| Thu 26 May 2011, 8:00 | | MPC - Mr Price - Audited group results and cash dividend declaration for the 53 |
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MPC
MPC
MPC - Mr Price - Audited group results and cash dividend declaration for the 53
Weeks ended 2 April 2011
MR PRICE GROUP LIMITED
Registration number 1933/004418/06
Incorporated in the Republic of South Africa
ISIN: ZAE000026951
JSE share code: MPC
("Mr Price" or "the company" or "the group")
AUDITED GROUP RESULTS AND CASH DIVIDEND DECLARATION FOR THE 53 WEEKS ENDED 2
APRIL 2011
2011 HIGHLIGHTS
+ 45% OPERATING PROFIT (52 WEEKS: +39%)
+ 51% HEPS (52 WEEKS: +46%)
+ 46% DIVIDENDS PER SHARE
25% 25 YEAR CAGR IN DIVIDENDS PER SHARE
RESULTS
This year, the group celebrates the 25th anniversary of the change in control.
The compound annual growth rate in share price and dividends per share over this
period has exceeded 25%, with headline earnings per share growing at a compound
annual rate of 24%. Other significant milestones have also been achieved this
year - retail sales have exceeded R10 billion and profit attributable to
shareholders has exceeded R1 billion for the first time.
Retail sales for the 53 week trading period ended 2 April 2011 increased by
12.9% (52 weeks: 10.5%). This compares favourably with the total retail sector,
which, as reported by Statistics South Africa, grew by 7.5%. Sales in like-for-
like locations were up by 10.2% (52 weeks: 7.8%). The group`s weighted average
trading space increased by 0.7% as a result of expansions and new store openings
being offset by store closures. More than 180 million units were sold, an
increase of 9.9% (52 weeks: 7.6%) and product inflation of 3.0% was recorded.
Other income grew by 11.9% as a result of increased interest received from trade
receivables and premium income relating to the sale of financial services
products.
Costs and expenses continued to rise at a lower rate than sales, increasing by
9.2%. The gross profit margin improved by 2.0% to 41.9% as a consequence of
improved resourcing and lower markdowns. Selling expenses were well controlled,
increasing by 8.3%. Administrative expenses, impacted by higher performance
based incentives, rose by 13.8% and by 12.1% after excluding once-off costs.
The operating margin increased from 10.5% to 13.4% (52 weeks: 13.2%) of retail
sales and profit attributable to shareholders increased by 50.0% (52 weeks:
44.3%).
The taxation charge in the prior year was impacted by the unbundling of the
export partnerships.
Core headline earnings per share, which excludes the final adjustments relating
to the export partnerships and is a true measure of trading performance,
increased by 47.2% to 420.6 cents (52 weeks: 41.8% to 405.0 cents). Additional
disclosure regarding the impact of the 53rd week is contained in the
presentation to analysts which is available on the company`s website.
The board extends its appreciation to each of the group`s 17 877 associates,
whose efforts and commitment have made these results possible.
TRADING
The Apparel chains increased sales and other income by 13.1% to R7.8 billion
with comparable sales up by 8.5%. Operating profit increased by 31.0% to R1.3
billion, resulting in the operating margin improving to 16.9%. Mr Price Apparel
recorded sales growth of 14.4% to R5.9 billion, representing 55.3% of group
sales and continued to capture market share. Mr Price Sport opened six stores
and grew sales by 27.0%, exceeding R500 million for the first time, and
delivered a greatly improved financial performance. Miladys only grew sales by
2.1% but an improved gross profit margin and tight expense control resulted in
operating profit increasing by 21.5%.
The Home chains grew sales and other income by 12.3% to R3.1 billion with
comparable sales up by 14.0%. Operating profit increased by 168.1% to R271.2
million and an operating margin of 8.8% was achieved. Mr Price Home recorded
sales growth of 13.0%, breaching the R2 billion mark for the first time. The
gross profit margin improved by 3.6% and the chain contained expenses, resulting
in operating profit increasing by 182.2%. Sheet Street grew sales by 12.8%
despite closing a net nine stores. Comparable sales were up by 14.3% and
operating profit rose by 140.6%.
FINANCIAL POSITION
The group continues to reflect a healthy financial position, with the cash sales
component remaining high at 83.8%. Despite dividends paid to shareholders
increasing by 46.9% to over R500 million and purchasing treasury shares to the
value of R219.7 million to partially cover share options awarded, cash balances
at year end increased to R1.4 billion.
Stock turn increased from 5.9 to 6.6 times as gross inventory balances remained
in line with the prior year. Project Redgold continued to deliver efficiencies,
borne out by the fact that over the last four years, inventory has only
increased by 5% while sales have increased by 48%.
