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MR PRICE GROUP LIMITED INTERIM RESULTS SEPTEMBER 2004

MR PRICE GROUP LIMITED INTERIM RESULTS SEPTEMBER 2004. Market Conditions:. Interest rates at lowest levels in 22 years South African Rand continues to trade well against the US$ Credit retailers benefiting from increased consumer borrowing

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MR PRICE GROUP LIMITED INTERIM RESULTS SEPTEMBER 2004

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  1. MR PRICE GROUP LIMITED INTERIM RESULTS SEPTEMBER 2004

  2. Market Conditions: • Interest rates at lowest levels in 22 years • South African Rand continues to trade well against the US$ • Credit retailers benefiting from increased consumer borrowing • South African economy appears to be achieving macro inflation targets

  3. Mr Price Group: • Group remains predominantly cash retailer with 85% of sales for cash • Financial health of balance sheet provides solid platform to achieve 2007 targets of: • Turnover R6 billion • Operating margin 10% • Group remains committed to expansion and revamp programmes (35 000 sqm added to date)

  4. Group Performance for the Period Ending Sept 2004: • Revenue from continuing operations up 9% (comp 5.7%) to R2 billion despite deflation of 8% • Strong unit sales exceed 50 million units, up 19% on prior year • Costs and expenses grew by only 7% • Net finance income reach R5m compared to net finance costs of R1.5m reported in the previous year • Net profit from continuing operations up 45% to R18m • Interim operating margin from continuing operations increased from 4.6% to 6.1% as a consequence of an improvement in gross profit margins

  5. Headline Earnings per share Headline earnings per share up 31% to 33.2 cents per share Compound growth 60.66% over 5 years

  6. Dividends per share Interim dividend per share up 52% to 10.5 cents per share Interim dividend cover reduced from 3,7 times to 3,2 times Compound growth 36.78% over 5 years

  7. Taxation: • RSS operations sold to management during the period under review (loss on discontinuance of R1m does not impact on HEPS) • Group tax rate up to 35% from last year 31% • STC • Effective corporate and other tax • Prior year tax rate impacted by the significant losses uncured by the discontinued Chile operation Discontinued Operations: • RSS operations sold to management during the period under review (loss on discontinuance of R1m does not impact on HEPS) • As reported previously, the business closed the six test stores in Chile in the previous financial period and is attending to the wind-up of the corporate structure

  8. Mr Price Group Turnover Growth

  9. Strength in Working Capital Management Continues: • Cash: • Cash balances end on R337m notwithstanding: • Capital expenditure of R37m • R95m of short term borrowings repaid (SARS) • Payment of final F2004 dividend which was 40% up on prior period • Inventory: • Inventories 3.9% lower at R586m, notwithstanding: • Sales growth of 9% • Unit sales growth of 19% • Stock turn increased from 4.3 times to 4.5 times

  10. Strength in Working Capital Management Continues: • Accounts Receivable: • Trade debtors up 3% to R284 million • Debtors that can purchase, up to 93.7% from previous year 92.1% • Bad debts as percentage of credit sales down to 1.7% from 2.7% • Provision for doubtful debt as % of accounts receivable at 5% • Credit continues to be tightly controlled • Group remains cash business with 85% of sales for cash

  11. CASH DIVISION: 539 STORES WEEKEND MATERIAL: 306 stores Weighted ave sqm up 3.3% Gross space added 5037 sqm SHEET STREET: 114 stores Weighted ave sqm 10.6% Gross space added 2751 sqm MR PRICE HOME: 119 stores Weighted ave sqm1.0% Gross space added 623 sqm

  12. Cash Division Comprises: • Mr Price Weekend Material • Mr Price Home • Sheet Street • Revenue up 9% (comp 4.7%) to R1.5 billion with deflation of 9% • Unit sales grew by 20 % to over 42 million • Weighted average trading space up 4.4% • Operating profit up 42% at R89 million • Operating margin increased from 4.7% to 6.1% • Operating profit up 42% at R89 million • Operating margin increased from 4.7% to 6.1% • Weekend Material delivers strong operating margin • Home chains significant increase in operating profit with deflation of 2%

  13. CREDIT DIVISION: 259 STORES MILADYS: 160 stores Weighted ave sqm down 0.3% Gross space added 183 sqm GALAXY & CO: 88 stores Weighted ave sqm down 7.1% Gross space removed 473 sqm THE HUB: 11 STORES

  14. Credit Division Comprises: • Miladys • The Hub • Galaxy & Co • Revenue up 9% (comp 8.7%) to R513 million on deflation of 8% • Unit sales grew by 15 % to over 7 million • Weighted average trading space down 0.4% Operating profit up 33% at R47 million • Operating margin increased from 7.5% to 9.3%

  15. Prospects: • Commitment to expansion and revamp programme • Investigation of new concepts and potential growth opportunities • The group anticipates growth in earnings for the full year, despite a far stronger base in the second half • Credit division: new look for Galaxy tested and new Miladys format to be rolled out within the next few years

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