| Wed 27 May 2009, 8:00 | | MPC - MR Price Group Limited - Audited Group Results for the Year Ended 31 |
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MPC
MPC
MPC - MR Price Group Limited - Audited Group Results for the Year Ended 31
March 2009 and Cash Dividend Declaration
MR PRICE GROUP LIMITED
Registration number 1933/004418/06
Incorporated in the Republic of South Africa
ISIN: ZAE000026951
JSE share code: MPC
AUDITED GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2009 AND CASH DIVIDEND
DECLARATION
2009 Highlights
Retail sales up 19%
All divisions achieved growth in market share
Cash resources of R661 million
Diluted headline earnings per share up 16%
Final dividend up 17%
16 855 people employed
RESULTS
During the current reporting period, consumer spending was inhibited by high
interest rates as well as high fuel and food costs. Although these factors
started to abate during the second half of the year, high levels of consumer
debt and a lack of consumer confidence resulted in a continuation of negative
sales growth in the retail sector. The fashion/value formula of the Mr Price
Group has been able to counter this negative trend, with all divisions having
gained market share as measured by the Retailers` Liaison Committee.
Retail sales for the year ended 31 March 2009 grew by 19,3% to R8,6 billion.
Comparable sales, which include sales of expanded and relocated stores in
like-for-like locations, were up 11,4%. Profit from operating activities
increased by 15,5% and the operating margin decreased from 9,9% to 9,6% of
retail sales. Profit attributable to shareholders was affected by an increase
in the effective tax rate from 28,4% to 31,0%. This arose as a consequence of
dividends attracting full secondary tax on companies (STC) charges in the
current reporting period, while the prior period distributions were mainly
from share premium which did not attract STC.
Excluding the impact of STC, diluted HEPS increased by 20,4%.
Mr Price Group has continued to expand its footprint and opened a net 58 new
stores, which in turn has enabled it to create in excess of 400 full-time
jobs in the financial year. Our associates have benefited from their
participation in the Partners Share Trust and since inception just a few
years ago, approximately R13 million in tax free dividends have been awarded
to them. In addition, associates should benefit materially in the long term
from an enhanced share price.
The final dividend has been set at 92,8 cents per share which reflects an
increase of 16,7% over the comparable period and is based on a maintained
cover of 1,9 times.
The five year compound growth rate in distributions per share now stands at
30,6%.
TRADING
The Apparel chains (Mr Price, Miladys and Mr Price Sport), which constitute
69,1% of group sales, grew sales by 22,7% to R5,9 billion (107,5 million
units), with retail selling price inflation of 4,0%. Comparable sales were up
16,2%. Operating profits increased by 23,7% to R828,6 million and the
operating margin increased from 13,8% to 14,0% in the current year.
Mr Price grew sales by 24,0% to R4,5 billion on an increase in weighted
average trading space of 6,7%. Comparable sales were 20,3% higher and the
division recorded retail selling price inflation of 6,0%. Unit sales were up
15,7%.
Miladys increased sales by 10,2% to R1,0 billion, with a growth in weighted
average trading space of 10,8% and comparable sales growth of 4,0%. The
division experienced retail selling price inflation of 1,1% and a 7,0% growth
in the number of units sold.
Mr Price Sport opened eight stores, bringing the total stores operated by the
division to 31. Sales of R367,1 million were generated off a weighted average
trading space of 38 846 mSquared.
Sales in the Home chains (Mr Price Home and Sheet Street), which constitute
30,9% of group sales, were up 12,1% to R2,7 billion (51,6 million units) and
retail selling price inflation of 6,3% was recorded. Comparable sales were up
2,0%. This segment has been the most affected by the reduction in consumer
spend on semi-durable products which has resulted in operating profits being
29,3% lower at R83,3 million.
Mr Price Home grew sales by 13,3% to R1,9 billion and weighted average
trading space increased by 24,3%. Retail selling price inflation of 4,6% was
recorded and comparable sales were up 2,5%. Unit sales were 4,4% higher.
Sheet Street increased sales by 9,7% to R0,8 billion, with weighted average
trading space increasing by 13,1%. Comparable sales were 0,9% higher with
retail selling price inflation of 9,7%.
Mr Price International opened an additional 10 franchise stores in the Mr
Price, Mr Price Home and Sheet Street formats, bringing the total to 17.
FINANCE
The group has increased its return on capital employed to 52,5%.