The group continues to manage its debtors` book in a controlled, responsible
manner and the net bad debt to book ratio improved from 7.0% to 4.5%. The
impairment provision has been set at 9.1% of gross accounts receivable.
Trade and other payables decreased by 5.2% to R1.2 billion, mainly as a result
of the timing of year end, and the resultant lower level of outstanding cheques.
PROSPECTS
Potential inflationary increases, particularly in food and fuel prices, will
concern both consumers and retailers. However, recently reported statistics
highlight the trend of increasing real disposable incomes of households and the
migration of consumers from lower to higher living standard measures (LSM`s).
These studies suggest that in recent times, this has been driven by rising real
incomes rather than debt. Consumers have benefited by wage inflation
outstripping CPI over the last year and this will aid retailers. A well executed
strategy will result in the group continuing to increase its number of shoppers,
attracted by fashionable merchandise at everyday low prices.
The business is looking forward with confidence and investments in the key areas
of information technology and supply chain are being undertaken that will
position the business for its next growth phase, both locally and beyond our
borders. While the group expects a further increase in earnings in the year
ahead, the growth will not be at the same rate as in the past year, which had 53
trading weeks and included a strong recovery of the underperforming chains.
DIVIDEND POLICY
The dividend cover has been retained at 1.6 times and the dividend declared is
based on a 52 week trading period. In view of the company`s strong balance sheet
and cash generative business model, the board intends to reduce this cover
further, with the most likely timing being the final dividend for the year ended
31 March 2012.
FINAL CASH DIVIDEND DECLARATION
Notice is hereby given that a final cash dividend of 175.3 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 17 June 2011
Date trading commences `ex` the dividend Monday 20 June 2011
Record date Friday 24 June 2011
Date of payment Monday 27 June 2011
Shareholders may not dematerialise or rematerialise their share certificates
between Monday 20 June 2011 and Friday 24 June 2011, both dates inclusive.
On behalf of the board
AE McArthur (chairman) Durban
SI Bird (chief executive officer) 26 May 2011
DIRECTORS
LJ Chiappini* (Honorary chairman), SB Cohen* (Honorary chairman), AE McArthur
(Chairman), SI Bird (Chief executive officer), MM Blair (Chief financial
officer), N Abrams, TA Chiappini-Young, SA Ellis , K Getz*, MR Johnston*, RM
Motanyane*, NG Payne*, Prof. LJ Ring (USA), MJD Ruck*, SEN Sebotsa*, WJ Swain*,
M Tembe*
* Non-executive director Alternate director
The following changes to the Board of Directors took place on 26 August 2010:
- LJ Chiappini and SB Cohen were appointed honorary chairmen;
- AE McArthur was appointed chairman;
- SI Bird was appointed chief executive officer;
- N Abrams, TA Chiappini-Young, SA Ellis and Prof. LJ Ring were appointed
alternate directors; and
- S van Niekerk retired from the company and CS Yuill retired from the board.
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
SPONSOR
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Consolidated statement of
comprehensive income
2011 2010
53 weeks 52 weeks %
R`000 to 2 April to 27 March change
Revenue 10 973 327 9 747 910 13
Retail sales 10 673 364 9 454 130 13
Other income 239 730 214 149 12
Retail sales and other income 10 913 094 9 668 279 13
Costs and expenses 9 479 326 8 676 761 9
Cost of sales 6 201 640 5 685 157 9
Selling expenses 2 505 393 2 313 226 8
Administrative and other
operating expenses 772 293 678 378 14
Profit from operating activities 1 433 768 991 518 45
Net finance income 54 662 36 761 49
Profit after net finance income 1 488 430 1 028 279 45
Net adjustment to contributions
to export partnerships (4 226) (164 688)
Profit before taxation 1 484 204 863 591 72
Taxation 473 950 190 023 149
Profit attributable to
shareholders 1 010 254 673 568 50
Other comprehensive income:
Currency translation adjustments (3 941) (8 979)
Defined benefit fund net
actuarial gain/(loss) 625 (2 976)
Total comprehensive income 1 006 938 661 613
Earnings per share (cents)
- basic 412.3 273.5 51
- headline 418.9 276.9 51
- core headline 420.6 285.7 47
- diluted basic 382.7 259.7 47
- diluted headline 388.8 263.0 48
- diluted core headline 390.4 271.3 44
Dividend cover (times) 1.6 1.6 -
Dividends per share (cents) 252.0 173.0 46
Consolidated statement of
cash flows
2011 2010
53 weeks 52 weeks
R`000 to 2 April to 27 March
Cash flows from operating activities
Operating profit before working
capital changes 1 535 455 1 100 117
Working capital changes (210 002) 89 444
Net interest received 223 486 178 350
Taxation paid (444 241) (346 467)
Net cash inflows from operating
activities 1 104 698 1 021 444
Cash flows from investing activities
Net receipts in respect of
long-term receivables - 42 361
Proceeds on disposal of investment in
subsidiary - 18 452
Additions to and replacement of
intangible assets (33 838) (44 816)
Property, plant and equipment
- replacement (71 921) (26 430)
- additions (49 815) (91 722)
- proceeds on disposal 531 1 231
Net cash outflows from investing
activities (155 043) (100 924)
Cash flows from financing activities
Proceeds from disposal of investments
by staff share trust - 26
Decrease in lease obligations (9 966) (7 236)
(Purchases)/sales of shares by staff
share trusts (161 214) 25 426
Deficit on treasury share transactions (64 538) (71 284)
Dividends to shareholders (512 308) (348 731)
Net cash outflows from financing
activities (748 026) (401 799)
Change in cash and cash equivalents 201 629 518 721
Cash and cash equivalents at beginning
of the year 1 170 743 660 787
Exchange losses (3 860) (8 765)
Cash and cash equivalents at end
of the year 1 368 512 1 170 743
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.
