APRIL MARCH 2012 2013 - Mr Price Group

TAKE AN INSIDE LOOK AT OUR

MR PRICEFAMILY

P R I C E L E S S ( V A T I N C L )

APRIL

MARCH2012

2013ANNU

AL IN

TEGRA

TED RE

PORT ONLINE SALES

PLATFORM LAUNCHED - WWW.MRP.COM

GROUP POSITIONS ITSELF FOR THE NEXT

PHASE OF ITS GROWTH

Test stores in Nigeria and Ghana deliver strong results

“A celebration of the individuals who

make it all happen”STUART BIRD

CHIEF EXECUTIVE OFFICER - MR PRICE GROUP LIMITED

WELCOME TO THEMR PRICEGROUP LIMITEDANNUALINTEGRATEDREPORT2013

38OUR PEOPLE

06 Scope and Boundary

07 2013 Highlights

08 2013 Under Review

10 Our Business

12 Our Footprint

14 Business Overview

26 Stakeholder Engagement

29 Chairman’s Report

31 CEO's Report

32 CFO's Report

37 Divisional Performance Indicators

38 Report on Our People

44 Stories of Our People

80

15

DIVISIONALREVIEWS

OURVALUES

SHAREHOLDER INFORMATION

REMUNERATIONREPORT

29 CHAIRMAN'SREPORT

46 Divisional Reviews

60 Corporate Governance

68 Board Risk Committee Report

70 Audit and Compliance Committee Report

72 Internal Audit Report

74 Social, Ethics, Transformation and Sustainability Committee Report

78 Social Report

80 Remuneration Report

93 Board of Directors

94 Shareholder Information

95 Declaration of Final Cash Dividend

96 Approval of the Annual Financial Statements

97 Report of the Independent Auditor

98 Report of the Directors

102 Abridged Financial Statements

108 Administration and Contact Details

109 Definitions and Glossary

110 Notice of Annual General Meeting

115 Form of Proxy

46

94

WHERE WE’RE AT...Scopeand Boundary

About the report The Group is committed to integrating social, environmental and governance performance with financial performance in accordance with the King Code of Governance for South Africa, 2009 (King III). Issues that have a material impact on the Group have been included. This year's report has been produced in a more concise manner, including only abridged financial statements. Additional information is available on the Group's website (www.mrpricegroup.com). Scope and boundary This Annual Integrated Report, for the 52 week period ended 30 March 2013, includes the consolidated financial results of Mr Price Group Limited trading in South Africa and its African operations in Botswana, Namibia, Lesotho, Swaziland, Ghana and Nigeria as well as the income received from its franchise operations trading elsewhere in Africa. Pages 12 and 13 illustrate the geographical representation of retail operations.

The Group’s Strategic Planning Framework and the Global Reporting Initiative (GRI) served as guidance to identify issues material to its long-term sustainability. Relevant disclosures include those pertinent to corporate-owned operations but exclude franchise operations. The Group’s social initiatives are focused on South African national priorities.

The Annual Financial Statements have been prepared on the historic cost and going concern bases, and are prepared in accordance with the International Financial Reporting Standards (IFRS) and in the manner required by the Companies Act of South Africa (71 of 2008) and the JSE Listings Requirements.

AssuranceThe Group’s consolidated Annual Financial Statements were audited by the external auditor, Ernst & Young Inc. Their unqualified report can be found online as part of the consolidated Annual Financial Statements.

The South African Broad-Based Black Economic Empowerment (B-BBEE) accreditation level has been externally verified by a SANAS accredited organisation, BEESCORE (Pty) Ltd.

The Board is satisfied with the level of integrated reporting, but recognises that it is premature to subject the Annual Integrated Report to external assurance at this point. The Group’s Internal Audit Division has verified the selected disclosures contained in the Social, Ethics, Transformation and Sustainability Committee Report (page 74) and the Report on our People (page 38). The external auditors have verified the information in the Remuneration Report (page 80).

Directors’ responsibilityThe Board acknowledges its responsibility to ensure the integrity of the integrated report. The Board has applied its mind to the integrated report and confirms that it addresses all material issues, and presents fairly the integrated performance of the Group and its impacts. The integrated report has been prepared in line with best practice pursuant to the recommendations of the King III Code (principle 9.1). The Board authorised the integrated report for release on 22 May 2013.

NG Payne SI Bird MM BlairChairman Chief Executive Officer Chief Financial Officer

HIGHLIGHTS

RETURN ON EQUITY 51.1%

OPERATING PROFIT 19%

CASH RESOURCES OF R1.2 BILLION

ASSOCIATES EMPLOYED 19 384

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

700 120

600 100

50080

400

60

300

40200

20100

HEP

S an

d D

PS (c

ents)

Shar

e pr

ice

(rand

)

Headline earnings per share Dividends per share Share price

27 YEAR CAGR IN HEPS 23.5%

HEADLINE EARNINGS PER SHARE 26%

DIVIDENDS PER SHARE 27%

07MR PRICE GROUP LIMITEDANNUAL INTEGRATED REPORT 2013:

2013 HIGHLIGHTS

Maintained B-BBEE Level 6 Compliance.

Exceeded 1 000 corporate-owned stores.

R16.4 million paid in dividends to Mr Price Partners Share Scheme participants.

Facebook Likes Twitter Followers Site Visits Page Views209 418 14 768 2 949 827 33 024 760

The Group has invested in smart software solutions (Ceridian Dayforce Human Capital Management System, Cornerstone Learning Management System and VIP Payroll) enabling world class people support to the business as the Group continues to expand locally and internationally.

Launched on the 30th July 2012, at a high profile event held at Mr Price Head Office that included South Africa’s who’s-who in the fashion and media industry, www.mrp.com has enjoyed an almost fairy tale experience to date. Constant and positive social media feedback is testament to the fact that Mr Price has set the benchmark in online shopping in South Africa, so much so that it also became the most searched retail brand on Google in South Africa for 2012, despite only launching 7 months into the year.

People Management

Mr Price Online

2012 - RedCap Foundation

2012 - Mr Price GroupFinalist of the World Retail

Awards 2012 in the Emerging Market Retailer of

the Year category.

2012 - Mr Price GroupIncluded in MSCI Emerging

Markets Index from May 2012.

2012 - Mr Price GroupInvestment Analyst

Society Awards 2012 Mr Price Group was voted

leader in corporate reporting in the consumer services sector.

2012 - Mr Price GroupRanked top of the JSE for total shareholder returns

over 10 years by the Sunday Times in May 2012.

2012 - Mr Price GroupRanked 5th in Sunday Times Top 100 Companies 2012 (10 year compound growth rate in share price 44.2%).

2012 - Mr Price GroupRanked 2nd in Sunday Times Top 100 Companies 2012 (5 year compound growth rate in share price 43.2%).

The RedCap Foundation’s YoungHeroes programme received an Honorable Mention in the Africa category at the IPN Global Best Awards. This award recognises the programme’s achievements under the category of “partnerships that support health, wellbeing and learning in Africa.”

stores in Ghanaand Nigeria

Successful first year performance of

AWARDSAND ACCOLADES


2013 UNDER REVIEW

APPAREL

HOME

FRANCHISE

FINANCIAL SERVICES

CENTRAL SERVICES

NUMBER OF STORES DETAILSNUMBER OF ASSOCIATES CUSTOMERS AND POSITIONING

Clothing, footwear, accessories, underwear and maternitywear

Marketing is pitched at 16 to 24 year olds who want to keep abreast of the latest international trends at exceptional prices. LSM range 6 to 10.

Average store size624m2

Average store size 920m2


Credit and financial services available in all South African and

Namibian stores

Sporting apparel, equipment, footwear and accessories

Home textiles, homeware, furniture and kids’ merchandise

Clothing, footwear, accessories, underwear and maternitywear. Home textiles, homeware and furniture

Granting of credit, management and collection of debtors book and identification and marketing of financial services products

Provides the following services to the trading divisions:• Information technology,• Internal audit,• Human resources,• Real estate,• Financial,• Risk and governance, and• Sustainability

Value-minded sporting families who enjoy performance, quality, comfort and fit, whether they are participants or spectators. LSM range 6 to 10.



Classic and updated women’s clothing, footwear, intimatewear, cosmetics and accessories

Bedroom, living room and bathroomware

Young-at-heart women aged 40+ years who have fashion sensibility and require differentiated trends that offer style and co-ordination. LSM range 6 to 10.

Contemporary lifestyle customers, aged 18 and upwards, all with a young-at-heart attitude. LSM range 6 to 10.

The franchise stores operate the same business model as the corporate-owned stores.

* Head office associates only

Cards available are as follows:• Mr Pricemoney (Mr Price Apparel, Mr Price Home, Mr Price Sport)• Miladys• Sheet Street

Middle-income consumers looking to co-ordinate their homes tastefully but responsibly. LSM range 5 to 8.

Average store size326m2

Looking good...

10 3981 2241 964

3 335

1 597

PRODUCT OFFERING

7*

352

507

19 384

38453

189

150

253

26

1 055

1 1MR PRICE GROUP LIMITEDANNUAL INTEGRATED REPORT 2013:

OUR BUSINESS

UR

FOO

TPRI

NT

384

150

53

253

189

1029 CORPORATE STORES IN AFRICA

Mr Price Apparel

Mr Price Home

Mr Price Sport

Sheet Street

Miladys

BOTSWANA

933

2

6STORES

22

2

143

7

15

4

2

4STORES

11

2

2STORES

1

1STORE

NAMIBIA

17STORES

27STORES

SWAZILAND

LESOTHO

GHANA

NIGERIA

19

26STORES

FRANCHISE

13 - Mr Price Apparel

4 - Mr Price Home

1 - Mr Price Sport

7 - Sheet Street

6 - Miladys


17 - Mr Price Home

8 - Mr Price Sport

35 - Sheet Street

38 - Miladys


8 - Mr Price Home

1 - Mr Price Sport

23 - Sheet Street

18 - Miladys

Mr Price Apparel - 27

Mr Price Home - 7

Mr Price Sport - 2

Sheet Street - 16

Miladys - 14

Mr P

rice

App

arel

- 3

3

Mr P

rice

Hom

e - 1

0

Mr P

rice

Spor

t - 3

Shee

t Stre

et -

24

Mila

dys

- 13


Mr Price Home - 7

Mr Price Sport - 3

Sheet Street - 13

Miladys - 17

Mr Pric

e App

arel -

105

Mr Pric

e Hom

e - 5

8

Mr Pric

e Spo

rt - 2

3

Shee

t Stre

et - 7

0

Milady

s - 43

31STORES

154STORES

299STORES

GAUTENG LIMPOPO


Mr Price Home - 8

Mr Price Sport - 1

Sheet Street - 15

Miladys - 10

50STORES

82STORES

58STORES

83STORES

149STORES

Mr Pric

e App

arel -

54

Mr Pric

e Hom

e - 2

4

Mr Pric

e Spo

rt - 1

0

Shee

t Stre

et - 3

9

Milady

s - 22

MPUMALANGAFREE STATE

66STORES

WESTERN CAPEEASTERN CAPE

KWAZULU-NATAL

NORTH WEST

NORTHERN CAPE


OUR FOOTPRINT

OVER THE PAST 27 YEARS, THE GROUP HAS DELIVERED STRONG

GROWTH IN EARNINGS, DIVIDENDS AND SHARE PRICE

HEPS

27 year compound annual growth rate - HEPS: 23.5% DPS 25.3%

DPS Share Price

20

120

100

80

60

40

600

500

400

300

200

100

HEP

S an

d D

PS (c

ents)

Shar

e pr

ice

(rand

)

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

PASSIONOrdinary people doing extraordinary things. Passion is our engine. It is the positive attitude and enthusiasm of all our associates who approach each day bright-eyed, smiling and projecting a positive image – believing work is fun.

VALUEThe heart of our business. The success of our business has been, and will continue to be, built on our ability to add value to our customers’ lives. But it is more than just price. It's about quality, fashionability, being in stock of the wanted item and delighting our customers by doing more than what is expected.

PARTNERSHIPSharing 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 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 children and youth.

OUR DREAMTo become a top performing international retailer.

OUR PURPOSETo add value to our customers’ lives and worth to our partners’ lives,whilst caring for the communities and the environments in which we operate.

OUR VALUESPASSION - VALUE - PARTNERSHIP

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 we are building a sustainable business as we progress towards our vision of being a top performing international retailer and fulfilling the dream for our partners – our Mr Price family.

GOVERNANCEGood governance and ethical and effective leadership are considered critical to the Group’s success and sustainability. The Group is therefore committed to “Governance beyond Compliance” and to the adoption, integration and embedding of the spirit and principles of governance as opposed to simply responding to and complying with rule sets and recommended codes. The Group considers good governance to be a natural extension of its values and has structured and organised itself in order to give effect to its commitment to robust governance. More information on the Group’s governance strategy and activities during the period can be found in the Corporate Governance Review on page 60.

The Group retails apparel, homeware and sportswear in 2 business segments of ‘Apparel’ and ‘Home’. ‘Apparel’ includes the Mr Price, Mr Price Sport and Miladys brands and ‘Home’ includes the Mr Price Home and Sheet Street brands.

The Group launched its online sales platform in July 2012 and also offers financial services to its customers.

The Group operates 1 029 corporate-owned stores in South Africa, Botswana, Namibia, Swaziland and Lesotho with recent corporate store expansion into West Africa, namely Nigeria and Ghana. The Group has 26 franchise operations trading elsewhere in Africa namely Kenya, Malawi, Mauritius, Mozambique, Rwanda, Tanzania, Uganda and Zambia. More information on these international operations can be found in the International Review on page 56.

WE ARE A HIGH GROWTH SOUTH AFRICAN-BASED

FASHION-VALUE RETAILER, SELLING PREDOMINANTLY FOR CASH. WITH A

MARKET CAPITALISATION OF R29.4 BILLION AT YEAR END,

THE GROUP RANKED 46TH ON THE JSE.


