our

report ANNUAL
INTEGRATED
REPORT
APR 2013 - MAR 2014
contents
Overview
Scope & Boundary
2014 Highlights
03
04
Our People
Our Corporate Citizenship
20
24
Governance
Corporate Governance Report
Risk Committee Report
48
56
Who We Are 05 Audit & Compliance Committee Report 58
Chairman’s Report 06 Strategy Internal Audit Report 59
CEO’s Report 08 Our Strategy 28 Social, Ethics, Transformation &
CFO’s Report 10 Key Performance Indicators 34 Sustainability Committee Report 61
Remuneration Report 63
Business Brands Board of Directors 75
Our Business Model 15 Divisional Reviews 35
Our Operations & Footprint 16 Divisional Performance Indicators 47
Stakeholder Engagement 17

ANNUAL INTEGRATED REPORT 2

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 The International Integrated Reporting Framework The independent external auditor also verified the
has also provided guidance on identifying issues information in the Remuneration Report on
material to long-term sustainability. page 63.

Scope &
This year we have printed and distributed an The South African Broad-Based Black Economic
abridged report to our shareholders with the full Empowerment (B-BBEE) accreditation level has
Annual Integrated Report only being made available been externally verified by a SANAS accredited
online. Additional information pertaining to the organisation, BEESCORE (Pty) Ltd.
Group is available on our website
www.mrpricegroup.com. The Group’s Internal Audit Division has verified the

boundary
disclosures contained in Our People Report (page
scope and boundary 20) and Our Corporate Citizenship Report (page
This Annual Integrated Report, for the 52 week 24).
period ended 29 March 2014, includes the financial
results of Mr Price Group Limited trading in South The Board is satisfied with the level of integrated
Africa, Botswana, Namibia, Lesotho, Swaziland, reporting, but recognises that it is premature to
Ghana and Nigeria as well as the income received subject the Annual Integrated Report to external
from franchise operations trading elsewhere in assurance at this point.
Africa. The geographical footprint of our operations
is detailed on page 16. directors’ responsibility
The Board acknowledges its responsibility to
The Annual Financial Statements have been ensure the integrity of the Annual Integrated Report.
prepared on the historic cost and going concern The Board has applied its mind to the Annual
bases, and in accordance with International Integrated Report and confirms that it addresses all
Financial Reporting Standards (IFRS), the material matters, and presents fairly the integrated
All matters that are considered to be material to the
about the report business have been incorporated into this report. requirements of the Companies Act of South Africa performance and impact of the Group. The Annual
Integrated Report has been prepared in line with
The Group is committed Material matters have been identified and prioritised (71 of 2008) and the JSE Listings Requirements.
best practice pursuant to the recommendations of
to integrating social, after taking into consideration:
The Group’s social investment is focused on South the King III Code (principle 9.1) and in accordance
• Items that are top of mind to the Board and
environmental and executive management African national priorities and the carbon footprint
with the International Integrated Reporting
Framework.
governance principles • Issues derived from key stakeholder incorporates only South African operations at this
point.
with financial performance engagement
The Board authorised the Annual Integrated Report
• Strategic objectives and key business risks
in accordance with the arising from the Group’s Strategic Planning assurance for release on 27 May 2014.

King Code of Governance Framework The Group’s consolidated Annual Financial

for South Africa, 2009 • Our business model and values Statements were audited by the independent
external auditor, Ernst & Young Inc. Their
• External factors that impact on the Group’s
(King III). ability to create value in the short, medium and unqualified report can be found on page 80. NG Payne SI Bird MM Blair
chAirMAN ceo cfo
long-term.

SCOPE & BOUNDARY 3

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2014
operating profit + 22.6%
diluted headline earnings per share + 22.4%
dividends per share + 21.1%
revenue + 15.2%
new channels (online) & markets (West Africa) + 125.1%
return on equity 52.2%
cash resources R2.3 bn
COMPOUND ANNUAL GROWTH RATE

high
HEPS DPS SP
28 years 23.4% 25.2% 27.1%
10 years 24.0% 30.0% 34.7%
5 years 24.9% 29.4% 45.1%
800 160

700 140

lights
600 120

HEPS and DPS (c)

Share price (R)

500 100

400 80

300 60

200 40

100 20

1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
l Headline Earnings Per Share l Dividends Per Share l Share Price

2014 HIGHLIGHTS 4
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 ourvision
To become a top performing international, omni-channel retailer.

whoweare ourpurpose
To add value to our customers’ lives and worth to our partners’ lives, whilst
caring for the communities and the environments in which we operate.
A high growth, omni-channel, fashion value retailer:

ourvalues
p
Targeting younger customers in the mid to
upper LSM categories
v p
retail predominantly own branded merchandise
PASSION • VALUE • PARTNERSHIP
+80% of sales are for cash These are the 3 key values upon which the Group has been built. They are the foundation stones of the
business and never change. By staying true to PASSION, VALUE and PARTNERSHIP, we ensure that
1 079 stores and online channels we are building a sustainable business as we progress towards our vision and fulfilling our dreams for
offering full product assortments our partners – our Mr Price family.

28-year cAGr in hePS and dividends

+20% PASSION is our engine. This means ordinary people doing extraordinary things. It is the positive
attitude and enthusiasm of all our associates who approach each day bright-eyed, smiling and
Market capitalisation of R39 billion, ranked projecting a positive image – believing that work is fun.
42nd on JSe
VALUE is the heart of our business. Our success has been, and will continue to be, built on our ability
included in MSCI
Emerging Markets Index to add value to our customers’ lives. But it is more than just price. It’s about quality, fashion, being in
stock of the wanted item and delighting our customers by doing more than what is expected.
50% of shares held by international investors
(uSA 23%, uK 13%) PARTNERSHIP Mutual respect is integral to the ethos of the Group. We therefore refer to our
co-workers as “associates” and, once they own shares or share options, they are referred to as
3rd in Financial Mail Top Companies 2013 “partners”. Partnership is sharing the ownership and success of the Company with all our associates
and fostering solid and long-term partnerships with our suppliers. Without our customers, we don’t
and 6th in Sunday times top 100 companies have a business and they are one of our most valued partners. We partner with our community by
investing in strategic initiatives that improve the lives of those who are less fortunate, particularly
Finalist in World Retail Awards children and youth.
‘emerging Market retailer of the Year’ 2013

WHO WE ARE 5
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chairman’s
report Another year of pleasing operational
and financial performance

Nigel Payne
chAirMAN

On behalf of the Board, I am privileged to report to the path we have chosen is the correct one, and
our people, customers, suppliers, shareholders and that we will attain the goals we pursue.
to all other stakeholders. Another year of pleasing
operational and financial performance is reported The Annual Integrated Report also details how
on by our CEO, Stuart Bird and CFO, Mark Blair. we govern the Group, appoint and evaluate the
Board, deploy the skills of our Directors in various
The Annual Integrated Report contains a wealth of Board Committees, align the remuneration of the
information about our DNA and values, our vision executives to the achievement of earnings targets
to become a top performing international omni- and strategic milestones, and ensure that we
channel retailer, our strategy to get there and the invest appropriately for the future. I believe that
related risks we are embracing and mitigating. these structures, processes and outcomes remain
When read together with our previous Annual appropriate. I again thank Lead Independent
Integrated Reports, it is clear that, not only have Director, Bobby Johnston, for shouldering much
our intentions remained the same with a well of the corporate governance responsibilities, most
defined strategic plan to guide our journey, but we of which takes place outside the boardroom. This
have largely implemented the things we said we allows me to focus on ensuring that the Board’s
would. We continue this phase of our journey with role in relation to strategy and risk management is
the same conviction we had when we embarked appropriate, and that most of the Board’s meeting
upon it, but now with even greater assurance that time is devoted to these issues.

CHAIRMAN’S REPORT 6
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 as to continuously recycle our working capital are due to the Chairmen of our Board Committees
and avoid the various traps related to credit for their ongoing commitment to excellence.
and debt. Increasing innovation in our business

Our opportunities for model, coupled with ongoing investment in

our merchandising, supply chain, logistics and
I am thoroughly enjoying my role as Chairman, with
such passionate and talented people, a special
growth are exciting, information technology backbones, are aimed business model built upon a robust value system,

and are not based upon

at achieving our targeted rates of sales and and a world of opportunities awaiting us. Thank you
profit growth for many years to come. This is to our Mr Price people, our shareholders and other

chasing diminishing notwithstanding any short-term impact of having

to invest ahead of such growth.
stakeholders for your engagement with the Board
and with me during the year. We appreciate being
marginal returns. The Board has devoted a significant amount of its
entrusted with the leadership and governance of
your Company into its exciting future.
nigel payne, chairman time to ensuring that we remain true to our values,
with an appropriate strategy and the best possible
leadership team to implement it. Our recruitment,
development and reward mechanisms are all
tailored to this end. I believe that our remuneration
policies and practices, are well conceived, have
Our Mr Price people have again demonstrated increase transparency and competitiveness, been fairly and consistently applied, and serve the
how much can be achieved by a committed and remove disincentives to hard work and best interests of the Company in the short, medium
team, with a common purpose, in an energised entrepreneurship. and long-term. Refer to the Remuneration Report
environment. This report, and our 28-year history of on page 63 for more details.
earnings growth, is a celebration of our people, and The retail industry is in the early phases of a
evidence of the power of an effective team. Well number of disruptive trends, including the No company can survive apart from the society
done and thank you to our leaders and to every integration of online with other channels to market, in which it operates. We thus continue to
member of the Mr Price family. fast fashion and the globalisation of customers passionately drive our many corporate social
and suppliers. We have made it our business to investment initiatives via RedCap Foundation, in
The global and South African economies are be one of the disruptors, with much of our efforts conjunction with other funders who have chosen
currently not stable, predictable or safe. Turbulent over the past few years being devoted to these the Foundation as a custodian for their CSI
times are to the advantage of those who are alert, opportunities. Even as societies in some advanced investments. We are very proud to be working in
lean, disciplined and prepared. The fact that the economies are ageing rapidly, there are millions of partnership with you.
vast majority of our management and staff have an emerging consumers aspiring to own fashionable
ownership stake in the Company equips us better goods, available where they live and at prices I believe that the Board and each individual Director
than most to tackle more challenging times. they can afford - ideal Mr Price customers. Our have functioned effectively during the year, have
opportunities for growth are exciting, and are not made a valuable contribution to the Group, and
Securing sustainable economic growth requires based upon chasing diminishing marginal returns. have earned their Directors’ fees. The culture in the
countries to make tough choices to avoid Our value focus remains on offering our boardroom is robust, based upon transparency
populism, take bold action to implement structural merchandise at prices that people can afford, at and mutual respect, but with significant space for
reforms, deregulate labour and product markets, the leading edge of fashion, so they will be desired, challenge and independent thinking, and with no
remove tariff barriers to employment and trade, and on an overwhelmingly cash sales basis, so tolerance for sloth or mediocrity. Particular thanks

CHAIRMAN’S REPORT 7
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 Our formula of great
fashion and quality
at excellent prices,
has again delivered
good results in our
established markets

The consumer environment in South Africa well as proving that we can successfully operate
continued to deteriorate over this reporting period. an online business within specific markets without
Despite this, our formula of great fashion and having to install major infrastructures.
quality at excellent prices, has again delivered

ceo’s
good results in our established markets, as well as Mr Price Home had another good year, exceeding
giving us pleasing growth in the new markets and expectations in a difficult market. The division also
channels we have entered. successfully launched its online business locally in
November 2013.

report
current trade
The Mr Price Apparel division has had a very Despite the discretionary nature of their markets,
good year, continuing to gain momentum Mr Price Sport and Sheet Street also delivered
throughout the period as well as making good solid results.
progress with the major projects of the online
business, corporate stores in West Africa and the After a satisfactory first half, Miladys has
enhancements to the supply chain. unfortunately had a difficult second half. Whilst the
higher margin and credit-based segment in which
Despite some lessons being learnt and further they operate has undoubtedly been difficult, much
improvements required to get our West African of the slower performance was a consequence of
Stuart Bird business operating at the desired level, the the product assortment not being at the level their
chief executive officer positive results achieved confirm our view of the customers required. We are expecting to see an
long-term potential in the region. improvement as we progress into the new period.

The online business is now expected to be in investing for the future

We have made good progress over this reporting our top 10 stores with current monthly growths We aim to be an internationally competitive, omni-
period towards realising our vision of being a in excess of 100%. After opening the site to channel retailer. To realise these plans, significant

top performing international retailer as measured international customers in June 2013, we have
successfully shipped to over 130 countries and
investment in our systems, processes and supply
chain capabilities is required.
against our global peers. the international portion is now approximately 25%
of online sales. In March 2014, an online site was The project to implement new core IT systems
launched in Nigeria with fulfilment from our Ikeja is well advanced, with the selection and design
store. The results to date have been pleasing, as phases complete. The build phase is now

CHIEF EXECUTIVE OFFICER’S REPORT 8

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underway, with the first division, Mr Price Sport, JumpStart Manufacturing Programme was as we look ahead
expected to “go live” in April 2015, followed by the
our culture of Passion, launched. This is a partnership between Mr Price The challenging economic and consumer
Mr Price Apparel division, with their target to be Value and Partnership. Apparel, Miladys, RedCap Foundation and 5 environment is expected to continue for the
operational before peak trade in December 2015. selected strategic suppliers, to develop the skills foreseeable future, particularly in our current major
We strongly subscribe to transformation and have in the local clothing and footwear manufacturing market of South Africa.
The plans to have our new distribution centre made good progress towards our employment sector, including quick response as a key strategy
operational by August 2015 were unfortunately equity targets and improved our B-BEEE status to build a sustainable supply chain. The Group’s Nonetheless, by continuing to deliver on our
disrupted by the final municipal zoning approval from a level 6 to a level 5 contributor. We remain local commitment was rewarded when the formula of great fashion and quality at excellent
not being obtained, despite the municipality of the view that, for our transformation strategy to Department of Trade and Industry (dti) approved prices and continuing to build our capacity to
having indicated during the entire process that be meaningful and sustainable, there is no quick both cluster applications aimed at strengthening further execute this formula, I am confident that
approval would be given. Fortunately, contingency fix. Our approach is to consistently invest in and the competitiveness of the South African Clothing, we will satisfy our customers in both current and
plans were in place for such an eventuality and develop people both within our Group and in Footwear and Textile Industry. new markets and deliver positive future results.
no disruptions are expected, particularly over related businesses outside the Group to grow and
the forthcoming peak periods. A new site that transition them meaningfully. The Group joined the Ethical Trading Initiative as In closing, I would like to thank all our wonderful
the municipality is in favour of has since been a Foundation Stage Member during the year as associates across the Group, who have not only
sourced, for which zoning approval is now The Group has always been committed to well as the Supplier Ethical Data Exchange. Social played their role in delighting our customers and
awaited. Completion date is now expected to be investing in the communities in which it operates, responsibility and a deeper understanding of our consequently delivering the results that we have
August 2016. not only through employment, but also through supply chain are critical to a sustainable business achieved, but also for making this such a special
positively impacting the lives of children and that creates value over the short, medium and place to work.
the Mr Price way youth through RedCap Foundation’s national long-term.
imperatives. In August 2013, RedCap Foundation’s

Our achievements,
both past and in the
future, are and will be as a
consequence of our people
and the culture we have
in the business, no matter
where we operate. We see
both our people and our
culture as precious assets
that require constant care,
attention and investment.
To this end, our associates
have attended over 28 800
courses, aimed at personal
development and to instil

CHIEF EXECUTIVE OFFICER’S REPORT 9

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 cfo’s economic and retail environment

report
The challenging retail environment that we experienced last year has
continued into the current reporting period. Although all retailers have
previously benefitted from the tailwinds driven by credit extension
and strong real wage growth, these have now slowed. Consumers,
particularly those in the lower income groups, are being financially
stretched and will avoid or postpone spending where possible,
especially on big ticket durable items. In such circumstances our
positioning, being a value retailer targeting customers mainly in the mid
to upper LSM categories, is a distinct advantage.

change in accounting policies and

Mark Blair disclosures
The Group adopted IFRS 10 in the current year, which impacted the
chief fiNANciAL officer
accounting for its 100% interest in the equity shares of the Financial
Services cell captives. As a result of no longer meeting the
requirements for consolidation, IFRS 4 has been applied to account for
the cell captives as reinsurance contracts. Full disclosure of the impact
highlights % change
on the income statement and financial position is provided in the
Revenue R15 892m +15.2% Annual Financial Statements. The prior year’s reported earnings were
restated, reducing by an immaterial amount of R2.8 million.
Gross profit margin 42.0% 0.0%
Profit from operating activities R2 537m +22.6% Airtime sales have been reclassified in the current and prior period into
Group operating margin 16.7% +1.1% other income and cost of sales, whereas previously the net income
Headline earnings per share 765.1c +20.5% was included in ‘other income’. This was a disclosure change only and
had no impact on profit.
Diluted headline earnings per share 715.1c +22.4%
Dividends per share - annual 482.0c +21.1% financial performance
- final 314.0c +18.5% Total Group revenue increased by 15.2% to R15.9 billion primarily
due to increases in:
Cash resources R2 252m +95.9%
• retail sales of 14.8% (comparable 10.6%) to R15.2 billion
Return on shareholders’ equity 52.2% +1.1% • financial services income growth of 27.8% to R582.5 million.

CHIEF FINANCIAL OFFICER’S REPORT 10

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We are delighted that the Group has produced a strong set of results on the back of a good performance in Segmental analysis
the prior year, despite:
• the challenging retail environment Retail sales and other income Apparel Home
• incurring costs that will position the Group to realise its long-term growth goals
16 000
• a planned curtailment of credit sales growth, which increased by only 9.6% compared to cash sales
4 290 +10.2%
which were up 16.1%. 12 000

R’m
27.3%
Retail sales for the Group reflected growth of 14.8% highlighting the appeal of our merchandise offer. The 8 000 2 333 +9.4%
1 957 +11.2% 72.7%
Group’s South African retail sales increased by 13.4% compared with the total retail sector which grew by
4 000
6.9%. 5 161 +16.4% 6 252 +17.4% 11 413 +17.0%

H1 H2 Annual
Source: Stats SA

18%
% sales growth

12%
The Apparel chains retail sales and other income increased by 17.0% to R11.4 billion with comparable
16.5%

13.4%
12.9%

11.0%
11.3%

10.2%

sales up by 11.9%. Retail selling price inflation was 9.3% and 157.0 million units were sold. Mr Price Apparel
10.1%

10.1%
6%
7.5%

7.6%
6.4%
6.3%

opened 24 new stores and recorded sales growth of 18.9% (comparable 13.0%) to R8.6 billion. The
division’s excellent second half performance significantly outperformed the market, with comparable sales
Q1 Q2 Q3 Q4 increasing by 15.3%. In contrast, Miladys had a disappointing second half which had the effect of reducing
MPC Total SA retail sales Retailers in textiles, clothing and footwear annual sales growth to 7.0% (comparable 7.2%) to R1.4 billion. Mr Price Sport recorded sales growth of
14.2% (comparable 6.5%) to R962.4 million.

Growth in our new channels delivered encouraging results:

The Home chains increased retail sales and other income by 10.2% to R4.3 billion with comparable
• Online sales were up by 293.4%
sales up by 7.3%. Retail selling price inflation was 10.9% and 59.8 million units were sold. Mr Price Home
• International sales increased by 37.6% and now account for 7.3% of Group retail sales.
increased sales by 10.5% (comparable 8.2%) to R2.9 billion and Sheet Street by 8.9% (comparable 5.4%) to
In the key West African markets of Nigeria and Ghana, sales were up by 98.2%.
R1.3 billion.

Retail selling price (RSP) inflation was 9.7%, which comprised input price inflation of 5.3% and product mix costs and expenses
inflation of 4.4%. Unit sales were up by 4.9% to 216.9 million. The gross profit margin remained in line with last year at 42.0% (after adjusting for the reclassification of
airtime sales and related costs discussed earlier), while the merchandise gross profit percentage in both
Trading space continued to expand, with 68 new stores being opened and 18 non-performing stores being periods was 42.2%.
closed. At year end there were 1 079 corporate-owned and 23 franchise stores. Gross space added in the
form of new stores and expansions represents an increase of 4.8% over the prior year. After store closures Selling expenses increased by 11.9% and constituted 22.0% of retail sales compared with 22.6% in the
and space reductions, weighted average trading space increased by 3.4%. prior year. Significant factors driving this expense growth were an increase in net bad debt, store rentals (as a
consequence of performance-based turnover rental clauses and weighted average space growth), increased
Financial Services delivered a strong performance despite tightening credit limits and limiting new account computer licence fees relating to the new human capital management and e-commerce systems, and staff
growth. Revenues increased by growing insurance premium income by 38.1%, airtime sales by 41.7% and costs, which rose in line with salary inflation and space growth. Higher performance-based store incentives
debtors’ interest and fees by 19.2%. were paid.

CHIEF FINANCIAL OFFICER’S REPORT 11

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Administrative expenses increased by 10.3% and comprised 6.8% of retail sales, an improvement on last current year, the interim payout ratio was increased
earnings and dividends
year’s 7.0%. Staff costs relating to building online and merchandise trending teams, higher incentives paid as from 52.5% to 55.1%. Dividend withholding tax of
a result of divisional and Group performance and a reduction in foreign exchange gains were the significant
per share 15.0% will be applicable to shareholders who are
The number of shares in issue at year end
movements. not exempt.
increased by 2.0 million due to the decreased
number of treasury shares held. Treasury shares
The effective taxation rate for the year was 28.2%, higher than the prior year (27.8%) primarily due to a The return on equity of 52.2% and the return
sold (4 649 937 shares) as a result of share options
capital gains tax release in the base period. on net worth (RONW) of 47.6% are the highest
vesting exceeded treasury share purchases during
achieved to date, and over the last 5 years. The
the year (2 649 714 shares at an average cost of
operating profit R137.70 per share totaling R364.9 million).
latter has been driven mainly by an increased net
Group operating profit increased by 22.6% and the operating margin increased from 15.6% to 16.7% of profit margin as follows:
retail sales.
Headline earnings per share increased by 20.5% 2014 2009
to 765.1 cents. The dilution impact has reduced
Net profit margin % 12.3 7.2
Segmental analysis from 50.6 cents last year to 50.0 cents this year
as a result of the increase in the weighted average Asset turn times 2.3 2.6
Operating profit Apparel Home share price for the year (R139.41) being more Return on assets % 28.3 18.7
3 000 than offset by the reduced number of shares and
Leverage times 1.7 1.9
591 +20.2% options outstanding. Accordingly, diluted headline
2 000 21.9% RONW % 47.6 34.9
R’m

earnings per share increased by 22.4%. The Group

364 +16.3% is pleased to have performed in line with its long-
1 000 226 +27.0% 2 102 78.1%
+23.7% term performance, which is a 28-year CAGR in
1 237 +21.7%
865 +18.9% HEPS of 23.4%.
H1 H2 Annual
The annual dividend payout ratio has risen from
62.7% to 63.0%, resulting in a dividend of 482.0
cents per share, an increase of 21.1%, marginally
higher than the increase in HEPS of 20.5%. The
The Apparel chains’ operating profit grew by 21.7% to final dividend to be paid in June 2014 will be 314.0
R2.1 billion and the operating margin increased from 18.3% cents per share, an increase of 18.5%, which is
to 19.1% of retail sales. The Home chains’ operating profit lower than the increase in the interim dividend and
rose by 20.2% to R590.6 million and the operating margin 2nd half HEPS growth due to the closer alignment
of interim and annual dividend payout ratios. In the
increased from 12.9% to 14.0% of retail sales.

