| Wed 29 May 2002, 0:00 | | Mr Price Group Limited - Audited Group Results |
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MR PRICE GROUP LIMITED - Audited group results for the year to 31 March 2002
And Press Announcements
MR PRICE GROUP LIMITED
Registration number 1933/004418/06
Incorporated in the Republic of South Africa
ISIN: ZAE 000026951 JSE share code: MPC
Audited group results for the year to 31 March 2002
Highlights
* Sales increase by 14% to R3 billion
* Dividend per share increased by 50%
* Strong cash flow to fund major expansion programme
* Earnings per share increase
- adjusted headline up 51% to 59,5 cents
- comparable up 35% to 51,4 cents
CONSOLIDATED INCOME STATEMENT
2002 2001
52 weeks 53 weeks %
R`000 March March Change
Turnover 2 979 520 2 604 211 14
Other income 41 936 39 415 6
Total revenue 3 021 456 2 643 626 14
Costs and expenses 2 819 012 2 501 966 13
Operating profit before
restructuring costs 202 444 141 660 43
Restructuring costs - 1 839
Operating profit 202 444 139 821 45
Net finance costs 9 547 17 379 (45)
Profit before taxation 192 897 122 442 58
Taxation 54 243 34 318 58
Profit after taxation 138 654 88 124 57
Minority interest - 1 085
Net profit for the year 138 654 89 209 55
Preference dividends 8 16
Profit attributable to
Ordinary shareholders 138 646 89 193 55
Weighted average number of
ordinary shares in
issue (`000) 235 525 233 896 1
Earnings per ordinary
share (cents) (weighted)
- basic 58,9 38,1 55
- headline 59,5 38,6 54
- adjusted headline 59,5 39,4 51
- comparable 51,4 38,2 35
- diluted 58,3 37,6 55
Distribution per ordinary
share (cents) 18,0 12,0 50
Distribution cover (times) 3,3 3,2 3
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
2002 2001
R`000 March March
Opening capital and reserves 560 715 481 726
Effect of change in treatment
of health and
retirement benefits 4 024 -
Restated capital and reserves 564 739 481 726
Redemption of preference
share capital (300) -
Increase in share capital
and share premium 535 17 694
Profit attributable to ordinary
shareholders 138 646 89 193
Ordinary distribution (30 610) (27 898)
Closing capital and reserves 673 010 560 715
CONSOLIDATED BALANCE SHEET
2002 2001
R`000 March March
Assets
Non-current assets 443 736 423 385
Property, plant and equipment 190 060 188 740
Intangibles 8 044 8 559
Long-term receivables 242 974 224 384
Deferred taxation assets 2 658 1 702
Current assets 1 036 126 820 768
Inventories 418 453 382 596
Accounts receivable 334 989 312 639
Bank balances and cash 282 684 125 533
Total assets 1 479 862 1 244 153
Equity and liabilities
Capital and reserves 673 010 560 715
Ordinary shareholders` interest 673 010 560 415
Preference share capital - 300
Minority interest - 1
Non-current liabilities 324 249 299 041
Long-term liabilities 86 488 106 267
Deferred taxation liabilities 237 761 192 774
Current liabilities 482 603 384 396
Trade and other payables
and provisions 471 970 378 063
Other current liabilities 10 633 6 333
Total equity and liabilities 1 479 862 1 244 153
SUPPLEMENTARY INFORMATION
2002 2001
March March
Number of ordinary shares in issue (`000) 235 605 235 380
Net asset value per ordinary share (cents) 286 238
R 000 R 000
Reconciliation of adjusted headline and
comparable earnings
Attributable earnings 138 646 89 193
Amortisation of goodwill 1 515 326
Loss on disposal of property,
plant and equipment 108 1 047
Taxation adjustment (32) (314)
Headline earnings 140 237 90 252
Restructuring costs - 1 839
Adjusted headline earnings 140 237 92 091
Foreign exchange gains (19 284) (2 728)
Gross gains (21 706) (4 857)
Taxation effect 2 422 2 129
Comparable earnings 120 953 89 363
Comparable earnings per share (cents) 51,4 38,2
Depreciation and amortisation
for the year - R`000 67 027 54 220
Capital expenditure - R`000
- expended during the year 69 379 81 268
- authorised at year end 100 000 68 871
Borrowing powers are limited to R1 009 million and
unutilised borrowing facilities amount to R215 million.