BUSINESS OVERVIEW

OUR JOURNEYThe Group has consistently delivered exceptional growth, however it still views itself as a growing company with great prospects. Over the last few years the Group has been heavily focused on driving operational performance and specifically, improving the operating margins of underperforming divisions. Although considerable success has been achieved to date, further margin improvements are expected in the future. The Group has moved into the investment and growth phases of the journey. This will support its dream and includes expansion into new trading formats such as online and new markets beyond South African borders.

The Group has adopted an integrated approach to strategy, risk management, performance and sustainability. It is committed to the alignment of “profit, people and planet” as it pursues its vision to become a top performing international retailer.

The following focus areas which are detailed on pages 18 to 24 are relevant to the Group's ability to create and sustain value in the longer term, and thereby achieve its vision:

1. Sustainable growth in targeted markets

2. Building people capacity

3. Focus on the value model

4. Business systems, supply chain and resourcing capability enhancements

5. Sustainable local development

OUR MODEL

VALUE IS AT THE VERY CORE OF THE GROUP’S EXISTENCE……

OUR BUSINESS MODEL IS SYNONYMOUS WITH OFFERING FASHIONABLE MERCHANDISE AT EVERYDAY LOW PRICES.

THIS IS HOW WE SATISFY OUR CUSTOMERS’ NEEDS FOR FASHION:

• Fashion research, specialist trend teams and frequent international travel• Activedialoguesthroughdigitalandsocialmedia• Respondingtocustomers’changingfashionneeds• Thoroughproducttestingbeforemakinglarge merchandise commitments• Slowsellingmerchandiseismarkeddownandsoldto make way for new fresh merchandise. Product is not accumulated for an ‘end of season’ sale, so there are everyday low prices

THE GROUP IS FOCUSED ON REMAINING A CASH-DRIVEN RETAILER. THE AIM IS TO MAINTAIN A CASH SALE CONTRIBUTION OF AT LEAST 75%. THIS YEAR CASH SALES WERE 80.4% (81.4%) OF TOTAL SALES.THIS LEVEL OF CASH SALES ENSURES THAT THE GROUP IS:

• Lessimpactedbythecyclicalnatureofretail

• Lessexposedtobaddebt(asitdoesnothavethe challenge of collecting a large debtors’ book)

• Not dependent on releasingmore credit into the market to drive turnover, particularly during poor economic times

• Abletofundfuturegrowthwithoutgearing.Strong cash flows will support increased capital expenditure and maintain an appropriate dividend pay-out ratio

FASHION - QUALITY - PRICEBeing 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.

Maintaining a low overhead structure is imperative to delivering acceptable operating margins. The Company seeks to balance this with incurring costs often ahead of revenue generation which will support future growth.

The Group's long-term thinking requires it to invest substantially in information technology and supply chain. This underpins the growth strategy in order to preserve the proud track record of earnings growth.

• Address areas of weakness and opportunity, particularly in the underperforming divisions

• Capture market share, improve trading densities and increase operating margin %

• Group has committed to R2.5 billion capital expenditure over the next 5 years, including R1 billion for a new ERP system and distribution centre

• Have a suitable infrastructure in place. A powerful engine which is revving and ready to go

• Enhanced processes, systems and infrastructure to support the next phase of growth

• To be an internationally competitive retailer, with robust topline growth and foreign revenue increasing at a higher rate than locally

• Extend track record of HEPS growth of CAGR greater than 20%

• Research and testing of new markets is currently underway

Since 2010:• Trading densities have increased from R18 492m-2 to R24 979m-2

• Operating margin has increased from 10.5% to 15.6%

2010 2011 2012 2013 2014 2015 2016 2017

BUSINESS IN ‘FIX UP’ MODE

PROGRESS

INVEST IN SYSTEMS, LOGISTICS, SUPPLIERS

GROWTH PHASE

FIX INVEST GROW

OBJECTIVES

FASH

ION

VALU

E

CA

SH

1 7MR PRICE GROUP LIMITEDANNUAL INTEGRATED REPORT 2013:

BUSINESS OVERVIEW

South African consumers moving up the LSM curve (the rising middle class) have directly benefited the Group’s topline growth, profitability and total shareholder returns. These increases are expected to continue, mainly in the LSM 4 -10 categories, which includes the Group’s direct target market, LSM 6 -10. A key consideration in focusing on international growth is to decrease dependence on one specific market and develop a more diversified business.

The trends which have driven economic development in other emerging economies are beginning to take hold in Africa. Sub-Saharan Africa (SSA), driven by commodity availability, a youthful workforce, recent discoveries of oil and gas on the eastern seaboard and the continued supply of agricultural products to international markets is expected to grow at a faster rate than the western world. Foreign direct investment into Africa will continue to grow exponentially. This will lead to further private

sector growth and job creation. This will in turn lead to an increase in consumer spending which is expected to grow from US$860 billion (2011) to US$1.4 trillion by 2020. Other factors such as a faster population growth rate of 875 million (2011) growing to 1.2 billion (2025), urbanisation increasing from 36% (2011) to an estimated 50% (2030) and the rapidly expanding new middle class (growing by over 3.1% per year), will as a result of improved living standards, increasingly need apparel, homeware and sportswear. Africa will be the new retail growth story within the next decade. (Source: Global McKinsey Institute, World Bank, African Development Bank)

The growth of the internet has also presented retailers with the opportunity to enter new markets without the need to commit to building a large and expensive network of stores. The Group’s research is focused on the right business model to enter new territories with either online or a mixture of online and bricks and mortar stores.

WHERE WE ARE GOING

• Grow market share in established markets. South African “home base” is still key to the Group’s future and holds exciting growth prospects. It is the foundation which will fund infrastructure and expansion;

• Open further stores in West Africa (Nigeria and Ghana), and research specific African countries for direct investment opportunities;

• Research other international markets to identify additional growth opportunities;

• Launch Mr Price Apparel online internationally, with specific focus on Australia, New Zealand and the UK in the first half of the new financial year;

• Launch Mr Price Home, Sheet Street and Mr Price Sport online in South Africa within the next year; and

• Enhance the level of marketing, product testing and linking with customers via social media.

1. SUSTAINABLE GROWTH IN TARGETED MARKETS

OUR CHALLENGES AND OPPORTUNITIES OUR RESPONSE

Assessing the emerging market opportunity, including Africa. Focused 'research and test' strategy for international markets. Strengthen management teams in key growth areas.

Availability and cost of retail infrastructure and space. Engaging with the new generation consumer, who is becoming increasingly “switched on” and demands convenience in their shopping.

Multi-channel approach to expansion, which integrates traditional stores, E-commerce and mobile. Stringent store feasibility process.

Increased urbanisation and rising middle class. Maintain focus on target customers and continue to increase market share.

Increased globalisation, including increased entry of international retailers into South Africa.

Continue to focus on the fashion-value business model, and increased product design and test strategy.

Infrastructure, systems and people capacity and maturity. The Group’s strategy in terms of building supply chain, systems and people are well established and clear.

South African social and economic landscapes. Sales growth strategy will lessen dependence on one country.

KEY IMPERATIVE RESPONSE

MAXIMISE LOCAL OPPORTUNITIES:

STORE LOOKNew generation store design to be rolled out. The new generation store design is currently being rolled out and has been

positively received by customers. The number of new generation stores that have been opened during the year is as follows:Mr Price Apparel 23Mr Price International 1Mr Price Sport 9Miladys 12Mr Price Home 17Sheet Street 42

TRADING SPACEIn recent years, the focus has been on improving divisional performance by driving up trading densities.

• Target gross new space of 5% per annum;

• Reduce space in oversized stores, (Mr Price Sport and Mr Price Home had many overspaced stores); and

• Expand stores where trading densities are too high.

(Mr Price Apparel’s trading density of R31 466m² is high by industry standards, especially for a value retailer. Up to a 3rd of its stores are considered too small, which negatively impacts shopper experience and results in lost sales opportunities).

This process is well underway and the Group now has a greater appetite to take on new attractive trading space – the right sized store with the right rental structure.

Gross new trading space was increased by 3.8% (closing) and 3.6% (weighted average) during the current year. However, prior to planned space reductions and store closures, new space opened amounted to growth of 6.2% (closing space).

Mr Price Sport reduced its store space by 3 095m² and Mr Price Home reduced by 4 158m², the latter remaining a continuing opportunity over the next 5 years. This has had a positive impact on store performance, with Mr Price Sport reducing space in 4 stores by 42% but increasing sales by 8% and profit by 69% and Mr Price Home reducing space in 4 stores by 29% but increasing profit by 26%.

This year, Mr Price Apparel expanded by 2 781m², evidencing that this will still be an opportunity area for many years to come.

TEST NEW CHANNELS The Mr Price Apparel online site, www.mrp.com, was successfully launched in South Africa in July 2012. The objective was clear – make online shopping as convenient for the customer as possible. To this end, the online offer was made available both on the web and on mobile devices. Multiple delivery methods and 6 payment options were offered.

INTERNATIONAL RESEARCH ON OWNED STORES IN AFRICA

The corporate ownership model and structure for international operations was established. Test stores were opened in Nigeria and Ghana, which have traded very well.


BUSINESS OVERVIEW

The Group recognises that skilled and committed people, who have high passion for their work, drive a successful business. The ability of leadership to respond to opportunities and threats, to build strong team structures supporting future expansion, and to effectively rollout the new Human Capital Management (HCM) system is key to achieving goals.

With ongoing expansion and business systems improvements, management of change is an essential competency to ensure that company values and corporate ‘DNA’ are retained. Effective communication will be vital to ensure that associates understand and are energised by the various opportunities, in both work and careers.

VALUE is a foundation stone of the business model and this will never change. By staying true to this the Group ensures that it is building a lean, sustainable business in a more constrained world. Adding value to our customers’ lives is our purpose and this is achieved through an ongoing focus on improved efficiencies.

2. BUILDING PEOPLE CAPACITY

3. FOCUS ON THE VALUE MODEL


GROW THE HUMAN CAPITAL RESOURCE, PRIMARILY:

• Emergingleadershipandkeyskillsdevelopment.

• Focused development of previously-disadvantagedassociates for middle and senior management succession, which will feed the 'pipeline' into top management.

• Identified areas that required strengthening and implemented various initiatives such as new e-learning modules, internship programmes, and emerging leader development.

• Improvedskillssourcingandattraction.

• Built a robust succession plan, which is constantly updated as peopledevelopment takes place.

• Identifiedappropriatestructures for thekey teams impactedby theGroup’sexpansion plans.

•ActivelymanagedandmonitoredEmploymentEquitygoals.

Research and implement new Human Capital Management (HCM) system.

Selected an appropriate HCM system and started implementation of the labour scheduling and payroll components. Conducted workplace training and change management to enable business outcomes.


Continue to improve operational performance by maintaining low overhead structures and improving operating margins.

The initial operating margin targets were:

Mr Price Sport 10%Mr Price Home 10%Sheet Street 10%Miladys 15%

Although the Group’s operating margin has shown strong growth, it was impacted by the performance of certain divisions.

The initial targets were achieved with the exception of Mr Price Sport, and revised medium-term targets are:>15%>15%>15%>20%

There are still opportunities to further improve the operating margin of Mr Price Apparel, however the magnitude of the improvement is not at the same scale as the other divisions.

Identify cost savings to offset the financial impact of the increased investment in business systems and supply chain.

A number of cost saving initiatives were identified and are currently being progressed, including:• Enhancedtenderprocess;• Energyinitiativestoreducecostandconsumption;• Reviewofsportsponsorships;• RolloutoftheCeridianDayforceLabourSchedulingSystem,whichwasimplemented

in 114 stores (aims to better align associate working hours with peak trading periods and thereby improve the customer experience and turnover whilst reducing overtime); and

• Focusonrentalnegotiationsandamorestringentnewstorefeasibilityprocess.

Keep input prices low. Refer to point 4 on page 22.


Attraction and retention of key skills. Continued focus on embedding the Group’s values and DNA in order to position the Group as a preferred employer. Continuation of share schemes, in which all associates can partake, is a strong incentive and retention mechanism.

Leadership development and succession, including senior and merchant leadership.

Focus on building future leaders and strong pools of talent to feed the succession pipeline.

Associate engagement and empowerment. Process re-engineering to improve efficiencies, release capacity and enhance the work environment.

Transformation. Continued focus on transforming and empowering the workforce. The medium to long-term plan is to train and develop middle management levels, rather than to 'buy in' at top levels.

WHERE WE ARE GOING

• Focus on leadership development, including Employment Equity;• Build and train new skills required to support the Group’s future growth;• Monitor and manage changes to processes and roles as a result of business systems improvements; and• Continue to rollout the HCM system, labour scheduling module to all stores in the next financial year and implement the learning management module.

WHERE WE ARE GOING

There will be continued emphasis on operating performance to achieve the desired level of margins, despite the Group’s strategic focus moving to the investment and growth phases. Although these investments are expected to result in higher short-term costs, they represent significant opportunities to further improve efficiencies, costs optimisation and topline growth over the longer term.


Significant investment in building future capabilities. Investment in a new Enterprise Resource Planning (ERP) system and distribution centre.

Resourcing model, availability and cost of local manufacturing capabilities.

Continuing to build a robust supply base that focuses on maintaining and developing local suppliers and entering into strategic partnerships.

Support Centre infrastructure and costs. Continued focus on maintaining a low cost structure and tendering process for larger input costs.

Availability and cost of retail space. Developing a multi-channel approach to retailing, which includes growth in traditional retail space, E-commerce and mobile.

Labour efficiency. Implementation of the Ceridian Dayforce Labour Scheduling System.

MR PRICE GROUP LIMITEDANNUAL INTEGRATED REPORT 2013:

BUSINESS OVERVIEW 21

The Group’s future growth and profitability strategies are dependent on an agile and low cost end-to-end supply chain. Visibility of product throughout the supply chain is crucial in order to create an effective network that responds to changes in demand and supply thereby ensuring optimal product availability at acceptable cost.