CHIEF FINANCIAL OFFICER’S REPORT 12

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financial position section below show signs of improvement, and Equity attributable to shareholders has increased by R613 million to R3.9 billion.
the improvement in ageing profiles of the Group’s The movement is made up as follows (R’m):
Additions to property, plant and equipment
trade receivables are considered sustainable, the
for the year amounted to R253 million, of which
provision for impairment, currently at 9.8%, will
furniture, fittings, equipment and vehicles
continue to be conservatively set. Opening balance 3 309
constituted 83% and computer equipment 13%.
Total comprehensive income for the year 1 880
Disposals totaling R30 million related primarily
Cash balances ended the year at R2.3 billion, Treasury share transactions
to the sale of a retail property. The depreciation (247)
which was impacted by substantial trade creditor
charge for the year was R162.2 million. The purchase of treasury shares to partially cover options granted (365)
payments being made after the year end cut-
off date. After creditor and SARS payments The net credit on vesting of options 77
Intangible asset additions amounted to
in the subsequent week, cash balances were Taxation relating to grants from the Company to share trusts 41
R151 million and related primarily to e-commerce
approximately R1.5 billion. Cash sales remained
and ERP systems. The amortisation charge for the Recognition of share-based payments 75
high at 80.8% of total sales. The Group seeks to
year amounted to R29.1 million.
strike a balance between: Dividends to shareholders (1 094)
• maintaining a strong balance sheet by having Non-controlling interests (1)
Gross inventories were well managed, increasing
adequate cash resources to fund the working
by 12.3% relative to a 14.8% increase in retail sales Closing balance 3 922
capital and capital expenditure requirements to
and Group stock turn increased from 6.4 to 6.8
maintain and expand its operations, without the
times.
need to incur debt
Long-term lease obligations comprise the long-term portion of straight line lease liabilities.
• hedging its obligations to participants in the
Trade and other receivables increased by
various share schemes. An ongoing repurchase
10.6% to R1.7 billion. Prepayments decreased Trade and other payables increased by 56.1% to R2 billion. Trade payables grew by 74.9% to R1.2 billion
programme is in place that spreads the
from the prior period, while gross trade receivables (2013: R673.3 million) as a result of the timing of creditor payments referred to above. Accruals and other
purchase of shares over an extended period
increased by 13.1% to R1.8 billion. Despite the payables increased by 34.8% to R804.2 million mainly as a result of stock in transit, increased incentive
and limits the percentage of daily trade to
net bad debt increasing from 6.5% to 7.6% of the accruals and higher turnover rentals due.
ensure that there is no impact on the share
debtors’ book, external benchmarking has reflected
price. During the year treasury shares to the
the Group’s book to be one of the best performing
value of R364.9 million were purchased and the
in the industry. Since December 2013, an improved
hedged ratio at year end was 65.2%
ageing profile of the Group’s debtors has been
• returning funds to shareholders in the form of
encouraging. However, until such time that the
dividends.
economic conditions detailed in the outlook

CHIEF FINANCIAL OFFICER’S REPORT 13

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outlook The performance of our new channels and
The country is in a rising interest rate cycle, markets, being online and West Africa are very
although this is not expected to be as extreme as encouraging, providing early support for our
previous cycles. The impact of currency weakness intentions of taking our proven business concepts
has found its way into the broader economy, to new territories, rather than look for acquisitive
increasing inflation, which now exceeds the growth. We have much work to do to realise the full
Reserve Bank’s targeted range and affects the cost potential of the brand beyond our borders and will
of living of all South Africans. approach this sensibly on a research and test basis
prior to committing to substantial expansion.
The Group’s target customers are mainly in the
mid to upper LSM categories, who have to date We are prepared
been less affected by the constraints mentioned
above. If inflation rises further and interest rates
tactically for a tough year
increase materially this situation could change. In ahead but, at the same
the short-term, consumers will need to address
time, our sights are set
the economic challenges facing them by spending
wisely and reducing debt. We aim to ease their on a long-term growth
plight, and ensure that all areas of our business, strategy that will do
including those which can be described as
‘discretionary buys’ or are exposed to lower
homage to our 28-year
income customers, receive our intense focus. earnings growth history.
Detailed plans are in place to protect and entrench
the foundations upon which the business has been
By achieving these
built – selling fashionable merchandise at incredible goals we hope to reward
value for cash. investors, improve the
However, cycles are temporary and the Group
lives of our associates
has many reasons to have an optimistic long-term and positively contribute
view. Locally, we plan to capitalise on changing
market conditions and continue with our approach
to society.
of requiring quality growth. This includes a cautious
approach to credit, being selective in new space
acquired and constantly challenging all aspects
for improved processes and efficiencies. The
Group has high expectations of the performance
of its South African operations and is confident of
achieving further market share gains.

CHIEF FINANCIAL OFFICER’S REPORT 14

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our business
model
value is at the very core of the Group’s existence...

1
THIS IS HOW WE SATISFY OUR CUSTOMERS’ NEEDS FOR FASHION:
• Fashion research, specialist trend teams and frequent international travel

fashion Fashionable merchandise

at everyday low prices.
•
•
•
Active dialogues through digital and social media
Responding to customers’ changing fashion needs
Thorough product testing before making large merchandise commitments
• Slow selling merchandise is cleared to make way for new fresh merchandise

2
MAINTAINING A LOW OVERHEAD STRUCTURE IS IMPERATIVE TO
fashion DELIVERING ACCEPTABLE OPERATING MARGINS:

value
+ • Best price for quality and fashion offered
quality
+
• Being a value retailer means lower mark-ups in order to offer ‘everyday low prices’. This results in large
order quantities and higher sales volumes that keep input prices low
price • The Company seeks to balance this with incurring costs often ahead of revenue generation, which will
support future growth

3
THIS LEVEL OF CASH ENSURES THAT THE GROUP IS:
• Less impacted by the cyclical nature of retail

cash
Remaining a cash-driven • Not dependent on releasing more credit into the market to drive turnover, particularly during poor
retailer with a cash sale economic times
contribution of 80% of total • Less exposed to bad debt
sales. • Able to fund future growth without gearing. Strong cash flows will support increased capital
expenditure and maintain an appropriate dividend pay-out ratio.

OUR BUSINESS MODEL 15

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 South Africa 369 Mr Price Apparel

1 014
Total Stores
148
60
253
184
Mr Price Home
Mr Price Sport
Sheet Street
Miladys

our operations
Botswana

19
10 Mr Price Apparel
3 Mr Price Home
4 Sheet Street
Total Stores 2 Miladys

& footprint
Namibia 16 Mr Price Apparel

29
4 Mr Price Home
1 Mr Price Sport
5 Sheet Street
Total Stores 3 Miladys

Lesotho

4
404 158
2 Mr Price Apparel
1 Mr Price Home
Mr Price Mr Price 1 Sheet Street
Apparel Home Total Stores

Stores Stores
Swaziland
Average store size 632m 2
Average store size 883m2
7
2 Mr Price Apparel
1 Mr Price Home
Total trading area 255 380m2 Total trading area 139 452m2 2 Sheet Street
Total Stores 2 Miladys

61 Mr Price
Sport
Stores
Average store size 813m2
Total trading area 49 578m2
265 Sheet
Street
Stores
Average store size 187m2
Total trading area 49 584m2
Nigeria

4
Total Stores
4 Mr Price Apparel

Ghana

2
191 1 079
1 Mr Price Apparel
1 Mr Price Home
Total Stores
Miladys Total
Stores Stores 8 Kenya
Franchise

23
2 Mauritius
Average store size 318m 2
Total trading area 554 742m 2 3 Mozambique
Total trading area 60 748m2 2 Rwanda
Total Stores 2 Tanzania
1 Uganda
5 Zambia

OUR OPERATIONS & FOOTPRINT 16

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 stakeholder
engagement
The Group recognises the importance of engaging with its
stakeholders to ensure the long-term sustainability of the
business. This process ensures greater transparency, as key
stakeholder issues are identified and response plans developed.

An analysis of the business from a strategic owner who is the individual in the Group primarily
and operational perspective highlighted where accountable for managing the relationship with the
particular external parties currently have an particular stakeholder or stakeholder group.
interest in the organisation or may have an interest
in the future. The tables that follow provide information on the
Group’s key stakeholders. Although we have not
Key stakeholders were then mapped and listed the communities in which we operate and
prioritised as those individuals, groups of certain government departments with whom we
individuals or organisations who affect and/or have a relationship, it is important to note that
could be affected by the Group’s activities, the Group acts in a responsible and compliant
products, services and performance of the Group. manner towards these stakeholders.
Each key stakeholder group has a business

STAKEHOLDER ENGAGEMENT 17
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 shareholders and the investment community customers

Why they are important to us Shareholders are the owners of the Company and require To better understand needs so that we may provide the wanted product and service; to
information about its performance and business strategy. understand brand perceptions so that we may grow long-term loyalty with our brand by
relevant targeted customer communication.
The investment community assists shareholders to understand Our customers thrive on engagement - the more we connect and engage, the more social
the value of the Company. capital we build and the more we are a part of their decisions as a brand in the fashion
value space. Ultimately, top of mind brands translate into increased market share.

What we engage on • Company performance • The common engagement themes and issues are related to product, delivery and
(key themes / issues • Retail market trends and issues payment followed by store experience, staff and environment
identified) • Brand perception and expectations
• Dividend policy
• Share price performance • Fashion trends
• Share schemes • Customer service levels
• Business strategy • Product and quality feedback
• Future prospects • Community support and fundraising through RedCap Foundation
• e-Commerce technical assistance, orders and queries
• Account queries and payment

How we engage • Annual General Meetings • In-store interaction

• Results announcements and presentations to the Investment • Traditional and digital media
Analysts Society and roadshows to the UK and USA • Telephone, email and various social media platforms
• SENS announcements • Live chat feedback on our e-commerce sites
• Trading updates • Affiliate publisher partners in foreign markets, these local market affiliates feedback
• Group website weekly via email any successes or challenges faced in their local market
• Annual Integrated Report • Inbound and outbound call centres
• Annual Results booklet • Customer and market surveys
• Press releases • Advertising campaigns and competitions
• Customer panel surveys
• Mystery shopper programme

Engagement frequency • Throughout the year with increased engagement during the • Daily in-store, customer care engagement, social media channels and online
release of the interim and year-end results • Weekly and bi-weekly through e-mailers and customer/market research
• Monthly communication across various channels

How we measure our • Responses by shareholders to resolutions voted on at the Annual • Call centre service levels
engagement General Meeting • Campaign response rate
• Feedback from the Investment Analysts Society • Social media reporting
• Share price • In-store sell offs
• Data collection to continue engagement
• Customer feedback

STAKEHOLDER ENGAGEMENT 18
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 associates and partners (our people) suppliers

Why they are important to us Our associates are our most valuable asset and brand ambassadors as Suppliers are key to our performance and core to our strategic positioning.
their efforts and activities drive our profitability and the effectiveness of our
customer engagement.

To enhance associates’ sense of value, commitment and motivation; to

align associates to the Group strategy; and to receive feedback on areas for
workplace and performance improvement.

What we engage on • Vision and values • Supplier performance

(key themes / issues • Business Code of Conduct • Order quantities, factory capacities, product cost and quality
identified)
• Group policies and guidelines • Future growth and expectations of the Group
• Company financial performance • Supplier core competencies
• Individual and team performance • Future trends in product and sourcing opportunities
• Remuneration, benefits and incentives • DC requirements
• Transformation and employment equity • Quick Response
• People development and training • Supplier Ethical Data Exchange (SEDEX)
• Wellness programmes • RedCap Foundation Manufacturing Programme (Skills development)
• Health and safety • National textile and apparel cluster
• Culture survey issues • Regional Footwear cluster interaction
• B-BBEE Compliance

How we engage • Induction programmes • Supplier days

• Training needs • Regular supplier meetings
• Performance reviews and fireside chats • Supplier performance reviews
• Career planning discussions • Strategic partnerships
• Culture and climate surveys • Quality audits
• Internal media – Red Cap Radio and TV • Ethical and social audits
• Team meetings • Distribution Centre (DC) tours
• Results presentations • Factory visits and tours
• Divisional events, including awards events • Whistleblowers’ hotline
• Whistleblowers’ hotline

Engagement frequency • On joining, through “Your Journey” induction programme • Supplier opening meetings and tours
• Communication sessions throughout the year • Ad-hoc meetings on topical issues
• Internal TV broadcasts (fortnightly) • Continuous quality audits
• Company results communicated (bi-annually) • Weekly or fortnightly current trade meetings
• Fireside chats and performance reviews (bi-annually) • Bi-annual/seasonal performance reviews
• Incentives set, aligned to business strategies (annually) • Annual ethical and social audits (1st tier suppliers)
• Training plans compiled (annually) • Annual supplier days
• Cost-to-company letters distributed to all associates, including updated
share option information (annually)
• Divisional and Group succession plans reviewed (annually)
• Culture survey conducted (annually)

How we measure our • Culture and climate survey results • Integrated Supplier Grading Tool
engagement • Solutions Café’s following Culture Survey • Performance to Strategic Agreements – capacity, performance, flexibility to trade
• Feedback from fireside chats/performance reviews • Performance to Service Level Agreements
• Employment Equity Committee Evaluation • Supplier audit results
• Whistleblower complaints and compliments
• Turnover statistics
• Exit interviews

STAKEHOLDER ENGAGEMENT 19
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 our
The Group strives to be a sought-after international company
of employment choice by offering leading career opportunities
in fashion value retailing.

conducted culture and climate survey, followed

capacity building
by sessions designed to listen to the needs of
The past year was characterised by considerable
associates, while protecting our core values.
investment in human capacity in line with the
upgrading and renewal of processes, systems,
In line with our culture, we ensure that
technologies and ways of working across the
communication is ongoing through frequently held
Group. A number of new roles were established
“Comm Times”, regular internal TV broadcasts and
creating valuable new skills that improve the
social media platforms. Close working relationships
Group’s competitive advantage. Most of these
between managers and associates are valued
positions were filled internally indicating excellent
and, to allow associates to participate proactively
progress in providing career opportunities for our
in this relationship, employee self service and
associates.
interactive learning management systems have
been introduced. These will provide associates with
In the year ahead we will continue to look for direct access to information relating to personal
people who are adaptive, enjoy working in a fast- performance and management of their careers,
paced, progressive and changing environment and thereby improving the quality of discussions with their
who thrive on high performance. managers.

associate engagement The Group beneficially impacts the lives of

Inspired by our core values of Passion, Value and associates, their families and the communities in
Partnership, our energetic and entrepreneurial culture which they live through RedCap Foundation. We also
continues to be central to the Company’s successful reach into communities through our talent attraction
performance. We have paid close attention to and acquisition teams, ensuring that young people
our culture during this period of high growth and are engaged at an early stage of their careers and
organisational change by striving to understand the gain insight into the many employment opportunities
climate within our working environments. This has available in our Group.
been achieved through our annual independently

OUR PEOPLE 20
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performance recognition human capital management Attracting the right skills externally has become In the last 2 years many new career opportunities
and reward increasingly important in the high growth have been created such as in Digital Marketing,
(hcm) systems
environment. We frequently conduct fun, exciting e-Commerce, ERP Systems, Business Process
Our Group thrives on happy, motivated employees. The continuous transformation of our human capital
and creative campaigns to profile our employment Improvement, Product Development, Resourcing,
A very important element of our culture is to management capabilities to world-class standards
proposition, either to potential associates through Supply Chain, International, Governance and Legal.
actively encourage, recognise and reward has included investment in leading edge workforce
exceptional performance and the achievement our social networking platform or through direct
management, learning management and payroll
involvement with schools, colleges and universities. Personal growth and career development are
of personal goals. Well-defined incentive targets systems. These enable us to better manage and
Systems to administer and hold application data discussed with each associate at least annually
are set annually, with performance discussions develop our people, supporting our objective to
allow proactive management of these talent pools. and line managers are responsible for ensuring
conducted at year-end or as required through the differentiate the Group as an employer of choice.
that these discussions give rise to meaningful
year. The result is generous financial incentives Intended benefits are higher levels of productivity
Our talent acquisition teams are constantly striving development plans. Assessments have been
for outstanding performance. All associates within and cost efficiency as well as improved HCM
to improve our induction processes to cater for the increasingly used to inform career paths, training,
the SADC region are invited to participate in the transactional efficiency in support of our business
increasing geographic spread of associates. On development and improved performance, with
Mr Price Group share or share option schemes. expansion plans.
joining, new associates attend induction programmes competency profiling being core to their effective
This after fulfilling the specific employment tenure
introducing their job specific requirements and we application.
requirements of that scheme as detailed on the We have also planned for a Business Intelligence
Group’s website. As these employees are part- use this opportunity to introduce the core values
solution that will enable our business leaders to
owners in the Company, we refer to them as and the benefits of belonging to an exciting working
make better-informed and predictive HCM decisions,
partners or associates. Further details are contained environment.
particularly relating to building people capacity
in the Remuneration Report on page 63 and on the ahead of strategic requirements. All associates will
Group’s website. Turnover at senior management and executive levels
be offered access to employee self service and
is low, indicating the Group’s ability to retain key staff.
learning management platforms with readily available
We use every opportunity to celebrate team or Store associate turnover for this financial year was
personal information. This will engender a modern
personal achievements and reinforce the spirit 20.1%, substantially below comparative industry
culture of performance accountability through direct
of performance. Group results are presented to norms of 30.9%. Our stringent pre-employment
ownership of career planning and development. The
associates bi-annually at communication sessions assessments for store and key positions which
roll-out of these platforms will continue to be a focus
and, more frequently, divisional performance is include numeracy and behavioural attributes, ensure
in the new financial year.
discussed in the respective divisions. A highlight that the required levels of skill are maintained. The
is the award of the Mr Price Group ‘Running Man’ talent acquisition and introduction of psychometric assessments has also
statue, presented to selected associates who development proved highly effective in screening of key skills at the
have made extraordinary contributions over an point of hiring.
extended period. These highly valued individuals Developing career and personal
embody the Group’s culture and core beliefs and
demonstrate consistently high dedication and
‘homegrown’ talent development
performance. Additionally, the Mr Price Group is a strategy that has
medallion is awarded to associates who have served the Group We offer outstanding
delivered outstanding performance or exceptional
extremely well to date career opportunities and
innovation through the year. These individuals set
new standards and become role models for those and will continue to associates are actively
who follow. In this way we are able to maintain a
be our core area of encouraged to pursue
working culture that encourages people to succeed
and drives them towards their personal aspirations. focus. their ambitions within the
Group.
OUR PEOPLE 21
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 Our primary focus areas for training are merchandise of associates who have completed one or more
management and Managers from across the Group have also
participated in the Retail Management Development skills, frontline operational associates who are of the available modules such as point-of-sale,
leadership development
Programme since February 2012. challenged with the complexities of expansion stock control, credit and business administration,
Given the hands-on nature of retail, managers
into new territories and skills associated with new customer service or a specific module on product
are encouraged to take direct ownership for their
The personal growth and development of our workplace systems. Our intern and graduate knowledge. New modules are continually developed.
areas of responsibility and to use the programmes
leaders is supported by personal and career development programmes in merchandise and
provided to build their own entrepreneurial
development discussions, comprehensive leadership store operations feed externally selected trainees The Group supports the national skills initiative
leadership style. We have continued to partner with
assessments, development of personal development into areas of need, while internal trainees are through learnerships. These are available across
leading training organizations and business schools,
plans and regular performance feedback. Mentoring provided with meaningful work under the guidance various disciplines enabling associates to receive
locally and internationally, to design and run creative
and coaching are offered on-the-job or as required. of allocated mentors and trained according to an a nationally recognised qualification. During the
leadership development programmes. We favour
individually paced hierarchy of learning. year 119 associates were involved in a learnership
flexibility in the design of these programmes to cater
for unique peer group needs within the demands of
talent development programme, of which 92% were previously-
We pride ourselves on our ability to excite all As highlighted earlier, significant investment in disadvantaged.
their busy day-to-day working environments.
associates with the training opportunities that are leading technologies has enabled us to make
provided throughout the Company, both on and training available to associates regardless of where During the past year we invested in training systems
The successful Emerging Leaders Development and upgrades to e-learning which will enable a
off the job. Recognising that attracting, developing they are geographically located. Our e-learning
Programme has enriched our succession plans higher quality of training intervention. Increased
and retaining world-class retailers is critical to our methodology makes learning available to thousands
with entry-level leaders who display high potential training attendance is expected as a result in the
competitiveness and long-term sustainability, we of associates at store level through point-of-sale
for future leadership positions. A Leadership coming year.
pay very high attention to succession planning and terminals on a daily basis. The effectiveness of
Series is planned for the forthcoming year. This
continuously improving the quality and delivery the medium is highlighted by the high number
will focus on individuals in positions of influence
of training. This is reflected in the allocation of a
who are candidates for growth into higher levels of
longer-term budget to the development of our
leadership, as well as incumbent senior executives Key achievements in talent development 2014 2013 2012
talent.
with specific developmental requirements relating
Investment in learning and development R33 775 854 R30 855 899 R25 160 637
to the demands of their positions and/or strategic
The SETA accredited Red Cap Academy has
priorities. Total annual number of hours allocated to learning 230 973 266 416 246 393
served as the in-house institution through which
all learning and development programmes are Average learning and development days per
2.5 2.8 3.7
Our productive facilitated and, aligning with Group strategy, this will
person
Associates who have completed leadership
relationship with the undergo significant renewal in the coming year.
development programmes
2 662 3 748 3 241

Wholesale and Retail As a top retail training ground, we employ innovative Percentage of associates participating in learning
and development programmes who are previously- 90% 88% 87%
SETA has led to a training practices that draw on internal subject
disadvantaged
matter experts, top external faculty and carefully
number of our managers selected service providers. We have become more Percentage of associates participating in learning
69% 70% 70%
and development programmes who are female
being selected for the precise at job and competency profiling as the core
Percentage of associates trained through
SETA’s International of the design and development of training material,
coupled with the effective identification of training
e-learning who are previously-disadvantaged
94% 94% 94%

Leadership Development needs. This is critical given the planned rollout Percentage of associates on learnerships who are
92% 93% 83%
previously-disadvantaged
Programme. of the new enterprise resource planning system,
including redesigned core processes.

