| Thu 20 Nov 2003, 9:35 | | RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2003 |
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MR PRICE GROUP LIMITED - GROUP RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2003
MR PRICE GROUP LIMITED
Registration number 1933/004418/06
Incorporated in the Republic of South Africa
ISIN: ZAE000026951
JSE share code: MPC
GROUP RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2003
Highlights
* TURNOVER FROM CONTINUING OPERATIONS UP 14% TO R1,8 BILLION
* HEADLINE EARNINGS PER SHARE UP 10%
* DIVIDEND PER SHARE INCREASED BY 15%
* IMPROVED CONSUMER SPENDING ANTICIPATED
CONSOLIDATED INCOME STATEMENT 2003 2002 2003
26 weeks 26 weeks 52 weeks
September September % March
R"000 (Unaudited) (Unaudited) change (Audited)
Revenue 1 839 474 1 628 759 13 3 603 603
Continuing operations 1 827 200 1 602 526 14 3 558 034
Discontinuing operations 12 274 26 233 (53) 45 569
Continuing operations
Turnover 1 806 062 1 583 140 14 3 514 566
Other income 21 138 19 386 9 43 468
Total revenue 1 827 200 1 602 526 14 3 558 034
Costs and expenses 1 741 831 1 516 378 15 3 290 221
Profit from operating activities 85 369 86 148 (1) 267 813
Net finance costs 1 509 1 319 14 10 678
Profit before taxation 83 860 84 829 (1) 257 135
Taxation 26 109 25 240 3 78 993
Profit attributable to ordinary
shareholders from continuing
operations 57 751 59 589 (3) 178 142
Discontinuing operations
Profit/(loss) from operating
activities 3 080 (4 864) 163 (16 762)
Loss arising from discontinuance (12 819)
Net finance income - 52 (100) 76
Loss attributable to ordinary
shareholders from discontinuing
operations (9 739) (4 812) (102) (16 686)
Total group
Profit attributable to ordinary
shareholders 48 012 54 777 (12) 161 456
Weighted average number of
ordinary shares in issue (000) 236 634 235 809 - 235 990
Earnings per ordinary share (cents) (weighted)
- basic 20,3 23,2 (13) 68,4
- headline 26,0 23,6 10 71,5
- diluted 19,8 22,9 (14) 67,3
Dividend per ordinary share (cents) 6,9 6,0 15 25,0
Dividend cover (times) 3,8 3,9 (3) 2,9
CONSOLIDATED BALANCE SHEET
2003 2002 2003
September September March
R"000 (Unaudited) (Unaudited) (Audited)
Assets
Non-current assets 599 272 493 902 576 582
Property, plant and equipment 272 086 222 690 267 619
Intangibles 9 980 8 952 9 211
Long-term receivables 311 299 258 565 295 038
Deferred taxation assets 5 907 3 695 4 714
Current assets 1 125 466 1 104 141 1 113 048
Inventories 610 284 520 214 574 211
Trade and other receivables 310 579 344 703 331 687
Bank balances and cash 204 603 239 224 207 150
Total assets 1 724 738 1 598 043 1 689 630
Equity and liabilities
Capital and reserve 794 859 695 513 788 918
Non-current liabilities 370 019 327 907 360 420
Long-term liabilities 50 739 75 428 63 535
Deferred taxation liabilities 319 280 252 479 296 885
Current liabilities 559 860 574 623 540 292
Trade and other payables and provisions 557 630 559 113 519 793
Taxation 2 230 15 510 20 499
Total equity and liabilities 1 724 738 1 598 043 1 689 630
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2003 2002 2003
September September March
R"000 (Unaudited) (Unaudited) (Audited)
Opening capital and reserves 788 918 673 010 673 010
Increase in share capital and
share premium 2 817 729 1 625
Profit attributable to ordinary
shareholders 48 012 54 771 161 456
Ordinary dividends (44 888) (33 003) (47 173)
Closing capital and reserves 794 859 695 513 788 918
CONSOLIDATED CASH FLOW STATEMENT
2003 2002 2003
26 weeks 26 weeks 52 weeks
September September March
R"000 (Unaudited) (Unaudited) (Audited)
Cash flows from operating activities
Operating profit before working
capital changes 88 651 96 657 284 556
Working capital changes 17 645 (34 158) (105 338)
Net interest received 18 695 16 798 28 294
Taxation paid (23 177) (6 684) (12 059)