The major IT projects support the business growth strategy, the key drivers being: a more flexible and agile supply chain to reduce costs, getting merchandise to market timeously and enabling the ability to trade internationally. This enables the Group to trade competitively whilst complying with all local and cross border regulations.

The underlying technical architecture to support all these new, more complex and distributed applications needs to be upgraded.

4. BUSINESS SYSTEMS, SUPPLY CHAIN AND RESOURCING CAPABILITY ENHANCEMENTS

WHERE WE ARE GOING


Ability to develop a more balanced and sustainable resourcing model. Continue to develop and partner with our suppliers to build a supply chain that provides continuity of supply at best cost whilst being flexible to changing customer demands.

IT alignment and capability to support the Group strategy and vision. Continued focus on IT governance, business alignment and strategic IT roadmap.

Change impact of migrating to a new ERP system and introducing new business processes.

Deployed a focused team and partnered with specialists. Robust due diligence, project governance and change management processes were undertaken to minimise business disruption. A phased implementation plan is being adopted, with the new system being tested in a smaller division (Mr Price Sport) before being rolled out to the remaining areas of the business.

DC capacity and change impact on our people of relocating the DC to a new location.

The new DC project has been set up as a major project, with a focused team and partnership with specialists. This includes sound due diligence, project governance and change management processes.

Skills and proficiency, including leadership, to support planned changes.

Continued focus on skills development and/or skills acquisition, including through partnership with specialists.


Continue to enhance supply chain efficiency, capacity and responsiveness to enable the Group’s expansion plans and reduce the impact of rising fuel prices.

• Thesizeofthenewsinglefacilitydistributioncentrehasbeendeterminedandthelocation identified. The land has been acquired, subject to the necessary approvals, which are in progress. Building design and material handling equipment installation planning has commenced.

• Internationalconsolidationcentresoperatedby3rd parties are being used. The consolidation of merchandise at source with shipment directly to point of customer demand is key to reducing cost and lead times. The elimination of the current double duty scenario whereby import duty is incurred into South Africa and then again in foreign markets is key to reducing selling prices in those territories.

•Anew5yearcontract,effective1April2013,hasbeensignedwiththeGroup’soutbound store carriage service provider.

Information technology and business systems innovation to support business growth and achieve increased capabilities and efficiencies.

•A project to define business information needs and business processes wasinitiated. The outcome was an improved business process model for all aspects of merchandise, taking global supply chain and global trading into account.

•A strategic IT capability assessmentwas conducted. The key outcomewas theneed for a new ERP backbone and merchandise planning and allocation system, both of which will enable efficient processes to be adopted, and global requirements to be met. The application solutions and implementation partners have been selected with the project starting in the new financial year.

Product sourcing and enhanced level of engagement with key suppliers.

The Group is reviewing its resourcing strategy, including building strategic relationships with key suppliers, to improve on time and in full order delivery rates, reduce lead times and enhance visibility and flexibility.

The Group plans to implement a new Enterprise Resource Planning (ERP) system and construct a new and enlarged distribution centre (DC) facility over the next 3 years, which will require a significant capital investment of almost R1 billion.

The implementation of the 1st ‘test division’ for the new ERP system is scheduled for May 2014, with the remainder of the Group’s divisions following thereafter. The new distribution facility is scheduled to be operational in August 2015 and the project contains several key milestones over this period.


BUSINESS OVERVIEW

The Group is identifying opportunities to implement strategic initiatives to develop the capacity of local suppliers. By building capacity in South Africa, the Group supports the local economy and enables flexibility in the supply chain.

Social investment is made through the Group’s donation to RedCap Foundation and RedCap Sport, which continue to implement innovative solutions to address challenges in the South African education system in partnership with the National Department of Basic Education.

The Group has recently joined forces with the JobsFund and other organisations to promote job creation in South Africa. This is being achieved through the Group’s Enterprise Development Strategy and the efforts of RedCap Foundation to support strategic skills development through the JumpStart Programme. Refer to the Social Report on page 78 for further details.

5. SUSTAINABLE LOCAL DEVELOPMENT

Key indicators have been identified to measure the Group’s economic, social and environmental progress.

ECONOMIC Unit 2013 2012 2011 2010

Retail sales R’m 13 266 11 767 10 673 9 454

Headline earnings per share cents 635.5 503.0 418.9 276.9

Operating margin % 15.6 14.8 13.4 10.5

Dividends per share cents 398.0 314.0 252.0 173.0

Share price (closing) Rand 116.99 94.34 63.38 39.80

Return on net worth % 46.4 43.8 42.2 32.5

Cash sales as a % of total sales % 80.4 81.4 83.8 83.9

SOCIAL

Total number of people employed 19 384 17 894 17 887 17 300

Staff turnover % 21.5 22.6 22.1 25.7

Black staff as a % of total permanent staff % 94 91 89 90

Promotions of black people as a % of total promotions % 87.1 85.2 78.2 82.7

Investment in people learning and development R’m 30.8 25.1* 9.9 7.0

Black people participating in learning and development % 88 87 83 78

B-BBEE rating Level 6 6 6 Not measured

Corporate Social Investment R’m 16.7 13.0 11.4 7.4

Enterprise Development Investment R’m 23.2 21.4 1.5 Not measured

ENVIRONMENTAL

Carbon emissions (estimated) CO2e tonnes 210 786


Continue to invest in the community. • RedCapFoundation’s JumpStartProjectwasawarded its1st tranche of the JobsFund’s R17.5 million grant to upscale the programme. 745 young people were placed into jobs over a 6 month period.

• TheRedCapCentresofExcellenceintroducedtheYoungHeroesProgramme(focusedonphysical

education and school sport) to 6 provinces in 2012.

• ThevariousinitiativesoftheRedCapSchoolsProjectproducedanimprovementinlearnerresultsof 10% - 13% and teacher content knowledge by 15% - 17%.

• TheHighSchoolSoccerProgrammewasimplementedin6provinces.

Build a sustainable local supply base. A loan was made to a local shoe manufacturer to assist them to grow their business output and become a strategic supplier. The impact will be:•Growthinjobs;and•Skillsdevelopmentinthefootwearmanufacturingindustry.

Support sustainable B-BBEE. The Group maintained B-BBEE Level 6 Compliance due to its on-going investment in skills development, enterprise development, socio-economic development and local procurement.

WHERE WE ARE GOING

• Continue to invest in RedCap Foundation and RedCap Sport Programmes;

• Develop the skills of unemployed youth to support the local footwear and clothing manufacturing sector;

• Identify further Enterprise Development opportunities to support capacity building and skills needs of local suppliers to the Group; and

• Continue to support sustainable B-BBEE taking into consideration the amendments to the BEE Codes of Good Practice.


Poor education levels and a lack of skills hamper business growth. RedCap Foundation’s JumpStart Project, with regular monitoring and evaluation of programme impact.

Lack of physical education and sport offered in schools. RedCap Sport initiatives with regular monitoring and evaluation of programme impact.

Lack of competitiveness and skills in the South African manufacturing industry.

Investment and participation in a local retail manufacturing skills training facility and Enterprise Development initiatives.

Change impact of impending revised Codes of Good Practice. Respond, where possible, to the new Codes of Good Practice and re-align initiatives to ensure compliance.

NOTE: The accuracy of the Group’s carbon footprint has been enhanced in 2013 as the data is more complete. It is expected that this will be further enhanced in 2014 as meters are being installed in stores to accurately record electricity consumption. Refer to the energy and carbon footprint section of the Social, Ethics, Transformation and Sustainability Committee Report on page 74 for more details.

OTHER INDICATORS: Additional indicators of the Group’s performance can be found under “Divisional Performance Indicators” on page 37, and under “The 6 Year Review” which can be found on the Group’s website.

*2012 onwards, includes capital expenditure as per BEE recognition criteria.


BUSINESS OVERVIEW

MUTUAL RESPECT IS BASIC TO THE ETHOS OF

MR PRICE GROUP. WE THEREFORE REFER TO

OUR CO-WORKERS AS “ASSOCIATES” AND, ONCE

THEY OWN SHARES OR SHARE OPTIONS, THEY

ARE GENERALLY REFERRED TO AS

“PARTNERS”.

STAKEHOLDER ENGAGEMENT

The Group defines stakeholders as those individuals, groups of individuals or organisations who affect and/ or could be affected by the Group’s activities, products, services and performance. Each key stakeholder group has a business owner who is the individual in the Group primarily accountable for managing the relationship with the particular stakeholder or stakeholder group.

The table on page 27 provides information on the Group’s key stakeholders. Although we have not listed the communities in which we operate and certain government departments with whom we have a relationship in this table, it is important to note that the Group acts in a responsible and compliant manner towards these stakeholders.

Social media has become critical to successful engagement in the retail environment. Real-time mass communication can be leveraged as an advantage, for example to gauge consumer opinion on an issue or merchandise, but it can also have the opposite impact in the event of an unpleasant experience. The Group recognises this importance, in particular the link between new technologies and the age profile of its target market. The international trend is for an integrated omni-channel approach to communicating with customers, presenting a consistent look, feel, and experience. Several new and exciting initiatives are underway, including the recent launch of www.mrp.com.

The Group recognises the importance of stakeholder engagement to ensure the long-term sustainability of the business. This process ensures greater transparency, as key stakeholder issues are identified and addressed.

DEFINITION OF ASSOCIATE AND PARTNER:

KEY STAKEHOLDERS AND WHY THEY ARE IMPORTANT TO US

HOW WE ENGAGE WHAT WE ENGAGE ON ISSUES RAISED DURING THE YEAR

RESPONSES AND OUTCOMES

SHAREHOLDERS AND THE INVESTMENTCOMMUNITY

To provide details regarding company preformance and the business strategy

Annual General Meetings

Meetings throughout the year with local and international analysts and investors

Results announcements and presentations to the Investment Analysts Society in Johannesburg and Cape Town and roadshows to the UK and USA

SENS announcements

Trading updates

Group website

Annual Integrated Report

Company performance

Retail sector trends and issues

Dividend policy

Share price performance

Future prospects

Strategy

Clarification around certain issues related to the remuneration of Directors

Growth in unsecured credit and the impact on consumers and the Company

Concern regarding the social and economic situation in South Africa

The issues requiring clarification have been detailed in the Remuneration Report on page 80

The Group's strategy is to remain a cash based retailer and in recent times has restricted its credit growth – refer to the CFO’s Report on page 32 for details

Companies in South Africa have, over the years, developed mechanisms and strategies to cope with doing business in an environment such as ours and the resultant volatile currency. While this is not ideal, the country has coped with far worse situations. The Group has managed to achieve a compound rate of HEPS growth over the last 27 years of 23.5%, and has performed well during periods of Rand weakness and poor economic conditions

The Group’s strategy is to grow both locally and internationally, and to reduce dependence on 1 market

CUSTOMERS

To understand our customers’ needs, increase market share and enhance the brand

Traditional, digital and social media

E-commerce

Customer and market surveys

Customer service hotline

Advertising campaigns and competitions

Store associates' interaction with customers

Brand perception and expectations

Fashion trends

Customer service

Customer safety

Community support and fundraising through the RedCap Foundation and RedCap Sport

Range, availability and quality of products

Customer service

Credit facilities

Customer interest in andinteraction with the Group via social media

Continuously offer core and fashion products, improve availability of wanted merchandise

Continued focus on quality through enhanced quality assurance processes

Continued focus on associate service levels

Responsible credit facilities are available to qualifying customers

Launch of www.mrp.com in July 2012

ASSOCIATES AND PARTNERS(our people)

To enhance associates’ sense of value and commitment and to align associates to the Group strategy

Induction programme

Team meetings

Training needs analyses

Results presentations

Performance reviews

Career planning

Internal media – Red Cap radio and TV

Fireside chats

Culture survey

Whistleblowers’ hotline

Awards events

People development and training

Health and safety performance

Wellness programmes

Remuneration, benefits and incentives

Transformation and employment equity

Financial performance

Business Code of Conduct

Culture survey results

Vision, dreams and beliefs

Pay and employee benefits

Training and development opportunities

Letters distributed to all associates detailing total cost to company, including updated share option information

Increased use of technology to address issue of time to train e.g. e-learning, social learning etc.

New learning management system being implemented to give associates greater access to learning and developmental opportunities

Divisional learning development plans aligned to business strategies

Divisional and Group succession plans developed Equity goals and plans set

Career plan development

Refer to the Report on our People on page 38 for detailed engagement activities

SUPPLIERS

To provide performance feedback and information regarding the future direction of the Group

Supplier meetings and negotiations

Strategic partnerships

Quality audits

Supplier days

Distribution Centre (DC) tours

Monitoring and evaluating performance

Order quantities and product cost and quality

Future growth and expectations of the Group

Real estate requirements and rentals

Enterprise development and socio-economic development opportunities

DC delivery requirements

Non-deliveries

Supplier performance and development

Product cost and quality

Investment in local supply chain

B-BBEE compliance

Investment in supplier performance management systems

Partnership agreements and service level agreements

Increased strategic supplier meetings

Enterprise development and socio-economic investment initiatives


STAKEHOLDER ENGAGEMENT

C H A I R M A N ’ S R E P O R T NIGEL PAYNE

W O R T HV A L U EA D D V A L U E T O O U R C U S T O M E R S ’ L I V E S

A D D W O R T H T O O U R P A R T N E R S ’ L I V E S

On behalf of the Board, I am privileged to report to our shareholders, people, customers, suppliers and all other stakeholders. We believe that the best way to align all interests is by relentlessly pursuing our long-term vision,

whilst daily living out the dreams and beliefs that have sustained our compound growth in headline earnings per share over more than a quarter of a century.

Our purpose is to add value to our customers’ lives and worth to our partners’ lives. Our dream or vision is to become a top performing international retailer. Our customers continue to be delighted by our fashion-value offering, as reflected in our results to March 2013, thereby enabling us to continue to build momentum towards realising our dream. We value the ongoing support of our ever-increasing customer base and recognise that we only win when our customers win.