OUR PEOPLE 22
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 subject to negotiation at the time of this report. The
employee relations that could potentially give rise to a conflict of occupational health
Maintaining sound working relationships is of utmost process regarding the proposed amendments to interest are disclosed. The Group has a confidential, and safety
importance to us, hence one-on-one relationships the Unemployment Insurance Bill and the newly independently managed, toll-free number for Safe working practices are encouraged throughout
between managers and associates and open proposed Women Empowerment and Gender the reporting of suspected fraudulent activity or our businesses and monitored with regular attention
communication channels are encouraged. Frequent Equality Bill are being monitored. unacceptable behaviour. Associates are encouraged being paid to workplace health and safety training,
communication sessions are held to update to be alert to fraud or unacceptable activity and practice drills and safety reviews. In the year under
all associates on business progress, celebrate The Group has taken positive steps to transform immediately report incidents. These reports are review 75 work-related accidents occurred with
achievements and introduce new associates. contractual relationships with all employees through investigated by Internal Audit. The Social, Ethics, no major accidents reported involving associates.
conversion of non-permanent employee contracts Transformation and Sustainability Committee This represents a 12% decrease in the number of
General employee communication is conducted to permanent. This aligns with the requirements monitors matters relating to ethical conduct. accidents compared to last year.
through Red Cap TV with informative broadcasts of future national employment legislation and in
delivered twice monthly via intranet or point-of-sale particular the principle of “equal pay for work of wellness
technologies. A Social Media policy is in place to equal value”. Our associates are encouraged to make healthy
provide guidelines for new and innovative ways of lifestyle choices, a philosophy that is promoted
communicating internally using social networking We have commenced implementation of our annually through a Wellness Week and via regular
technologies. responses to the major impact areas of the Red Cap TV broadcasts. Associates have access
Labour Relations Act and the Basic Conditions of to health counselling and programmes to assist
employment legislation Employment Act and are responding proactively with information and treatment regarding serious
The Group complies with all relevant legislation to proposed changes to the Employment Equity illnesses. Wellness initiatives include assistance with
including the Labour Relations Act, the Basic Regulations. This ensures that the Group is personal financial planning and retirement planning.
Conditions of Employment Act, the Sectoral compliant with national employment legislation.
Determination Act No. 9, the Skills Development Currently we have 2 910 associates covered by one
Levy Act, the Skills Development Act, the We have maintained active membership of of the available medical aid options, this represents
Employment Equity Act, the Unemployment the National Retail Association, through which 22% of all permanent staff, which includes a low
Insurance Fund Act and the Occupational Health representation to Nedlac and participation in cost entry-level medical plan specifically offered for
and Safety Act. Line management is supported by discussions of national interest is facilitated. This store associates.
well-trained employee relations practitioners who has assisted us to stay abreast of labour law
guide the interpretation and application of legislation developments and plan our responses accordingly. We recognize the ongoing challenges of HIV/Aids
in the workplace. and strive, where possible, to assist our associates
ethical behaviour who are affected by the disease. Regular HIV/Aids
There have been significant changes to national Ensuring that ethical behaviour is widely practiced awareness communication is distributed to all
employment legislation during the past year, and demonstrated is very important to the associates via the intranet, point-of-sale system and
including changes to the Basic Conditions of sustainability of our Group culture. As such the printed media. The Group is an active member of
Employment Act, Employment Equity Act and Business Code of Conduct is acknowledged by Retailers Unite, a voluntary association of retailers
Employment Services Act (effective dates are each new associate when joining the Group. Senior who collectively arrange wellness days where health
not determined at time of this report). Changes and other selected associates complete an annual screenings are offered free of charge to employees
contained in the Labour Relations Amendment declaration in which compliance with the Code is of participating members.
Bill and the Employment Equity Regulations were confirmed and any external interests or relationships

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 Sustainability is deeply entrenched in the Group’s corporate
values and its commitment to long-term business success.
In this report we provide an overview of performance against the generic Broad-Based Black Economic
Empowerment (B-BBEE) Scorecard and key social and environmental sustainability issues in relation to our
value-adding journey. The Social, Ethics, Transformation and Sustainability Committee reviews the Group’s
corporate citizenship agenda and related activities. Their report is located on page 91.

Our Governance is about effective and ethical leadership, the outcomes of which are sustained value creation,
success and longevity. The Board subscribes to ethical leadership, business sustainability, stakeholder
inclusivity and sound values of good corporate governance. The principles of governance are a natural
extension of our values of Passion, Value and Partnership and have been adopted and integrated into our
business. More information on the Group’s governance strategy and activities during the period can be found
in the Corporate Governance Report on page 48.

BROAD-BASED BLACK ECONOMIC EMPOWERMENT (B-BBEE)

Our Level 5 Compliance has been independently verified against the Department of Trade and Industry’s (dti’s)

our
B-BBEE Codes of Good Practice, 2007 by BEESCORE (Pty) Ltd, a SANAS accredited verification agency.

We are committed to driving social transformation and B-BBEE in a way that is both meaningful and

corporate
sustainable. A high level assessment of the impact of the Revised Codes on our future scorecard has been
conducted and it is acknowledged that the scorecard result is likely to be less favourable. Current initiatives
that will be impacted include the Mr Price Partners Share Trust (which has approximately 95% black
participants), as well as significant investment in people’s skills, local suppliers and local communities (through
RedCap Foundation).

citizenship
B-BBEE Scorecard
element total weighting F2014 F2013 F2012
Ownership 20 5.51 6.47 5.46
Management 10 3.08 3.38 3.68
Employment Equity 15 6.26 6.18 6.01
Skills Development 15 12.00 12.00 12.00
Preferential Procurement 20 15.92 14.54 11.20
Enterprise Development 15 7.55 7.09 8.80
Socio-economic Development 5 5.00 5.00 5.00
Total 100 55.31 54.66 52.15
B-BBEE Level 5 6 6

OUR CORPORATE CITIZENSHIP 24

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 affirmative action and to ensure adherence to
management and Sustainable Textiles and Apparel Cluster will receive socio-economic development
relevant legislation. the full funding required to further their objectives.
employment equity The strategy is to invest in South African
The objective of the Regional Footwear Cluster communities to support a local sustainable
The Group recognises the need for its workforce
to be representative of national and regional
enterprise development is to deepen and widen engagement in people, market and skilled labour force. Social funds
The Enterprise Development investment has product and processes in the footwear and leather are strategically invested in a way that unlocks
demographics and continues attracting,
been centered on the development of strategic value chain to increase profitability and employment empowerment in the hands of individuals rather
employing and developing people from previously
local suppliers in order to build the local South levels within the region. The suppliers involved than creating a cycle of dependence.
disadvantaged groups. Focus is given to taking
African manufacturing capacity. The investment are strategic partners in the RedCap Foundation
in graduates from previously disadvantaged
may involve a combination of loan, early payment JumpStart Manufacturing Programme and they are The social investment initiatives are implemented by
backgrounds and preparing them for management
(to assist with cash flow) and skills development Enterprise Development beneficiaries. The cluster RedCap Foundation NPC, a registered Non-Profit
and specialist retail positions. Pre-employment
(through RedCap Foundation’s Jumpstart has a budget of R51 million over 5 years. and Public Benefit Organisation. Partnerships
internships are also offered as a means of
Programmes) and is dependent on the needs with various stakeholders, including the National
evaluating prospective employees and the RedCap
of the individual supplier, their level of supplier The National Textile and Apparel Cluster aims Department of Basic Education (DBE) and the
Foundation’s JumpStart programme provides
performance and capacity. to strengthen South Africa’s competitiveness in JobsFund, remain focused on delivering innovative
soft skill training and retail work experience for
producing sustainable raw materials and textiles for solutions whilst building towards systemic change
unemployed matriculants.
The Group’s commitment to partnering with local consumption and potential exports in future. at a national level.
suppliers to build a sustainable local supply This will inform the Group’s future raw material
The Group’s philosophy is to encourage all
base is demonstrated through the Group’s role considerations and will enable the availability of raw The Foundation has a vision of a South Africa
associates to achieve to their full potential,
as the founding retailer in the dti approval of 2 material sourcing data for business decisions and where young people create positive social change
irrespective of race or gender. Associates are
cluster applications aimed at strengthening the reporting. The cluster has a 5 year budget of R228 by being inspired, healthy and engaged citizens.
encouraged to apply for and secure growth
competitiveness of the South African Clothing, million, of which R61 million will be allocated for the Gap areas within the national priorities form
opportunities within the Group as these arise. Those
Footwear and Textile Industry. The Footwear and first year’s implementation. the space in which the Foundation focuses its
who have the potential to attain top management Leather Regional Goods Cluster and the National attention, by delivering strategic and innovative
positions and meet the needs of the succession
plans are invited to attend internal and external
leadership programmes that provide relevant
business exposure and highlight development Equity Statistics for all South African Associates
areas. This assists in the attainment of the
employment equity (EE) goals set for the various occupational level female male grand foreign national
total
occupational levels. The EE goals, set to 2017, have A C I W A C I W female male
supporting action plans to address representation Top Management 1 1 8 25 35
requirements at senior levels and there is regular
Senior Management 2 10 56 3 1 5 38 115 4 1
reporting in place to monitor progress.
Professionally Qualified 19 23 69 172 17 7 61 117 485 3 0
The Executive Transformation Committee reviews Skilled technical 1 065 560 282 446 455 109 123 124 3 164 8 6
and assesses, and the Board ratifies, appropriate
Semi-Skilled 4 613 1 178 293 120 1 797 294 119 38 8 452 5 7
employment equity targets in line with the Group’s
B-BBEE plan. An Employment Equity and Skills Unskilled 47 8 5 41 1 11 113
Development Committee, fully representative Total Permanent 2014 5 744 1 772 660 802 2 313 412 319 342 12 364 20 14
of the Group’s associates, meets regularly to
Non-Permanent 2014 2 594 492 79 74 1 019 152 23 44 4 477 1
discuss progress in employment equity, identify
and recommend steps to overcome barriers to Total 8 338 2 264 739 876 3 332 564 342 386 16 841 21 14

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 solutions to the socio-economic issues. The in 2009 with the collaboration between the
social responsibility
Foundation’s partnership with the Group allows it to Foundation and the DBE. The objective of this The Group’s social strategy, guided by its
respond with strategic solutions designed to meet collaboration was for the Foundation’s programmes values, recognises the partnership with society,
the socio-economic needs of society as well as and learnings to be incorporated into the new acknowledges the impact on partners and takes
those of the Group and its supply chain. School Sport Policy and the Department’s National the necessary steps to ensure that our involvement
Strategy on PE and school sport for all public is of a positive nature and results in “win-win”
This year the Foundation initiated the JumpStart schools. In the next year, 2 of the YoungHeroes outcomes.
Manufacturing Programme to develop the skills provinces will enter the sustainability phase, which
of unemployed youth in the clothing and footwear will test the ability of the local Department of The health, wellbeing and physical environment
manufacturing industry, thereby addressing Education officials to manage the programme. in countries where people produce our products
the needs of both the youth and industry alike.
is important to us. To this end, the Group has
In February 2014, 21 pre-production and 100 The RedCap Schools in Kwa-Dukuza further become a Foundation Stage Member of the
production students started an internship improved their academic results to above the KZN Ethical Trading Initiative (ETI) during the year.
programme across 5 manufacturing sites of average of 42% and the national average of 40%. The ETI membership gives the Group access
strategic suppliers in KZN. In June 2014, another At these schools, the Iciko Programme (focused on to a framework and expertise that will assist in
intake of 100 students will take the total to 200 arts, drama, dance and music) achieved significant developing a process of supplier compliance and
multi-skilled production trainees being skilled results and overwhelming support from principals alignment to our core values. By becoming a
for the sector in 2014. The JumpStart Retail and teachers to integrate the programme into member, we have joined a list of many international
Programme has assisted 717 previously school curricula. This integration started in February businesses from various sectors which are
unemployed youth to find job placements within 2014. From March 2014, the Foundation will committed to improving the lives of global supply
the Group and other business partners of the utilise the RedCap Schools computer laboratories workers.
programme during the past year. The investment to launch the Global Literacy and Numeric
cost per delegate is a mere R1 750 per person. programmes in support of further developing both The alignment of the Group’s Supplier Code
The programme started in 2007 and is currently educators and learners in the areas of Maths and of Conduct to the ETI Base Code is one of the
implementing a successful collaborative English. key steps in committing to trading ethically and
programme in partnership with National Treasury
improving conditions in a vast, complex and
through the JobsFund. This has resulted in 2 061 The Foundation’s Saturday School was launched global supply chain. A deeper engagement with
job placements since its inception. in early 2013 with 129 learners (from grades 2 to our suppliers on these issues is fundamental
12) attending lessons in Maths and English on a to influencing future change and obtaining
The YoungHeroes Programme expanded to Saturday morning at the Group Head Office. transparency. Further to this, the Group also joined
the Free State and made history by implementing
the Supplier Ethical Data Exchange (SEDEX) during
all elements (physical education, extra-mural, The Foundation raised over R2.8 million in outside the year. SEDEX provides member companies
intra-school and inter-school) of the programme donations this year, Facebook visits increased from with a secure online tool for sharing and managing
simultaneously at the time of launch. The 636 likes to 1 051 over a period of 6 months supply chain information on 4 key pillars: health and
programme has been successfully implemented in (65% increase) and the number of visits on the safety, labour standards, business practices and
8 provinces and continues to show best practice website increased by around 47% since last year. the environment. Becoming a member highlights
in Physical Education (PE) and school sport. The For further information on the activities of the the Group’s willingness to share information and
programme started in 2005 and was enhanced Foundation refer to www.redcapfoundation.org to utilise the available information to manage and
improve ethical standards within the supply chain.

OUR CORPORATE CITIZENSHIP 26

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 Energy and carbon footprint and a packaging specialist has been commissioned
The regular interruption of the national power grid to investigate opportunities for further product
and rising cost of electricity could have a significant packaging efficiencies and guide in-store recycling
impact on the Group. efforts.

The Group’s commitment is to reduce its carbon Both our Distribution Centres (DC) have excellent
footprint by 10% over the medium-term (on recycling rates with an average of 95% of all waste
baseline year 2013). During this year our carbon generated being recycled.
footprint was reduced by 2.9 million Kwh (2 871
tons CO2 emissions). The accuracy of the carbon Further to this, the DC has implemented an
footprint calculation improved significantly and innovative solution to the standard wooden pallets-
initiatives to calculate, monitor and reduce the recycled cardboard pallets have been implemented
emissions were implemented. for all airfreighted stock. This pallet is lightweight
and eliminates the need for fumigation of containers
environmental responsibility Raw materials and supply chain
The Group’s direct impact on the environment is when sending stock to our international operations.
The business is reliant on the environment for basic The Group’s most significant environmental impact
occurs within its supply chain, during the process limited, with the largest impact being electricity They have also reduced the quantity of cardboard
needs such as water, energy and the provision of
of production and transportation, as well as during usage at store level. Carbon reduction initiatives boxes (cartons) in the post distribution process by
raw materials needed to produce and transport
the customer washing and drying of the apparel included lighting retrofitting in stores, ongoing eliminating the need for repacking through
products. The reliance on natural resources and
and textile products. evaluation of energy requirements and improved engagement with suppliers on carton dimensions
the implications of climate change have recently
user behavior around energy reduction. The and specifications to supply merchandise into the
been acknowledged in terms of the impact on the
The Supplier Code of Conduct requires compliance initiatives have been enabled through an energy DC.
business risk profile. Whilst sufficient sector specific
with in-country environmental legislation, but it management programme and meters installed at
information is still largely lacking to effectively inform
is acknowledged that further work is required to store level. New store designs are now 30% more Fuel and travel
business decisions, it is acknowledged that, for
ensure that the Code is actually in line with energy efficient than they were 5 years ago. The Group’s outbound transportation and
future survival and success, a resilience to sustain
international legislation, particularly in countries distribution is managed by an external service
the impacts of climate change has to be built.
where laws do not sufficiently address Water provider who has successfully implemented fuel
environmental degradation. The Group has not yet focused on water usage and kilometer travel reduction for the distribution
The Group recently reduction as the nature of our business operations to stores. Due to the rising cost of fuel, this could

joined WWF as a In order to fully understand the climate change risk requires a very low usage of water. It is
acknowledged, however, that South Africa is
have a significant impact on the Group if not well-
managed. Scope 3 emissions, relating to business
and impact on raw materials used in the production
corporate network of the Group’s products, detailed and specific considered to be a water scarce country and we travel and emissions in the value chain, are

partner to access the research appropriate to the needs of the industry anticipate incorporating responsible water usage in
our value chain in the future.
currently not included in the Group’s carbon
footprint however opportunities for reduction are
expertise of global is required. It is expected that the participation in
the National Sustainable Textile and Apparel Cluster constantly investigated.

subject matter experts will produce life cycle assessments that will assist Waste
Our office recycling rates are still fairly low Awareness and education
in environmental the South African textile industry to make informed
decisions regarding the fibers that are socially and compared to industry norms and a target recycling Over the past year, regular awareness campaigns
issues. environmentally appropriate for local production rate of 20% has been set for F2015. To this end, to associates involved energy tips, recycling and a
and it will assist retailers to make appropriate textile the recycling initiative at our Head Office recently continuous focus on improving waste recycling.
and design decisions. underwent a re-launch to simplify source separation

OUR CORPORATE CITIZENSHIP 27

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our strategy
The Group’s strategy has been developed after period of low economic growth. At the same time,
careful consideration of the operating environment retailers are under increased pressure to consider
within the international, local and retail industry the environmental and social impacts of their
contexts. In particular, cognisance has been given operations.
to the following significant matters:
• economic and socio-political landscape of Customers have begun to move with much greater
South Africa fluidity between physical, mobile and PC-based
• globalisation of retail and the need for robust interfaces. Accordingly, it is critical that brands
systems and processes to ensure competitive create customer experiences that fuse the physical
advantage both in South Africa and new and digital worlds. The international trend is for Retailers are also continuing to focus heavily
markets an omni-channel approach (bricks and clicks)
• increasing role of technology in everyday life and presenting a consistent look and feel across on resourcing, supply chain and costs to
and the impact on current operations and
international expansion
all contact points. Social media has become a
critical success factor in the retail environment.
reduce lead times, the cost of procurement,
• supply chain, infrastructure and retail space Real-time mass communication can be leveraged enhance efficiency and improve working
challenges in new markets
• sustainability, the environmental and social
as an advantage, for example to test consumer
opinion on an issue or on merchandise, but can
capital in an increasingly competitive
impacts of a company’s operations. also have the opposite impact in the event of poor environment.
quality or an unpleasant shopping experience. The
retail industry Group’s target customers have fully embraced
Retail is a highly dynamic sector involving property, these new disruptive technologies. New-generation
design, technology, logistics, fashion and popular shoppers want to engage with retailers who are
culture. The current context of retail is challenging at the forefront of technology, both in store and
due to many retailers facing market saturation and online, and interact in a world without walls. Several
increased commoditisation, and many wrestling exciting initiatives are underway to ensure that the
with new multi-channel strategies to drive sales in a Group meets and exceeds such expectations.

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 positioning results in them competing more with
local market targeted range of 3-6%. This has a knock-on While the Company gives preference to and
effect across the whole economy, however the higher price-point credit retailers. The Mr Price sources a proportion of its merchandise from local
Economic considerations
it has the biggest impact on lower income brand is well entrenched in the hearts and minds suppliers, its efforts are hampered by the lack of
South African retailers have, in general, experienced
customers. The Group generally targets of South African consumers and Mr Price Apparel competitiveness of the local manufacturing industry.
a decade of remarkable growth, benefitting from
customers in the mid to upper income groups, has continued to increase market share despite A lack of investment in new technology and high
the expansion of the emerging middle class.
although Sheet Street’s target customers are in the presence of international retailers. Although cost of employment, without a corresponding
The recent slower momentum, which impacts all
the mid LSM 5-8 bands. the local market is still very important, the Group’s increase in productivity, contributes to the high
retailers, is due to the following:
• Interest rates have entered an upward cycle, strategy is to take our proven business concepts costs of local manufacturing. In response to the
• Wage growth has slowed and, although still
however the impact is not expected to be as to new markets and expose consumers there to opportunity to assist the competitiveness of local
higher than inflation, the gap has narrowed
extreme as previous cycles. If increases are the merchandise offer that has served us so well manufacturers, the Group has developed an
significantly.
moderate, the impact on retail sales will be to date. Enterprise Development Strategy and has recently
• Current rand weakness is fuelling an already
minimal and the Group will benefit from higher been involved in the establishment of 2 dti-approved
pressurised environment, impacting imports and
interest income on its cash resources and With regard to real estate, there is always high competitiveness clusters. Refer to Our Corporate
the cost of goods and services. South Africa
accounts receivable. demand for premium locations and there have Citizenship report on page 24 for further details.
has a volatile currency and, as the major South
• Unsecured credit, which accounts for 12% of
African apparel retailers import the majority been instances where new entrants have been
total credit in South Africa, is slowing as lenders Through the Red Cap Academy, talent and
of their merchandise, all are affected. Locally willing to pay higher rentals in order to secure
lower their risk appetites. The credit quality of management development programmes support
produced apparel also does not escape the space. However, the Group has strict store
this segment continues to weaken, however the development of black managers and grow the
volatility of the exchange rate as the majority feasibility guidelines and would rather decline such
the ageing profiles of other credit types remain leadership in the Group. Electronic retail-specific
of fabric used in South Africa is imported. With space opportunities than run the risk of performing
strong. The Group’s credit quality is strong training programmes train associates for a career in
its average selling prices being lower than its sub-optimally as a result of inappropriate overhead
relative to the industry. retail. Refer to the report on Our People on page 20.
competitors (which can be as much as 3 times structures.
higher), the Group is potentially less impacted The business model, which is explained in detail on The Group remains committed to acting responsibly
than its competitors by currency weakness. The Social and political considerations
page 15, has proven itself in previous economically and to considering the interests of its key
same percentage increase in the landed cost The South African social landscape remains
challenging times. Consumers will look for greater stakeholders – in short, being a good corporate
price due to a weak rand will widen the selling challenging, with low levels of education, a high
value and, for fear of falling into a debt trap, will be citizen. In doing so, the Group abides by the laws
price gap, making the Group’s merchandise unemployment rate and pressure on National
more confident paying by cash. In these conditions, of the territories in which it transacts and expects
offer more attractive on a relative basis. Our Government as a result of the high number of its associates, suppliers and stakeholders to do
as a cash-based value retailer, the Group is well
strategy is to maintain the gross profit margin placed to capture further market share. The past people employed by that sector or drawing social likewise. Refer to the Corporate Governance Report
during periods of currency weakness, rather few years have seen an increasing number of benefits from it. Critical skill shortages continue to on page 48.
than absorbing the cost thereof. international apparel retailers establishing a impact the business environment, including the
• Inflation is on the rise and has exceeded the presence in South Africa. However, their market retail, clothing and textile industries.

