ANNUAL INTEGRATED REPORT - Mr Price Group …

1 ANNUAL . INTEGRATED . REPORT . APR 2014 - MAR 2015. contents 2015 ANNUAL INTEGRATED REPORT . APR 2014 - MAR 2015. 03 03. 12 46 66 84. Scope & Boundary Group Strategy 12 Our People 46 Internal Audit REPORT 66 Approval of AFS 84. Who We Are 04 Key Performance Indicators 23 Sharing the Value 50 Social, Ethics, Transformation & REPORT of the Directors 85. Operations & Footprint 06 Chairman's REPORT 24 Corporate Governance REPORT 56 Sustainability Committee REPORT 68 Final Cash Dividend Declaration 87. Vision, Purpose & Values 07 CEO's REPORT 26 Risk Committee REPORT 63 Remuneration REPORT 70 REPORT of the Independent Auditor 87. Stakeholder Engagement 08 CFO's REPORT 28 Audit & Compliance Board of Directors 82 Shareholder Information 88. Value Creation through the Divisional Reviews 34 Committee REPORT 65 Statement of Accounting Policies 89.

2 Use of Capitals 10 ANNUAL financial Statements 94. Administration, Contact Details & Definitions 128. 2. CONTENTS PREVIOUS CONTENTS NEXT. scope&boundary We have pleasure in presenting the materiality remuneration policies and prospects. These matters have been identified complies with International financial The Board is satisfied with the level of 2015 INTEGRATED REPORT for Mr Price Our REPORT focuses on issues The material issues are reviewed on and prioritised after taking into Reporting Standards, the Companies assurance on the ANNUAL INTEGRATED Group Ltd and its subsidiaries. which the Board and management an ongoing basis to ensure that they consideration: Act of South Africa (71 of 2008) and REPORT and does not believe that it The REPORT is aimed principally at believe are material to stakeholders remain relevant and management the JSE Listings Requirements.

3 In should be subject to further external our shareholders the providers of and could impact value creation assumes the responsibility for Our business model and values terms of non- financial indicators, assurance at this point. financial capital and the broader in the business. We have aimed the approval of these material External factors that impact on the only South African operations are investment community, both locally to demonstrate the connectivity issues, which are then endorsed Group 's ability to create value in the included, unless otherwise indicated. approval and offshore. However, we recognise short, medium and long term The Audit and Compliance between these material issues by the Board. All matters that are that several stakeholder groups and our business model, strategy, considered material to the business Strategic objectives and key boundary Committee has reviewed the influence our business, primarily business risks arising from The boundary extends beyond INTEGRATED REPORT (including the risks, key performance indicators, have been included in this REPORT .)

4 But not limited to, our customers, the Group 's strategic planning Mr Price Group to include the full and abridged ANNUAL financial shareholders and employees. framework risks, opportunities and outcomes Statements) and recommended Items that are top-of-mind to the attributable to other stakeholders these to the Board for approval. This REPORT aligns with the Board and executive management beyond the Group that have a The Board has applied its mind to requirements of the King Code of Issues derived from key significant impact on its ability to the INTEGRATED REPORT and believes Governance for South Africa (King stakeholder engagement. create value for its stakeholders over that it addresses all material issues, III) and the International INTEGRATED the short, medium and long term. and fairly presents the INTEGRATED Reporting Council's Framework.

5 Additional information performance of the Group . This INTEGRATED REPORT aims to focus assurance on material matters only. Where The Group 's consolidated ANNUAL The 2015 ANNUAL INTEGRATED The Framework introduced the additional or ancillary information is financial Statements have been REPORT was approved for release to 6 forms of capital that impact on available, this has been separately audited by the independent stakeholders by the Board on 2 June 2015. published on the Group 's website: external auditor, Ernst & Young value creation and diminution in a Inc. Their unqualified REPORT can be business. These comprise financial , found on page 87. In addition, the scope manufactured, intellectual, human, This REPORT provides a consolidated independent external auditor verified the information contained in the social and relationship and natural view of the Group 's financial , social, Remuneration REPORT on page 70.