The values and ‘golden rules’ in support of our dream are clearly defined and widely communicated throughout the Group. These are the foundations upon which our success has been built, and can only be changed after diligent challenge and debate by the Board. This forms the basis of our 'DNA', which harnesses the talents of our people and enables them to do extraordinary things.

The Board strives to strike an appropriate balance between governance and entrepreneurship. This is facilitated by a management team that is transparent and a strong focus on eliminating under-performance. The Board continues to work closely with executive management in refining strategy. We focus on those risks that are the most crucial to our future and we have a risk appetite that facilitates entrepreneurship in pursuit of our dream. However, we are cautious in the implementation thereof, taking time to test, evaluate, modify where necessary and retest before committing significant capital to implementation.

Our Board Committee structures ensure rigorous debate around, and control over, major issues of strategy and risk, whilst allowing management the flexibility to act quickly in a dynamic retail environment. Having the founders of the Mr Price Group, Laurie Chiappini and Stewart Cohen, involved in these processes continues to add considerable value.

The global and South African economies remain under pressure. However, opportunities exist in Africa and other emerging markets, where our offering is particularly well suited. Whilst we anticipate that the next few years will be challenging, our strong balance sheet, business model, cash flows and talent pool will enable us to continue to invest for the future.

Our very pleasing operational and financial performance reported on by the CEO, Stuart Bird, and CFO, Mark Blair, reflect the efforts of over 19 000 people, a large portion of whom are shareholders in the Company. Our ‘growth through shared value’ approach serves us particularly well in tougher economic times, as our people recognise that it is our customers who pay their salaries. The Board believes that the Group’s remuneration structures, as detailed in the Remuneration Report on page 80, remain appropriate, and that they have been fairly applied during the past year.

As I indicated in my 2012 report, the Board has approved a number of significant capital investments in support of the Group’s 5 year business plans and budgets, specifically in supply chain and logistics in support of internationalisation and the expansion of our channels to market. Greater detail on these initiatives can be found in the CEO’s Report on page 31.

Once again, the Board robustly assessed itself, the Board Committees and the contribution of each Director. Whilst the overall assessment was positive, areas for improvement were identified and are being addressed. Thank you to Lead Independent Director, Bobby Johnston, for his tireless efforts in this regard. Significant additional information in relation to our corporate governance is presented in the integrated report and on our website.

A new Memorandum of Incorporation, aligned to the revised South African Companies Act, was approved by more than 80% of votes cast at the 2012 Annual General Meeting. The Board has noted that some shareholders, particularly those based in the United States of America, voted against the provision for the non-rotation of executive Directors, which is in line with South African corporate governance guidelines. The Board devotes significant attention to the selection, retention, performance and reward of our executives, and I encourage shareholders who have comments in this regard to address them to me via the Company Secretary.

I encourage stakeholders to familiarise themselves with our educational and other corporate social investment initiatives, as detailed in the Social Report on page 78. We have an unwavering commitment to honest business practices. Our daily practices, as well as our contracts with our business partners, make it very clear that we do not pay bribes, overtly or covertly, nor do we tolerate third parties doing so on our behalf. Any business partner who suspects otherwise is welcome to contact either the CEO or myself in confidence.

Professor Larry Ring retired from the Board at the end of March, after 15 years of valuable service. In addition to his input on international retailing trends, the Babson principles he taught to our management teams over the years, and which he will continue to teach, have been a contributing factor in the Group’s success. The Board records its sincere appreciation for the contribution he has made to our Group.

The Board, management and all associates will continue to focus on adding value to our customers’ lives as we build for the future and strive towards our vision.


CHAIRMAN'S REPORT

C E O ' SR E P O R T STUART BIRD

ur ambition is to be a top performing international retailer as measured against our global peers. By achieving this, we will not only grow in our existing markets, which

have now attracted many new international retailers, but also in the markets we enter in the future. While the local and global retail environments continued to bring many challenges, Mr Price Group yet again grew sales and profit, delivering a solid performance in a difficult environment.

Our formula of great fashion and quality at excellent prices has stood us in good stead over the years and will continue to be what drives us as we grow in our existing markets and enter new frontiers. Relentless focus on this is what will maintain our earnings track record into the future.

Current tradeWhile the Mr Price Apparel division had a difficult trading period in the 3rd quarter, much of which can be ascribed to internal issues, we are pleased to report that a good recovery was subsequently made. The division also successfully spearheaded 2 major projects, being the expansion into Africa and the launch of our online business.

Our African expansion is not expected to result in a dramatic short-term growth; however, we believe that many African countries are on strong economic growth paths that will see a significant expansion of their middle classes, to whom our fashion-value offer will appeal. By establishing our brand and infrastructure early in these growing markets, we see significant potential in the medium to long-term.

During the year, a store was opened in Lagos, Nigeria and another in Accra, Ghana. Within their 1st year of trade, these stores have performed well, even after including the set up and regional costs. While our results are pleasing, we intend to further improve our value proposition through supply chain enhancements. We will open further new stores in Nigeria this year and another in Ghana early in the next financial year and we are actively looking for additional sites.

At the end of July 2012, we launched our online business through the Mr Price Apparel division. The launch was ambitious in that the full assortment was available immediately; it was completely omni-channel, fully mobile enabled as well as allowing the customer 6 options to pay. In addition, delivery was guaranteed within 48 hours, but in reality it is below 24 hours. The launch has been very successful, delivering a dynamic, appealing, world-class site, with South Africa being an important environment in which to develop our capability. The way ahead is to now open the site to the global environment, with specific focus on certain countries, as well as bringing the other divisions onto our online offering.

The other divisions have delivered strong results this past year. They are past their turnaround strategies and have grown well off what have now become solid bases and expect further growth ahead.

Investing for the futureWe are investing heavily for the future, not just in new stores and our online business, but also in our systems and supply chain capabilities. While our in-house legacy core systems have served us well, we realised that to achieve our future ambitions we would need to consider acquiring an IT solution that would enable all our future plans. We have completed the research, specification and vendor evaluation and selection phases and are now entering the design and implementation phases. The project is expected to be completed in 24 months’ time.

Progress on the development of a new distribution centre is well underway, with the completion of the identification and procurement of the site. Once zoning is obtained, the build can start. Completion date is expected to be August 2015. The work on resourcing and shipping from source is also progressing well. This will allow us to eliminate significant costs in the form of double duties, shipping and handling, making us more competitive as we enter new markets.

The Mr Price spiritThe results achieved in the past, as well as those we hope to achieve in the future, are and will be, as a direct consequence of our people and the culture we have in our business. Our culture is built on Passion, Value and Partnership, with a high performance ethos.

Investing in our people is critical to our future success. Over the past year we trained over 9 300 of our associates, of whom 88% were black, completing over 22 000 training courses. One of the biggest training interventions we undertook last year was about our culture, with the update of our Dreams and Beliefs together with the Milestones of the past. This was delivered to every one of our associates in the Group.

Good progress has been made in achieving employment equity targets. We do not view our transformation strategy as being one of a quick fix, but a medium-term one of building and investing in our internal pool of candidates who can successfully transition to senior positions.

The way aheadThere is no doubt that the economic and consumer environment will continue to be a challenge, both at home and abroad. Nonetheless, we are confident that our formula of great fashion and quality at excellent prices will not only keep our customers happy, but will attract many more new ones, both in geographies we currently trade and in new territories.

In closing, I would like to thank all of our dedicated associates across the Group, for not only delighting our customers and achieving the results we have, but also for making this such a special environment of which to be a part.

O


CEO'S REPORT

Economic and retail environment

The retail environment is currently a challenging one, primarily due to slowing real wage growth and credit extension (particularly unsecured credit), which has been fuelling consumer spending in recent years. Consumer confidence in South Africa has been in decline for most of the year and dropped to a 9 year low in the first quarter of 2013, falling to -7 points, signalling a tougher time ahead.

While income tax cuts announced in the 2013 budget will bring some relief to low and middle-income households, they will not be enough to counter the effects of weak job creation, higher inflation and slower growth in social grant spending by the government.

In contrast, business confidence has generally been on the increase and is now net positive mainly due to increased sales volumes in the wholesale and motor trade sectors. It remains to be seen whether this optimism will continue, which will depend on the magnitude and duration of Rand weakness.

Financial commentary

The Group increased retail sales by 12.7% to R13.3 billion. This compares favourably with the total retail sector, which, as reported by Statistics South Africa, grew by 8.2% to March 2013. Comparable sales rose by 7.3% and 206.8 million units were sold, an increase of 7.1% Total revenue, which includes retail sales and other income, was up by 13.2%.

In tough economic times the Group expects to perform strongly relative to its retail peers due to shoppers being attracted by the pricing and fashionability of its merchandise offer. History has shown that these new customers are retained when the economy recovers. While satisfied that sales growth was higher than market growth, as evidenced by the graph above, the annual sales performance was negatively impacted by the performance in the 3rd quarter of the financial year due to:

• Theroleofcredit The Group is focused on remaining a cash-based retailer and has a

self-imposed ‘cap’ that credit sales are not to exceed 25% of total sales in the medium to long-term. In the 3rd quarter of the 2012 financial year, the Group experienced a 41% growth in credit sales which, although high, was still below the growth in unsecured credit in South Africa for the corresponding period in the prior year. The 2012 base was therefore high and in a deteriorating credit environment prevailing in the country, the Group was never going to ‘chase’ this high base. The Group has adopted a more cautious approach to credit and tightened its credit granting criteria - credit limits were lowered and certain accounts were granted 6 month payment terms

(in the base period new accounts opened were granted 12 month terms). As expected, this resulted in lower credit sales growth in Q3 2013, however the Group was satisfied that the correct decision was taken – to take some short-term pain in the form of a reduced sales performance, but to keep firmly focused on preserving its cash model.

• Divisionalsalesperformance The sales performance of 4 of the 5 trading divisions during the

quarter in question was good, reflecting total growth of 13.3%. However, the 7.8% growth in the Group’s flagship chain, Mr Price Apparel, which constitutes 54.5% of Group sales was disappointing. The childrenswear department in particular was hardest hit, impacted by inadequate stock levels brought about by non-delivery by certain suppliers and certain internal issues. Sales recovered in December once the situation had been remedied, but unfortunately it was too late to significantly impact the quarter’s sales performance. In the 4th quarter the division achieved a much improved sales growth of 13.9%. Management’s opinion is that the poor performance of one division was due to the circumstances described above and not to financial constraints being experienced by consumers, as under these circumstances, the Group would expect to gain market share as shoppers search for greater value. The disappointing performance for Q3 2013 creates an opportunity for growth in the forthcoming financial year.

The Group continued to expand its retail footprint and opened 77 new stores during the year. 10 non-performing stores were closed and certain stores were reduced in size. Gross space added in the form of new stores and expansions represents an increase of 6.2% over the prior year. After store closures and space reductions, weighted average trading space increased by 3.7% and closing space increased by 3.9%. The space reductions had a positive effect on profitability:

• MrPriceSportreducedspacein4storesby42%,however,increasedsales by 8% and profit by 69%; and

• MrPriceHomereducedspacein4storesby29%,whichresultedinsales increasing by 1% and profit by 26%.

This will represent an ongoing opportunity, with space reduction of 20 000m2 planned over the next 3 years, primarily in Mr Price Home.

The movement for the year is explained as follows:

HIGHLIGHTS 2013 2012 % change

Revenue R'million 13 720 12 122 13.2

Retail sales R'million 13 266 11 767 12.7

Gross profit margin % 42.2 41.8

Profit from operating activities R'million 2 072 1 741 19.0

Group operating margin % 15.6 14.8

Headline earnings per share cents 635.5 503.0 26.3

Dividends per share cents 398.0 314.0 26.8

- interim cents 133.0 93.6 42.1

- final cents 265.0 220.4 20.2

Dividend cover times 1.6 1.6

Cash and cash equivalents R'million 1 221 1 201 1.7

Return on net worth % 46.4 43.8

Return on shareholders' equity % 51.1 47.2

C F O ' SR E P O R T MARK BLAIR

R17 445m-2

Continuedtrading densityimprovement

R24 979m-2

+8.7% (y/y)

2009

New Expansions Reductions Closures New Stores (number)

2010 2011 2012 2013

m2

Num

ber

of s

tore

s

100 000

80 000

60 000

40 000

20 000

(20 000)

(40 000)

100

80

60

40

20

14.5%

9.6%

12.4%13.3%

Strong Recovery

9.1%

12.3%

10.0%

6.9%5.8%

14.6%

7.4%

10.7%

Apr - Jun 2012 Jul - Sep 2012 Oct - Dec 2012 Jan - Mar 2013

Mr Price Group Total SA Retail Sales Retailers in textiles, clothing and footwear

16%

14%

12%

10%

8%

6%

4%

2%

Sale

s gr

owth

%


CFO'S REPORT

C F O ’ S (continued)R E P O R TThere were 1 029 corporate-owned and 26 franchise stores at year end.

The Apparel chains retail sales and other income increased by 12.5% to R9.8 billion with comparable sales up by 5.9% and retail selling price inflation of 4.4%. Operating profit grew by 14.0% to R1.7 billion and the operating margin increased from 18.0% to 18.3% of retail sales. Mr Price Apparel opened 31 new stores and recorded sales growth of 10.5% (comparable 3.9%) to R7.2 billion. Mr Price Sport recorded sales growth of 22.9% (comparable 11.9%) to R842.8 million and Miladys 13.0% (comparable 12.9%) to R1.3 billion.

The Home chains increased retail sales and other income by 15.2% to R3.9 billion with comparable sales up 10.8% and retail selling price inflation of 6.9%. Operating profit rose by 31.9% to R491.6 million and the operating margin increased from 11.2% to 12.9% of retail sales. Mr Price Home increased sales by 15.6% (comparable 12.4%) to R2.6 billion and Sheet Street by 13.8% (comparable 7.6%) to R1.2 billion. The operating margins in the Home chains have showed good improvement and are now moving well into double digits as planned.