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 group strategy
The Company’s vision is to become a top performing, international omni-channel retailer which requires
sustainable value creation over the short, medium and long-term. The Board of Directors reviews the
appropriateness of the strategic objectives annually and performance against set targets regularly throughout
the year. An integrated approach to strategy, risk management, performance and sustainability has been
adopted and there is continued commitment to the alignment of “people, profit and planet”. The Group’s
strategy has been captioned ‘FIX, INVEST, GROW’:

international and expensive, while under-developed supply

chains, corruption and lack of infrastructure are
The African continent, additional challenges. The Group’s growth strategy FIX Address all areas of operational weakness and improve the operating margins of
underperforming divisions.
with a rapidly urbanising is multi-faceted, incorporating local, African and This phase was targeted at the Home businesses which were performing below
international growth.
population of nearly expectation and Mr Price Sport which was a start-up business that had not yet achieved
critical mass and was incurring losses. These divisions have improved their trading

900 million,
The East, particularly China, continues to be the densities and operating margins are now all in excess of 10%. A revised target of a
major force in apparel manufacturing, however minimum of 15% within the next 5 years has been set, while Apparel and Miladys are
sourcing from that location is not always ideal targeting in excess of 20%.
is being considered by as the need for fast-fashion and shorter lead
many as “the next big times would, in theory, seem to support local
INVEST Improve processes and systems, the foundations of which will support and
sourcing. Where possible, the Group procures
thing”. from local manufacturers and suppliers, however
enable the growth strategy.
Detailed assessments of systems, people, resourcing and supply chain have taken place
the ability to accommodate our order volumes at and the Group has committed to capital expenditure of R3 billion over the next 5 years.
Disposable incomes are rising and consumer Significant investments are a new ERP system and distribution centre (page 31 & 32).
the most attractive price requires the Group to
spending is expected to grow to almost $1 trillion.
source from international suppliers to a significant
GDP growth is close to 6% and several Sub-
extent. The Company is currently reviewing its
saharan African countries rank among the 10
resourcing strategy to enable quick response and
GROW To be an internationally competitive omni-channel retailer with robust top line
fastest growing economies globally. A middle class growth and an increasing contribution of foreign revenue.
is working with strategic suppliers to develop key The Group’s approach to expansion is to fully test foreign markets before committing to
is emerging and increasingly wealthy consumers
manufacturing skills. Refer to the Group’s social an entry strategy. Early results are encouraging, with focus now being placed on supply
are embracing Western brands, products and
responsibility initiatives on page 26. chain improvements to ensure appropriate pricing and consistent brand positioning in all
lifestyles. Mobile phones and the internet are
markets and research into other territories (page 31).
proliferating rapidly across the continent and
Worldwide businesses have acknowledged the
internet penetration is expected to increase from
167 million to 600 million by 2025, and smart need to address climate change via more efficient
and effective usage of resources such as energy, The Group’s most material matters are those which affect the execution of its strategy and its ability to
phone utilisation to increase from 67 million to
water and fuel. This reduces carbon footprints create and sustain value in the short, medium and long-term. These material matters have been identified
360 million over the same timeframe. There are
and the overall impact on the environment and and prioritised after taking into consideration the Group’s business model, unique culture and partnership
significant opportunities for retail in developing
mitigates rising costs. The Group’s usage of these philosophy, the top of mind issues for the Board and executive management, issues that have been derived
economies. Africa represents a major opportunity
resources is under scrutiny, through energy and from key stakeholder engagement, strategic objectives and key risks. The Group’s most material matters
for us to expand but capturing it will require
supply chain initiatives. Read further on the Group’s have not been reported separately; instead these are integrated throughout this report.
patience, hard work and ingenuity. Formal retail
space (malls and shopping centres) is scarce environmental responsibility on page 27.

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strategic objectives and kpi’s progress to date key risks and mitigations future priorities

Deliver sustainable growth in revenue and South Africa - ‘home base’ is the foundation Slowdown in consumer spending in SA • Grow new revenue streams which are showing
profitability in targeted markets and channels. which will fund infrastructure and future growth. • Focus on fashion-value business model, encouraging early signs. Ensure that we
Increase in: Sales growth of 13.1% achieved and 59 stores including trend and design capabilities, continue to execute well locally and increase
• Revenue were opened. systems, logistics and suppliers to maintain low market share
• Trading space cost structures and value positioning • Target new annual space growth of 5% and exit
• Trading density Other Markets – opened 9 corporate owned • International expansion strategy from unproductive space which is presently 9%
• Operating profit stores to bring the total to 65. Sales increased by • All international growth to be cash based. Cap of total space
• Operating margin 37.6% which included Nigeria and Ghana, which on total credit contribution of 20% of Group • Design and test Mr Price Apparel new-age
• HEPS grew by 98.2%. sales store
• Return on equity • Implement new operations structures, targeting
• Return on investment Acquired Zambian franchise and awaiting Increasing competition, including presence of improved customer service and operational
Competitions Board approval. international retailers in SA efficiency
• Focus on fashion-value business model • Enhance shoppers’ online experience via
New trading space increase by 4.8% (3.4% net • Development of merchant and trend teams improved navigation and integration with
of closures and reductions). • Raised level of pre-season planning physical stores
• Improved supply chain and resourcing • Enhance our CRM processes to ensure that
Online launch of Mr Price Apparel internationally processes customer experience across all touch-points is
(mrp.com) and in Nigeria (mrp.com/ng) and Mr • Associate retention policies consistent
Price Home and Sheet Street in SA. Total online • Launch online in remaining trading divisions
sales increased by 293.4%. Investment in wrong market or format • Acquire key franchise operations and continue
• Clearly defined risk appetite with African expansion, focusing on value and
Research in progress in other African and • Multi-channel approach to expansion in order channels to market
international markets to identify additional growth to overcome limited availability of retail space • Further research to identify the international
opportunities. • Intensive research and test strategy for new markets and formats (physical or digital)
markets and new channels appropriate for the expansion of the red cap
Improved returns are detailed in the CFO’s report • Stringent feasibility requirements and approval brands - Apparel, Home and Sport
on page 10. processes • Build brand equity in new markets
• Primary focus on logistics, pricing and • Extend our track record of growth
competition
• Focus on effective people and management
structures
• Pricing initiatives in progress include new
transfer pricing model and supply chain
initiatives to eliminate double duties

Develop world class information system Oracle has been selected as the new Enterprise Systems and business requirements are • Mr Price Sport live on new ERP by April 2015
capabilities to enable more intuitive and agile Resource Planning (ERP) system and Just Enough misaligned or a problematic implementation and overall project completion by 2nd half
processes, improve efficiency and support as the new Planning Solution. disrupts the business of 2016
international growth. • Establishment of the MRP World team to • Implementation of online and customer
• Successful implementation of new ERP and The project is underway, with the design phases ensure alignment with business requirements interface requirements
merchandise planning systems having being completed and the build phases and Group strategy • Control capital expenditure within budget of
• Achievement of detailed project milestones having commenced. Implementation in the 1st ‘test • Deployment of senior resources and R210 million
• Timeous and successful implementation in division’ for the new ERP system is scheduled appointment of IT specialists and independent
test division for April 2015, with the remainder of the Group’s advisors
• Key business needs met divisions following thereafter. • Effective IT governance structures and
• Minimisation of new project requests and processes, including Executive Steering
scope creep Committee and oversight by the Risk
• Roll-out to remaining divisions in line with Committee
project plan • Phased implementation plan, commencing with
• Capex and operating costs within budgeted a small division before being rolled out further
levels • Effective change management processes

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strategic objectives and kpi’s progress to date key risks and mitigations future priorities
Build an improved end-to-end supply chain, Direct imports increased by 53% to 16% of total Increased direct exposure to exchange rates • Ensure that suppliers are reputable and able to
including resourcing and logistics, to improve imported merchandise. may cause volatility in selling prices and meet our increasingly complex requirements.
visibility, optimise costs, reduce lead times gross margin % • Achieve consistent progress on factory direct
and support international expansion Group input price inflation was 9.7%, of which • Increase in direct imports is on a phased basis and trading relationships, with 85% of imports
• Ongoing transition of resourcing strategy - % approximately 5.3% was like-for-like input prices over a few years to be on this basis by F2019
of inputs acquired via direct relationships with and 4.4% mix. • Hedging strategy in place and treasury • Eliminate double-duty in foreign markets.
manufacturers committee established Foreign stores incurring single duty to increase
• Like-for-like product input price inflation Bond store established and accredited. • Selling prices routinely checked against from present level of 17% to 90% over the next
• Delivery performance – on time in full, lead 4 consolidation centres established in the East. competitors 5 years
times • Conduct limited tests on direct shipments from
• Elimination of double duties in foreign trading New DC plans were well advanced, however Inability to eliminate double duties will result China to Nigeria in July 2014
territories - % of merchandise delivered from setback due to municipal approval being declined. in retail selling prices in foreign markets being • Obtain necessary approvals for new distribution
point of manufacture to each respective market Alternative approved site identified and an higher than desired. This will hamper our centre and achieve project milestones
• Achievement of consolidation centre and bond environmental impact assessment is underway. competitiveness, result in the brand identity • Establish the potential of bringing the fulfillment
store utilisation targets not being consistent in all markets and the of e-commerce sales in house
• DC cost per unit Freight as a % of FOB reduced, exceeding initial growth strategy being impacted
• Freight cost as % of FOB value targets set. • Detailed plans to eliminate double duties
• Build a new distribution centre in SA – timing, • Amended transfer pricing policies awaiting
efficiency gains and costs regulatory approval
• RSP’s to be lowered as benefits accrue which
will positively impact competitiveness against
informal markets and increase market share

Distribution Centre capacity may be unable

to cope with peak trading throughputs and
future growth
• Interim focus on process and stock-flow
optimisation
• Use of off-site facilities during peak periods
• New DC project has been set up as a major
initiative, with a focused team, appointment
of specialists, sound project governance
structures and processes including reporting
to the Services Division Board and Risk
Committee
• New DC to be in use by August 2016

Empower and engage people, enhance • Investment in learning and development Poor education levels and a lack of Remuneration structures will be reviewed across all
people and leadership capabilities and ensure increased to R33.8 million skills result in the further decline in the levels to ensure that they are still relevant to those
that company values and corporate ‘DNA’ are • Continued investment in e-learning facilitated manufacturing industry which is already whom they impact and continue to act as a strong
embedded training across a widespread footprint struggling with competiveness motivator to drive future growth.
• Effective staff recruitment strategy • Various initiatives to train the new skills required • Supplier and enterprise development plans, by
• Effectiveness of succession plan to support the Group’s strategy the merchandise, resourcing and sustainability Significant focus will be placed on the completion
• Appropriate training investment • Focus on leadership development, including EE teams aimed at improving supplier sustainability of the HCM system roll-out and the results
• Achievement of Employment Equity (EE) targets • 96% of associates that joined the Group in and quick response capabilities in SA obtained. Refer Our People report on page 20.
• Successful implementation of human capital 2014 were from disadvantaged backgrounds • RedCap Foundation participation in skills
management (HCM) system • 119 associates, 92% of whom are development with strategic suppliers in the
• Results of culture surveys disadvantaged were involved in a learnership footwear and apparel manufacturing sectors
• Staff retention programme (JumpStart Manufacturing)
• RedCap Foundation JumpStart Retail Project

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strategic objectives and kpi’s progress to date key risks and mitigations future priorities
• Achievement against EE targets The Group may not be able to attract and
• At store level, the staff turnover rate of 20.1%, retain critical skills
is within industry norms. The retention of head • Brand profiling and talent search strategy,
office staff is high including intern and graduate programmes
• Further roll-out of a world class HCM system, • Improved recruitment processes and
labour scheduling module to all stores in the information
next financial year and implement the learning • Ongoing focus on skills development in order to
management module create suitable talent pools, particularly around
• Succession plans are in place for key positions merchandise skills
and is reviewed annually by the Board • Continued focus on embedding of Group
culture and enhancing the work environment

Leadership does not have the ability to

execute the strategy
• Executive development initiatives include
strategy and operating in a global marketplace
• Board oversight of performance to strategic
KPI’s
• Robust succession planning

Be a responsible corporate citizen that Mr Price Group has an established foundation Insufficient engagement with or consideration The Group governance strategy has remained
operates in a sustainable manner of good corporate governance - refer to the of business input into new or changed one that is “Beyond Compliance”, and is therefore
• King III application register Our Governance section on page 48. Further legislation may result in onerous compliance focussed on enabling the adoption, integration
• Number of incidents of legislative infringements enhancements were made to the Group’s requirements e.g. dti’s Revised B-BBEE and embedding of the spirit and principles of
• B-BBEE accreditation (in SA) governance processes, including: Codes of Good Practice will result in a less governance (fairness, accountability, integrity,
• Volume of carbon emissions (in SA) • Optimisation of Board structures and mandates favourable rating, despite the Group’s firm responsibility and transparency) in all areas of the
• Electricity consumed (in SA) • Implementation of a new strategic risk commitment and significant advancements in business.
• Social Investment appetite policy, the core instrument for aligning this area
• Enterprise Development Investment strategy, risk management, performance and • Continuous involvement in national and retail The ETI Framework and SEDEX will be
• Adherence of our associates and suppliers to sustainability forums and considered input into proposed implemented across the Group over the next 3
our codes of conduct • Publishing of the King III Application Register, changes years.
which confirmed the Group’s commitment to • Engaging and building positive relationships
uphold and integrate the spirit and principles of with regulators The energy behaviour across the Group is being
good governance • Group’s compliance philosophy monitored and further savings in electricity
• Updates to key Governance policies, including • Sustainability strategy are expected as the initiatives undertaken are
the delegation of authority, to further improve expanded further across the business.
the Board’s oversight over strategic areas and Although the Group insists that suppliers
to advance empowered leadership uphold the standards set in the code of The Group will respond to the Revised Codes of
conduct it is possible that this may be Good Practice issued by the dti.
The Group joined the Ethical Trading Initiative breached by suppliers, and may cause undue
(ETI) and Supplier Data Exchange (SEDEX) to reputational risk to the Group.
encourage socially responsible practices in its • Enhanced supplier code of conduct and
supply chain. supplier’s annual declaration process
• Supplier relationships and engagement
The installation of efficient lighting and electricity • Joined the Ethical Trading Initiative (ETI) and
meters in stores resulted in a more accurate Supplier Data Exchange (SEDEX) to encourage
calculation of consumption and carbon emissions socially responsible supplier practices
and lower costs. • Partnership with independent quality assurance
provider in aligning conduct to the ETI Base
Level 5 Contributor B-BBEE status was attained Code
through sustainable interventions, including • Group’s consistent and direct response to
social investment through RedCap Foundation, noted breaches
preferential procurement and enterprise
development investment with strategic suppliers.

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Key Performance Indicators
The following key indicators have been identified to measure the Group’s economic, social and environmental progress:

Unit 2014 2013 2012 2011 2010

Economic
Retail sales R’m 15 227 13 266 11 767 10 673 9 454
Headline earnings per share cents 765.1 634.8 503.0 418.9 276.9
Operating margin % 16.7 15.6 14.8 13.4 10.5
Dividends per share cents 482.0 398.0 314.0 252.0 173.0
Share price (closing) Rand 156.01 116.99 94.34 63.38 39.80
Return on net worth % 47.6 46.4 43.8 42.2 32.5
Cash sales as a % of total sales % 80.8 79.9 81.4 83.8 83.9
Social
Total number of people employed 18 1041 19 384 17 894 17 887 17 300
Staff turnover % 20.08 21.5 22.6 22.1 25.7
Black staff as a % of total permanent staff % 91 94 91 89 90
Promotions of black people as a % of total promotions % 82 87 85 78 83
Investment in people learning & development R’m 33.8 30.8 25.1 9.9 7
Black people participating in learning & development % 90 88 87 83 78
B-BBEE rating Level 5 6 6 6 Not measured
Corporate Social Investment R’m 18.8 16.7 13.0 11.4 7.4
Enterprise Development Investment R’m 28.0 23.2 21.4 1.5 Not measured
Environmental 2

Carbon emissions (estimated) (in SA) Tonnes 157 639 210 786
Electricity consumed (Kwh in SA) Million 2.9 Not reported

1
The decline in associates employed is due to the Group addressing employment contract types in response to amended labour legislation, where the conversion of casuals
to permanent contracts resulted in fewer people being employed. Refer to Our People Report on page 20 for further information
2
Refer to Our Corporate Citizenship Report on page 24 for further information

OUR STRATEGY 34
34
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Nicci Lyne
MANAGING DIRECTOR, Mr Price APPAREL
We target young
Mr Price is a leading
fashion value retailer
who we are
We retail a selection of own sub-brands along with and youthful
customers in the
designer collaborations. Assortments are differentiated
and category dominant in the wanted fashion items of
that provides an the season. We target young and youthful customers
inspired range of
LSM 6 to 10 range
in the LSM 6 to 10 range who love fashion and
appreciate exceptional value.
differentiated, on-trend

who love fashion

An omni-channel retail approach is used to leverage
clothing, intimatewear, multi-markets, together with social media platforms, to
shoes and accessories engage with customers.

offering distinctive and The store footprint is supported by a strong

e-commerce capability, thereby giving customers
market-leading value. access to our full assortment online.

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 R8.6 billion
what we did where we are going
The division had an exceptional year, with sales Significant investment has already been made
growing by 18.9% and comparable sales by 13.0%. Sales in securing and up-skilling human resource
capabilities, improving merchandise buying and
This performance was driven by the following:

18.9%
planning processes, acquiring new systems and
• Weighted average trading space growth of streamlining our resourcing and logistics. However,


8.4%, the highest in the Group, as a result of
opening 24 stores and expanding another 15.
Sales the capacity building will be ongoing, as we plan to

In total, the sales performance of these new growth penetrate selected international markets through a
focused omni-channel approach.
stores exceeded feasibility

13.0%
• West African stores continue to perform well,
growing sales by 95.8%
• Growth of our e-commerce in South Africa Comparable We are optimistic about the
since the launch in July 2012 and the launch of
sales growth opportunities for the brand
e-commerce internationally in June 2013.
beyond our borders, given
the customer response
e-Commerce has added an exciting new dimension the online business has had on our physical store The gross profit percentage increased primarily due to our initial tests. Value
to our business, strategically opening up new (bricks) sales and believe that this has been a key to an improved markdown performance. Overhead
is a key differentiator in all
growth opportunities and positioning us as one driver in our overall market share gains this year. growth, despite the many investments being made
of the most progressive omni-channel retailers to position the Group for future growth (which are new markets and we have
in Africa. Significant improvements to all aspects Although RSP inflation of 11% appears high, it was most often first implemented in Mr Price Apparel), identified further opportunities
of the online platform have been made since the impacted by product mix and lower markdowns. increased at a rate lower than sales growth.
launch, resulting in growth of 203.5% year-on- Like-for-like product input prices increased by 4.7%.
to enhance our value
year. We have also noted the positive impact that positioning, mainly via supply
chain improvements.

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 The division continued
to deliver improved
density and store
Clint Larsson
MANAGING DIRECTOR, MR Price SPORT
profitability
who we are
We are a value retailer selling sporting and outdoor
apparel, equipment, footwear and accessories.

Our target market is

value-minded sports
and outdoor enthusiasts,
from age 6 upwards, within
the 8 to 10 LSM range.

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 what we did
The focus on maintaining a strong value offering in
inflationary conditions enabled us to grow top line
sales, which exceeded R1 billion (VAT inclusive) for
the first time. Sales growth of 14.2% (comparable
6.5%) was driven by inflation of 6.0% and volume
growth of 8.0%. Gross profit improved due to lower
markdowns and this, together with good cost
control, resulted in a strong increase in operating
profit. The operating margin exceeded 10% for the
first time.

The division continued to

deliver improved density
and store profitability. The

R1 billion
weighted average trading
space for the division grew by Sales
0.8% as 9 new stores were

14.2%
opened and excess space of
3 251m2 was reduced. Sales
The successful testing of smaller format stores growth
has confirmed the opportunity for future store

8.0%
expansion.

New resource channels and strengthening of Unit

direct manufacturer relationships has resulted in
the further development of the ‘one-up’ brands,
growth
Maxed Elite and Trail Tech, and enhanced the
value of the current core house brands, Maxed
and Trail. During the current challenging economic
where we are going
environment, seasonal sports in private label brands In the new year, the division will continue to roll-out stores in suitable Southern African locations and Mr Price
have performed well, and, as expected, the growth Sport will be launched online. Research into international markets will be conducted to explore the possibility of
in branded merchandise has slowed, as a result of trading in new territories.
higher retail selling prices and RSP inflation.

