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Unaudited group results and interim cash dividend declaration for the 26 weeks ended 26 September 2015
MR PRICE GROUP LIMITED
Registration number 1933/004418/06
Incorporated in the Republic of South Africa
ISIN: ZAE 000200457
JSE share code: MRP
(“Mr Price” or “the Company” or “the Group”)
UNAUDITED GROUP RESULTS AND INTERIM CASH DIVIDEND DECLARATION FOR
THE 26 WEEKS ENDED 26 SEPTEMBER 2015
PRESS RELEASE
MR PRICE GROUP LIMITED REPORTS CONTINUED PROFIT GAINS (26 weeks
ended 26 September 2015)
[Durban, 18 November 2015] Mr Price today announced an increase in
diluted headline earnings per share of 16.6% to 406.8c per share
and interim dividend of 17.3% to 248.0 cents. The Company has
achieved 10-year compound annual growth rates in interim HEPS of
23.5% and DPS of 26.1%.
Total revenue grew by 9.2% to R9.0 billion with retail sales
increasing by 8.6% (comparable stores 4.0%) to R8.6 billion. Cash
sales grew by 9.0%, ahead of credit sales of 6.7%, and constitute
81.4% of total sales. Retail selling price inflation was 7.1% and
unit sales were up by 1.4% to 103.7 million. Weighted average
trading space increased by 3.9%.
Sales growth continued to exceed the market, as reported by STATS
SA, but was lower than in the same period in the previous year.
“The economy is not in good shape and consumer confidence is
understandably low, but our resilient fashion value model is built
to withstand these conditions,” said CEO Stuart Bird. “We were
trading off an exceptional performance in the corresponding period
last year, especially in MRP apparel which represents 60% of our
business. Last year, MRP apparel grew sales in the same period by
20% and comparable sales by 15%. In so doing it created an
extremely high base to beat in a softer trading environment. The
timing of the Easter school holidays and the late onset of Winter
also did not aid the first half trading period. These factors
largely resulted in the comparatively lower sales and unit
growths.”
Sales in markets outside RSA grew by 9.8% to R756.6 million.
Trading in Nigeria was initially strong, but slowed appreciably in
the last two months due to recently imposed restrictions on
imported merchandise. Although these are expected to be temporary,
the Company’s interactions with regulators are focused on urgently
re-enabling supply.
Other income, derived mainly from the financial services business,
MRP Money, increased by 23.1% to R425 million. Insurance premium
income rose by 16.1%, mobile (cellular) revenue by 55.9% and
debtors’ interest and fees by 10.4%. The improvement in the net
bad debt to book ratio to 5.2% significantly contributed to the
division’s strong performance.
The Group gross profit margin of 40.1% was 1.3% lower than last
year. The merchandise margin was impacted by exchange rates and,
to a lesser extent, higher markdowns, and declined by 1.1% to
40.7% of retail sales. The cellular gross margin is initially low
due to the upfront recognition of customer acquisition costs.
Selling and administration expenses, which benefitted from a mark
to market gain on open foreign exchange contracts, were generally
well controlled and grew by 0.9%. Profit from operating activities
increased by 16.3% and the operating margin improved from 15.1% to
16.1% of retail sales and other income (RSOI).
The Apparel chains increased RSOI by 10.1% to R6.6 billion.
Operating profit rose by 13.4% to R1.2 billion and the operating
margin increased from 17.5% to 18.0%. Sales in MRP apparel grew by
10.7% (comparable 5.1%) to R5.1 billion. Operating profit,
impacted by a lower GP% and expenses growing at a slower rate than
sales, was comfortably ahead of the prior year. MRP Sport grew
sales by 12.6% (comparable 3.6%) to R559.9 million. An improved
markdown performance and cost curtailment resulted in a meaningful
increase in operating profit. Miladys, a higher margin credit
business, had a disappointing performance, with sales decreasing
by 0.8% (comparable -1.7%) to R654.3 million. Operating profit was
down on the previous year despite continued tight cost control.
The Home chains increased RSOI by 6.6% to R2.3 billion. Operating
profit rose by 23.5% to R333.8 million and the operating margin
increased from 12.6% to 14.6%. Sales in MRP Home were up by 6.3%
(comparable 3.4%) to R1.6 billion. An improved gross profit % and
an increase in costs at well below the inflation rate enabled a
significant gain in operating profit. Sheet Street grew sales by
5.2% (comparable 3.1%) to R653.8 million and operating profit was
also well up on the prior year.