Other income grew by 34.9% largely due to a 50.5% increase in premium income relating to the sale of financial services products and a 32.6% increase in interest on trade receivables. This area is expected to continue to deliver strong growth.

The gross profit percentage increased to 42.2% (2012: 41.8%) as a consequence of having an appealing merchandise offer.

Selling expenses increased by 13.2% and constituted 22.6% of retail sales compared with 22.5% in the prior year. Significant factors driving this expense growth were increases in net bad debt, credit card commissions as customers moved to credit from debit cards as tender type, electricity and water costs and store rentals as a consequence of opening a net 67 stores and expanding high trading density stores. Acquired customer lists, that were acquired in previous years were impaired by R10.7 million.

Administrative expenses increased by 12.0% and comprised 7.0% of retail sales, an improvement on last year’s 7.1%. Electricity, water and rental costs were significantly up on last year. Foreign exchange losses amounting to R11.5 million were incurred, while in the prior year there was a gain of R7.7 million. In preparation for the new ERP system implementation commencing in 2014, a complete review of IT assets was undertaken, resulting in a write-off of R7.9 million.

Total expenses as a percentage of sales remained at 29.6%. Excluding the total impairments of R18.6 million detailed above, total expenses would have improved to 29.5% of sales. The Group has its eyes firmly fixed on the future, as evidenced by the many growth initiatives underway. Being a value retailer, the Group has an intense focus on costs, however does not avoid incurring expenditure that may only favourably impact earnings in future periods. Costs incurred during the current year include implementing a labour scheduling system that will result in more efficient staff planning and costs relating to international operations and the launch of the online channel www.mrp.com.

Operating profit increased by 19.0% or by 20.1% excluding the impairments referred to earlier. The operating margin increased to 15.6% of retail sales, compared with last year’s 14.8%. The increase in operating margin can be explained as follows:

0.5

Ope

ratin

g m

argi

n 20

12

14.8

16.5

16.0

15.5

15.0

14.5

14.0

PMO

0.4

Mar

kdow

ns

0.1

Oth

er

0.1

Oth

er in

com

e

Payr

oll

0.2

Occ

upan

cy

0.2

Oth

er s

ellin

g ex

pens

es

Ope

ratin

g m

argi

n 20

13

15.60.5

The sales and operating profit percentage growth splits for the first and second halves of the year are as follows:

SALES

Apparel

Home

Total

OPERATING

PROFIT

Apparel

Home

Total

11.9%

14.9%

12.7%

14.0%

31.9%

19.0%

10.9%

14.1%

11.8%

12.5%

29.5%

17.6%

13.1%

15.9%

13.9%

16.2%

36.5%

21.2%

First half Second half Full year

Net finance income was 23.5% higher than the comparable period as a result of a mix of higher average cash balances and average interest rates.

The effective taxation rate for the year was 27.8%, lower than the prior year (31.9%) primarily due to the fact that there was no secondary tax on dividends (STC) paid during the first half of the year, as was the case in the prior year. STC was discontinued due to the introduction of dividends tax.

The number of shares in issue at year end increased by 1.9 million due to the decreased number of treasury shares held. Treasury shares sold (4 135 332 shares) as a result of share options vesting exceeded treasury share purchases during the year (2 315 068 shares at an average cost of R120.57 per share totaling R279.1 million). Treasury shares held all relate to covering the Group’s commitments under its various share schemes.

The Group is hedged in terms of future obligations to the extent of 64.5% (18 550 769 treasury shares held in relation to 28 747 407 options granted).

Headline earnings per share increased by 26.3% to 635.5 cents. The increase in the weighted average share price for the year to R121.82 (2012: R75.68) is the main driver for the difference between headline and diluted headline earnings per share. The higher weighted average share price resulted in a higher number of shares deemed to be issued for no consideration and consequently a larger dilution effect. Despite the lost trading opportunities in the current year, the Group is pleased to have performed in line with its long-term performance, which is a 27 year CAGR in HEPS of 23.5% and DPS of 25.3%.

The Group’s return on equity at 51.1% is the highest achieved to date. The return on net worth (RONW) has continued to increase, from 37.2% 5 years ago (2008), to its present level of 46.4%, which has been driven mainly by an increase in net profit margin, explained as follows:

2013 2008Net profit margin % 11.6 7.6Asset Turn times 2.7 2.6Return on assets % 31.4 19.7Leverage times 1.5 1.9RONW % 46.4 37.2

Financial position

Additions to property, plant and equipment for the year amounted to R288.5 million, of which furniture, fittings, equipment and vehicles constituted 82% (2012: 72%) and computer equipment 17% (2012: 10%). Disposals of property, plant and equipment totaling R7.6 million (2012: R6.6 million) occurred due to the closure of non-performing stores and planned space reductions. The depreciation charge for the year was R161.3 million (2012: R164.5 million).

Additions to intangible assets amounted to R48.4 million and related primarily to the e-commerce system, the Human Capital Management system and e-learning modules developed. The amortisation charge for the year amounted to R28.7 million (2012: R25.5million).

Inventories were well managed with net inventories increasing by 5.8% on the back of the 12.7% increase in retail sales. Group stock turn decreased marginally from 6.5 to 6.4 times.

Trade and other receivables increased by 27.9% to R1.5 billion. Gross trade receivables increased by 28.4% to R1.6 billion.

Net bad debt as a percentage of the debtors’ book increased from 3.9% to 6.5%. This increase can be ascribed to the high book growth in the 3rd quarter of the 2012 financial year detailed earlier in this report. The behaviour of these new accounts was not in line with expectations, resulting in higher write-offs. However, the impact of this segment has now largely worked its way through the system and the remainder of the book is performing well and in line with long-term averages. Independent benchmarking continues to confirm that the Company leads the industry in terms of the health of its book. The provision for impairment has been set at 9.0% of trade receivables.

Prepayments increased from R37.3 million to R49.6 million primarily as a consequence of the prepayment of operating lease rentals relating to the Nigerian subsidiary.

AS PER THE LATEST AMPS SURVEY THE LARGEST CHAIN, MR PRICE APPAREL, HAS STRONG REPRESENTATION OF SHOPPERS ACROSS THE SPECTRUM OF LSM 6 - 10


CFO'S REPORT

C F O ’ S R E P O R TThe Group continues to reflect a healthy financial position, with the cash sales component remaining high at 80.4%. Despite dividends paid to shareholders increasing by 32.4% to R887.8 million, capital expenditure of R337.9 million and the purchase of shares to the value of R279.1 million to cover share scheme obligations, cash balances ended the year in line with the prior year at R1.2 billion. Free cash flow (cash generated from operations less capital expenditure) increased by 54.6% to R797.6 million. The cash-generative business model will ensure that the Company will be able to fund its new infrastructure costs and growth without incurring debt.

Equity attributable to shareholders has increased by R535.0 million to R3.3 billion. The movement is made up as follows (R’m):Opening balance 2 781Total comprehensive income for the year 1 545Treasury share transactions (185)Recognition of share-based payments 63Dividend to shareholders (888)Closing balance 3 316

Treasury share transactions include (R’m):The purchase of treasury shares to partially cover options granted (279)The net credit on vesting of share options 65Taxation relating to grants from the Company to the share trusts 29Total treasury share transactions (185)

Long-term lease obligations comprise the long-term portion of straight line lease liabilities.

Trade and other payables increased by 3.4% to R1.3 billion. Trade payables grew by 4.0% to R673.3 million (2012: R647.6 million) while accruals and other payables increased by 2.8%.

ProspectsWhereas the growth in household consumption expenditure was the mainstay behind the domestic economic recovery between 2010 and 2012, growth in consumer spending is now expected to be subdued and much less supportive of economic growth. The current financial hardships are mainly being experienced by low-income households and it is a misconception that these represent the Group’s core customers. As per the latest AMPS survey the largest chain, Mr Price Apparel, has strong representation of shoppers across the spectrum of LSM 6 (mid) to LSM 10 (upper). Refer to graph below.

In the short-term there are some serious challenges facing consumers. Under these economic conditions, shoppers tend to shop for value and therefore, as a value retailer, the Group is well placed to attract more customers. Mr Price will continue its unwavering focus on its core competency of offering fashionable merchandise at everyday low prices.

Business and consumer confidence are at low levels. Despite these challenges, the Group is confident about the future and in its 5 year business strategy, capital expenditure of R2.5 billion is planned. The future brings many opportunities and challenges, yet an air of excitement and optimism exists as the Group positions itself for the next phase of its growth.

Dividend policy and final cash dividendThe Group seeks to maintain a balance between:• maintainingastrongbalancesheetbyhavingadequatecashresources;• returningfundstoshareholdersintheformofdividends;and• funding the required level of capital expenditure to maintain and

expand its operations.

The dividend cover has been retained at 1.6 times. Annual dividends have increased by 26.8% to 398.0 cents per share. The final dividend of 265.0 cents per share reflects a lower growth due to the reduction in cover at the interim stage (2.0 times to 1.9 times). The Company is more closely aligning the dividend cover at the half year and year end, and further reductions in the interim cover can be expected over the next few years.

Mr Price Mr Price Total Mr Price Sheet Total Total Apparel Miladys Sport Apparel Home Street Home Group Retail sales (R’m)* March 2013 7 304 1 293 843 9 440 2 633 1 193 3 826 13 266 March 2012 6 607 1 145 686 8 438 2 281 1 048 3 329 11 767 % change 10.6 13.0 22.9 11.9 15.4 13.8 14.9 12.7 Retail sales (R’m)^ March 2013 7 226 1 293 843 9 362 2 618 1 193 3 811 13 173 March 2012 6 539 1 145 686 8 370 2 264 1 048 3 312 11 682 % change 10.5 13.0 22.9 11.9 15.6 13.8 15.1 12.8 Comparable sales growth (%) March 2013 3.9 12.9 11.9 5.9 12.4 7.6 10.8 7.3 March 2012 9.8 14.0 11.7 10.6 8.4 12.0 9.5 10.3 Number of stores Opening 353 188 47 588 140 234 374 962 New stores 31 3 7 41 11 25 36 77 Store closures - (2) (1) (3) (1) (6) (7) (10)

Closing 384 189 53 626 150 253 403 1 029 Trading area - weighted average net m2 March 2013 229 640 62 197 47 675 339 512 139 079 48 735 187 814 527 326March 2012 213 605 63 784 45 848 323 237 137 845 47 308 185 153 508 390% change 7.5 (2.5) 4.0 5.0 0.9 3.0 1.4 3.7 Trading area - closing net m2 Opening 220 750 62 240 47 091 330 081 138 571 47 181 185 752 515 833 New stores 17 113 742 4 398 22 253 3 233 3 408 6 641 28 894 Expansions 2 364 198 - 2 562 40 405 445 3 007Reductions (725) (923) (2 631) (4 279) (3 534) (541) (4 075) (8 354)Store closures - (582) (1 658) (2 240) (301) (1 137) (1 438) (3 678)

Closing 239 502 61 675 47 200 348 377 138 009 49 316 187 325 535 702

% change 8.8 1.5 9.3 7.5 2.4 8.1 3.8 6.2 (new stores and expansions only)% change (closing) 8.5 (0.9) 0.2 5.5 (0.4) 4.5 0.8 3.9 Sales densities (Rand per weighted average net m2) March 2013 31 466 20 794 17 678 27 575 18 820 24 469 20 286 24 979March 2012 30 614 17 950 14 963 25 895 16 426 22 149 17 888 22 979% change 2.8 15.8 18.1 6.5 14.6 10.5 13.4 8.7 Units sold (000) March 2013 127 236 8 917 10 350 146 503 41 671 18 595 60 266 206 769March 2012 120 034 7 950 9 074 137 058 38 596 17 417 56 013 193 071% change 6.0 12.2 14.1 6.9 8.0 6.8 7.6 7.1

* Including sales to franchisees^ Excluding sales to franchisees

DIVISIONAL PERFORMANCE INDICATORS

(continued)

LSM 1010%

LSM 916%

LSM 812%

LSM 716%

LSM 626%

LSM 511%

LSM 2/3

3%

LSM 46%

Mr Price Apparel - Strong representation of customers in target market LSM 6-10

• AttractedhigherLSMcustomers• MisconceptionthattheCompany'scustomersareatthelowerLSMlevels

30% 82%

80%

78%

76%

74%

25%

20%

15%

10%

5%

2009 2010 2011 2012

LSM

1-5

LSM

6-1

0

LSM 1-5 LSM 6-10

25%

75%

80%

20%


CFO'S REPORT

EMPLOYEE ENGAGEMENTInspired by the Group’s core founding values of Passion, Value and Partnership, the energetic, entrepreneurial company culture is an important driver underpinning the Group’s successful performance. The climate of the working environment is constantly surveyed to ensure that the needs of associates are heard, that actions are taken to enrich their working lives and to protect the core values.

The Group beneficially impacts the lives of not only its 19 384 associates, but also their families and the communities in which they reside, being actively involved in these communities through RedCap Foundation and RedCap Sport. The Group also reaches into communities through innovative talent attraction and acquisition practices, ensuring that young people are engaged at an early stage of their careers and given insight into the many employment opportunities available within the Group.

While direct communication is preferred through frequently held “Comm Times”, social media technologies are increasingly utilised to engage all associates and to invite new and better ways of doing things.

PERFORMANCE RECOGNITION AND REWARDA key theme in maintaining a productive company culture is to actively encourage, recognise and reward exceptional performance and the achievement of personal goals. Performance is measured against well-defined incentive targets and performance discussions are conducted at year end or as required through the year.

This culminates in generous financial rewards for outstanding performance in terms of the incentive programme indicated in the Remuneration Report on page 80.

Group results are presented bi-annually at management communication sessions, and more frequently divisionally, at which time, team or personal achievements are celebrated to reinforce the spirit of performance. Associates who have delivered outstanding performance or are responsible for exceptional innovation, are acknowledged annually by receiving the Mr Price Group medallion. The Mr Price Group ‘Running Man’ statue is presented to selected associates who have made extraordinary contributions to the Group's progress over an extended period. These highly valued individuals embody the Group's culture and core beliefs, and have demonstrated consitently high dedication and performance (refer to page 44).