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 On trend,
Larry Simon good quality,
comfortably
MANAGING DIRECTOR, MILADYS

fitting
who we are
Miladys retails a focused assortment of own brand
women’s clothing, intimatewear, shoes, bags and
accessories which are of good value, trend right,
differentiated and of flattering fit. garments
Our customer is primarily a 40+ family-orientated
woman who is not a fashion “risk taker” but has and value
for money
fashion sense and wants to look on trend. She is in
the LSM 6 to 10 range and requires good quality,
comfortably fitting garments and value for money.

DIVISIONAL REVIEW 39
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 R1.4 billion
what we did
The division delivered a solid first half performance, however, the
gains were diminished as a result of performance in the second
half of the year falling short of expectations.
Sales

7.0%
Being predominantly a credit retailer (54.3% of sales are on
store credit), the division has been impacted by the tightening
of credit extension in line with its peers. This, together with a
Sales
poor performance in certain merchandise categories, resulted growth
in a second half sales growth of 4.6%, impacting the annual
performance substantially.

Weighted average trading space reduced by 2.0% as a result of where we are going
the opening of 7 stores being offset by the closing of 5 stores and
right-sizing of a further 6 stores. The past trading period highlighted opportunities for improvement
in certain merchandise processes and team structures. The value
The division was able to partly mitigate the lost sales opportunities offering will be further enhanced to improve our market positioning.
and lower gross profit percentage (higher markdowns) by
maintaining overhead costs in line with the prior year. As a result, Despite the temporary set-back, there
the division was able to deliver a meaningful increase in annual
operating profit.
are significant opportunities to improve
gross margins via improved resourcing
The focus on windows and in-store displays to improve the brand and lower markdowns. The division is
experience was positively acknowledged in our market research. Miladys will continue to take a conservative approach to
generating an operating margin which is the opening of new stores, by ensuring that store size and
high in the Group context, but is some location match strict feasibility criteria.

way off its potential.

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 Mr Price Home
Arn de Haas is the most loved
and frequented
MANAGING DIRECTOR, MR Price HOME

who we are
Mr Price Home sells contemporary in-house
homeware retailer in
South Africa
designed, fashionable homeware and furniture to
value-minded customers, with a young-at-heart
attitude.

Our primary customer is a fashion-value minded

female, aged 18 years and older within LSM 8 to
10, who loves her home. With the insight of past
results, expected future local and international
trends and customer feedback, we constantly aim
to delight our customers with innovative products
at everyday low prices.

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what we did The local launch of our e-commerce channel in where we are going presented through our online channel, grow the
the second half of the year proved successful, omni-channel experience in our stores and facilitate
We grew our sales by 10.5% and comparable sales with results exceeding our expectations and As a leading fashion-value retailer of homeware further benefits to our customers. Our international
by 8.2%, in line with expectations. Our sales growth enhancing our customers’ shopping experience. and furniture, we remain committed to continued e-commerce website will be launched in the year
reflected an increase in RLC market share and, We were recognised for great customer service in improvements to enhance customers’ shopping ahead.
while it was fairly consistent across all merchandise the Homeware category through the Orange Index experiences through product selection, range and
categories, we achieved above average growth in and were identified as the Most Iconic Homeware brand experience. Our strategy includes increased focus on improved
our textiles and home décor categories. brand by the TGI Icon Brands Survey. Independent resourcing and supply chain initiatives, as we look
research, conducted by Nielsens, reflected that The division still has significant opportunity to drive to grow market share across current assortments
We opened 9 new stores and closed 1, keeping Mr Price Home is the most loved and frequented efficiency via the right-sizing of stores, with excess and store footprint within Southern Africa. In
our weighted average space footprint in line with homeware retailer in South Africa with the highest space in the division approximating 28 000m2. addition, we plan to test stores in West Africa and
the past year as we right-sized existing stores. level of brand awareness in the sector. We expect to capitalise on the opportunities explore other opportunities to grow our business
In the current year, the division increased sales beyond our current geographic locations.

R2.9 billion
in right-sized stores despite a space reduction
of 2 825m2, which led to a strong bottom line
improvement. The stock turn was consistent with
last year and merchandise quality improved with a Sales
greater level of fresh stock. The gross margin grew

10.5%
faster than sales, and this, combined with well-
managed overheads, contributed to a meaningful
increase in operating profit. Sales
growth

8.2%
DIVISIONAL REVIEW
Comparable
sales growth
42
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Roger Maingard
MANAGING DIRECTOR, SHEET STREET

Our customers are very who we are

important to us and we We are a value retailer offering a range of affordable
home textile and décor products for bedroom,
interact and engage living-room, bathroom, kitchen and dining.
extensively at various In particular, we pride ourselves on providing

service touch points in our exceptional value to middle-income households

(LSM 5 to 8) who can create a home they love at a
265 stores and via various price they can afford. South Africans love and trust
social media channels. The Sheet Street for providing freshness, co-ordination
and helpful tips in-store, in catalogues and online.
store environment is small Sheet Street online gives shoppers access to over
and intimate, with clearly- 1 000 products, 24 hours a day, 7 days a week,

defined and easy-to-shop with delivery direct to their doorstep.

room categories.

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 R1.3 billion
what we did where we are going
Total sales increased by 8.9% this year and Despite the mid-LSM customer being impacted
comparable sales by 5.4%. Weighted average Sales by current economic conditions, the business is
trading space grew by 0.9% as a direct in good shape and it is expected that sales and

8.9%
consequence of the strategy to right-size stores operating margins will continue to increase in line
that were too big whilst still maintaining turnover. with targets.
During the year we opened a net 12 stores.
Sales
growth
The headwinds and increased competition help
Although market sales growth per the RLC has to focus the team on what is important and
revealed a slow-down, Sheet Street increased encourage an environment of constant innovation

5.4%
market share by 0.3%. Trading density increased and adaption as customer needs are satisfied.
by 7.7% and the gross profit percentage was in line
with last year. Ongoing efficiency improvements in Comparable
people, processes and productivity, plus excellent
cost control, contributed to operating profit growth
sales growth Sheet Street achieved 1st
in a tough economic environment. place in the Daily News
Your Choice Awards -
Best Linen Store and was
Industry winner in The Times
Sheet Street online was launched towards the end of the financial year enabling us to
reach a wider section of the population. Early indications are that online is indirectly Sowetan Retail Awards -
improving existing stores sales. Accessory and Home Décor
Category

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Rex Samuelson We support the
MANAGING DIRECTOR, MR PRICE FINANCIAL SERVICES Group’s profitable
who we are what we did growth in retail
market share
We support the Group’s profitable growth in retail Growth in profitability was achieved despite
market share by developing and maintaining the declining consumer disposable income.
right relationship with customers across our primary
financial service products. The strategic decision taken in 2012 to moderate
credit sales growth resulted in credit growth
These products are positioned to reward and retain slowing to 9.6% (2013: 18.3%). This, together
our most valued customers, in addition to being with a strong cash retail performance, resulted in
competitive, simple and easy to understand. the credit sales contribution declining to 19.2%
These include: of total sales (2013: 20.1%). The active account
• Store cards – support customer base growth slowed to 5% (2013: 10%) as did our
acquisition and merchandise sales debtors book at 13% (2013: 28%).
• Insurance – life, income and disability
protection with family and individual
benefits

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Despite the challenging credit environment, our bad debt increased marginally to 7.6% (2013: 6.5%) which is testament to our
robust credit risk policies and improved collections environment. Our credit portfolio remains one of the best in the industry based
on independent benchmarking performed by Principa.
mrpricemoney.com Account management summary 2014 2013

The following key successful strategic projects were completed this year: Gross trade debtors (R’000) 1 754 054 1 550 324
• Collections - introduced additional risk segmentation and propensity-to-pay tools, enhanced our structures Total active accounts 1 375 259 1 307 751
and resources, and created a “cradle to grave” strategy from collections through to write-offs and recoveries Average balance (R) 1 275 1 185
• Digital - built a platform that facilitates an end-to-end solution to shop, pay and manage your account % of debtors able to purchase on credit 88.4% 86.5%
Retail sales analysis (% of total sales)
online, and continued migration of customers to cost-effective digital channels
Cash 80.8% 79.9%
• Finalised a new joint venture which will be launched subsequent to the internal test phase.
Credit 19.2% 20.1%
Net bad debt (net of recoveries)
where we are going
% of credit sales 4.5% 3.8%
The challenges in the external credit and regulatory environment are expected to remain, and even potentially % of debtors 7.6% 6.5%
intensify, for the foreseeable future. We therefore remain cautious regarding our credit landscape, but we do Impairment provision % of debtors 9.8% 9.0%
however anticipate good growth from insurance and other new products.

Our customer centric focus will include the following imperatives:

Gross trade receivables per division (R’000)
• Optimisation of product, process and distribution
Mr Price Mr Price Mr Price Miladys Sheet Total 2014 Total 2013
• Customer service investment in system integration and contact centre infrastructure
Apparel Home Sport Street
• Investment in systems and processes to support cash customers across insurance and mobile
6 months 323 152 77 769 10 661 90 721 49 767 552 070 478 880
• Ongoing investment in our collection model, data management and analytics
12 months 713 618 122 439 43 621 240 932 57 898 1 178 508 1 051 092
• Attracting and retaining key skills necessary to support a diversified financial services business.
24 months 23 476 23 476 20 352
Total 1 036 770 223 684 54 282 331 653 107 665 1 754 054 1 550 324
96.6% of the debtors’ book is interest bearing (2013: 94.5%), with all of the interest free accounts being
Miladys 6 month facilities.

DIVISIONAL REVIEW 46
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divisional performance indicators
Apparel Home
Mr Price Mr Price Sport Miladys Mr Price Home Sheet Street Total
Segment Segment
Retail sales (R'm) - incl. Franchise
2014 8 677 962 1 384 11 023 2 905 1 299 4 204 15 227
2013 7 304 843 1 293 9 440 2 633 1 193 3 826 13 266
% change 18.8 14.2 7.0 16.8 10.3 8.9 9.9 14.8
Retail sales (R'm) - excl. Franchise
2014 8 588 962 1 384 10 934 2 892 1 299 4 191 15 125
2013 7 226 843 1 293 9 362 2 618 1 193 3 811 13 173
% change 18.9 14.2 7.0 16.8 10.5 8.9 10.0 14.8
Comparable sales growth (%)
2014 13.0 6.5 7.2 11.9 8.2 5.4 7.3 10.6
2013 3.9 11.9 12.9 5.9 12.4 7.6 10.8 7.3
Retail selling price inflation (%)
2014 11.0 6.0 4.1 9.3 12.0 8.3 10.9 9.7
2013 4.0 7.7 0.5 4.4 7.0 6.6 6.9 5.1
Number of stores (year end)
Opening 384 53 189 626 150 253 403 1 029
New stores 24 9 7 40 9 19 28 68
Closures (4) (1) (5) (10) (1) (7) (8) (18)
Closing 404 61 191 656 158 265 423 1 079
Trading area - weighted average net m2
2014 248 882 48 034 60 932 357 848 138 026 49 158 187 184 545 032
2013 229 640 47 675 62 197 339 512 139 079 48 735 187 814 527 326
% change 8.4 0.8 (2.0) 5.4 (0.8) 0.9 (0.3) 3.4
Trading area - year end net m2
Opening 239 502 47 200 61 675 348 377 138 008 49 317 187 325 535 702
New stores 13 564 5 142 1 482 20 188 3 556 2 566 6 122 26 310
Expansions 3 594 - 97 3 691 290 149 439 4 130
Reductions - (1 684) (939) (2 623) (2 006) (1 105) (3 111) (5 734)
Closures (1 280) (1 080) (1 567) (3 927) (396) (1 343) (1 739) (5 666)
Closing 255 380 49 578 60 748 365 706 139 452 49 584 189 036 554 742
Sales densities (Rand per weighted average net m2)
2014 34 507 20 036 22 731 30 560 20 956 26 342 22 373 27 747
2013 31 466 17 678 20 794 27 575 18 820 24 469 20 286 24 979
% change 9.7 13.3 9.3 10.8 11.3 7.7 10.3 11.1

DIVISIONAL REVIEW 47
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Governance is about effective and
corporate
governance
ethical leadership, the outcomes of
which are sustained value creation,
success and longevity.

The Board subscribes to ethical leadership, The supporting documents for this report which
business sustainability, stakeholder inclusivity and can be found on the Group website
sound values of good corporate governance. www.mrpricegroup.com are as follows:
The governance environment is supported by the • Board Charter
King Code of Governance for South Africa 2009 • Policy for the appointment of Directors
(King III) principles and practices and the JSE • Board Committee Mandates
Listings Requirements. The Board recognises that • Outline of Board, Statutory and Management
compliance with this combination of voluntary and Committees
compulsory guidelines creates a solid governance • Internal Audit Mandate
foundation. It details the ethical standard of • Internal Audit Annual Assurance Statement
conduct required of Directors and executive • Business Code of Conduct
management in the discharge of their fiduciary and • Supplier Code of Conduct
governance duties and ensures that the Group • King III application register
remains a sustainable and good corporate citizen. • Notice of AGM

The principles of governance are a natural

extension of our values of Passion, Value and
Partnership and have been adopted and integrated
into our business.

CORPORATE GOVERNANCE 48
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 we believe in going “beyond compliance” through
the adoption, integration and embedding of the
spirit and principles of governance

compliance with king III Those sub-principles which the Group acknowledges not applying or partially applying for year under review can be summarised as follows:

King III is not prescriptive but rather a series of

recommendations which can be adopted on principle sub-principle explanation for non-application
an “apply or explain” basis. Furthermore, we
believe in going “beyond compliance” through
2.23: The board should delegate certain functions The committees should be appropriately At the Special Corporate Governance meeting held
the adoption, integration and embedding of the to well-structured committees but without constituted and the composition and the terms in April 2014, the Board reconsidered the position of
spirit and principles of governance as opposed abdicating its own responsibilities. of reference should be disclosed in the integrated Chairman of the Risk Committee and it concluded that
to simply responding to and complying with rule report. Mr NG Payne, as a recognised industry expert in risk
management, remained the best qualified Director to
sets and recommended codes. As such, we
chair this Committee, despite his position as Chairman
do not follow King III blindly, but very carefully of the Board.
consider each and every aspect, even where the
JSE Listings Requirements prescribe compliance.
2.25: Companies should remunerate directors and The remuneration policy should address base pay The Company does not disclose the present value
The Board then applies or rejects that aspect in executives fairly and responsibly. and bonuses, employee contracts, severance and of long-term awards due to the varied models
light of what it considers to be in the best interest retirement benefits and share-based and other and unpredictable forecasting element required to
of all stakeholders. A qualitative evaluation of the long-term incentive schemes. determine the value of the share options upon vesting.
However, full details of each award are given enabling
extent to which each of the 75 King III principles
stakeholders to value such future awards on whatever
has been strategically integrated into the Group’s basis they deem appropriate.
processes was undertaken in 2013. The outcome
of this evaluation was extremely positive. Except for
9.3: Sustainability reporting and disclosure should Even though the entire sustainability report and
the 1 area of non-compliance and 3 areas of partial
be independently assured disclosure are currently not independently assured,
compliance, all of which have been fully explained the Board is satisfied with the progress made both on
in previous Annual Integrated Reports, we have the sustainability journey and with integrated reporting
effectively adopted and integrated the principles and is of the opinion that it remains premature to
subject the entire report to an external verification at
of King III into our business. Please refer to the
this point.
comprehensive register of King III application which
is available on the website.
9.3: Sustainability reporting and disclosure should The audit committee should oversee the provision In terms of the Audit and Compliance Committee’s
be independently assured of assurance over sustainability issues. charter it must ensure that a combined assurance
model is applied to provide a co-ordinated approach
to all assurance activities. The consolidated Annual
Financial Statements, contained within the Annual
Integrated Report, are audited by the external auditor
and Our People and Corporate Citizenship reports are
verified by internal audit.

CORPORATE GOVERNANCE 49
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 JSE listings requirements
Rand Merchant Bank (a division of FirstRand Bank Limited) remains the Company’s Sponsor and, among other functions, it advises the Board on compliance with the
JSE Listings Requirements.

In addition to the voluntary governance principles outlined by King III, Paragraph 3.84 of the Listings Requirements stipulate those corporate governance requirements
with which compliance is compulsory. Although respectful of the JSE’s rulings, there were 2 areas where the Board did not believe that compliance was in the best
interest of the Company. These can be summarised as follows:

JSE listings
requirements governance principle JSE guidance mr price group response

3.84(a) The Nominations Committee must The Nominations Committee must be The Nominations Committee operates in a
constitute only non-executive Directors, of chaired by the Lead Independent Director co-joined manner with the Remuneration
whom the majority must be independent, if the Board is chaired by an executive Committee and the Lead Independent
and should be chaired by the Chairman of Chairman. Director acts as chair. The Board did not
the Board of Directors. consider it operationally effective for the
Chairman of the Board to chair the
Nominations aspect of this co-joined
meeting.

3.84(d) The composition of such (Board) The Risk Committee must have a minimum The Board believes that its Chairman, as
Committees, a brief description of their of three members. Membership of the Risk a recognised industry expert in risk
mandates, the number of meetings held Committee should include executive and management, is the best qualified Director to
and any other relevant information must be non-executive Directors. The Chairman of chair the Risk Committee.
disclosed in the annual report. the Board may be a member of this
Committee but must not chair it.

companies act (71 of 2008)

The Company Secretary, the Group Legal and Compliance Officer and the Group’s external legal advisors remain abreast of any changes to this legislation to ensure
continued compliance.

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board structure
The Group operates with a unitary Board structure.
There were no changes to the Board during the
year under review and the year-end membership of
the Board comprised 2 executive, 10 non-executive
and 3 Alternate Directors.

Although the Group no longer has an executive

Chairman, the Board has elected for Mr MR
Johnston to continue in his position as Lead
Independent Director, thereby ensuring that a
balance of power and authority remains on the
Board and that no one individual has unfettered
power of decision making. The necessity and
appropriateness for the position of Lead
Independent Director is reviewed on an annual
basis. challenges management’s strategies and evaluates demographics have been adjusted over the last
board charter
performance against established benchmarks. few years. The Group believes in the application
The alternate Directors were appointed to the The Board operates in terms of a formal charter, There is a preponderance of non-executive of holistic long-term planning to its succession
Board for 2 separate reasons. Mr SA Ellis had been the purpose of which is to regulate business in Directors, the majority of whom are independent, programmes. The Board holds the view that its
a fully appointed Director of the Board but resigned accordance with sound corporate governance with the only executive Directors being the CEO current succession plan allows for the scheduled
in August 2010 as part of the restructuring which principles. Furthermore, it seeks to ensure that and the CFO. The objective is to maintain a good retirement of older Board members and, with the
sought to reduce the size of the Board. The Board these principles are applied in all dealings by representation of retail experience, to ensure that introduction of appropriately skilled and mentored
did not want to lose his valuable contribution, thus Directors, in respect of, and on behalf of, the business strategies remain robust and sustainable, new members, ensures the continuity of a vibrant
he was appointed as alternate Director with the Company. The charter sets out the specific value creation and performance are enhanced and knowledgeable Board.
invitation to attend meetings as and when possible. responsibilities to be discharged by the Board
and effective management of key risks is enabled.
members collectively and individually, and was
Consideration is also given to the contribution ongoing training and
To ensure the continuity of founding family reviewed and updated at the Special Corporate
afforded by skills and experience in other disciplines development
shareholdings and interest in the Group, the Governance meeting of the Board in April 2014.
which strengthen the decision making abilities
daughter (Mrs TA Chiappini-Young) and son-in-law The full charter can be found on the Group’s There is an appropriate induction and mentoring
of the Board. The policy for the appointment of
(Mr N Abrams) of the Honorary Chairmen were website. programme for new Directors. A Director skills
Directors can be viewed on the Group’s website.
appointed as alternate Directors in August 2010. assessment is conducted annually, supported
The intention is for them to become full Directors
board appointments The Board is satisfied that it is operating at its by a development and succession plan. The
upon the retirement of the Honorary Chairmen. All appointments to the Board are made in terms optimal size, with an appropriate weighting of Directors are primarily responsible for acquiring
The qualifications of each Director and their brief of a formal policy, after taking into account the non-executive to executive Directors. Furthermore, the skills necessary for the effective discharge of
CV’s are detailed on pages 75 and 76. skills requirement for the Board and the philosophy there is an appropriate balance of retail and non- their duties, although the Group does share in this
of maintaining a vibrant Board that constructively retail skills and the age profile, racial and gender responsibility. To this end, an annual economic