“We are satisfied with these results given the trading
environment. Credit must go to our associates, who thrive in our
culture of performance. It is a testament to them that five of our
six trading divisions have produced double digit profit growth and
the Group has increased operating profit in 29 consecutive
reporting periods,” said Bird. “A special word of gratitude must
go to the MRP apparel team and the support divisions, who have
worked tirelessly on our international expansion programme. It was
a proud moment for us all when the Group’s first two stores were
opened in Melbourne, Australia in October and we will assess their
performance in the new year prior to endorsing our roll-out
strategy,” Bird added.
“However exciting international expansion is, we are focusing
acutely on our established markets. The consumer environment could
deteriorate further and we will still be up against a very
challenging base in the second half of the year, particularly in
Q3,” said Bird.
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
- 1 166 stores and online channels offering full product
assortments
- Market capitalisation of R48.9bn, ranked 37th on JSE
- Included in MSCI Emerging Markets Index
- Included in JSE Top 40 and Socially Responsible Investment Index
- 3rd in Financial Mail Top Companies 2015
- 17th in Business Times Top 100 Companies, highest ranked
retailer
Contacts
Investor Relations
Helen Grosvenor, Company Secretary
HGrosvenor@mrpg.com
Mr Price Group Ltd
Tel +27 (0)31 310 8000
UNAUDITED GROUP RESULTS AND INTERIM CASH DIVIDEND DECLARATION
FOR THE 26 WEEKS ENDED 26 SEPTEMBER 2015
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
248.0 cents per share has been declared, an increase of 17.3%.
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 210.8 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 Friday 04 Dec 2015
Date trading commences 'ex' the dividend Monday 07 Dec 2015
Record date Friday 11 Dec 2015
Payment date Monday 14 Dec 2015
Shareholders may not dematerialise or rematerialise their share
certificates between Monday 07 December 2015 and Friday 11
December 2015, both dates inclusive.
The dividend was approved on behalf of the Board on 13 November
2015 in Durban by:
NG Payne – Chairman
SI Bird - Chief Executive Officer
DIRECTORS
SB Cohen* (Honorary Chairman), NG Payne* (Chairman), SI Bird
(CEO), MM Blair (CFO), N Abrams*^, SA Ellis^, K Getz*, MR
Johnston*, RM Motanyane*, D Naidoo*, MJD Ruck*, WJ Swain*
* Non-executive director ^ Alternate director
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
SPONSOR
Rand Merchant Bank (a division of FirstRand Bank Limited)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2015 2014 2015
26 Sep 27 Sep % 28 Mar
R’m 26 weeks 26 weeks change 52 weeks
Restated
Revenue 9 030 8 266 9.2 18 099
Retail sales 8 558 7 883 8.6 17 285
Other income 425 345 23.1 726
Retail sales and other income 8 983 8 228 9.2 18 011
Costs and expenses 7 538 6 986 7.9 14 935
Cost of sales 5 194 4 663 11.4 10 186
Selling expenses 1 815 1 761 3.1 3 602
Administrative and other
operating expenses 529 562 (5.9) 1 147
Profit from operating
activities 1 445 1 242 16.3 3 076
Net finance income 47 38 22.8 87
Profit before taxation 1 492 1 280 16.6 3 163
Taxation 422 362 16.6 878
Profit after taxation 1 070 918 16.5 2 285
Loss attributable to non-
controlling interests 6 3 8
Profit attributable to equity
holders of parent 1 076 921 16.8 2 293
Other comprehensive income:
Currency translation adjustments 7 5 (26)
Defined benefit fund net
actuarial (losses)/gains (1) 1 (8)
Total comprehensive income 1 082 927 16.7 2 259
Earnings per share (cents)
- basic 426.2 370.5 15.0 917.3
- headline 427.6 371.1 15.2 919.7
- diluted basic 405.2 348.4 16.3 862.9
- diluted headline 406.8 349.0 16.6 865.1
Dividend payout ratio (%) 58.0 57.0 63.1
Dividend per share (cents) 248.0 211.5 17.3 580.0
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.
