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MR PRICE GROUP LIMITED - Unaudited Group results and interim cash dividend declaration for the 26 weeks ended 27 September 2014

Release Date: 17/11/2014 13:55
Code(s): MPC     PDF:  
Wrap Text
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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