CORPORATE GOVERNANCE 51
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update is facilitated and any relevant briefings or In this regard, the Board agreed that, although not employment contracts information regarding any potential conflict of
presentations are disseminated during the course classified as independent, Messrs Cohen, Chiappini interest is tabled at each meeting. Directors are
of the year. and Getz do act independently in their service to The Honorary Chairmen, as founders of the Group, required to recuse themselves from discussion on
the Board. continue to participate in the business and give any matters in which they may have a conflict of
Independence guidance and direction in general and on strategy, interest.
The potential impact that the length of service merchandise and Group culture in particular. They
An evaluation of non-executive Directors, in terms of of a Director has on their independence was attend most Committee meetings as observers/ Non-executive Directors cannot participate in the
the independence criteria set out in King III and the considered in respect of Messrs Johnston and invitees and offer substantial input. The Board Group’s share incentive schemes. Furthermore,
requirements of the Companies Act, was conducted Swain, in the form of a more robust evaluation has determined that their contribution should be before dealing in Company shares, Directors
at the Special Corporate Governance meeting of the than was applied to other independent Directors. financially rewarded and they therefore operate are obliged to obtain the written consent of the
Board in April 2014. It was concluded that both Directors remain within the framework of employment contracts. Chairman or (should the Chairman be involved in a
independent. Furthermore, the cyclical nature Their remuneration is revised annually, to take into transaction) the Lead Independent Director.
The following Directors were accepted as being of retail necessitates the need for Directors with account the planned, gradual reduction of their
independent: long-serving Board experience. It is therefore not involvement over time. Details of the remuneration
• Mr MR Johnston practical, nor in the best interest of its stakeholders, received can be viewed in the Remuneration
• Mrs RM Motanyane for Directors with more than 9 years service to Report on page 63. No Directors have fixed-term
• Ms D Naidoo resign from the Board or to automatically lose their employment contracts.
• Mr NG Payne “independent” status.
• Mr MJD Ruck rotation
• Mr WJ Swain information and communication
• Mr M Tembe. In accordance with the requirements of the
The Board is supplied with timely and relevant Companies Act and the Group’s Memorandum of
It was agreed that the following Directors should information in a form and of a quality appropriate Incorporation, one third of non-executive Directors
not be classified as independent: to enable it to discharge its duties and to enable retire by rotation every year, at which time they may
• The Honorary Chairmen, Messrs SB Cohen it to assess the Group’s quantitative performance be considered for re-election at the Annual General
and LJ Chiappini, on account of their material and consider other qualitative performance issues. Meeting. At the 2013 Annual General Meeting, 4
shareholdings Non-executive Directors are made aware of any Directors retired by rotation and were approved
• Mr K Getz, who acts as a professional advisor relevant developments in the affairs of the Group for re-election by shareholders. In addition, the
to the Company. and receive comprehensive monthly trading reports 3 alternate Directors retired and were approved
and annual strategy and risk management reviews for re-election by shareholders. The names of the
Sub principle 66 of principle 2.18 of King III states by the trading and support divisions. Furthermore, Directors retiring by rotation in the current financial
that: the non-executive Directors are welcome to attend year can be located in the Notice of Meeting in the
“An independent Director should be independent in any merchandise window reviews held during the Annual Results booklet.
character and judgement and there should be no year. To fulfil their responsibilities, Directors have full
relationships or circumstances which are likely to and unrestricted access to Group information and
affect, or could appear to affect this independence. personnel and can seek independent professional conflicts of interest and share
Independence is the absence of undue influence advice at the Group’s cost, in accordance with the dealings
and bias which can be affected by the intensity Board Charter. All Directors have access to the
of the relationship between the Director and the advice and services of the Company Secretary and The matter of conflicts of interest is a standing
Company rather than any particular fact such as unrestricted access to the Chairman. Board agenda item and a register of all Directors’
length of service or age.” company shareholdings, other directorships and

CORPORATE GOVERNANCE 52
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performance reviews chairman evaluation Director, nor is she related to or connected to any of the Directors, thereby negating a potential conflict of
interest, it was agreed that she maintains an arm’s length relationship with the Board.
The Board undertakes an annual series of A full performance evaluation of Mr NG Payne’s
performance as Chairman was undertaken at the
assessments so as to monitor performance and board meetings
identify areas for improvement. These assessments beginning of 2013. Any suggestions for
improvement were communicated to Mr Payne by The Board meets at least 4 times annually to conduct its regular business and is responsible for the Group’s
can be summarised as follows:
the Lead Independent Director. By year end, the overall strategic direction and control. The last meeting of the financial year is usually held in March but due
Lead Independent Director was in the process of to internal and external commitments, the Board was only able to meet on 1 and 2 April 2014. An annual
board assessment
approaching each Director individually to ascertain Special Corporate Governance meeting, under the chairmanship of the Lead Independent Director, has
This is conducted on a bi-annual cycle. Every historically been held in March but from the 2015 financial year it will be held in November. The purpose of
if the suggested improvements had been made and
second year a full review and assessment of the Special Corporate Governance Meeting is to:
to request comment on any additional aspects of
the Board’s activities is undertaken by all Board • Review and approve the Board Charter
Mr Payne’s performance. Any further suggestions
members. From this assessment, a “Steps for
for improvement would be communicated to the • Review and approve the mandates of the various statutory and Board Committees, Internal Audit and the
Improvement” document is generated. In the
Chairman by the Lead Independent Director. IT Divisional Board Committee
alternate years, the Board assesses their
• Consider the independence of Directors
performance against the Steps document. A full
peer and self-evaluation
Board assessment was undertaken in January • Consider the re-appointment of Directors retiring by rotation
2013, with the Steps document being approved In a similar fashion to the Chairman, the full • Confirm the appointment of the Board Chairman
by the Board at the Special Corporate Governance self-assessment and peer evaluation process • Propose the Chairman and members of the Audit and Compliance Committee
Meeting in March 2013. A review against the Steps conducted on the non-executive Directors in 2013
(subject to approval of the membership of this Committee by shareholders at the Annual General Meeting)
to address any pertinent matters was in progress was supported by a follow up review conducted
• Confirm the Chairman and members of other Committees for the forthcoming financial year
at year end. by the Lead Independent Director with each
• Define levels of materiality, reserving specific powers to the Board and delegating other matters with the
Director individually. Any further suggestions for
improvement would be communicated by the necessary written authority to management
committee evaluations
Chairman and the Lead Independent Director. • Review and approve the Business Code of Conduct
The Board Committees follow the same bi-annual
• Evaluate the Company Secretary in terms of the JSE Listings Requirements
cycle as the Main Board with a Steps assessment
company secretary evaluation • Review the level of the Group’s compliance with the King III and JSE Listings Requirements governance
being conducted in the year under review. The
exception to this was the Social, Ethics, During the year under review, and in compliance principles.
Transformation and Sustainability Committee which with paragraph 3.84(i) and (j) of the JSE Listings
did not undertake an assessment due to its relative Requirements, the Board evaluated Mrs HE
infancy. It will be included in the full committee Grosvenor, the Company Secretary, and is
assessment process to be undertaken in the latter satisfied that she is competent, suitably qualified
part of 2014. and experienced. Furthermore, since she is not a

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attendance of directors
at board and committee meetings
social, ethics,
remuneration transformation
special audit and and and
corporate compliance risk nominations sustainability
director status board governance committee committee committee committee non-attendance of
meetings by directors
SI Bird executive 4/4 1/1 4/4 Generally, all Directors attend the Annual General
Meeting and are available to answer shareholders’
MM Blair executive 4/4 1/1 4/4
questions. Alternate Directors are not required
LJ Chiappini non-executive 3/4 0/1 to attend each meeting. Mr N Abrams (UK) was
kept updated on Board issues by receiving all
SB Cohen non-executive 4/4 1/1
Board meeting documentation. Ms D Naidoo
K Getz non-executive 4/4 1/1 4/4 4/4 was unable to attend the August Audit and
Compliance Committee meeting due to out-of-
MR Johnston independent non-executive 4/4 1/1 4/4 4/4 town commitments. Mr LJ Chiappini and
RM Motanyane independent non-executive 4/4 1/1 4/4 Mrs TA Chiappini-Young had overseas
commitments at the time of the April 2014
D Naidoo independent non-executive 4/4 1/1 3/4 meetings. Mr MD Ruck joined the Risk Committee
for the second half of the year.
NG Payne independent non-executive 4/4 1/1 4/4 4/4
 
MJD Ruck1 independent non-executive 4/4 1/1 4/4 2/2 4/4
prescribed officers
WJ Swain independent non-executive 4/4 1/1 4/4 4/4 4/4
As per the requirements of the Companies Act, the
M Tembe independent non-executive 4/4 1/1 4/4 Board determined that the prescribed officers are
the CEO, Mr SI Bird and the CFO, Mr MM Blair.
N Abrams 2 alternate non-executive 2/4 1/1
These individuals exercise general executive control
TA Chiappini- alternate non-executive 3/4 0/1 and management of the business and all divisional
Young 2 heads report directly to them.

SA Ellis 2 alternate executive 4/4 1/1

1
Appointed to the Risk Committee effective October 2013
2
Alternate Directors are not required to attend every meeting

CORPORATE GOVERNANCE 54
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 governance and codes of conduct
assurance Directors and associates are required to maintain
As Head of Governance and Assurance, Mrs the highest ethical standards. On joining the Group,
S Moodley is responsible for the strategic every associate receives a copy of the Business
leadership of the Company Secretariat, Enterprise Code of Conduct and is required to sign as
Risk Management, Legal and Compliance and acknowledgement of acceptance of the Code. On
Internal Audit functions. This consolidated and an annual basis, all senior associates of the Group
holistic approach to governance has improved are required to submit a declaration confirming
the integration of strategy, risk management and their continued compliance with the Code. Any
sustainability. areas of non-compliance or any perceived conflicts
of interest are addressed through the appropriate
A robust model of combined assurance has levels of divisional management, with ultimate
been adopted in recognition of the need for a reporting to the CEO and Board. The Code, which
co-ordinated approach to risk management to has been updated during the year under review
allow for the effective management, monitoring and was approved at the Special Corporate
and mitigation of key risks. The model clarifies the Governance meeting in April 2014, is located on
the Group’s website.
statutory, board and management committees roles and co-ordinates the efforts of management,
internal assurance providers and independent
To assist the Board in discharging its responsibilities for corporate governance, it functions with 2 Board The Supplier Code of Conduct, setting standards
assurance providers. In addition, it increases
Committees and 2 Statutory Committees. The statutory and non-statutory obligations of each Committee and practices to which the Group expects its
collaboration and facilitates a shared and more
are constantly being reviewed to reduce overlap and prevent governance fatigue. Details of the composition suppliers to adhere, is currently being updated to
holistic view of the Group’s risk profile. Internal
and key achievements of each Committee can be located in the following sections of this Annual Integrated take into account the requirements of the Ethical
Audit plays a vital role as an independent 3rd line of
Report: Trading Initiative and to allow for greater focus on
defense.
committee name page the environmental and social impact of trade. The
code is located on the Group’s website.
The independence, organisational positioning and
Risk Committee 56
scope and nature of work of the Governance and
closed and prohibited periods
Audit and Compliance Committee 58 Assurance Division were evaluated by the Audit and
Compliance and Risk Committees in April 2014 The Group operates a closed period policy in
Social, Ethics, Transformation and Sustainability Committee 61 line with the JSE Listings Requirements and the
and determined to be appropriate and consistent
with the approved combined assurance model. In Financial Markets Act (19 of 2012). During the
Remuneration and Nominations Committee 63
addition it has been confirmed that there were no defined closed periods, Directors, officers and
An outline of the Board, Statutory and Management Committee structures, together with the mandates/ impairments to the independence or objectivity of other selected associates are prohibited from
charters of the respective Committees, can be located on the Group’s website. the assurance provided by Internal Audit as a result dealing in the Company’s shares. Associates who
of the consolidated structure, and that in fact this may have access to confidential or price-sensitive

The Board believes that, in respect of the structure had the desired effect of strengthening information are cautioned against the possibility
of insider trading. Regard is also had to other JSE
the Group’s assurance framework. Refer to the
business specifically reserved for its decision, Internal Audit annual assurance statement, on page Listings Requirements in respect of the dealings of
Directors in the Company’s shares.
it has satisfactorily discharged its duties and 59.

responsibilities during the year under review.

CORPORATE GOVERNANCE 55
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 The Board of Directors is accountable and • Mr SI Bird Executive Director
responsible for the governance of strategy and risk, • Mr MM Blair Executive Director
and is satisfied that the Group’s management has:
The Committee mandate is published on the
• Integrated and aligned strategy, risk
Group’s website www.mrpricegroup.com
management, performance and sustainability

RISK
• Implemented an effective risk management
role
system, which enables the effective
identification, assessment and responses to The Committee has an independent and advisory
risks and opportunities role with accountability to the Board. The purpose
• Managed risks within the approved appetite and of the Committee is to assist the Board to fulfill its
tolerance levels corporate governance responsibilities relating to the
• Embedded risk management into the day- governance of risk.
to-day activities of the Group.
The Committee is responsible for overseeing risk
board commitment governance (including the risk appetite and
monitoring the effectiveness of the risk
The Board is committed to business sustainability
management framework and processes. The
and to creating and preserving stakeholder value.
Committee reviews key opportunities and risks,

committee
It recognises that the governance of strategy, risks/
assesses risk mitigation plans and reports back
opportunities and performance are critical success
to the Board. The Committee gives due
factors and, therefore, exercises active oversight

report
consideration to the legitimate and fair expectations
over these processes in order to ensure that the
of all key stakeholders, resource constraints,
achievement of its strategic objectives is enabled.
external pressures and the drivers of the Group’s
sustainability.
composition
The Risk Committee, established in May 2010, Management is accountable to the Board for
operates in terms of a formal mandate. The designing, implementing and monitoring the
Committee is comprised of the following Directors: process of risk management and integrating it into
• Mr NG Payne (Chairman) Independent the day-to-day activities of the Group. Management
non-executive Director is also accountable for building the competencies
• Mr WJ Swain Independent non-executive and capacity required for a sustainable business.
Director
• Mr M Ruck Independent non-executive
Director

RISK COMMITTEE REPORT 56

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 framework and policy was developed, approved Key Business Risks and Opportunities
risk governance and The Group recognises that a co-ordinated
and successfully implemented during the year. The approach to risk/opportunity management is
management Key business opportunities and risks were
Committee confirms that this policy has enabled discussed comprehensively by the Committee needed in order to create and sustain value in the
During the year under review, the Committee increased consideration of risk capacity, system/ during the year. The Committee, having considered longer-term and to enable the achievement of its
fulfilled its mandate by meeting 4 times to discuss process maturity and overall risk capability in vision.
the Group’s key risks, is satisfied that the systems
the following key issues: relation to the key strategic, financial, operational and processes in place to manage risk are
and compliance focus areas of the Group; and adequate and that management has generally For this reason, the Group has adopted the globally
Risk Appetite that the enhanced policy is being increasingly recognised, three-lines-of-defence Combined
executed their risk management responsibilities
The Board recognises that a well-defined risk referred to, including in the development of related Assurance Model. The model optimises the skills
satisfactorily.
appetite is the core instrument for aligning overall governance polices. and expertise of management, second-line-of-
corporate strategy, capital allocation, risk and defence functions and assurance providers to
Enterprise-wide Risk Management (ERM)
performance. Risk appetite and tolerance are the The Committee confirms that there were no increase collaboration and to facilitate a shared
The Committee, having evaluated the ERM
fundamental concepts that provide the context for material deviations from the Group’s risk appetite in and more holistic view of the Group’s risk profile.
Framework, which is based on ISO 31000 and
strategy setting, entrepreneurial behaviour and the the period. The Committee confirms that all key strategic risks
Committee of Sponsoring Organisations (COSO),
pursuit of Group objectives. It is informed by the were assured by at least 1 of the 3 lines of defence
is satisfied that it is adequate, and if consistently
Group risk culture and clarifies what risks the Group Risk Profile functions.
applied, should guide the Group’s approach to
can, or is willing to, take and the risks that the The Board is satisfied that strategy and business
identifying, evaluating and responding to key
Group will avoid. Risk appetite and risk tolerance plans do not give rise to risks that have not been
opportunities and risks that may impact on
are inextricably linked to performance over time. thoroughly assessed by management and confirms
strategic objectives.
that there were no undue, unexpected or unusual
The Board has formally defined its appetite for risks taken by the Group and no material losses
risk, and an enhanced strategic risk appetite were incurred during the year.

RISK COMMITTEE REPORT 57

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 role having given due consideration,
• Assists the Board to discharge its responsibility
the committee believes that:
to: • Mr MM Blair, who is the Financial Director
- safeguard the Group’s assets, and carries the title of Chief Financial Officer,
- operate adequate and effective systems of possesses the appropriate expertise and
internal control, financial risk management experience to meet his responsibilities
and governance and that the Company’s financial function
- prepare materially accurate financial incorporates the necessary expertise, resources

audit and
reporting information and statements in and experience to adequately carry out its
compliance with applicable legal/ responsibilities
regulatory requirements and accounting • The Company’s accounting practices and
standards the effectiveness of the internal controls have

compliance
- monitor compliance with laws and regulations been maintained at a high standard and fully
- provide oversight of the external and internal support the accuracy of the financial and related
audit functions and appointments. information presented to stakeholders in the

committee report
• Provides a communication channel between the integrated report
Board, the internal and external auditors and • It has satisfactorily carried out its obligations in
other assurance providers terms of its mandate
• Assists the Board, in conjunction with the Risk • It can confirm that there were no material
Committee, to monitor management’s system of or frequently repeated instances of non-
controls, particularly over enterprise-wide risks. compliance by either the Group or the Directors
Mr Price Group remains committed to the principles of good during the year

governance, ethical leadership and exemplary corporate The Committee mandate is published on the • The Designated Auditor attended a meeting of
Group’s website www.mrpricegroup.com the Committee not more than a month before
citizenship. To this end, the Audit and Compliance Committee the Board met to approve the integrated report
assists and supports the Board in discharging its duties. annual report of the committee to discuss matters of importance to the auditor
and the Committee regarding the Company’s
During the year under review, the Committee
financial statements and general affairs.
fulfilled its mandate by meeting 4 times to deal
with comprehensive agendas. It received the
The Directors believe that the Committee has
appropriate information from internal audit, external
composition The Committee is comprised of the following 4
audit, management and other sources deemed
satisfied its responsibilities under its mandate.
Directors:
Under the sponsorship of the Committee’s
The Committee is constituted as a statutory Mr • Mr WJ Swain (Chairman) Independent non- necessary to fulfill its obligations. Pursuant to these
Chairman, a self-evaluation assessment was
Price Group Limited Committee in respect of its executive Director activities and the investigations it conducted, the
undertaken during the year and action to address
duties in terms of section 94(7) of the Companies • Mr MR Johnston Independent non-executive Committee can report satisfaction with the external
certain issues requiring attention was determined.
Act (71 of 2008), and has been delegated the Director auditor’s independence and established principles
responsibility to provide meaningful oversight, • Ms D Naidoo Independent non-executive governing the auditor’s employment for non-audit
The Chairman of the Committee, Mr WJ Swain,
particularly over the audit, finance, IT and Director services.
attends the Annual General Meeting and is available
compliance functions. • Mr MJD Ruck Independent non-executive
to answer shareholders’ questions.
Director

AUDIT AND COMPLIANCE COMMITTEE REPORT 58

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 internal audit
report
The Group Internal Audit Division (Internal only activity in South Africa with the exceptional
Audit) was established to assist the Board and rating of full conformance in an independent
executive management with the achievement external quality review. This result placed the
of their objectives and has remained a vital Internal Audit activity in the top QAR results
part of the Group’s governance and combined globally. The independent external QAR team
assurance structures. Internal Audit is the primary recognised that:
independent assurance provider on the adequacy • “This level of operations could only have been
and effectiveness of the Group’s governance, risk sustained by a combination of strategic
management and control structures, systems and leadership of Internal Audit, an alignment of
processes. The centralised division operates in interests and incentives; the maturity and mutual
terms of a formal mandate, in full conformance to respect of the Audit and Compliance
the International Professional Practices Framework Committee, executive and senior management
for Internal Audit (Standards) and with leading risk- and the external auditor towards Internal Audit;
based and integrated methodology. and Internal Audit’s ability to consistently deliver
a highly professional audit product over time”.
professional positioning • “Internal Audit has continued to be a leading
and recognition professional activity, characterised by
innovation, development of leading practices
Internal Audit has been subjected to 2 independent
ahead of the theory or requirements to do
external quality assessment reviews (QAR), in 2007
so, wide integration of global best practices
and 2011. It was recognised as the first internal
and unequivocally demonstrating a commitment
audit activity in South Africa with full conformance
to upholding the Standards”.
to all Standards; and in 2011 was confirmed as the

INTERNAL AUDIT REPORT 59

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independence and authority annual internal audit assurance area description
The independence of Internal Audit is formally
statement
Based on the work completed during 1 April 2013 to 31 March 2014, which has been
considered by the Chief Audit Executive and Audit Internal Audit assurance can only be reasonable carried out in accordance with the International Professional Practices Framework for
and Compliance Committee on an annual basis, and not absolute and does not supercede the OVERALL Internal Audit and the approved Internal Audit Plan; and provided that management
or as and when changes to the organisational Board’s and management’s responsibility for the OPINION has effectively implemented the agreed actions to rectify reported control weaknesses,
in the opinion of Internal Audit, except for a few specific control weaknesses noted,
positioning occur. It has been determined and ownership, design, implementation, monitoring and in all material respects, controls evaluated were generally adequate, appropriate and
confirmed that Internal Audit has remained reporting of governance, risk management and effectively implemented to provide reasonable assurance that risks are being managed
independent of all operational functions; and internal controls. and that the Group objectives should be met.
that the functional reporting to the Audit and
Internal Audit has continued to note a constructive tone at the top. Divisional
Compliance Committee and administrative scope of work TONE AT management generally responds immediately and appropriately to reported
reporting to the Chief Financial Officer have enabled THE TOP weaknesses and demonstrates a willingness to adopt recommended improvements.
There were no undue scope limitations or Executive management and the Board require, encourage and monitor quality and
appropriate organisational positioning. Internal
impairments to independence. In our professional continuous improvement in the Group’s governance, risk management and control.
Audit has access to the Chairman of the Board,
judgement, sufficient and appropriate audit
as well as free and unrestricted access to all areas The quality of governance is considered in every audit and we confirm that there are
procedures have been conducted through the
within the Group. generally very good governance structures and processes in place to:
completion of the risk-based audit plan and
GOVERNANCE • Promote appropriate Group ethics and values;
evidence gathered to support the conclusions • Ensure effective organisational performance and accountability; and
In order to facilitate strategic positioning and • Adequately co-ordinate Group strategies, communication and activities among the
contained in this report.
alignment of Internal Audit, it has had a standing Board, management, second-line-of-defence functions and external and internal
invitation to Executive and Board Committee audit.
meetings for many years, including meetings of
The effectiveness of risk management structures, systems and processes is evaluated
the Divisional Boards and Main Board Committees in every audit, as far as possible, and we confirm that these are adequate to identify,
(Audit and Compliance, Risk, Social, Ethics, assess and mitigate key risks and to support the achievement of the Group’s strategic
Transformation and Sustainability Committee and goals.
RISK
more recently Special Corporate Governance). MANAGEMENT The quality of the Group’s risk management frameworks, policies and the processes
applied by the Enterprise Risk Management function have been considered by the
Board Risk Committee and confirmed as being strategic, leading and effective in
enabling the integration of strategy, risk management and performance. There is
continuous focus on the embedding of risk management, advancing risk reporting
and performance measurement.
The following Audit Grading Framework has been applied. This framework has been successfully integrated
into the business, is well understood and elicits appropriate management responses: We have continued to note an improvement in internal controls across the Group,
especially in areas that have been re-audited. We have identified isolated instances of
fraud within the Group, mainly at a store level, and of immaterial amounts.
grade description

Low risk Controls evaluated are adequate, appropriate and effectively implemented to provide INTERNAL audit area 2014 2013 2012 2011
(≥ 90%) reasonable assurance that risks are being managed and objectives met. CONTROLS Continuous Audits and Very Very
Adequate N/A
Forensics Good Good
A few specific control weaknesses were noted, but generally controls evaluated are
Medium risk Corporate Audits 92% 91% 91% 91%
adequate, appropriate, and effectively implemented to provide reasonable assurance
(75-89%)
that risks are being managed and objectives should be met. IT Audits 91% 91% 89% 87%

Numerous specific control weaknesses were noted. Controls evaluated are unlikely to Operational Audits 92% 92% 90% 93%
High risk
provide reasonable assurance that risks are being managed and objectives should be
(≤74%)
met.