CONSOLIDATED CASH FLOW STATEMENT
2002 2001
52 weeks 53 weeks
R`000 March March
Cash inflows from operating
activities 269 870 177 294
Operating profit before working
capital changes 232 600 164 088
Working capital changes 48 059 13 605
Net interest received 27 458 16 680
Taxation paid (7 629) (5 778)
Dividends paid (30 618) (11 301)
Cash outflows from investing
activities (93 168) (236 737)
Advances in respect of long-term
receivables (25 228) (38 104)
Repurchase of accounts receivable
from bank - (118 001)
Replacement of property, plant
and equipment (13 175) (20 472)
Additions to property, plant and
equipment (51 080) (58 088)
Additions to intangible assets (5 124) (2 708)
Proceeds on disposal of property,
plant and equipment 1 439 636
Cash (outflows)/inflows from
financing activities (19 551) 107 403
Net increase in cash and
cash equivalents 157 151 47 960
SEGMENTAL REPORTING
Business segments
The group`s retail activities are
organised into two divisions
for operational and management purposes.
The main constituent
of "Other" is the group`s
shopfitting business.
2002 2001
52 weeks 53 weeks %
R`000 March March Change
Revenue - external
Cash division 1 993 458 1 676 600 19
Credit division 1 006 323 948 253 6
Other 15 578 13 705 14
Central services 6 097 5 068 20
Total 3 021 456 2 643 626 14
Operating profit before
restructuring costs
Cash division 137 321 88 632 55
Credit division 78 532 63 742 23
Other 533 4 326 (88)
Central services (13 205) (13 406) (1)
Eliminations (737) (1 634) (55)
Total 202 444 141 660 43
NOTES
1. The accounting policies applied are in compliance with South African
Statements of Generally Accepted Accounting Practice and, with the exception
of the change referred to in note 2 below, are consistent with those applied
in the latest annual financial statements.
2. The group has adopted AC116 (revised) - Employee Benefits. Opening
retained income in the current period has been restated accordingly.
3. The resolution of the taxation queries referred to in the previous
annual financial statements is ongoing.
COMMENTS
RESULTS
Group sales increased by 14% to R3 billion compared with growth of 5,3% for
clothing and footwear reported by the Retail Liaison Committee. Operating
profits before restructuring rose by 43% to R202,4 million, with the
comparable operating margin rising from 5,3% to 6,1%. Profits before tax
increased by 58% to R192,9 million as a consequence of lower finance
charges. Attributable income was up by 55% to R138,6 million and adjusted
headline earnings per share rose by 51% to 59,5 cents per share compared to
last year`s earnings of 39,4 cents. Given the dramatic fall in the value of
the Rand towards the end of the year, the group benefited from unusually
high foreign exchange gains amounting to R21,7 million. The comparable
earnings growth, excluding these gains, was 35%. The distribution to
shareholders for the year has been increased by 50% from 12 cents to 18
cents per share.
TRADING
The cash division (which contributes 67% of group sales) performed well with
sales rising by 19% to R2 billion and operating profit up by 55% to R137,3
million. Mr Price Weekend Material and Mr Price Home both produced excellent
results and market share gains. A loss was, as expected, recorded by the
recently established Mr Price Chile operation. There has been an encouraging
improvement in the performance of the six test stores in Chile in the
current winter season which will need to be sustained to justify the opening
of further stores.
The credit division grew sales by 6% and operating profits by 23%. Milady`s
had a very good year, significantly exceeding budgeted profitability. The
Hub produced a profit comparable with the previous year and the profits of
Galaxy and Sheet Street were also in line with the previous year`s figures
despite significant stock clearance in both chains.
During the year the group opened 52 stores and ended the year with 740
stores.
FINANCE
Cash sales as a percentage of total sales increased to 82% (last year: 79%).
The strong cash flows led to a reduction in finance charges and enabled the
group to end the year with cash on hand of R283 million. Inventories were
well controlled despite a build-up of stock for the early Easter trading
period and increased by 9% relative to the turnover growth of 14%. Bad debts
were lower than budgeted.
PROSPECTS
The company has commenced a major project aimed at increasing trading space,
market share and profitability in the cash division.
Despite the likelihood of tighter trading conditions, particularly in the
first half, the group is expecting to achieve a meaningful increase in
earnings in the year ahead.