Dividends paid (44 888) (33 003) (47 173)
Net cash inflows from operating activities 56 926 39 610 148 280
Continuing operations 54 614 43 575 157 276
Discontinuing operations 2 312 (3 965) (8 996)
Cash flows from investing activities
Advances in respect of long-term
receivables (4 091) (4 354) (42 969)
Replacement of property, plant and
equipment (5 914) (11 652) (27 149)
Additions to property, plant and equipment (36 951) (53 788) (130 482)
Additions to intangible assets (3 255) (3 132) (6 223)
Proceeds on disposal of property, plant
and equipment 717 187 4 337
Net cash outflows from investing
activities (49 494) (72 739) (202 486)
Continuing operations (50 083) (72 396) (202 256)
Discontinuing operations 589 (343) (230)
Cash outflows from financing activities
Continuing operations (9 979) (10 331) (21 328)
Net decrease in cash and cash equivalents (2 547) (43 460) (75 534)
Cash and cash equivalents at beginning
of the period 207 150 282 684 282 684
Cash and cash equivalents at end of
the period 204 603 239 224 207 150
SUPPLEMENTARY INFORMATION
2003 2002 2003
September September March
(Unaudited) (Unaudited) (Audited)
Number of ordinary shares in issue (000) 237 114 235 960 236 253
Net asset value per ordinary share (cents) 335 295 334
R"000 R"000 R"000
Reconciliation of headline earnings
Attributable earnings 48 012 54 777 161 456
Amortisation of goodwill 184 169 368
Loss on discontinuance of Chile operations 12 819
Loss on disposal and scrapping of
property, plant and equipment in
continuing operations 610 1 173 10 001
Taxation adjustment (183) (352) (3 000)
Headline earnings 61 442 55 767 168 825
Depreciation and amortisation for
the period 36 155 33 674 70 790
Capital expenditure
- expended during the period 46 120 68 572 163 854
- authorised or committed at period end 47 680 90 792 69 190
Borrowing powers are limited to R1 192 million and unutilised borrowing
facilities amount to R300 million.
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.
2003 2002 2003
26 weeks 26 weeks 52 weeks
September September % March
R"000 (Unaudited) (Unaudited) change (Audited)
Revenue
Continuing operations 1 827 200 1 602 526 3 558 034
Cash division 344 429 1 138 008 18 2 547 455
Credit division 473 085 454 406 4 990 594
Central services 4 238 4 507 10 814
Other 30 153 49 668 93 104
Eliminations (24 705) (44 063) (83 933)
Discontinuing operations 12 274 26 233 (53) 45 569
Total 1 839 474 1 628 759 13 3 603 603
Operating profit before loss on discontinuance
Continuing operations 85 369 86 148 267 813
Cash division 63 029 62 995 - 165 222
Credit division 35 697 31 511 13 110 263
Central services (15 097) (9 584) (12 248)
Other 1 114 4 455 13 352
Eliminations 626 (3 229) (8 776)
Discontinuing operations 3 080 (4 864) 163 (16 762)
Total 88 449 81 284 9 251 051
COMMENTARY
TRADING
Shareholders were advised at year end and in the August trading statement that
earnings growth in the first half of this year would be inhibited as a
consequence of the high base in the comparable period of last year (when
headline earnings were up 50%) and tighter trading conditions flowing from
higher inflation and interest rates.
The cash division comprising Mr Price Weekend Material, Mr Price Home and Sheet
Street increased revenue by 18% to R1,3 billion and profits were in line with
last year at R63 million. The major chain of the group, Mr Price Weekend
Material, traded extremely well and recorded material growth in profitability
and market share. In particular, the men"s and ladies" departments as well as
the RED brand made significant gains. The recently launched MAXED athletic wear
and the BODY MATERIAL ladies" and men"s underwear departments have been very
well received nationally. Fashion accessories, which were tested during this
period, are now being rolled out to all stores for the Christmas trading season.