INTERNAL AUDIT REPORT 60

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Social, Ethics,
Transformation and
Sustainability
Committee Report
In compliance with the requirements of the In addition, all Board members are permanent
Companies Act (71 of 2008), the Social, Ethics, invitees to meetings and this invitation is duly
Transformation and Sustainability Committee was taken up on occasion by certain Board members
established in March 2012 and held its inaugural (including by the Board Chairman and CEO).
meeting in May 2012.
The following senior executives were permanent
It operates in terms of a formal mandate, which attendees at the meeting:
contains detailed provisions relating to the terms • Mrs VT Botha-Richards Corporate
of reference, duties, composition, role and Services and Sustainability Executive
responsibilities of the Committee. • Mrs N Ambrosio Sustainability Manager
• Mrs T Clarke Group Legal and
the committee is comprised of Compliance Officer
the following directors: • Mr S Glendinning Group People Director
• Mrs HE Grosvenor Company Secretary
• Mr K Getz (Chairman)
• Mrs S Moodley Head of Governance
Non-executive Director
and Assurance
• Mr M Tembe
Independent non-executive Director
• Mrs RM Motanyane
Independent non-executive Director

SOCIAL, ETHICS, TRANSFORMATION AND SUSTAINABILITY COMMITTEE REPORT 61

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 The Committee is
responsible for assisting
the Board with the
monitoring and reporting
of social, ethical,
transformational and • Monitoring and assessing of the Group’s
meetings • Approval of the Group’s participation in 2 dti
sustainability practices that transformational progress (including funded competitiveness clusters.
are consistent with good The Committee met 4 times during the year, consideration of the Employment Equity Act,
although the final meeting was held 3 days post the Broad-Based Black Economic As the Committee has now been in operation
corporate citizenship, as year end. Meetings are convened and conducted Empowerment Act and the supporting Codes for more than 18 months, it is in a position to
well as assisting the Group in terms of a detailed agenda accompanied by of Good Practice). The Committee is materially undertake a meaningful self-evaluation. This
in discharging its business supporting documents, minutes of 4 supporting assisted in monitoring transformation by the will be conducted in time for the November
management sub-committees and reports of the Executive Transformation Committee, chaired 2014 Special Corporate Governance Meeting.
responsibilities in relation permanent attendees. These representations by the CEO, and the input of the Board. The Committee believes that the Group is
thereto. cover the core mandate of the Committee and • Report on the Group’s compliance with substantively addressing the issues monitored by
serve as a material tool used by the Committee to applicable legislation, codes of good practice the Committee, in terms of its statutory mandate
Statutorily, the Committee is responsible for monitor its responsibilities. and other legal requirements. This included a and the additional mandates referred to it by the
review of the Group’s exposure to anti- Board, in a beneficial and positive manner. Refer
monitoring the Group’s activities as per the
The Committee actively engages with corruption legislation. to Our Corporate Citizenship report on page
Companies Act with regard to matters relating to:
management during these presentations. • Review and monitoring of the Group’s 24 for more details around transformation and
• Social and economic development
environmental sustainability strategy and the sustainability.
• Good corporate citizenship
execution thereof.
• Environment, health and public safety Matters considered by the Committee (and
• Review of the social sustainability initiatives As Chairman of the Social, Ethics, Transformation
• Consumer relationships reported to the Board) include:
undertaken by RedCap Foundation and and Sustainability Committee, Mr K Getz will be
• Oversight of the comprehensive updating of
• Labour and employment practices. RedCap Sport. (Post the year end, RedCap
the Group’s Business Code of Conduct to be available at the Annual General Meeting to answer
Sport was incorporated into RedCap any questions relating to the statutory obligations
more reflective of the values of the Group.
The Committee incorporates the responsibility to Foundation). The details of the projects of the Committee.
• Approval of the Group’s membership
draw matters within its mandate to the attention undertaken can be located on the website
application to the Ethical Trading Initiative.
of the Board and to shareholders of the Company. www.redcapfoundation.org
• Oversight of the alignment of the Group’s
It can be viewed on the Group’s website: www. • Monitoring of matters relating to its statutory
Supplier Code of Conduct with the Ethical
mrpricegroup.com obligation and good corporate governance and
Trading Initiative Base Code.
corporate citizenship

SOCIAL, ETHICS, TRANSFORMATION AND SUSTAINABILITY COMMITTEE REPORT 62

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remuneration
report
The Remuneration Report provides an overview of the Group’s
remuneration philosophy, policy, practices and governance,
with particular focus on the remuneration payments to the
executive and non-executive Directors.

remuneration governance
structure Meeting attendance is disclosed in the Corporate
Governance Report on page 48. Other executive
board and non-executive parties attend the Committee
The Board is ultimately responsible for the Group’s meetings where appropriate, but no individual is
remuneration policy and applies it with the present when their remuneration is discussed.
assistance of the Remuneration and Nominations
Committee. The Chairman attends the Annual General Meeting
(AGM) and is available to answer shareholders’
remuneration and nominations committee questions regarding the remuneration policy, its
The Committee oversees the remuneration application and the Committee’s activities.
of executive Directors and divisional executives and
operates according to a formal Board mandate,
which can be found at www.mrpricegroup.com

REMUNERATION REPORT 63
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The Committee met 4 times during the year under workforce management, learning management market trends in employee remuneration, scheduling capabilities of store managers and
review. In respect of its nominations activities, and payroll solutions benchmarking remuneration policies and practices will lead to gains in productivity and diminished
the philosophy guiding the Committee on Board • Review the efficacy of the existing share to retail and other sectors and making remuneration labour costs
appointments and annual evaluations are outlined schemes and propose changes, including recommendations to management. The main • The new VIP Payroll system has been
in the Corporate Governance Report on page 48. the introduction of Forfeitable Share Plans activities undertaken during the year under review implemented to enable improved payroll
In satisfying its mandate in remuneration focused (FSP’s) were: processes and procedures, which provides
matters, the main activities undertaken were to: • Review all new share and share option • Maintaining personalised communications to upgraded functionality in the processing and
• Approve base increases for general staff and allocations under the various share schemes in every associate including an analysis of their administration of pay and incentive schemes
senior management operation total cost-to-company. This has allowed • The Cornerstone learning management system
• Approve, on the basis of the market benchmark • Review the impact of labour legislation associates to fully understand the true value and is being implemented, contributing to employee
exercise undertaken, the executive Director and amendments and the introduction of various benefit of their employment contract with the self-service functionality.
divisional executive management remuneration, new employment contract types Company and is a key retention mechanism
including the basis for determination of • Review and update the mandate for approval at • Evaluating certain aspects of the annual
incentives the Special Corporate Governance meeting in Culture Survey and discussing areas for
• Propose non-executive Director fees for April 2014 improvement with associates in “Solutions
consideration by shareholders at the AGM • Review the 2014 Remuneration Report for Café’s”
• Update letters of appointment relating to the inclusion in the Annual Integrated Report and • Communicating share scheme changes to
non-executive Directors subsequent to its publication, respond to associates and, where requested, the
• Review employment contracts of the Honorary queries and comments received from provision of externally conducted personal
Chairmen and approve remuneration payable in shareholders or their representatives who financial counselling for those associates
terms of the contracts identified opportunities to improve the receiving substantial share scheme payouts
• Review the performance of the Chairman, determining methodology and future disclosure. • Conducting ongoing remuneration
executive Directors and divisional management benchmarking for Support and Group Head
• Conduct an annual self-evaluation review, from people division Office positions in conjunction with PwC
which steps and targets for the improvement of RemChannel
processes and operational methods were The People Division is responsible for implementing • Staff contracts in operations were brought in
agreed and monitoring human resources policies and line with new employment legislation
• Review the Human Capital Management Project processes and the People Director attends • The Dayforce workforce management system
progress, which addresses the Group’s most Divisional Board meetings, reporting directly to has been implemented to improve store
crucial needs through the implementation of the the CEO. Key responsibilities include researching efficiency. This greatly enhances the staff

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 All associates sign letters of employment, which of listed companies. Each position is strictly
remuneration philosophy is achieved by reaching
stipulate the notice period. The contract may be benchmarked against like-for-like criteria
Driven by the principles of Passion, Value and stretch performance terminated by either party giving written notice of and necessary adjustments are made to ensure
Partnership, the Group culture encourages and targets, whereby 1 month for a store or head office associate, 3 competitive pay. In establishing an appropriate
incentivises high performance as the key driver of
associates’ efforts are months for a divisional Director and 6 months for peer group for organisational benchmarking,
business success. An entrepreneurial management executive Directors. Despite these provisions, either the individual’s role and business size including
style is encouraged, providing all associates with
aligned with strong party may terminate the contract of employment turnover, profit before tax, total assets, number
the room to innovate and grow, effectively enabling corporate performance without notice for any cause recognised by law of employees and annual salary and wage bill
ordinary people to achieve extraordinary things. and increased shareholder or by agreement by both parties to waive the are taken into account, as well as the level of
The ability to attract, retain and motivate competent value. notice period. Contracts are also terminated in the the individual’s decision-making.
people is critical to the Group’s continued growth event of a dismissal without the associate having • Executive Directors - (including, basic pay,
short-term incentives and share option awards),
and long-term sustainability and is therefore remuneration policy and an entitlement for compensation. Employment
contracts do not contain provisions relating to: a peer group of 16 companies was selected
the core of the remuneration philosophy. This practices
philosophy aims to create partnerships with • the compensation of executives for a change of in conjunction with PwC. This included 8 retail
The Group’s remuneration policy is to reward control of the Company companies, 4 companies with a similar market
associates in their journey of continued growth
executives for their contribution to the performance • providing ‘balloon’ payments on termination or capitalisation and 4 companies that had
through market-related base pay and benefits,
of the business, taking into consideration an retirement achieved similar total shareholder returns.
attractive performance-driven short-term (bonuses)
appropriate balance between long and short-term • restraint of trade payments, although these may Meaningful comparisons in respect of long-
and long-term (share schemes) incentives and
benefits. be contained elsewhere. term incentives are difficult given the various
recognition and reward programmes.
methodologies adopted by companies. Awards
Remuneration levels are influenced by work External service providers assist the Remuneration can either be based on the face value (approach
Being a value retailer, the Group aims to pay basic
performance and scarcity of skills especially in the and Nominations Committee from time to time. used by the Group) or the expected value of the
salaries and benefits at the market median.
area of merchandising. Where this involves the remuneration of executives instruments issued and companies can either
In the case of newly appointed associates whose
and non-executive Directors, appropriate have smaller annual awards (approach adopted
remuneration is below the median, the intention is
Given that performance-related incentives form a benchmarking comparatives are made. This by the Group) or larger awards which vary in
that adjustments will be made to raise them to the
material part of remuneration packages, ongoing benchmarking exercise takes place every 2 years, frequency, or a combination of both.
median over a 3 year period, commensurate with
performance feedback is vital. Associates annually with inflationary adjustments made in alternate • Non-executive Directors – fees are
their increased experience. Where the Group needs
participate in performance and career development years. A benchmark assessment was conducted benchmarked every 2 years and proposed at
to urgently attract core skills, pay above the median
evaluations, focusing on work achievements, during the 2013 financial year, for implementation the market median. The most recent
is considered, as long as internal equity is not
learning and development needs, values and on 1 April 2013: benchmarking exercise was conducted in
disrupted and the Group’s commitment to ensuring
cultural alignment. Remuneration is not influenced • Senior management - roles were graded F2013 using the PE Corporate Services survey.
the right candidate fit is achieved.
by race, creed or gender, with the emphasis on according to the Paterson and Towers Watson It is envisaged that the next benchmark study,
equal pay for equal work. There is strong alignment global grading job evaluation methodology. The which will be performed in the current year, with
Associates are of the types of benefits offered to the various levels benchmarks included PE Corporate Services’ any changes being effective from 1 April 2015,
provided with the of permanent associates. The Group can justify Total Executive Remuneration Survey (which will use the same peer group of companies
used for benchmarking the executive Directors.
opportunity to earn well areas where differentiation has been applied,
specifically where consideration has been given to


comprises approximately 800 companies listed
on the JSE, private companies and parastatals),
above the median through the position’s seniority and the need to attract and as well as the JSE database which contains
generous incentives. This retain key skills. information extracted from annual reports

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The disclosure of the remuneration of executive remuneration structure Retirement benefits - the majority of associates
Directors is governed by the JSE Listings employed in South Africa, Swaziland and Lesotho
Requirements and the Companies Act, 2008, with Remuneration and reward structures are are provided for in a funded defined benefit
additional recommendations from King III. In order categorised into 3 elements: fund and 2 funded defined contribution funds.
to maintain its competitive edge, the Company has • Fixed remuneration: base pay and benefits Associates employed in Namibia, Botswana,
applied the principles of King III that are appropriate • Variable remuneration: short-term performance- Nigeria and Ghana are members of separate
for the business, to which there have been no related incentives defined contribution funds in those countries. The
material changes during the year under review. • Long-term incentives: shares and share options. defined benefit fund was closed to new entrants
with effect 1 June 1997. The funds provide for
The Company complies with all disclosure aspects, fixed remuneration pensions and related benefits for permanent
except the recommendation of paragraph 180 of All associates, including executive Directors, associates and membership is compulsory after the
King III, relating to the present value of long-term receive a fixed remuneration package based on first year of service. No material ex-gratia payments
incentives due to the varied valuation models and their roles, individual performance and the Group’s are routinely paid.
the unpredictable forecasting elements required performance. Increases are based on a review
to determine the value of the share options when of market data and consideration of individual variable remuneration
vesting. The Group’s view is that to consider the performance and potential. All associates, including executive Directors,
present value of option awards as remuneration
participate in an annual short-term incentive
is misleading, in that the present value does Basic Pay - salary and benefits are reviewed scheme which is related to performance.
not reflect the value paid to or receivable by the at least annually and all associates earn above Although challenging targets are set, the incentive
executive. Such gains can only be determined upon legislated minimum wages. schemes are potentially generous to encourage
exercise of the options. However, to compensate
the achievement of targets that can be directly
for this omission, share option disclosure has been Motor vehicle expenses - a travel allowance or influenced by superior performance. In setting
enhanced in order to aid shareholder evaluation company car is offered to associates whose the performance targets, the Remuneration and
(refer pages 71 and 72). position requires them to travel for business Nominations Committee ensures targets are linked
purposes. Associates who are required to to the Group’s or division’s annual key imperatives,
The Group is appreciative of the input and travel less frequently for business purposes are are substantially within the associate’s control, do
feedback received from shareholders. The general reimbursed for this cost. not expose the organisation to undue risk caused
feedback has been that the level of disclosure on
by their behaviour and that there is an appropriate
remuneration matters is detailed and clearly laid Medical aid membership - is offered to all full- balance between short-term and long-term
out. Specific issues raised are detailed on page 68. time associates, but is not a condition of service. incentivisation.
Where the offer of comprehensive medical aid is
At the AGM held in August 2013, shareholders not accepted by associates due to affordability The Group does not defer bonus payments as
representing 97.0% of total votes voted in favour reasons, membership of cost-effective schemes it is essential to attract and retain bright young
of the Remuneration Policy of the Company, is encouraged to gain access to hospital care, talent, many of whom are at the age that they
while votes in favour of the proposed fees for the chronic illness benefits (including HIV/Aids care) are committing to their first property purchase or
various roles and Committee memberships of non- and daily benefits including doctors and medicines. financing their children’s education. Associates
executive Directors ranged between 99.35% and
have to be in the Group’s employ at year end to
99.91%.
receive incentive bonuses, unless due to specific
circumstances, alternative arrangements have been
approved by the Remuneration and Nominations
Committee. The incentive structures for the 2014
financial year were as follows:

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divisional executives % allocation
financial total
Achieving budgeted operating profit 3 months 37.5
Stretch targets operating profit 5 months 62.5
Total operating profit 8 months 100.0 66.6
Achievement of strategic key imperatives 2 months 16.7
Personal performance 2 months 16.7
Total maximum number of months 12 months 100.0

The bulk of the short-term incentive award depends Personal performance, incorporating areas of imperatives for the year. For the 2014 financial - Personal performance, incorporating areas
on exceeding budget and achieving stretch demonstrated performance contribution like year, the targets against which the CEO and of demonstrated performance contribution such
performance targets, which should have a positive leadership, innovation, effort and teamwork are CFO were measured included: growth in as leadership, innovation, effort and teamwork.
impact on shareholder returns. The number of also assessed. For senior management, ‘soft’ headline earnings per share, return on equity Measuring these ‘soft’ issues necessitates
months’ incentive can be reduced by a maximum awards are generally capped at 2 months basic and the achievement of Strategic KPI’s. The more subjective judgment and is determined via
of 2 penalty months should stock levels or ageing salary, although in deserving circumstances, the maximum that can be earned is equal to 12 individual and peer reviews. For executive
exceed target, or employment equity or internal CEO can propose a higher award. A poor personal month’s basic salary. The awards are only made Directors, ‘soft’ awards are capped at 12
audit scores fall short of target. performance evaluation can reduce or eliminate if the Group achieves its budgeted half year and months basic salary, however this would only
the incentive due under measurable company annual headline earnings per share targets. In be achieved in exceptional circumstances. A
In the case of the heads of service divisions performance. that event, a maximum award of 3 months’ poor personal performance evaluation can
such as Systems, Governance and Assurance, salary is made, with the result that the majority reduce or eliminate the incentive due under
People, Real Estate and Sustainability, the executive directors of the short-term incentive award allocated measurable company performance.
maximum incentive ranges from 8 to 12 months to company performance therefore depends
A strong relationship exists between executive
(including personal performance). Measurement on exceeding budget and achieving stretch All associates, including executive Directors,
incentives and sustainable value created for
criteria include performance evaluation from, and performance targets. The Supply Chain Director, participate in a ‘December bonus’ scheme that
shareholders. The incentive portion of Directors’
financial performance of the trading divisions who is an alternate Director, was measured on generally commences at the level of 20% of
earnings is tied to financial targets and is measured
whom they support (budget and stretch targets), the combined profitability of the trading monthly salary per completed year of service up
as a multiple of monthly salary. The achievement of
overhead costs, service delivery, innovative divisions, which also included budget and to 80% (after 4 years), followed by an additional
predetermined targets is a function of:
business improvements and the achievement of stretch targets, Distribution Centre targets and 20% after the completion of 10 years’ service. This
- Measurable Company performance, dependent
key imperatives. Penalty months apply to specific the delivery of KPI’s related to the supply chain incentive is not guaranteed and is payable at the
on the executive’s work function. Targets are
criteria. strategy. The maximum potential award is equal discretion of the Company.
linked to the Group’s performance and are
to 10 months’ remuneration.
tailored annually to ensure alignment with key

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long-term incentives limiting the number of times shares may be sold an assistant store manager. They have received Specific issues raised by shareholders during the
in a year. Directors and prescribed officers dividends amounting to R18.3 million over the last year regarding long-term incentives include:
Partnership and reward for performance are among cannot participate in the scheme. year (final 2013 and interim 2014 dividends). • The need for more substantial returns based
the Group’s key beliefs. The Group has ambitious • Mr Price Partners Share Scheme - shares performance - the mechanics of the share
growth plans that will require substantial capital are awarded instead of options. Associates in schemes are reviewed annually. Last year,
expenditure and the continued dedication of its
associates, and the long-term incentives (LTI) are
junior positions, where staff turnover is relatively The Company has consideration was given to the input received
high, are awarded shares after being from shareholders and minimum performance
to motivate and retain associates critical to the paid out total dividends of
permanently employed for 12 months. conditions were introduced. The purpose of this
achievement of these goals. To that end, various • 4 share option schemes. R77.7 million to associates hurdle (HEPS growing a minimum of CPI +1%)
share and share option schemes have been • 2 forfeitable share plans (FSP) which were participating in the Partners was to ensure that share options would not
established to enable all permanent associates
within the SADC region the opportunity to share in
introduced during the year – page 69-71. Share Scheme since its vest in the event of there being poor company
performance. The intention was not to raise the
the long-term success of the Group. We believe inception in 2006, and at year
Mr Price Partners Share Scheme performance hurdle to a height that would cause
that our inclusive approach to share ownership in A key factor of the share and share option end, 7 404 associates hold the schemes to lose their motivational appeal
the Company is a key differentiator and is essential schemes would, in essence, incorporate the 4 877 144 shares, to the to the valued partners within the Group.
to achieving a high level of performance in the
long-term. In other companies, LTI’s are typically
Group’s intentions regarding the ownership criteria value of R761 million. Cognisance was also taken of the fact that, due
of B-BBEE. Rather than enter into an ownership to strong company performance and the re-
reserved for company executives, however in our
case, executive management’s interest is less than
deal with external parties, the Board resolved to share option schemes rating of the share price (the PE ratio varied from
embrace the true spirit of B-BBEE and, subject to around 12 to a peak of 25), the quantum of share
25% of total company share or option awards. The share option schemes operate on a “rolling”
certain qualifying criteria, included all associates options awarded to participants has decreased.
basis, in that smaller annual awards are made (rather
in its various share and share option schemes. In The option schemes are rolling in nature and
The scheme in which associates can participate than larger upfront awards) according to market
this way those responsible for contributing to the the current awards are materially lower than
depends on their position in the Company. Long- benchmarked criteria and the timing of these awards
Group’s success become partners in the business options vesting. The remuneration philosophy of
term incentives are subjected to an annual review coincides with a tranche vesting. This mechanism
and are rewarded for sustained high performance. the Group is to remunerate at the median and
to confirm their efficacy and affordability. The spreads the market risk, avoiding the situation reward through bonuses and shares. Should the
schemes which are active are summarised below where all options could be out of the money, which
Since an upfront free allocation of shares, not share shares become less attractive, the Group would
and further information can be found on the is a disincentive to associates. All option and share
options, are awarded under the Mr Price Partners need to employ a less favourable approach of
Group’s website www.mrpricegroup.com awards are based on a formula of guaranteed annual
Share Scheme, participants of this scheme receive increasing basic salaries to retain key associates.
pay multiplied by a factor, divided by the share price,
bi-annual dividends and are eligible to vote on As detailed in last year’s report, the Company
• Mr Price Group Employees Share Investment which limits company exposure during a period of
their shares as shareholders. Of the trustees has further considered performance targets upon
Trust allows associates the opportunity to share price strength. The strike price mechanism for
overseeing the operation of this scheme, 50% introducing the FSP’s – refer pages 69 to 71.
purchase shares on a monthly basis up to a all share option schemes is calculated at the lower of
were elected by the participants, which serves
value of 15% of their monthly remuneration the 30 day volume weighted average price (VWAP)
to ensure greater understanding and enhanced
(salary, and where applicable, car allowance). for the period preceding the offer date, or the price
communication between partners, the trustees and
The Company makes an additional contribution, on the day prior to the offer. Re-pricing of strike
the Board. Black ownership in this scheme is 95%
equal to 15% of the associates’ contribution, prices is not permitted and options are not awarded
and the average value of shares held on behalf of
which amounted to R2.6 million in the current to or exercised by key personnel in the Executive
each individual associate is R87 000. Associates
financial year. This scheme has been in and Executive Director Share Schemes during
who became participants between the date of
existence since 1992 and at year end 3 642 closed periods. The Remuneration and Nominations
introduction of this scheme and November 2010,
associates were participants, holding 308 334 Committee has the authority to prevent vesting in
were allocated 1 000 shares or 1 250 shares as
shares. In order to encourage participants to circumstances where the individual is deemed to
hold the shares, restrictions are in place have demonstrated poor personal performance.