2015 2014 % 2015
R'm 26 Sep 27 Sep change 28 Mar
Retail sales and other income
Apparel 6 616 6 007 10.1 13 175
Home 2 293 2 150 6.6 4 665
Central Services 74 71 171
Total 8 983 8 228 9.2 18 011
Profit from operating activities
Apparel 1 194 1 052 13.5 2 535
Home 334 270 23.6 705
Central Services (83) (80) (164)
Total 1 445 1 242 16.3 3 076
Segment assets
Apparel 3 541 3 076 15.1 3 239
Home 1 000 919 8.8 995
Central Services 3 281 2 897 3 633
Total 7 822 6 892 13.5 7 867
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2015 2014 2015
R’m 26 Sep 27 Sep 28 Mar
Assets
Non-current assets 1 604 1 245 1 364
Property, plant and equipment 1 083 770 838
Intangible assets 368 290 328
Long-term receivables and prepayments 6 7 6
Defined benefit fund asset 40 45 40
Deferred taxation assets 107 133 152
Current assets 6 218 5 647 6 503
Inventories 1 887 1 654 1 741
Trade and other receivables 2 037 1 771 1 874
Reinsurance assets 184 163 124
Cash and cash equivalents 2 110 2 059 2 764
Total assets 7 822 6 892 7 867
Equity and liabilities
Equity attributable to shareholders 4 801 4 126 5 021
Non-current liabilities 225 219 213
Lease obligations 164 180 170
Deferred taxation liabilities 8 9 4
Long-term liabilities 28 7 15
Post-retirement medical benefits 25 23 24
Current liabilities 2 796 2 547 2 633
Trade and other payables 2 369 2 164 2 116
Reinsurance liabilities 31 37 46
Current portion of lease obligations 62 60 63
Taxation 334 286 408
Total equity and liabilities 7 822 6 892 7 867
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2015 2014 2015
26 Sep 27 Sep 28 Mar
R’m
Total equity attributable
to shareholders at beginning
of the period 5 021 3 922 3 922
Total comprehensive income for
the period 1 082 927 2 259
Treasury share transactions (400) 39 83
Recognition of share-based payments 52 39 105
Dividends to shareholders (948) (798) (1 340)
Non-controlling interest (6) (3) (8)
Total equity attributable to
shareholders at end of the period 4 801 4 126 5 021
CONSOLIDATED STATEMENT OF CASH FLOWS
2015 2014 2015
26 Sep 27 Sep 28 Mar
26 weeks26 weeks52 weeks
R’m
Cash flows from operating activities
Operating profit before working
capital changes 1 320 1 144 3 039
Working capital changes (36) (168) (422)
Net interest received 235 210 442
Taxation paid (432) (372) (795)
Net cash inflows from operating
activities 1 087 814 2 264
Cash flows from investing activities
Net receipts in respect of
long-term receivables - - 1
Purchase of Zambian franchise (30) (30)
Additions to and replacement of
intangible assets (62) (64) (121)
Property, plant and equipment
- replacement (66) (63) (138)
- additions (272) (77) (172)
- proceeds on disposal 2 1 4
Net cash outflows from investing
activities (398) (233) (456)
Cash flows from financing activities
Increase in long-term liabilities 13 1 9
Net (purchase)/sale) of shares by staff
share trusts (372) 88 322
Deficit on treasury share transactions (43) (66) (267)
Dividends to shareholders (948) (798) (1 340)
Net cash outflows from financing
activities (1 350) (775) (1 276)
Change in cash and cash equivalents (661) (194) 532
Cash and cash equivalents at
beginning of the period 2 764 2 252 2 252
Exchange gains/(losses) 7 1 (20)
Cash and cash equivalents at end
of the period 2 110 2 059 2 764
SUPPLEMENTARY INFORMATION
2015 2014 2015
26 Sep 27 Sep 28 Mar
Weighted average number of
shares in issue (000) 252 439 248 560 249 990
Number of shares in issue (000) 251 746 249 095 252 449
Net asset value per share (cents) 1 907 1 656 1 989
Reconciliation of headline
earnings (R’m)
Attributable profit 1 076 921 2 293
Loss on disposal and impairment
of property, plant and equipment
and intangible assets 5 2 8
Taxation adjustment (1) (1) (2)
Headline earnings 1 080 922 2 299
Notes:
1. The results at September 2015 and 2014, for which the
Directors take full responsibility, have not been audited. The
abridged consolidated results at March 2015, 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
2015 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 2014 statement of comprehensive income
has been restated due to a reclassification between selling and
administration expenses. This was a disclosure change only and
had no impact on profit.
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, and demanded
that the Company settle the alleged liability, the value of which
had been revised to R74.4 million.
Subsequent to further exchanges of correspondence, on 13 October
2015 the Company filed a formal appeal against SARS’ letter of
demand. SARS National Appeals Committee is required to notify the
Company of their decision within 90 working days from the date of
appeal.
The Company’s view, supported by legal advice, is to impugn the
Commissioner’s decision. No adjustments have been made to the
financial statements as the Directors are of the opinion that it
is unlikely that any liability will be incurred.
18 November 2015
Date: 18/11/2015 02:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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