TALENT ACQUISITIONDeveloping 'homegrown' talent is a high priority, however as the Group continues to grow, attracting the right skills externally is increasingly important. Campaigns to creatively profile the Group’s employment proposition are frequently conducted, either to potential employees through the Company’s social networking platform or through direct involvement with schools, colleges and universities. The Group has been well recognised for these campaigns, and the database of applicants and potential employees has continued to grow significantly over the past year. Continued improvement in systems to administer and store applicants’ data has allowed more proactive management

of talent pools.

All new associates attend induction programmes introducing their job specific requirements, working environment and the core values. Considerable improvement to induction processes is being achieved to cater for the increasingly geographic spread of associates.

The Group has a staff turnover of 23.34% per annum in stores and 11.11% per annum at Group head office, including support services (permanent associates only). These figures are within industry norms. Vacancies are preferably

filled in-house or with applicants drawn from local communities, with exceptions occurring when associates apply for more senior positions that may require relocation. Stringent pre-employment assessments are conducted for store positions, including numeracy and behavioural attributes, to ensure that the required levels of skill are achieved. The introduction of a specialist psychometric assessment unit over the past year has enabled more specific screening of key skills at the point of hiring.

MR PRICE GROUP STRIVES TO BE A SOUGHT-AFTER COMPANY TO

WORK FOR BY OFFERING LEADING CAREER

OPPORTUNITIES IN FASHION-VALUE RETAILING.

STEVE GLENDINNING GROUP PEOPLE DIRECTOR

REPORT ON OUR


REPORT ON OUR PEOPLE

CAREER AND PERSONAL DEVELOPMENTThe Group offers outstanding career opportunities and actively encourages associates to pursue their ambitions within the Group. Development discussions are held with associates at least annually to discuss personal growth and career development, with line managers responsible for ensuring that these discussions give rise to meaningful personalised development plans.

The Group’s psychometric assessment unit, led by a qualified psychologist, offers line managers and associates a specialist capability for assessing, evaluating and identifying areas of potential performance improvement through personal development.

TALENT DEVELOPMENTThe Board and top management recognise the importance of attracting, developing and retaining world-class skilled retailers and managers in all disciplines to ensure competitiveness and sustainability. High attention is therefore given to succession planning and continuous improvement in the quality and delivery of training and development. This is reflected in the allocation of a longer term budget to the development of talent and significant investment in cutting edge technologies that enable not only greater reach in the number of associates developed (regardless of where they are geographically located), but also enables efficient planning and management of training schedules.

The Red Cap Academy (RCA), as the in-house institution through which all learning and development programmes are facilitated, continued to grow its expertise, improve its delivery capability and meet its longer term objective to be a top retailing academy. The RCA employs innovative training practices including online, on-the-job and classroom-based learning, drawing on internal subject matter experts, top external faculty and carefully selected service providers. Precise job and competency profiling is at the

Key achievements in talent development 2013 2012

Number of off-the-job learning and development programmes completed 15 090 10 610

Total annual number of hours allocated to learning 266 416 246 393Associates who have completed various leadership development programmes 3 748 3 241Investment in learning and development R30 855 899* R25 160 637*Average learning and development days per person 2.8 3.7Percentage of previously-disadvantaged individuals participating in learning and development programmes 88% 87%Percentage of females participating in learning and development programmes 70% 70%

Percentage of previously-disadvantaged associates trained through e-learning 94% 94%

Percentage of previously-disadvantaged associates on learnerships 93% 83%

core of the design and development of training material, coupled with effective identification of individual training needs of core associates.

A major achievement remains accreditation of the RCA, allowing associates to obtain credits towards qualifications and secure recognition for training received. Merchandise skills are one of the Academy’s primary focus areas in accordance with the Group’s merchandise needs, as well as frontline operations management development. Based on the demands of the business, intern development programmes in merchandise and store operations ensure a feed of externally selected trainees into areas of need, while internal trainees are provided with meaningful work under the guidance of allocated mentors and trained according to an individually paced hierarchy of learning.

The e-learning methodology provides an effective training solution to the geographically widespread store locations. This method has made learning and development initiatives available to thousands of associates at store level, providing access to learning at point-of-sale terminals on a daily basis. New modules are continually being developed. Participation is actively encouraged as a way to progress careers and promote job security. The effectiveness of the medium is highlighted by the high number of associates who have completed one or more of the available e-learning modules, such as an overview of point-of-sale, stock control, credit and business administration, customer service or a specific module on product knowledge.

The Group supports the national skills initiative through learnerships. These are available across various disciplines such as logistics and store management, and enable associates to receive a nationally recognised qualification. During the year, 88 associates were actively involved in a learnership programme, 93% of whom are previously-disadvantaged individuals.

* Includes capital expenditure as per BEE recognition criteria

EQUITY STATISTICS FOR ALL SOUTH AFRICAN ASSOCIATES

Occupational LevelsFemale Male Foreign

Nationals TotalAsian Black Coloured White Asian Black Coloured White Female Male

Top Management 1 7 23 31Senior Management 10 2 39 5 2 1 43 1 103Middle Management 56 14 18 166 54 13 5 101 4 1 432Junior Management 290 1 009 582 477 125 413 101 123 5 2 3 127Semi-Skilled 269 3 577 1 057 113 95 1 455 252 36 2 4 6 860Unskilled 5 44 9 10 45 1 114Total permanent 2013 631 4 644 1 668 802 289 1 928 360 326 12 7 10 667

Non-permanent 2013 132 4 300 970 111 56 1 808 350 45 4 14 7 790

Total 763 8 944 2 638 913 345 3 736 710 371 16 21 18 457

EMPLOYMENT EQUITYThe Group recognises the need for its workforce to be fully representative of national demographics and continues attracting, employing and developing people from previously-disadvantaged groups. Special attention is given to taking in graduates from previously-disadvantaged backgrounds and preparing them for future management and specialist retail positions. Pre-employment internships are offered as a way of evaluating young prospective employees, while the RedCap Foundation’s JumpStart programme provides soft skills training and work experience for unemployed matriculants in a Mr Price Group store or distribution centre.

The Group’s philosophy is to encourage associates to achieve their full potential, irrespective of race or gender. In line with this philosophy, associates are encouraged to apply for and secure growth opportunities in the Group as these arise. Those who have the potential to attain top management positions and meet succession planning needs are invited to attend internal and external leadership programmes that provide relevant business exposure and highlight development areas. This assists the Group in attaining the employment equity goals set for the senior management and middle management categories.

The Executive Transformation Committee reviews and assesses, and the Board ratifies, appropriate employment equity targets in line with the Group’s broad-based black economic empowerment plans (B-BBEE). An Employment Equity and Skills Development forum, fully representative of the Group’s associates, meets regularly to discuss progress in employment equity, identify and recommend steps to overcome barriers to affirmative action and to ensure adherence to relevant legislation.

Goals have been set to 2017 with action plans to address representation requirements at senior levels. Regular reporting is in place to monitor progress made.



EMPLOYEE RELATIONSAll associates within the SADC region are invited to participate in the Mr Price Group share or share option schemes, after fullfilling the specific employment tenure requirements of that scheme as detailed on the Group's website. As these employees are therefore part-owners in the Company, they are referred to as partners.

Maintaining good working relationships is of the utmost importance to the Group. Developing and maintaining one-on-one relationships with associates opens communication channels with management. Frequent communication sessions are held within divisions to update associates on business progress, celebrate achievements and introduce new associates. General employee communication and information sharing is conducted through Red Cap TV with informative broadcasts delivered twice monthly to associates through intranet or point-of-sale technologies. A social media policy has been developed to provide guidelines for new and innovative ways of communicating internally using social networking technologies.

The regularly conducted climate and culture surveys across all divisions allow associates to confidentially highlight areas of concern and thereafter to discuss these in facilitated focus groups, thus contributing to improving the workplace. This, together with tight control, communication and monitoring of

best practice human resources policies ensure that the Group retains its status as a leading destination for career retailers.

The Group complies with all relevant labour legislation including the Labour Relations Act, the Basic Conditions of Employment Act, the Sectoral Determination Act No. 9, the Skills Development Levy Act, the Skills Development Act,

the Employment Equity Act, the Unemployment Insurance Fund Act and the Occupational Health and Safety Act. Line management is supported by well trained employee relations practitioners.

Proposed amendments to national labour legislation during the forthcoming year may pose challenges to the Group, however, these changes have been anticipated and preparatory work has been conducted to mitigate risks that may arise. Mr Price Group is an active member of the National Retail Association, through which representation to Nedlac and participation in discussions of national interest is facilitated.

During the year, 24% of dismissals were referred to the Commission for Conciliation, Mediation and Arbitration

(CCMA). Of the total cases referred to CCMA, 28% were settled at no cost, 21% were settled at cost, 17% of the cases were withdrawn and 12% were dismissed at either conciliation or arbitration. Of the 22% of cases that proceeded to arbitration at the CCMA, 96% were determined in favour of the Group and 4% in favour of the associate.

MANAGEMENT AND LEADERSHIP DEVELOPMENTGiven the hands-on nature of retail, the Group’s approach to leadership development is to encourage managers to take direct ownership for their particular area of responsibility and to use the programmes provided to build their own entrepreneurial leadership style. During the year, the Group continued to partner with the Gordon Institute of Business Science and similar organisations to provide creative and highly developmental leadership programmes for designated individuals. These programmes are designed flexibly to cater for unique peer group needs, taking into account the day-to-day time and scheduling demands of the busy retail working environment and include:

• The Emerging Leaders Development Programme for entry level leaders who display high potential for future leadership positions;

• The Advanced Leaders Development Programme available to individuals already in positions of influence and who are candidates for growth into higher levels of leadership; and

• Executive Development opportunities designed for incumbent senior executives who have specific developmental requirements in line with the demands of their positions and/or current Group strategic priorities.

Programmes with more direct skills development objectives are offered to managers and leaders, either to facilitate individual growth or to promote the development of a collective Group capability. These include:

• The internationally facilitated programme in Strategic Planning and Management in Retailing focused on productivity measures and key retail performance indicators (facilitated by Babson University, USA);

• The Supply Chain Development Programme that seeks to improve global supply chain skills in anticipation of international growth (facilitated by Sam M. Walton College of Business, USA); and

• The Area Manager Development Programme that develops retail operational management skills.

Through the Group’s relationship with the Wholesale and Retail SETA, during the past year 4 candidates were selected onto the SETA’s International Leadership Development Programme (over

and above the 5 from previous years), and 14 middle managers participated in the Retail Management Development Programme which commenced in February 2012.

Ongoing partnerships with leading international universities have proved highly beneficial. The Group has gained international exposure through its talent exchange programme with the Sam M. Walton College of Business, University of Arkansas, and was invited onto the Board of that university’s Center for Retailing Excellence. Students from Harvard’s MBA class have participated similarly, while the productive relationship with Babson University continues. These relationships provide direct access to top international academic and training experts in retail, supply chain and logistics.

The personal growth and development of leaders is supplemented by personal and career development discussions, comprehensive leadership assessments, development of personal development plans and regular feedback on performance. Mentoring and coaching are offered on-the-job, or more specifically as required.

ETHICAL BEHAVIOUREach associate acknowledges receipt of a detailed Business Code of Conduct upon joining the Group. Senior and other selected associates complete annual declarations in which compliance with the Code is confirmed and any external interests or relationships that could potentially give rise to a conflict of interest are disclosed.

The Group has partnered with an independent organisation to provide a confidential toll-free number for reporting suspected fraudulent activity or unacceptable behaviour. Associates are encouraged to be alert to fraudulent or unacceptable activity and immediately report instances to the Whistle Blowers’ fraud hotline. Internal Audit confidentially investigates reported incidents.

A Social, Ethics, Transformation and Sustainability Committee has been established and held its first meeting in May 2012.

WELLNESSFull-time associates are offered membership to the subsidised Group medical aid, while the cost-effective medical aid products Discovery Keycare Plus and KeyCare Access offer associates access to affordable medical aid benefits. Currently 2 986 associates, representing 26% of permanent associates, have cover for themselves and their families through one of the medical aid options.

The Group encourages associates to make healthy lifestyle choices. This philosophy is promoted annually through the Wellness Week and via regular Red Cap TV broadcasts.

Through both the medical aid programmes and Wellness Week, associates have access to health counseling and prevention and risk-control programmes to assist with information and treatment regarding serious diseases.

Executive wellness is given high attention, with senior executives having completed thorough physical health assessments during the year.

Mr Price Group acknowledges the seriousness of HIV/Aids, and has a comprehensive policy formulated in this regard. To ensure that our associates are educated and aware of how HIV is contracted, and can be managed, we conduct regular communication campaigns to all associates which are distributed via our intranet, point of sale system and printed media.

In addition, Mr Price Group has joined with the Retailers Unite Against HIV Group with other retailers such as Pick n Pay, Cape Union Mart, Woolworths and Clicks participating. This initiative enables us to afford our store associates, who are geographically distributed, to have access to free HIV testing and counselling. This initiative will commence in the North West Province in June 2013.

OCCUPATIONAL HEALTH AND SAFETYThe Group encourages safe working practices and 10.1% of permanent associates have been trained as health and safety officers and/or fire marshalls. This includes those who have completed a first aid course. Regular attention is paid to workplace health and safety with the required practice drills and safety reviews being conducted.

In the year under review, no serious work-related accidents were reported, while the number of minor injuries on duty decreased from 92 to 84.

HUMAN CAPITAL MANAGEMENT SYSTEMSIn order to transform human resources management practices to a world class standard, investment in leading edge information systems and technologies is required. Comprehensive and in-depth research and analysis was conducted during the year to identify the best possible solutions available, and systems selections were made accordingly for workforce planning and management, learning management and payroll.

The new payroll has been wholly configured and the workforce and learning management systems have been partly configured. All systems will be fully implemented and optimised during the forthcoming financial year, with very high attention given to the change management requirements associated with these implementations.