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 total options/shares awarded annually new awards are less than those vesting... • The remuneration report could contain more surveyed had more than 1 type of long-term

12
is reducing... 160
details on financial indicators and parameters incentive scheme operating in parallel.
5
4.5 but the Group is very sensitive to releasing Forfeitable shares are freeshares awarded to
140

vesting vs awarded (million)

10
options awarded (million)

4 information which could be considered participants, subject tocertain conditions and

120
8 3.5 forecasting. To that end, the Group will not offer more certainty to the recipient as the value

share price (r)

100 3 commit in print to goals of attaining certain is in the share that vests, not growth on strike
6 80 2.5
financial indicators. Nonetheless, the reports price as is the casewith options. From a
60 2
4 from the Chairman, CEO and CFO clearly detail company perspective FSP’s are attractive due
1.5
40
2 1 both the exceptional historic performance and to the strong retention element as well as the
20 0.5 the strategic goals of the Company. fact that the shares result in a lower number of
0 0 0
2010 2011 2012 2013 2014 2012 2013 2014
instruments than options. Generally companies
Other amendments that were implemented during offer FSP’s without performance conditions and
the year were as follows: senior employees can also receiveenhancement
• Discounted strike prices – previously the strike options being awarded. This is expected to • The tapering off of share option allocations shares which are subject to performance
price of options in 2 of the option schemes reduce over time, as there is a shift to an for associates nearing retirement - applies conditions. The following FSP schemes were
(excluding the Executive Director Share allocation formula which takes into account to participants of the General Staff and Senior introduced during the year:
Scheme) had the potential to be reduced upon annual guaranteed remuneration and the Management share schemes in recognition of
the attainment of certain financial targets. This prevailing share price which has led to smaller the retention aspect diminishing. These - Mr Price Executive Forfeitable Share Plan
practice was discontinued with effect from the tranches being awarded. Furthermore, the associates’ job functions are more for executive Directors and certain divisional
November 2013 awards. Board is of the opinion that it is not appropriate administrative or short-term in nature. The Directors, executives and senior managers.
• Limits for participation - the Company’s to include shares allocated under the Partners impact of their work does not generally impact Awards will be of an annual rolling nature, as
partnership approach results in all associates Share Scheme, which effectively operates as the business well after their retirement, as is per the option schemes. In order to keep the
within the SADC region participating in the the Group’s B-BBEE scheme, in this overall the case with the participants in the Executive cost to company (IFRS 2 charge) at a level no
share schemes, which is unique in South Africa participation total. Excluding this scheme, the and Executive Director share schemes. higher than that of the option schemes, the
and critical to the success of the Company. total number of shares committed under the Consequently, as associates approach number of options awarded was reduced and
Over 9 000 associates are members of the various equity incentive schemes equates to retirement age, their option awards reduce on a a lower number of FSP’s awarded. The shares
various share schemes in operation, which 8.05% of the issued share capital. sliding scale. are held in escrow and vest in 5 years’ time,
has resulted in a large number of shares or • Adjustment to the factor of guaranteed with participants receiving dividends during
remuneration upon which the option awards are this period. This ‘vanilla’ award does not contain
calculated - considering the cost of each performance conditions. A matching
LTI awards as a % of share capital is reducing scheme, the removal of strike price discounts ‘performance award’ (equivalent to the vanilla
35 14%
in the Senior Management and Executive Share award) was also made, but this contains stretch
options awarded (million)

30 Schemes, and the strong need to motivateand HEPS targets linked to the company’s 5 year
% of share capital

25 12% retain our most senior people, the factors strategic plan. 89 954 shares have been
20 applied to the General Staff Share Scheme was acquired by the Company and are held by an
10%
15 decreased and those of the Senior Management institutional 3rd party to satisfy the current
10 8% and Executive share schemes were increased. obligation in full.
5
The factors applied to the Executive Director
0 6%
2012 2013 2014 Share Scheme remained unchanged.
• Introduction of FSP’s – in the prior year, the
total options/shares at year end (rhs) % of issued share capital (lhs) % excluding partners share scheme (lhs)
company’s advisors, PwC, recommended the
Note: tables above exclude FSP’s implementation of a FSP as 82% of companies

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- Mr Price Group Forfeitable Share Plan
It is imperative to retain the executives who are central to the Group’s growth strategy detailed elsewhere in this report. Participants were awarded free shares
equivalent to between 2 and 3 times their annual guaranteed remuneration and these shares vest in full in 5 years’ time. This award was offered subject to
participants entering into a restraint and retention agreement which precludes them from joining a competitor for a period of 2 years should they leave the
employment of the company. 433 576 shares have been acquired by the company and are held by an institutional 3rd party to fully satisfy this obligation.

The vesting periods of the various share option schemes have been amended over the years that they have been in operation. A balance has been sought
between allowing sufficient time to experience a meaningful growth in the share price and having the options vest in a timeframe which is not so distant as to
appear unattainable. Summarised, the position is as follows:

vesting period exercise period frequency of allocations

Partners Share Trust Unconditional vesting occurs 60 days Immediate upon unconditional vesting A once-off initial allocation is made with
after the death or retirement of the no further routine top-up allocations being
recipient associate awarded
General Staff Share Trust 3 years from date of offer within 90 days of vesting Annual
Senior Management Share Trust 5 years from date of offer within 90 days of vesting Annual
Executive Share Trust 5 years from date of offer within 5 years of vesting Annual
Executive Director Share Trust 5 years from date of offer within 5 years of vesting Annual
Mr Price Executive FSP 5 years from date of offer Immediately upon vesting Annual
Mr Price Group FSP 5 years from date of offer Immediately upon vesting Once-off award

Concerning the vesting of shares on retirement years’ service, to retirement at 64 which requires 11 Since the inception of the share option schemes,
or for other reasons for ending employment, the years’ service. Retirement at 65 does not require the Board has exercised its discretion on an
share trusts’ rules stipulate that associates retiring a minimum service period. In all other retirement exceptional basis and has allowed a very limited
at the age of 65 may retain unvested share options or dismissal situations, unvested options will lapse number of associates to retain unvested options
that will vest according to their original timeframes. unless the Board exercises its discretion and post resignation. In using its discretion, the Board
However, given associates are entitled to take early permits the exercise of any or all of the unexercised considered the associate’s length of service,
retirement from the age of 50, guidelines were options. resignation circumstances, past services to the
established taking into account the age and years’ Group and the vesting period remaining on all
service of associates retiring before 65. These In the Mr Price Partners Share Scheme, retirement offered tranches. In most cases, the tranche
guidelines permit the retention post-retirement causes the shares to vest unconditionally. The age closest to maturity was retained while the remaining
of unvested options on a sliding scale whereby and length of service guidelines detailed above unvested tranches were forfeited. No accelerated
associates can take early retirement from 50 and have also been applied to those associates retiring vesting of share options is permitted.
retain their options if they have a minimum 25 before 65.

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In terms of specific authority received from share- to satisfy the requirements of the various share The emoluments of executive Directors for the year were as follows (R’000):
holders, the Company may issue 46 548 430 schemes, as opposed to issuing new shares. The
shares to satisfy the requirements of its share Company has a share purchase programme in motor vehicle pension other short-term total total
salary
benefits contributions benefits incentives 2014 2013
schemes. Since the schemes were introduced in place to hedge against the future obligations of
SI Bird* 4 692 220 961 149 9 384 15 406 11 522
2006, the Company has issued 9 463 292 shares the schemes. The extent to which the Company is
and therefore still has 37 085 138 shares that may hedged against further share price appreciation and MM Blair* 3 131 367 672 120 5 688 9 978 8 214

be issued for this purpose. However, in order to details of unvested/unexercised shares and options SA Ellis 2 564 286 554 103 2 628 6 135 5 522
avoid shareholder dilution, the Group’s current at balance sheet date are as follows:
policy is to purchase shares on the open market Total 10 387 873 2187 372 17 700 31 519 25 258
*Considered to be prescribed officers

number of shares held by % of total

number of
long-term incentive scheme options/ the share obligation
participants
shares trusts hedged Details of the interest of executive Directors in long-term incentives are as follows:
Mr Price Share Option Scheme 67 55 467 - 0%
Mr Price Partners Share Trust 7 404 4 877 114 6 592 145 135% share shares
Mr Price General Staff Share Trust 1 773 9 371 943 4 806 015 51% Forfeitable share plans date of shares price at held at vesting
award granted award end of the date
Mr Price Senior Management Share Trust 204 4 297 119 1 444 615 34% date year
Mr Price Executive Share Trust 32 2 966 758 1 822 530 61%
Mr Price Executive Director Share Trust 5 3 007 621 1 365 067 45% SI Bird
Mr Price Executive FSP 34 89 954 89 954 100% Mr Price Executive FSP (EFSP)
Mr Price Group FSP 13 433 576 433 576 100%
- vanilla award 29-Nov-13 10 341 R155.97 10 341 29-Nov-18
Total 9 532 25 099 552 16 553 902 66%
- performance award 29-Nov-13 10 341 R155.97 10 341 29-Nov-18
Mr Price Group FSP (GFSP) 29-Nov-13 96 546 R155.97 96 546 29-Nov-18
In terms of cash flow, the Company’s unhedged
commitments, at a closing share price of R156.01 amounts MM Blair
Mr Price Executive FSP (EFSP)
to R1.6 billion. In comparison the strike price payable by - vanilla award 29-Nov-13 6 334 R155.97 6 334 29-Nov-18
participants amounts to R1.3 billion. - performance award 29-Nov-13 6 334 R155.97 6 334 29-Nov-18
Mr Price Group FSP (GFSP) 29-Nov-13 67 315 R155.97 67 315 29-Nov-18

executive directors’ part of the remuneration package and share option

SA Ellis
remuneration awards align the Director with the Group interest
in attaining profitable long-term growth. The Mr Price Executive FSP (EFSP)
The Remuneration and Nominations Committee benchmarking of base pay against the peer group - vanilla award 29-Nov-13 2 233 R155.97 2 233 29-Nov-18
annually reviews executive Directors’ remuneration, of companies detailed on page 65 revealed that the - performance award 29-Nov-13 2 233 R155.97 2 233 29-Nov-18
set at the market median, to attract and retain the CEO and CFO were behind the peer group average
calibre required to successfully direct the Group’s by 24% and 12% respectively. Accordingly their Total 201 677 201 677
business. In line with the remuneration philosophy, remuneration was adjusted by these factors on
performance-related incentives form a material 1 April 2013.

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 Share options - Mr Price Executive Director Share Trust
options held at date of options granted options exercised option price gain on options options held number of vesting date of vesting date latest expiry
the beginning offer and accepted or taken up of award exercised at the end of tranches first tranche of last tranche date for
of the year during the year during the year during the year the year remaining exercise of
(R'000) options

SI Bird 40 0001 22-Nov-06 40 000 R21.15 5 855 - -

376 000 27-May-09 94 000 R26.50 9 226 282 000 3 27-May-14 27-May-16 27-May-21
71 000 22-Nov-09 R32.75 71 000 1 22-Nov-14 22-Nov-19
400 000 25-Aug-10 R46.00 400 000 1 25-Aug-15 25-Aug-20
90 000 30-Nov-10 R62.77 90 000 1 30-Nov-15 30-Nov-20
210 500 22-Nov-11 R76.49 210 500 1 22-Nov-16 22-Nov-21
129 777 22-Nov-12 R133.67 129 777 1 22-Nov-17 22-Nov-22
22-Nov-13 112 271 R151.94 112 271 1 22-Nov-18 22-Nov-23
1 317 277 1 295 548

MM Blair 117 000 22-Nov-06 117 000 R21.15 15 774 - -

146 000 22-Nov-09 R32.75 146 000 1 22-Nov-14 22-Nov-19
155 000 30-Nov-10 R62.77 155 000 1 30-Nov-15 30-Nov-20
142 600 22-Nov-11 R76.49 142 600 1 22-Nov-16 22-Nov-21
86 870 22-Nov-12 R133.67 86 870 1 22-Nov-17 22-Nov-22
22-Nov-13 68 770 R151.94 68 770 1 22-Nov-18 22-Nov-23
647 470 599 240

SA Ellis 280 000 22-Nov-06 70 000 R21.15 9 351 210 000 1 22-Nov-13 22-Nov-18
50 000 22-Nov-09 R32.75 50 000 1 22-Nov-14 22-Nov-19
50 000 30-Nov-10 R62.77 50 000 1 30-Nov-15 30-Nov-20
50 000 22-Nov-11 R76.49 50 000 1 22-Nov-16 22-Nov-21
32 591 22-Nov-12 R133.67 32 591 1 22-Nov-17 22-Nov-22
22-Nov-13 24 242 R151.94 24 242 1 22-Nov-18 22-Nov-23
462 591 416 833

AE McArthur2 327 000 22-Nov-06 327 000 R21.15 44 029 - -

396 000 22-Nov-09 R32.75 396 000 1 22-Nov-14 20-Feb-15
250 000 30-Nov-10 R62.77 250 000 1 30-Nov-15 28-Feb-16
973 000 646 000

S van Niekerk2 140 000 22-Nov-06 140 000 R21.15 18 850 - -

50 000 22-Nov-09 R32.75 50 000 1 22-Nov-14 20-Feb-15
190,000 50 000

1
The options awarded to SI Bird were awarded in terms of the Mr Price Executive Share Trust prior to his appointment as an executive Director of the Company. These options were subject to a discount on the strike price due to strong Company performance and vested at R9.00 per share.
2
Disclosure required although no longer Directors of the Company.

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Composition of executive Directors’ total remuneration for the year: The emoluments of non-executive Directors for the year were as follows:

2014 2013 R’000

LJ Chiappini
salary

975
vehicle
allowances
& expenses
394
pension
contributions

343
fees

625
total
2014

2 337
total
2013

3 194
SB Cohen 1 085 375 324 625 2 409 3 250
K Getz - - - 396 396 377

25% 25% MR Johnston

RM Motanyane
-
-
-
-
-
-
556
284
556
284
534
270

56% 52%
short-term short-term
incentive incentive D Naidoo - - - 314 314 279
NG Payne - - - 1 050 1 050 1 000
long-term long-term
incentive incentive LJ Ring - - - - - 202

19% 23% MJD Ruck

S Sebotsa
-
-
-
-
-
-
430
-
430
-
372
84
salary & salary & WJ Swain - - - 555 555 537
benefits benefits
M Tembe - - - 284 284 270
Total 2 060 769 667 1 250 8 616 10 369

non-executive directors’ Proposed fees are detailed in the Notice of Meeting Director’s total fees are expected to be in 2016,
remuneration set out in the Annual Results booklet for approval at which is approximately R625 000 per annum.
the forthcoming AGM. Non-executive Directors do This was calculated by applying an inflationary
Non-executive Directors’ fees, which comprise not participate in any short-term incentive schemes increase of 6% per annum to the proposed Lead
separate remuneration for Board activity and and do not receive share option awards. Director’s total fees for the forthcoming year. This
Committee participation, are approved at the AGM. has been implemented by increasing the Honorary
The Honorary Chairmen have employment Chairmen’s fees to R625 000 in 2014, a level
The Company does not pay an attendance fee per contracts with the Company and the remuneration which will remain unaltered until 2016. Effective
meeting, as historically, the attendance at meetings payable in terms of these contracts is decided by 1 April 2013, the balance of their remuneration,
has been good and the performance of non- the Remuneration and Nominations Committee. represented by the total cost to company less
executive Directors is reviewed annually via peer Details explaining the role of the Honorary the fees of R625 000, is being reduced in annual
evaluation. In addition, the Board has always felt Chairmen, in support of their remuneration, are installments to 2016. Therefore in 2016, the
that Directors contribute as much outside of provided in the Corporate Governance Report on Honorary Chairmen’s salary and benefits will be
meetings as they contribute within meetings. page 48. Their total remuneration is decreasing Rnil, and their total remuneration, in the form of
over a 3 year period (which commenced in the fees, will amount to R625 000.
March 2014 financial year) to the level that the Lead

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Analysis of the remuneration of non-executive Directors for their services as Board Committee
Chairmen and members is detailed below:

F2014 actual F2015 proposed

board or committee chairman member chairman member
Main Board 1 050 000 212 000 1 113 000 225 000
Main Board - Honorary Chairman 625 000 625 000
Main Board - Lead Independent Director 341 000 361 500
Audit and Compliance Committee 182 000 102 000 193 000 108 000
Risk Committee 1
89 000 94 500
Remuneration and Nominations Committee 112 500 71 500 119 250 75 800
Social, Ethics, Transformation and 112 500 71 500 119 250 75 800
Sustainability Committee

1
Fees for the non-executive Chairman include his duties as Chairman of both the Board and the Risk Committee.

proposals for future remuneration policy

• Research and implementation of suitable long-term incentive structures for new geographic trading
territories.
• Effective November 2014, participants in the Mr Price Executive Forfeitable Share Plan, 34 associates in
total, can qualify to have their total (options and FSP’s) annual long-term incentive awards increased by
10% should they meet their minimum personal shareholding threshold, namely twice annual guaranteed
remuneration for divisional executives and 3 times for executive Directors.
• Alignment of the peer group utilised for benchmarking non-executive Directors’ fees to the peer group
used for executive Directors.

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 Chairman
Nigel Payne Age: 54

other directorships include: JSE Limited, The Bidvest Group Limited, Bidvest Bank
Limited, BSi Steel Limited, Vukile Property Fund Limited, STRATE (Pty) Limited, Free
State Maize (Pty) Ltd, PPS Insurance Company Limited
years of service: 7
qualifications: CA (SA), MBL

Honorary Chairman

board of
Stewart Cohen Age: 69

other directorships include: Catregav Holdings (Pty) Limited, Holdspec Investments

(Pty) Limited, Kovacs Investments 343 (Pty) Limited

directors
years of service: 28
qualifications: BCom, LLB, MBA

Honorary Chairman
Laurie Chiappini Age: 69

other directorships include: Gretrac Holdings (Pty) Limited, Storevest Investments

(Pty) Limited
years of service: 28

Chief Executive Officer

Stuart Bird Age: 54

years of service: 20
qualifications: CA (SA)

Chief Financial Officer

Mark Blair Age: 48

years of service: 8
qualifications: CA (SA)

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Lead Independent Director Independent Non-Executive Director
Bobby Johnston Age: 65 John Swain Age: 73

other directorships include: STRATE (Pty) Limited other directorships include: The Sharks (Pty) Limited
years of service: 20 years of service: 20
qualifications: CA (SA) qualifications: CA (SA)

Non-executive Director Independent Non-Executive Director

Keith Getz Age: 58 Moses Tembe Age: 52

other directorships include: BVPG Consulting (Pty) Limited, Steak Ranches Inter- other directorships include: Beige Holdings Limited, Crescendo Management
national BV, Spur International Limited, Spur Corporation Limited, Spur Corporation UK Services, Geochem (Pty) Ltd, OCS (Sa) (Pty) Limited
Limited, Cape Union Mart Group (Pty) Limited, STRATE (Pty) Limited years of service: 6
years of service: 9 qualifications: BA Public Administration and Political Science, Graduate of Caltex
qualifications: BProc, LLM Business Management Programme (UCT)

Independent Non-Executive Director Alternate Director

Maud Motanyane Age: 62 Neill Abrams Age: 49

other directorships include: Kagiso Media, G4S Secure Solutions, G4S Aviation other directorships include: Ocado Group Plc
Security, Jet Education Trust years of service: 4
years of service: 6 qualifications: BA, LLB (Wits), LLM (Cambridge)
qualifications: Diploma Library Science, WPI fellow

Independent Non-Executive Director Alternate Director

Daisy Naidoo Age: 41 Tracey Chiappini-Young Age: 42

other directorships include: STRATE (Pty) Limited, Hudaco Industries Limited, other directorships include: Taunina (Pty) Limited, Taunina LLC
OMNIA Holdings Limited, Marriott Unit Trust Management Company Limited, Old Mutual years of service: 4
Unit Trust Managers Limited, Anglo Platinum Limited, Old Mutal Alternative Risk Transfer qualifications: BBusSci (UCT), CFA, Associate in Applied Science (FIT),
Limited TRIUM EMBA (NYU, HEC, LSE)
years of service: 2
qualifications: CA (SA) MCom (Tax)

Independent Non-Executive Director Alternate Director

Myles Ruck Age: 58 Steve Ellis Age: 52

other directorships include: Standard Bank Group Limited, The Standard Bank of years of service: 22
South Africa Limited, ICBC Argentina qualifications: CA (SA)
years of service: 7
qualifications: BBusSc PMD (Harvard)

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