policy and
reclassification detailed in the 2014 annual financial
statements. The Group adopted IFRS 10 which impacted the
accounting for its 100% interest in the equity shares of the
financial services cell captives. As a result of no longer
meeting the requirements for consolidation, IFRS 4 was applied
to account for the cell captives as reinsurance contracts.
Airtime sales and related costs were reclassified into other
income and cost of sales, whereas previously the net income was
included in 'other income'. This was a disclosure change only
and had no impact on profits.
3. The financial statements have been prepared in accordance
with the Companies Act of South Africa.
4. There have been no adverse changes to the contingent
liabilities and guarantees provided by the Company as disclosed
in the 2014 annual financial statements.
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.
17 November 2014
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
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