SMITKEVIN

An idea was born when a passionate associate from the visual merchandising team in Mr Price asked to assist children by teaching them art.

A few months later, the idea was refined, and at that stage, one passionate person became many and the Iciko project was launched, where art, drama and music lessons are offered on Saturday mornings at 5 RedCap Schools in KwaDukuza. Iciko is a Zulu word meaning "gifted and talented".

The passionate pioneers and architects of the Iciko project are Lorraine Parkes, David Van Tonder and the Visual Merchandise Team of Mr Price Apparel.

The team developed a curriculum aligned to the requirements of the Department of Education at each level of development for a child in Primary School. An assessment was done to determine interest, and the children responded very positively to the opportunity of being able to develop their creative skills, something that was never previously offered at any of these schools.

Teachers are included and guidance is given on developing lesson plans, so that children not able to make the Saturday lessons can benefit in the classroom during the week.

This initiative is the first of its kind in the country, where full-time employees have succeeded in developing a project of this scale and nature. Because of their passion and inspiration, so many children’s lives have been impacted as they are now offered the space to develop their talent in dance, music and the arts.

The team would like to acknowledge the many other volunteers in the Company who have committed to helping these children by giving up one Saturday a month. Thank you.

AN EXTRAORDINARYTEAM

Kevin Smit is the epitome of a Mr Price partner. He joined the Group over 15 years ago, while still at school, as a casual in the Pinetown store. Once he matriculated, he became a permanent associate. From the very beginning, he was a noticeable individual, because of his energy, positive attitude and unbounding enthusiasm in everything he did. In 1997, he joined the merchandise team at the support centre to assist with consolidation of stock. Within a year he was appointed as an allocator, and from there he grew from strength to strength, trying his hand in all departments from kids to menswear to ladieswear, in both buying and planning roles.

Absolute determination, coupled with an intuitive care and understanding of others, an energy and passion that leaves most astounded, an acute understanding of numbers and an ability to grasp and implement new concepts quickly, are just some of his unique qualities.

His journey over the years within the merchandise team culminated in Kevin being appointed head of planning of the entire Apparel Division in October 2011.

His achievements are clear and his time at Mr Price has been wonderfully successful to date. What makes him so special is his incredible character – humble, hardworking, committed, passionate, caring, smart, innovative and unquestionably loyal.

RUNNINGMANAWARD

ICIKO

The Mr Price Group ‘Running Man’ statue is presented to selected associates who have made extraordinary contributions to the Group's progress over an extended period. These highly valued individuals embody the Group's culture and core beliefs, and have demonstrated consistently high dedication and performance.


STORIES OF OUR PEOPLE

APPAREL

Price Apparel is a fashion-leading clothing, footwear and accessories retailer that offers on-trend and differentiated merchandise at

exceptional value to ladies, men and children. Customers are people with a youthful and fashion conscious mindset of all ages. However the brand pitch is primarily focused on the 16 to 24 year old in LSM 6 to 10.

The brand engages with fans on all relevant social media platforms, bringing them the latest fashion and value offers online.

WHAT WE DIDThe division recorded retail sales growth of 10.5% and comparable sales growth of 3.9%. Stock delivery problems in the second half of the year unfortunately impacted overall sales growth.

Ladieswear continued to capture market share throughout the year, with some pleasing milestones achieved, and menswear made some significant market share gains in the last quarter.

OUR CUSTOMERS DEPEND ON US FOR

THE HOTTEST SEASONAL FASHION

AT UNBELIEVABLE PRICES.

Through constant innovation and product development,

staying on the pulse of international fashion trends and diligent

resourcing, this brand is able to make catwalk fashion

accessible to customers at highly competitive prices.

KEY HIGHLIGHTSThe online trading platform was launched in July 2012, exceeding expectations both in capability and sales performance. We are very proud of the team for achieving the following milestones:

• 33 MILLION PAGE VIEWS

• 209 000 FACEBOOK FANS • RANKED 12TH HIGHEST IN TERMS OF THE NUMBER OF FANS ACROSS ALL SOUTH AFRICAN PAGES

The brand has enjoyed the highest store usage in the sector, alongside being the most loved brand and having the strongest brand equity.

The division opened 31 new stores during the year, including one store in Nigeria and one in Ghana. As a result, weighted average trading space grew by 7.5%.

Jeans unit sales grew from 7.8 million to 8.7 million pairs in the year, while t-shirt sales grew to 25 million (70 000 units a day).

WHERE ARE WE GOINGThe strategy remains focused on the investment in human capacity, business process mapping and system enhancements, to ensure long-term sustainability. The implementation of the strategic initiatives will continue into 2013/14, with ongoing focus on maximising sales growth, profitability and improved product resourcing, to ensure that we deliver on all stakeholder expectations.

The research into other possible new international markets will continue.

Mr

NICCI LYNE MANAGING DIRECTOR, MR PRICE APPAREL

47


MR PRICE APPAREL REVIEW

CLINT LARSSON MANAGING DIRECTOR, MR PRICE SPORT

The division will increase its direct importing contribution responsibly, so as to grow margin and enhance sustainability of supply in key categories.

Mr Price Sport will be piloting the Group’s new ERP system and, with the implementation of location planning, expects to see the benefits of having the right stock in all stores at the appropriate time.

The new store design has been well received due to its ease of navigation, increased stock intensity, better lighting levels and speed of transacting at the cash desk. This concept has been implemented in all new stores opened in the past 18 months. The revamp of existing stores will take place on lease renewal or when necessary.

The performance of the new 'one-up' brands, Maxed Elite and Trail Tech present exciting growth prospects. This product uses better fabrics and additional trims, catering for the needs of sports people competing at higher levels. Fitness apparel, footwear and equipment all had a good year. The improved pitch of product across apparel and equipment in outdoor has also been well received and the sales growth is encouraging. Fitness and outdoor accessories also achieved solid sales growths.

The division sold 3.4 million units of fitness apparel, 32 500 units of fitness footwear and 365 000 balls in the year.

WHERE WE ARE GOINGThe division continues to grow profitability and remains on track to deliver its strategic targets. Future growth will be generated by new store growth within Southern Africa and expansion into new markets via an online sales platform.

Price Sport's target market comprises value-minded sporting and outdoor enthusiasts,

from age 6 and upwards, within the 6 to 10 LSM range.

WHAT WE DIDWeighted average trading space grew by 4.0% as a result of opening 7 new stores. As planned, 1 store was closed and the size of a further 4 stores was reduced. The reduced space in these locations has resulted in much improved trading density and branch profitability. The division is nearing the end of its right-sizing strategy, which it expects to complete over the next 2 years.

The gross profit margin was up on last year and was driven by improved resourcing and resultant lower markdowns. Operating overheads, which included additional investment in new stores, and specifically in head office systems and people, grew at a rate lower than the sales growth. This factor, together with the improvement in gross margin, contributed significantly to the growth in operating margin at year end.

The testing of smaller format stores, with an edited assortment, has continued. The rollout of this format will enable the growth of the chain into smaller towns and new African markets. These stores are trading to expectation and targeted locations will be pursued.

MR PRICE SPORT GREW SALES BY

22.9% WITH COMPARABLE SALES

GROWING BY 11.9%.

SP ORT

The Mr Price Sport division retails sporting and

outdoor apparel, equipment, footwear and accessories.

Mr


MR PRICE SPORT REVIEW

LARRY SIMON MANAGING DIRECTOR, MILADYS MI

LADYS

iladys retails an assortment of well-priced, fashionable women's clothing, intimatewear, shoes,

bags and accessories.

Our customer is not a fashion risk-taker but wants to look stylish and feel progressive, so the product she buys must be on-trend. She typically has family and financial responsibilities and, because of this, the Miladys value for money offering is important.

The division satisfies its customer’s need to interact with people who understand her by providing an exciting and vibrant in-store experience, showing her the style and co-ordination that she enjoys through store displays and windows, as well as

personal fashion advice.

WHAT WE DIDOur product appeal is a priority. To maintain the flow of appropriate merchandise into the business, focus is placed on sources of supply and timely delivery.

A significant amount of time and energy has been spent on recruiting the right team of people, as well as on the development and training of management in general, with positive impacts across the business specifically in product direction, selection and in-store merchandising.

The division opened 3 new stores and revamped 11 existing stores in the new-look format.

Retail sales increased by 13.0% and comparable sales grew by 12.9%, despite a reduction in weighted average trading space of 2.5%. As a consequence of the improved sales and reduced trading space, trading density increased by 15.8%. Retail selling price inflation, at 0.5%, was lower than in the previous year due to changes in price point mix. The overheads continue to be tightly controlled and grew at 4.6%. Operating profit increased by 48.4%.

WHERE WE ARE GOINGMiladys grew market share this year, and there are still many opportunities that have been identified to ensure that this growth is sustained. The vision is to position the Miladys brand as the number 1 choice in its target market. This will be achieved by

further improvements to the merchandise offer. Store growth will be accelerated and existing stores updated with the new concept to assist with this positioning.

Focus on supply chain management will intensify to ensure that relationships are built with trusted and reliable suppliers, guaranteeing product consistency and continuity. A prerequisite in developing these relationships will be the supplier’s commitment to sustainability.

OUR CUSTOMER IS A YOUNG-AT-HEART WOMAN, AGED 40+, LSM 6 TO 10, WHO APPRECIATES GOOD QUALITY AND A COMFORTABLE FIT.

M

The new-look stores are trading well above the store average and,

as a result of this success, we plan to revamp

another 15 in the new financial year.


MILADYS REVIEW

ARN DE HAAS MANAGING DIRECTOR, MR PRICE HOME

Price Home retails contemporary designed homeware and furniture to value-minded customers, with a young-at-heart attitude, who are aged 18

years and older and are within the LSM 6 to 10 range. The division continued to delight its customers with innovative products at everyday low prices.

WHAT WE DIDAMPS figures in the 12 months to December 2012 reflected a 18% growth in customers in the target market. In line with the strategy, the 35 to 49 year old customer base grew strongly and further penetration was gained in the LSM 6 to 8 range.

The weighted average space footprint grew by 0.9% as 11 new stores were opened and certain existing stores were right-sized.

Mr

The division aims to grow market penetration across current assortments and the store footprint will expand into underpenetrated areas of Southern Africa. The division is also well positioned to grow market share in the semi-durable homeware and furniture markets. Given positive internet activity and social media interaction, and to

delight customers further, the division intends to launch an online sales platform in the new financial year.

The quality of stock and the resultant freshness factor improved from the previous year, providing a good platform for the months ahead. Gross margins improved slightly and this, together with continued tight cost control, enabled a meaningful increase in operating profit.

Independent research, conducted by Nielsens, reflected that Mr Price Home is the most loved and frequented homeware retailer in South Africa. The research revealed that the brand has the highest conversion rate of frequent shoppers to brand ambassadors in South Africa.

WHERE WE ARE GOINGWe are committed to cementing our position as a leading fashion-value retailer of homeware and furniture and will continue to enhance customers’ shopping experiences through product selection, range and store experience.

THE DIVISION’S STRATEGY REMAINS FOCUSED ON IMPROVED RESOURCING, SUPPLY CHAIN INITIATIVES AND SUSTAINABLE BUSINESS PRACTICES. A sales growth of 15.6% was achieved, with a comparable sales

growth of 12.4%. This is a pleasing indication of market share

gains and all merchandise categories performed well.

H OME

53

Mr Price HomeMr Price Home named the winner of the Times Sowetan award for

Homeware Retailer of the Year in 2012 (Home Accessories and Décor).


MR PRICE HOME REVIEW

ROGER MAINGARD MANAGING DIRECTOR, SHEET STREET

The brand performance is strong, with ongoing focus on tracking and raising the levels of capability and engagement of the Sheet Street people. An environment of pride and service to our customers is created by granting partners the scope to determine the “how” and hold them accountable for achieving the “what”. People development is becoming increasingly important and is achieved on a number of levels through our Emerging Leaders Development Programme, bursary schemes, learnerships and targeted training interventions. Sheet Street partners have showed resilience and commitment in achieving excellent results.

he brand offers tasteful homeware products at exceptional value, allowing its customer to create the home they love, at a price that they can afford.

Customers are inspired with newness, co-ordination and décor tips in store windows and catalogues that showcase the assortments.

SH EET STREET

Sheet Street is a value retailer offering a wide range of

core and fashion products across the bedroom,

living room and bathroom.

NOW OVER 250 STORES LOCATED ACROSS SOUTHERN AFRICA

T

The small format stores, uncluttered space and creative displays allow for a pleasant shopping experience.

WHAT WE DIDSales increased by 13.8% with comparable sales growth of 7.6%. The compound sales growth over the last 3 years has been 12%. The division grew weighted average trading space by 3.0%. The opening of 25 new stores was partly offset by planned space reductions. The market sales growth per the RLC showed that the home market has slowed with Sheet Street taking an additional 0.9% market share.

Trading density increased by 10.5% and the gross profit margin improved slightly on last year, due to a change in product mix and reduced carriage costs. Excellent cost control and improved stock management resulted in the operating profit being substantially higher than the prior year.

WHERE WE ARE GOINGContinued sales growth is expected, through a combination of new sub-categories and fabrications, as well as the rollout of the new-look store design. The capability to sell product online will be tested later in the new financial year.

55

Sheet StreetAsk Afrika Orange Index® 2012:

Sheet Street named the industry winner for customer service levels in the Home and Décor category.

Sheet StreetDaily News Your Choice Awards - Sheet Street won first place in the Best Linen Store category.


SHEET STREET REVIEW

CRAIG JONES BUSINESS DEVELOPMENT DIRECTOR

INTER

NATIO

NAL

orking very closely with the trading divisions and leveraging their capabilities, the International division

is responsible for the effective testing of the entry strategy for each territory or market, and the subsequent rollout.

Research is extensive and entails country visits, pricing comparisons, detailed competitor analysis, engaging with external resources and developing and analysing financial feasibilities. The attractiveness and ease of doing business in each market is evaluated against ruling legislation and risks. The division guides in the establishment of the legal structures in the new markets, relationships with third party service providers and HR practices.

