Mr Price Group Limited

1 Mr Price Group LimitedAnnual Report2008 Adding value to our customers livescontents fashion value - it s the Mr Price brand DNA. 2 Our Stores 4 Our Mission 5 Financial Highlights 6 Our Vision 8 Our Core Beliefs 10 Report To Shareholders 12 Adding Value 18 Brands and Labels 20 Brand Reinforcement through Sports Marketing 22 Segmental Analysis 23 Divisional Performance Indicators 24 Divisional Reviews 40 Corporate Governance 50 Board Appointments 50 Group Remuneration Report 54 Sustainability Report 66 Directorate 68 Divisional Heads and Administration 70

2 Shareholder Information 71 Share Performance 72 Five Year Financial Review 73 Five Year Financial Statistics 74 Financial Commentary 80 Approval of the Annual Financial Statements 81 Report of the Independent Auditor 82 Report of the Directors 86 Annual Financial Statements 130 Notice of Meeting and Form of ProxyMr Price Group Limited is a predominantly cash-driven value retailer, operating in 896 stores across Southern Africa. There arefive retail chains focussing on clothing, sportswear, footwear, sporting equipment, accessories and homewares, which are divided into the two operating segments of Apparel and PRICEMr Price s target customer is the 14 to 25 year old, but the merchandise has broader appeal to people with a young, fun and sociable attitude.

3 The trend and product design teams bring up-to-date, fashionable merchandise to the market at everyday low prices. The brand image has been enhanced by innovative sponsorships of music, rugby, athletics, surfing, swimming and extreme first Mr Price apparel store opened in 1987 and the division now has 315 stores which average 650 gross m . Store sizes are being expanded where appropriate to allow newer categories such as footwear, accessories, underwear and maternitywear greater division has recently opened eight express stores. This format, which is made possible by lower fixturing costs and rentals, allows Mr Price to trade in areas which were previously not Price SPORTF ollowing the successful opening of our first Mr Price Sport store in August 2006, the chain has opened a further 22 stores, 15 of which were in the current financial year, establishing a strong national footprint across South Africa.

4 Store sizes range between 900 and 2 300 gross m . The stores create an exciting, interactive, lifestyle-driven environment in which to product range comprises sporting apparel, footwear, equipment and accessories and caters for all major sport types. Products have a strong fashion element and are predominantly in-house brands which have been pro-tested and endorsed by leading sportsmen and women. The merchandise is created to high specification by top local and international sporting goods value concept has been well received by our customers and makes an active sports lifestyle affordable to all South storess2MR Price HOMEThe first Mr Price Home store opened in 1999.

5 The division offers a wide range of co-ordinated home products which target mid to upper LSM customers who are contemporary and young at heart. The brand is built on the foundation of great value, quality and innovation. Design is influenced by overseas home trends, but pricing and value are significantly early foundation of the business was in home textiles, followed by homewares and more recently an entry into the furniture market. The division continued with its store expansion activity and as at the end of the financial year has a complement of four super stores (6 000m ), 20 ultra stores (3 000m ), 25 mega stores (1 500m ) and 87 regular stores ranging between 400m2 and 800m in end of November saw the opening of four stand-alone Kids stores, which is a test concept.

6 These stores incorporate products for kids including furniture, apparel, bedlinen and soft furnishings, fantasy and dress-up, educational development and accessories. A full assortment of Kids merchandise will be available in all super stores and ultra stores. MILADYSM iladys is the oldest chain in the Group , having been established in the 1960 s. The Miladys customer is a woman who considers style a matter of attitude rather than age. To this end, the division has a unique nich in the South African market and the products on offer are classic and updated clothing, footwear, intimatewear and accessories.

7 The Ren Taylor brand, which caters for the fuller figured woman, opened two stand-alone stores during the year with great success. Further stand-alone stores will be opened from the 2009 financial year onwards. There are 196 stores in total, with an average size of 380 gross m . The recent store revamp programme has proved extremely successful from both a sales and profitability point of view. Customers have responded well to the more modern in-store merchandise layouts and improved space efficiency. SHEET STREETS heet Street has grown from 17 stores in 1996, when acquired by the Group , to 222 stores at the year end.

8 Significant store growth in this chain is still possible. Sheet Street stores average 240 gross m2 and are widely spread, offering a high level of convenience and customer intimacy. The primary target customer is predominantly from the lower LSM, while higher profile locations do attract mid LSM customers who are looking for exceptional value. The merchandise on offer is commercially fashionable, which the South African consumer knows and direction is inspired by both fashion-forward local and overseas mainstream home retailers. Assortments are strategically balanced across design and colour to offer the Sheet Street customer a varied and balanced selection that suits their month fresh, co-ordinated themes are introduced across bedroom, livingroom and bathroom.

9 This allows both core and fashion stock to be turned quickly, resulting in freshness in the products on offer. The regular merchandise offer is supplemented with special deals that are planned to excite and delight shoppers by being typically 30% lower than prices add value to our customers lives and worth to our partners 54020054 0235 00820076 05720087 204retail salesRands in millionsdistributions per shareCentsheadline earnings per shareCents2004200520062007200889,1108,81 61,7191, 8219,05 year CAGR* 18% 21 year CAGR 22%(continuing operations)5 year CAGR 36% 21 year CAGR 25%5 year CAGR 25% 21 year CAGR 23%*CAGR = Compound Annual Growth Rate420065f inancial highlightsOur established businesses have improved their operating margin from 11,0% to 11,6%.

10 Notes:EBITDA: Earnings before interest, tax, depreciation and to shareholders comprise the interim distribution paid during the year and the final dividend declared after the financial year end. 2008 2007 R 000 R 000 % changeRetail sales 7 203 640 6 056 757 19 EBITDA 879 161 747 436 18 Operating profit 716 180 612 685 17 Total assets 2 791 516 2 493 662 12 % %Return on equity 39,6 41,0 Operating margin - Group 9,9 10,1- established businesses 11,6 11, 0 Earnings per share cents per share cents per share- basic 218,1 191,2 14- headline 219,0 191.