In the Mr Price Home and Sheet Street chains, which stock more imported
merchandise, a strategic decision was taken, as a value retailer, to reduce
prices of goods purchased when the rand was weaker. While this significantly
impacted first half margins in these two chains, good growth in unit sales was
achieved and this augurs well for the second half in which margins have been
restored.
The cash division continued to expand existing stores and opened 31 new stores
to bring its total number of outlets to 544.
The credit division, comprising Milady"s, The Hub and Galaxy increased revenue
by 4% to R473 million and the operating profits, assisted by well controlled
overheads, were up 13% to R35,7 million. Debtors were again well controlled and
bad debts were below budgeted levels. The division added four new stores to
bring the total to 261.
FINANCE
Cash sales rose to 85% of total sales, compared with 83% in the previous year.
The group"s bank balances and cash ended the period at R205 million after
capital expenditure of R46 million. Our strong cash position continues to
provide a solid platform from which to fund our expansion programme and further
investment in brand and assortment extensions across the group.
CLOSURE OF CHILE OPERATIONS
As previously reported, the six stores in Chile were closed during this
reporting period and recorded better results than in the comparable period as a
result of the reversal of onerous contract provisions of R5,0 million. Closure
costs of R12,8 million have been incurred and no further material costs are
anticipated. The closure costs do not impact on headline earnings.
RESULTS
The group"s turnover from continuing operations was 14% higher at R1,8 billion
compared with Retail Liaison Committee growth of 7%. Impacted by the strategic
repricing in the home chains, profit from operating activities, including Chile,
was 9% higher at R88,4 million. Headline earnings per share were 10% higher at
26,0 cents per share. The interim dividend to shareholders has been increased by
15% to 6,9 cents.
PROSPECTS
The second half of the year, which generates the major portion of the group"s
profits, is expected to produce an improvement in consumer spending brought
about by the much awaited interest rate cuts and lower inflation. As a
consequence, the group remains well positioned to continue passing on
outstanding value to our millions of Southern African customers and to entrench
our value retailing formula. As a predominantly cash retailer, we anticipate a
delay before the full benefits of these economic changes are reflected in our
sales, but are confident of again achieving growth in earnings for the full
year.
On behalf of the board
S B Cohen
Joint chairman
L J Chiappini
Joint chairman
A E McArthur
Chief executive officer
Durban
20 November 2003
DECLARATION OF INTERIM DIVIDEND
Notice is hereby given that the directors have declared an interim dividend of
6,9 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 Friday 5 December 2003
Date trading commences "ex" the dividend Monday 8 December 2003
Record date Friday 12 December 2003
Date of payment Monday 15 December 2003
Shareholders may not dematerialise or rematerialise their shares between Monday
8 December 2003 and Friday 12 December 2003, both dates inclusive.
On behalf of the board
C S Yuill
Secretary
Durban
20 November 2003
NOTES
1. The interim results are not audited.
2. The accounting policies applied are in compliance with South African
Statements of Generally Accepted Accounting Practice and are consistent
with those applied in the latest annual financial statements, with the
exception of the adoption of AC 133 Financial Instruments: recognition and
measurement (refer note 4).
3. The process of resolving the taxation queries relating to the export
partnerships referred to in the previous annual financial statements is
ongoing.
4. During the period, the group adopted the provisions of AC 133 Financial
Instruments: recognition and measurement, which has had no impact on the
presentation of the interim report. The long-term receivables are carried
at cost less any provision for impairment considered necessary and a
matching deferred tax liability equal to the value of the asset has been
recognised.
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), W J Swain,
C S Yuill, N P Woodroffe (alternate)
This report is available on our website: www.mrpricegroup.com
Date: 20/11/2003 08:55:09 AM Produced by the JSE SENS Department