On behalf of the board
S B COHEN - Joint chairman
L J CHIAPPINI - Joint chairman Durban
A E McARTHUR - Chief executive officer 22 May 2002
Declaration of final dividend
Notice is hereby given that the directors have declared a final dividend of
14 cents per share to the holders of ordinary and the unlisted B ordinary
shares.
The following dates are applicable:
Last date to trade "cum"
the dividend Wednesday, 19 June 2002
Date trading commences "ex"
the dividend Thursday, 20 June 2002
Record date Wednesday, 26 June 2002
Date of payment Thursday, 27 June 2002
Shareholders may not dematerialise or rematerialise their shares between
Wednesday, 12 June and Wednesday, 26 June 2002, both dates inclusive.
On behalf of the board 22 May 2002
TRANSFER SECRETARIES:
Computershare Investor Services Limited,
10th Floor, 11 Diagonal Street,
Johannesburg, 2001.
P O Box 1053, Johannesburg, 2000.
Telephone: (011) 370 5000
Directors: L J Chiappini (Joint chairman), S B Cohen (Joint chairman), A E
McArthur (Chief executive officer), C Hultzer, M R Johnston, Prof. L J Ring
(USA), S M Rubinstein (USA), W J Swain, C S Yuill, N P Woodroffe (alternate)
This report is available on our website: www.mrpricegroup.com
MR PRICE ANNOUNCES MAJOR EXPANSION PLANS
CASH DIVISION TO GROW SPACE BY MORE THAN 80%
GROUP TO INVEST R0.5-BILLION
[Cape Town, 29 May 2002] 740-store value retailing group Mr Price today
announced that it would be embarking on a major expansion programme for its
cash division. The expansion programme would involve Mr Price Weekend
Material, Mr Price Home and Sheet Street, which, from 1 April became part of
the cash division. The focus in the credit division would continue to be on
margin enhancement with less rapid store growth.
Announcing these plans, CEO Alastair McArthur explained the rationale behind
the move.
"Although there are 320 Mr Price Weekend Material stores in South Africa
with an average size of around 350 m2, these stores are becoming far too
small. Many of them are still in off-prime locations with poor brand
visibility. We have decided the best way to grow is to expand and in some
cases relocate our existing stores and open larger stores. In space terms,
this expansion programme will be the equivalent of opening 120 new Mr Price
Weekend Material stores of the current size."
A second part of the programme is the opening of another 80 Mr Price Home
stores and expanding existing stores. 90 newly designed Sheet Street stores
will also be opened with the average store size increasing in that chain
too.
The expansion programme represents growth of more than 80% in trading space
over the next three years in the cash division, which currently represents
67% of group sales. Along with growth in the credit division, this will mean
an investment of R0.5 billion for the Group in South Africa.
"Mr Price Weekend Material and Home stores are literally bursting at the
seams. While this is good for short-term profitability, in the long-term it
doesn`t serve to enhance the brand. Where sales densities are too high, not
only is it uncomfortable for customers to shop, but research has shown that
customer perception of quality is negatively affected. In the short term, a
R15-million upgrade in the point-of-sale system will make processing queues
at tills much faster and more efficient.
The small size of the stores has also inhibited the full roll-out of new sub-
brands such as URB and RED. The introduction of new departments and the
expansion of existing ones has also been handicapped. Growth areas like
accessories, shoes, intimate wear and sleep wear need more trading space,
likewise for the expansion of existing brands like Oakridge.
McArthur said that the new space would not come at higher rentals, because
larger space normally commands a lower average rental. Shopfitting costs
are also only marginally higher so the low-cost value retail formula would
remain effective.
The expansion programme for Weekend Material has been exhaustively tested in
terms of both new product and expanded stores in various locations.
Additional space in selected locations has resulted in increases in turnover
of between 40% and 100%. A further benefit of expanded stores will be the
inclusion of the Heroes brand within the new expanded concept.
The store expansion programme is aimed at increasing the Mr Price`s Weekend
Material share of the related RLC market from the current estimated 11% to
over 18% over the next five years. In terms of RLC figures, Mr Price
Weekend Material is significantly under-penetrated in childrenswear, shoes,
accessories and underwear, while the enhancement of brands like URB, RED and
Oakridge will increase the mens and ladies apparel market share.