6 NG Payne Chairman SI Bird CEO. capital. economic and environmental performance for the 52-week period The South African Broad-Based The Group 's activities and ended 28 March 2015. It includes the Black Economic Empowerment performance relating to these financial results of Mr Price Group Ltd (B-BBEE) accreditation level was capitals are covered throughout the trading in South Africa, Botswana, externally assured by BEESCORE. REPORT . The information contained Namibia, Lesotho, Swaziland, (Pty) Ltd, a SANAS accredited MM Blair in this REPORT is consistent with the CFO. Ghana, Nigeria and Zambia and MRP organisation. The disclosures within indicators used for our internal Foundation (100% consolidated), Our People REPORT (page 46) and management and Board reports, MRP Mobile (55% consolidated), Sharing the Value REPORT (page 50).

7 And is comparable with previous as well as the income received were verified by our Internal Audit INTEGRATED reports. from franchise operations trading Division. elsewhere in Africa. Our reporting 3. SCOPE & BOUNDARY PREVIOUS CONTENTS NEXT. business mode who we fashion are How do we satisfy our customers' need for fashion? Specialist trend teams, frequent international travel and thorough research Fashionable Active dialogues through social and digital media merchandise at Responding to customers' changing fashion needs Product testing before making significant merchandise commitments everyday low Slow moving merchandise cleared to make way for fresh, new prices merchandise A high-growth, omni-channel, value Increasing sales + low overhead structure = acceptable operating margins Fashion Quality and fashion offered at the best Price fashion-value + quality Lower mark-ups in order to offer everyday low prices.

8 Large order quantities and higher sales volumes to keep input prices low + Price Maintain balance by incurring costs for future growth, often ahead of retailer. revenue generation Retail predominantly own-branded merchandise Targeting younger customers in the mid to upper LSM categories Retailing predominantly own-branded cash A high cash sales component means: Less impacted by the cyclical nature of retail merchandise Remaining a cash Not dependent on credit to drive sales, particularly during driven retailer with poor economic times +80% of sales are cash cash sales > 80% Less exposed to bad debt Able to fund future growth without incurring debt of total sales Strong cash flows will support future growth and maintain an appropriate dividend payout ratio 4. WHO WE ARE PREVIOUS CONTENTS NEXT. Cash and credit sales % of total retail sales Share Price 2011 2012 2013 2014 2015.

9 Cash Credit Share Price Cash versus credit sales growth Share Price Share Price 2011 2012 2013 2014 2015 2000 2005 2010 2015. Cash Credit Headline earnings per share (cents) Dividends per share (cents). 1 150 stores Market 29-year Included International 4th in Business Ranked 6th Included in and online capitalisation CAGR in in MSCI shareholding Times Top 100 in financial JSE Top 40. channels of R64 billion, HEPS of Emerging of 53% Companies, Mail 2014 Top and Socially offering full ranked 32nd and Markets highest ranked Companies Responsible product on JSE DPS of Index retailer Investment assortments Index 5. WHO WE ARE PREVIOUS CONTENTS NEXT. South Africa 392 mrp 1 066 153. 70. 263. mrpHome mrpSport Sheet Street operations Total Stores 188 Miladys Botswana 20. 11 mrp 3 mrpHome 4 Sheet Street 2 Miladys Total Stores & footprint Namibia 18 mrp 37.

10 5 mrpHome 2 mrpSport 8 Sheet Street Total Stores 4 Miladys Lesotho 4. 2 mrp 1 mrpHome 1 Sheet Street stores Total Stores Swaziland 438 7. Average store size 635m2 2 mrp mrp Total trading area 278 258m2. 1. 2. mrpHome Sheet Street 2 Miladys Total Stores mrpHome Average store size 833m2. Total trading area 138 360m2 166 Nigeria mrpSport 72 Average store size 769m2. Total trading area 55 361m2. 6. Total Stores 6 mrp Ghana 278. Sheet 5. Average store size 181m2. 3 mrp Street Total trading area 50 392m2 2 mrpHome Total Stores Miladys Average store size 312m2. Total trading area 61 188m2 196 Zambia 5 4 mrp 1 150. 1 mrpHome Total Stores total stores Franchise 8 Kenya 15. Total trading area 583 559m2 3 Mozambique 1 Rwanda 2 Tanzania 1 Uganda Total Stores 6. OPERATIONS & FOOTPRINT PREVIOUS CONTENTS NEXT. our values Passion Value Partnership Passion means ordinary people doing extraordinary things.