2011 2010 %
R`000 2 April 27 March change
Retail sales and other income
Apparel 7 782 964 6 878 458 13
Home 3 119 944 2 778 311 12
Central Services 115 541 75 716
Eliminations (105 355) (64 206)
Total 10 913 094 9 668 279 13
Profit from operating activities
Apparel 1 284 567 980 308 31
Home 271 218 101 147 168
Central Services (122 017) (89 937)
Total 1 433 768 991 518 45
Segment assets
Apparel 1 607 267 1 509 056 7
Home 612 817 626 977 (2)
Central Services 1 641 053 1 474 211
Total 3 861 137 3 610 244 7
Consolidated statement of
financial position
2011 2010
R`000 2 April 27 March
Assets
Non-current assets 607 681 686 475
Property, plant and equipment 459 634 530 407
Intangible assets 79 164 69 970
Long-term receivables and prepayments 338 338
Defined benefit fund asset 20 241 16 795
Deferred taxation assets 48 304 68 965
Current assets 3 253 456 2 923 769
Inventories 953 666 934 671
Trade and other receivables 931 278 818 355
Cash and cash equivalents 1 368 512 1 170 743
Total assets 3 861 137 3 610 244
Equity and liabilities
Equity attributable to shareholders 2 394 184 2 070 823
Non-current liabilities 179 010 200 966
Lease obligations 160 519 180 329
Deferred taxation liabilities 744 782
Long-term provisions 4 810 8 462
Post retirement medical benefits 12 937 11 393
Current liabilities 1 287 943 1 338 455
Trade and other payables 1 241 624 1 310 170
Current provisions 3 227 4 388
Current portion of lease obligations 37 742 14 133
Taxation 5 350 9 764
Total equity and liabilities 3 861 137 3 610 244
Statement of changes in equity
2011 2010
R`000 2 April 27 March
Total equity attributable to shareholders
at beginning of the year 2 070 823 1 764 187
Total comprehensive income for the year 1 006 938 661 613
Treasury share transactions (209 796) (35 772)
Recognition of share-based payments 38 527 29 526
Dividends to shareholders (512 308) (348 731)
Total equity attributable to shareholders
at end of the year 2 394 184 2 070 823
Supplementary information
2011 2010
2 April 27 March
Weighted average number of shares
in issue (000) 245 024 246 320
Number of shares in issue (000) 244 845 247 298
Net asset value per share (cents) 978 837
Reconciliation of headline earnings (R`000)
Attributable profit 1 010 254 673 568
Loss on disposal and impairment of
property, plant and equipment 21 540 10 897
Taxation adjustment (5 395) (2 330)
Headline earnings 1 026 399 682 135
Impact of export partnerships 4 226 21 569
Core headline earnings 1 030 625 703 704
Capital expenditure (R`000)
- expended during the year 155 574 162 968
- authorised or committed at year end 304 683 187 058
Number of stores 937 962
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. 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 2010 annual financial statements. All new and revised Standards
and Interpretations that became effective during the period were adopted and did
not lead to any significant changes in accounting policies.
3. There have been no adverse changes to the contingent liabilities and
guarantees provided by the company as disclosed in the 2010 annual financial
statements.
This report and the supporting presentation are available on our website:
www.mrpricegroup.com
Date: 26/05/2011 08:00:01 Produced by the JSE SENS Department.
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