McArthur said that Mr Price Home had continued to perform beyond
expectations. In the space of three and a half years, this chain had grown
to over 90 stores with sales exceeding R400 million. Mr Price Home is
achieving even higher densities than Mr Price Weekend Material and there are
thus convincing arguments for much larger stores in this chain.
"We are clearly under-spaced and under-stored with Mr Price Home", he said.
"The extra 80 stores we plan to open in the next three years will give us a
much better national coverage and the space expansion will allow us to
considerably enhance the product offering. Enhancements and additions to
our kitchen, bathroom, bedroom and lounge assortments will be made. They
have been tested at selected stores and have worked well."
Turning to Sheet Street, McArthur said that it was trading extremely well.
Even when located close to a Mr Price Home store there was very little
effect on either business, because Sheet Street aims at a target customer in
a separate LSM category with different taste levels. The business concept
has been updated from a factory shop to a value retailer and the average
store size is being moved from the current 160 m2 to over 270 m2 to
accommodate extensions of bed linen and the introduction of decorative
housewares.
"Our overall plan", said McArthur "is to increase our gross trading space in
the cash division from a current 178 000 m2 for these three chains to 327
000 m2 within a three year period. We expect turnover in the cash division
to more than double in the same period," he said.
ENDS
For further information, please contact Tamra Veley on (021) 426 1233 or 083
251 3658.
MR PRICE SHOWS STRONG TRADING RESULTS
Adjusted headline EPS up 51%, comparable EPS up 35%, dividend up 50%
[Cape Town, 23 May 2002] Mr Price Group today announced strong trading
results for the 12 months ended 31 March 2002. Sales increased 14,4%to
R2,98-billion compared with a 5,3% increase reported by the Retail Liaison
Committee for clothing and footwear. Operating profits before restructuring
costs rose by 43% to R202,4-million and profits before tax increased by 58%
to R192,9-million as a consequence of lower finance charges.
Attributable income was up by 55% to R138,6-million and adjusted headline
earnings per share rose by 51% to 59,5 cents compared to last years 39,4
cents. The distribution to shareholders for the year has been increased by
50% to 18 cents.
CEO Alastair McArthur said that the fall in the Rand towards the end of the
year resulted in unusually high foreign exchange gains. If these gains are
excluded , the comparable growth in earnings per share would be 35% to 51,4
cents.
The cash division, which contributed 67% of group sales, performed well with
sales rising by 19% to R2,0-billion and operating profit increasing 55% to
R137-million. Mr Price Weekend Material and Mr Price Home both produced
excellent results and market share gains. McArthur said that a loss as
expected was recorded by the newly established Mr Price Chile operation.
"There has been an encouraging improvement in the performance of the 6 test
stores in Chile in the current winter season which will need to be sustained
to justify the opening of further stores ", he said.
In the credit division, sales increased by 6% to R1-billion and operating
profit by 23% to R78.5-million. Milady`s had a very good year, significantly
exceeding profit targets. The Hub produced a profit comparable with the
previous year. Profits for Galaxy and Sheet Street were in line with the
previous year`s figures despite significant stock clearances in both chains.
McArthur said the group`s strengthening balance sheet was very encouraging
and it was positioning the company for further expansion. "The focus on
value retailing is paying significant dividends for us: from being a
predominantly credit retailer (90% credit in 1986) to a predominantly cash
retailer (82% cash in 2002). This has revolutionised our business and our
balance sheet and is providing the cash flow for our bold investment in new
space.
"This year our operating activities generated R270-million in cash and our
forecasts indicate that this positive trend will continue. The strong cash
flows led to a reduction in finance charges and enabled the group to end the
year with cash on hand of R283-million. Stocks were well controlled and
increased by 9% compared to a turnover growth of 14% in spite of higher
stock intakes necessitated by an early Easter. Bad debts were lower than
the budgeted figures."
Looking ahead, McArthur said that the company was embarking on a major
expansion project aimed at increasing trading space, market share and
profitability. Over the next three years, the cash division (Mr Price
Weekend Material, Mr Price Home and Sheet Street) would grow its space by
more than 80%.
The group was expecting trading to be tight in the year ahead if the trend
in rising interest rates continued. The first half was expected to be more
difficult than the second half but a meaningful increase in earnings was
expected to be achieved in the year ahead.
ENDS
For further information, please contact Tamra Veley on (021) 426 1233 or 083
251 3658.