Our cash-driven business model, with 84% of sales in the current year being
for cash, will enable us to maintain a healthy balance sheet. Cash generated
from operating activities of R783,2 million, up 35,3% from the prior year,
resulted in an increase in cash resources which now stand at R660,8 million.
The debtors book has increased by 23,3% to R668,8 million and we have
continued with our cautious credit granting approach. Independent statistics
confirm that the age profile of our debtors book is significantly better than
the industry average. Bad debts, net of recoveries (excluding collection
costs) have decreased from 8,6% to 6,6% of year end debtors and the provision
for impairment has been set at 9,8% at year end.
Despite the build-up of merchandise for Easter, which was post year end,
gross inventory levels were well managed, increasing by 9,4% relative to an
increase in retail sales of 19,3%. The group stock turn improved from 5,3
times to 5,5 times during a difficult trading period.
PROSPECTS
Although we expect a more challenging trading environment in the year ahead,
the South African consumer should benefit from further reductions in interest
and inflation rates, which will initially aid in debt reduction. We are well
positioned to capture further market share with our fashionable merchandise
at everyday low prices.
On behalf of the board
SB Cohen - Joint chairman
LJ Chiappini - Joint chairman Durban
AE McArthur - Deputy chairman and CEO 27 May 2009
FINAL DIVIDEND DECLARATION
Notice is hereby given that a final cash dividend of 92,8 cents per share has
been awarded to the holders of ordinary and unlisted B ordinary shares.
The following dates are applicable:
Last date to trade `cum` the dividend Friday 19 June 2009
Date trading commences `ex` the dividend Monday 22 June 2009
Record date Friday 26 June 2009
Date of payment Monday 29 June 2009
Shareholders may not dematerialise or rematerialise their share certificates
between Monday 22 June 2009 and Friday 26 June 2009, both dates inclusive.
On behalf of the board Durban
CS Yuill - Group secretary 27 May 2009
DIRECTORS
LJ Chiappini* (Joint chairman), SB Cohen* (Joint chairman), AE McArthur
(Deputy chairman and Chief executive officer), SI Bird (Deputy chief
executive officer), MM Blair, SA Ellis, K Getz*, MR Johnston*, RM Motanyane*,
NG Payne*, Prof. LJ Ring (USA)*, MJD Ruck*, SEN Sebotsa*, WJ Swain*, M
Tembe*, S van Niekerk, CS Yuill
*Non-executive director
TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited
SPONSOR
Rand Merchant Bank (a division of FirstRand Bank Limited)
Consolidated income statement
2009 2008
March March %
R`000 52 weeks 52 weeks change
Revenue 8 857 229 7 421 124 19
Retail sales 8 591 258 7 203 640 19
Other income 190 129 146 176 30
Retail sales and other
income 8 781 387 7 349 816 19
Costs and expenses 7 954 199 6 633 636 20
Cost of sales 5 240 547 4 364 432 20
Selling expenses 2 104 880 1 765 698 19
Administrative and other
operating expenses 608 772 503 506 21
Profit from operating activities 827 188 716 180 16
Net finance income 25 757 23 096 12
Profit after net finance
income 852 945 739 276 15
Net adjustment to contributions
to export partnerships 39 258 30 255 30
Profit before taxation 892 203 769 531 16
Taxation 276 480 218 588 26
Profit attributable to shareholders 615 723 550 943 12
Weighted average number of
shares in issue (net of
shares held by staff share
trusts) (000) 247 175 252 599 (2)
Earnings per share (cents)
- basic 249,1 218,1 14
- headline 251,9 219,0 15
- diluted basic 241,8 209,9 15
- diluted headline 244,6 210,8 16
Distribution cover (times) 1,9 1,9 -
Distributions per share (cents) 133,0 116,0 15
Consolidated balance sheet
2009 2008
R`000 March March
Assets
Non-current assets 893 460 846 334
Property, plant and equipment 603 299 566 176
Intangible assets 45 163 25 471
Long-term receivables and prepayments 222 748 225 439
Defined benefit fund asset 19 009 28 632
Deferred taxation assets 3 241 616
Current assets 2 377 410 1 945 182
Inventories 1 002 456 909 094
Trade and other receivables 714 167 570 811
Cash and cash equivalents 660 787 465 277
Total assets 3 270 870 2 791 516
Equity and liabilities
Equity attributable to shareholders 1 764 187 1 479 331
Non-current liabilities 225 673 241 142
Lease obligations 145 785 125 846
Deferred taxation liabilities 69 926 106 686
Post retirement medical benefits 9 962 8 610
Current liabilities 1 281 010 1 071 043
Trade and other payables 1 208 450 1 034 118
Current portion of lease obligations 29 976 22 764
Taxation 42 584 14 161
Total equity and liabilities 3 270 870 2 791 516
Consolidated cash flow statement
2009 2008
R`000 March March
Cash flows from operating activities
Operating profit before working capital changes 937 825 800 311
Working capital changes (50 242) (43 897)
Net interest received 168 700 127 875
Restraints of trade (1 667) (2 500)
Taxation paid (271 463) (303 015)
Net cash inflows from operating activities 783 153 578 774
Cash flows from investing activities
Net receipts in respect of long-term receivables 14 142 3 021
Additions to and replacement of intangible assets (31 586) (25 816)
Property, plant and equipment
- replacement (110 673) (66 807)
- additions (92 111) (167 341)
- proceeds on disposal 982 1 923
Net cash outflows from investing activities (219 246) (255 020)
Cash flows from financing activities
Proceeds from issue of share capital - 13 911
Proceeds from disposal of investments by
staff share trust 40 117
Decrease in lease obligations (5 054) (3 322)
Purchase of shares by staff share trusts (34 255) (150 468)
Deficit on treasury share transactions (28 631) (14 668)
Distributions to shareholders (299 235) (275 168)
Net cash outflows from financing activities (367 135) (429 598)
Change in cash and cash equivalents 196 772 (105 844)
Cash and cash equivalents at beginning
of the year 465 277 570 945
Exchange (losses)/gains (1 262) 176
Cash and cash equivalents at end of the year 660 787 465 277
Statement of changes in equity
2009 2008
R`000 March March
Total equity attributable to shareholders
at 1 April 1 479 331 1 316 808
Shares issued - 214 060
Treasury share transactions (50 381) (357 296)
Recognition of share-based payments 28 865 28 238
Currency translation adjustments (1 190) 242
Profit for the year 615 723 550 943
Defined benefit fund net actuarial (loss)/gain (8 926) 1 504
Distributions to shareholders (299 235) (275 168)
Total equity attributable to shareholders 1 764 187 1 479 331
Segmental reporting
Business segments
The group`s retail activities are organised into two divisions for
operational and management purposes.
2009 2008 %
R`000 March March change
Retail sales and other income
Apparel 6 081 677 4 943 547 23
Home 2 688 976 2 394 968 12
Central services 73 747 49 402
Eliminations (63 013) (38 101)
Total 8 781 387 7 349 816 19
Profit from operating activities
Apparel 828 633 669 603 24
Home 83 275 117 853 (29)
Central services (85 905) (73 255)
Eliminations 1 185 1 979
Total 827 188 716 180 16
Supplementary information
2009 2008
March March
Number of shares in issue
(net of shares held by staff share
trusts) (000) 245 946 247 332
Net asset value per share (cents) 717 598
Reconciliation of headline earnings (R`000)
Attributable profit 615 723 550 943
Profit from discontinuance - (15)
Loss on disposal and impairment of property,
plant and equipment 9 441 3 151
Taxation adjustment (2 440) (914)
Headline earnings 622 724 553 165
Capital expenditure (R`000)
- expended during the year 234 370 259 964
- authorised or committed at year end 193 034 243 140
Number of stores 954 896
Number of full-time associates 10 204 9 794
Notes:
1. The results have been audited by Ernst & Young Inc. A copy of their
unqualified audit report is available for inspection at the company`s
registered office.
2. There have been no adverse material changes to the guarantees provided by
the company as disclosed in the 2008 annual financial statements.
3. A contingent liability exists relating to SARS potentially seeking to
hold the company liable for alleged unpaid import duties of R43,6 million by
one of its suppliers. No adjustments to the financial results have been made
as we have been advised that it is not probable that any liability will be
incurred.
4. 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 2008 financial statements. All new and revised Standards and
Interpretations that became effective during the year were adopted and did
not lead to any changes in accounting policies.
This report and the supporting presentation are available on our website:
www.mrpricegroup.com
Date: 27/05/2009 08:00:01 Produced by the JSE SENS Department.
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