WHAT WE DIDThis year, in addition to ongoing research into key African markets, we opened corporate-owned stores in West Africa, giving us first-hand experience of the nuances of trading in these markets - not least of all the ability to establish and maintain a sustainable supply chain.

The Group opened 2 corporate-owned stores this past year; 1 in Lagos, Nigeria, and 1 in Accra, Ghana. The trading results to date have been encouraging and are tracking ahead of forecast.

W

WHERE WE ARE GOINGThere will be continued monitoring and improvement in the franchisee performance, with ongoing assistance to franchisees to optimise their businesses, including enhancing the supply chain capability, in order to deliver merchandise to franchisees at the lowest possible cost in the quickest possible time. The rollout of the corporate-owned stores in Nigeria and Ghana will continue, as will the testing of alternative operational models to enable growth, despite existing retail infrastructural challenges.

The Group’s existing online sales platform will be further leveraged and launched into new markets in the forthcoming financial year.

The research into territories further afield will continue, and the potential of the various ownership models that best suit market entry into each of these regions will be evaluated. The Group’s merchandise offer allows us to be favourably positioned in many international markets.

OWNERSHIP MODEL Mr Price Apparel

Mr Price Sport

Miladys Mr Price Home

Sheet Street

Total Retail sales (R’m)

CORPORATE-OWNED

Namibia 14 1 4 3 5 27 383Botswana 9 - 2 3 3 17 212Lesotho 2 - - 1 1 4 35Swaziland 2 - 2 - 2 6 62Nigeria 2 - - - - 2 54Ghana 1 - - - - 1 32TOTAL CORPORATE-OWNED 30 1 8 7 11 57 778

FRANCHISE

Kenya 5 - - 4 - 9 30Malawi 2 - - - - 2 2Mauritius 2 - - - - 2 6Mozambique 3 - - - - 3 14Rwanda 1 - - 1 - 2 3Tanzania 1 - - 1 - 2 12Uganda 1 - - - - 1 4Zambia 4 - - 1 - 5 23TOTAL FRANCHISE 19 - - 7 - 26 94

TOTAL STORES OUTSIDE SA(corporate and franchise)

49 1 8 14 11 83 872

Percentage of Group retail sales 6.6

THE 26 FRANCHISESTORES IN 8 COUNTRIES SOLD 2.5 MILLION UNITS

FROM TOTAL GROSS SPACE OF 13 376 m2,

DELIVERING A 20% GROWTH IN

FRANCHISE PROFIT THIS YEAR.

The International division is responsible for identifying

new markets that appear to have attractive trading potential

for the Group’s brands.


INTERNATIONAL REVIEW

REX SAMUELSON MANAGING DIRECTOR, FINANCIAL SERVICES

T

WHERE WE ARE GOINGThe medium to long-term credit landscape remains positive, despite the rapid growth in unsecured lending and a challenging economic and social environment. The division is therefore cautious on short-term credit growth opportunities given the pressure on consumer's disposable income.

THE STRATEGY REMAINS:

• Operate within the Group’s cash-based model and credit mandate;

• Enhance mobile and insurance product offerings by extending to cash customers;

• Continue to deploy data science to unlock new customer insights; and

• Pursue digitally-green customer touch points with a primary focus on mobile.

ACCOUNT MANAGEMENT SUMMARY 2013 2012

Gross trade debtors (R'000) 1 550 324 1 207 559

Total active accounts 1 307 751 1 186 896

Average balance (R) 1 185 1 011

% of debtors able to purchase on credit 86.5% 87.4%

Retail sales analysis (% of total sales)

Cash 80.4% 81.4%

Credit 19.6% 18.6%

Net bad debt (net of recoveries)

% of credit sales 3.8% 2.0%

% of debtors 6.5% 3.9%

Impairment provision % of debtors 9.0% 9.3%

GROSS TRADE RECEIVABLES PER DIVISION

R’000 Apparel Home Sport Miladys Sheet Total 2013 Total 2012

6 months 261 128 64 812 8 217 105 414 39 309 478 880 397 648

12 months 666 747 104 154 40 112 190 087 49 992 1 051 092 792 668

24 months 20 352 20 352 17 243

Total 927 875 189 318 48 329 295 501 89 301 1 550 324 1 207 559

his division is focused on supporting the Group’s profitable growth in retail market share through the development of

the right relationship with customers. The division operates within its mandate of low risk and a credit cap of 25% of total Group sales.

The primary financial products - store cards, airtime and insurance - are positioned to reward and retain our most valuable customers by being competitive, simple and easy to understand.

WHAT WE DID

Excellent sales growth and profitability was achieved through the sale of airtime and insurance products into our existing account base.

Against a background of declining disposable income and continued growth in unsecured lending, and considering the Group’s cash-based retail model, the strategic decision was made to moderate credit sales growth this year. The risk adjustments to new account criteria and credit limits slowed the the active account base growth to 10.2% (2012: 14.7%) for the financial year.

The Credit Risk Management strategies are closely aligned to the trading divisions and this led to higher credit basket values and frequency of shop which resulted in credit sales growth of 18.2% and a credit contribution to 19.6% of total Group sales.

In line with industry trends, the bad debt increased to 6.5% of the book, with independent benchmarking performed by Principa continuing to confirm that the division has maintained the credit portfolio as among the best in the industry.

94.5% of the debtors' book is interest bearing (2012: 93.1%), with all of the interest free accounts being Miladys 6 month facilities.

SERVICES The appropriate blend of risk, merchandise and financial service

products that augment the Group’s core philosophy of

offering great value to customers is the key to success.


FINANCIAL SERVICES REVIEW

C O R P O R A T EG O V E R N A N C E

JSE LISTINGS REQUIREMENTS

Rand Merchant Bank (a division of FirstRand Bank Limited) has been appointed as the Company’s Sponsor and, among other functions, 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:

COMPLIANCE WITH KING III

In preparation for the adoption of King III in 2010, the Group undertook an externally-facilitated gap analysis exercise, including a separate analysis of remuneration related principles, and an internal audit review process. The areas identified by the gap analysis as requiring attention, and the progress made to address these gaps, have been well documented in previous Annual Integrated Reports. King III is not prescriptive but rather a series of recommendations which can be adopted on an “apply or explain” basis. Furthermore, the Group believes in going “beyond compliance” through the adoption, integration and embedding of the spirit and principles of governance as opposed to simply responding to and complying with rule sets and recommended codes. As such, the Group does not follow King III blindly, but very carefully considers each and every aspect, even where the JSE Listings Requirements prescribe compliance. The Board then applies or rejects that aspect in light of what it considers to be in the best interest of all stakeholders. A qualitative evaluation of the extent to which each of the 75 King III principles has been strategically integrated into the Group’s processes is currently being undertaken. The outcome of this will be a comprehensive register of King III application which will be available on the website during the course of 2013.

Those sub-principles which the Group acknowledges not applying for the period of the year under review can be summarised as follows:

PRINCIPLE SUB-PRINCIPLE EXPLANATION FOR NON-APPLICATION

2.16: The Board should elect a Chairman of the Board who is an independent non-executive Director.The CEO of the company should not also fulfill the role of Chairman of the Board.

45: With regard to the Chairman serving on other committees: 45.4: The Chairman should not chair the Risk Committee but may be a member of it.

At the Special Corporate Governance meeting held in March 2013, the Board reconsidered the position of Chairman of the Risk Committee and it concluded that Mr NG Payne, as a recognised industry expert in risk management, remained the best qualified Director to chair this Committee.

2.26: Companies should disclose the remuneration of each individual Director and certain senior executives.

180: Companies should provide full disclosure of each individual executive and non-executive Director’s remuneration, giving details as required in the Act in terms of base pay, bonuses, share-based payments, granting of options or rights, restraint payments and all other benefits (including present values of existing future awards). Similar information should be provided for persons falling within the definition of prescribed officers of the company as defined in the Act.

The requirements of sub-principle 180 have not been met in terms of the disclosure of the present value of the long-term awards due to the varied models and unpredictable forecasting element required to determine the value of the share options upon vesting. However, full details of each award are given enabling stakeholders to value such future awards on whatever basis they deem appropriate (refer to page 88).

JSE LISTINGS REQUIREMENTS GOVERNANCE PRINCIPLE JSE GUIDANCE MR PRICE GROUP RESPONSE

3.84(a) The Nominations Committee must constitute only non-executive Directors, of whom the majority must be independent, and should be chaired by the Chairman of the Board of Directors.

The Nominations Committee must be chaired by the Lead Independent Director if the Board is chaired by an executive Chairman.

The Nominations Committee operates in a co-joined manner with the Remuneration Committee and the Lead Independent Director acts as chair. The Group did not 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) Committees, a brief description of their mandates, the number of meetings held and any other relevant information must be disclosed in the annual report.

The Risk Committee must have a minimum of three members. Membership of the Risk Committee should include executive and non-executive Directors. The Chairman of the Board may be a member of this Committee but must not chair it.

The Board believes that its Chairman, as a recognised industry expert in risk management, is the best qualified Director to chair the Risk Committee.

GOVERNANCE IS ABOUT EFFECTIVE

AND ETHICAL LEADERSHIP, THE

OUTCOMES OF WHICH ARE SUSTAINED

VALUE CREATION, SUCCESS AND

LONGEVITY.

CO

MM

ITM

ENT

STAT

EMEN

T The Board subscribes to ethical

leadership, business sustainability, stakeholder inclusivity and sound

values of good corporate governance. The governance environment is supported by the

King Code of Governance for South Africa 2009 (King III) principles and practices and the JSE Listings

Requirements. The Board recognises that compliance with this combination of voluntary and compulsory guides creates a solid governance foundation. It details the ethical standard of conduct required of Directors and executive management in the discharge of their fiduciary and governance duties and ensures that the Group remains a sustainable corporate citizen.

The spirit of governance aligns well with the Group’s values of Passion, Value and Partnership and is therefore a natural extension of what the Group aspires to be.

Supporting documents which can be found on the Group website, www.mrpricegroup.com/governance• BoardCharter;• PolicyfortheappointmentofDirectorstotheBoard;• BoardCommitteeMandates;• OutlineofBoard,StatutoryandManagementCommittees;• InternalAuditMandate;• InternalAuditAnnualAssuranceStatement;• BusinessCodeofConduct;• SupplierCodeofConduct;and• KingIIIregister(willbeavailableduring2013).


CORPORATE GOVERNANCE

power and authority remains on the Board and that no one individual has unfettered power of decision making. The necessity for the position of Lead Independent Director is reviewed on an annual basis.

The Alternate Directors were appointed to the Board for 2 separate reasons. Mr SA Ellis had been a fully appointed Director of the Board but resigned in August 2010 as part of the restructuring which sought to reduce the size of the Board. The Board did not want to lose his valuable contribution, thus he was appointed as Alternate Director with the invitation to attend meetings as and when possible.

To ensure the continuity of founding family shareholdings and interest in the Group, the daughter (Mrs TA Chiappini-Young) and son-in-law (Mr N Abrams) of the Honorary Chairmen were appointed as Alternate Directors in August 2010. The intention is for them to become full Directors upon the retirement of the Honorary Chairmen.

The capacity of each Director and their brief CV’s are detailed on page 93.

Board Charter

The Board operates in terms of a formal charter, the purpose of which is to regulate how it conducts business in accordance with sound corporate governance principles. The objectives of the charter are to ensure that all Board members acting on the Company’s behalf are aware of their duties and responsibilities and the legislation and regulations affecting their conduct. Furthermore, it seeks to ensure that sound corporate governance principles are applied in all dealings by Directors, in respect of, and on behalf of, the Company. The charter sets out the specific responsibilities to be discharged by the Board members collectively and individually, and was reviewed and updated at the Special Corporate Governance meeting of the Board in March 2013. The full charter can be found on the Group’s website.

Board Appointments

All appointments to the Board are made in terms of a formal policy, after taking into account the skills requirement for the Board and the Group’s philosophy of maintaining a vibrant Board that constructively challenges management’s strategies and evaluates performance against established benchmarks. There is a preponderance of non-executive Directors, the majority of whom are independent, with the only executive Directors being the CEO and the CFO. The objective is to maintain a good representation of fashion-value retail experience, to ensure that business strategies remain robust and sustainable, value creation and performance are enhanced and effective management of key risks is enabled. Consideration is also given to the contribution afforded by skills and experience in other disciplines which strengthen the decision making abilities of the Board. The policy for the appointment of Directors can be viewed on the Group's website.

The Board is satisfied that it is operating at its optimal size, with an appropriate weighting of non-executive to executive Directors. Furthermore, there is an appropriate balance of retail and non-retail skills and the age profile, racial and gender demographics have been adjusted over the last few years.

The Group believes in the application of holistic long-term planning to its succession programmes. The Board holds the view that its current succession plan allows for the scheduled retirement of older Board members and, with the introduction of appropriately skilled and mentored new members, ensures the continuity of a vibrant and knowledgeable Board. Ongoing Training and Development

There is an appropriate induction and mentoring programme for new Directors. A Director skills assessment is conducted annually and supported by a development and succession plan. The Directors are primarily responsible for acquiring the skills necessary for the effective discharge of their duties, although the Group does share in this responsibility. To this end, relevant briefings/presentations, including industry and socio-economic updates, are facilitated.

Information and Communication

The Board is supplied with timely and relevant information in a form and of a quality appropriate to enable it to discharge its duties and to enable it to assess the Group's quantitative performance and consider other qualitative performance issues.Non-executive Directors are made aware of any relevant developments in the Group affairs and receive comprehensive monthly trading reports and annual strategy and risk management reviews by the trading and support divisions. Furthermore, the non-executive Directors are welcome to attend any merchandise window review held during the year.

To fulfil their responsibilities, Directors have full and unrestricted access to Group information and personnel and can seek independent professional advice at the Group's cost, in accordance with the Board Charter. All Directors have access to the advice and services of the Company Secretary and unrestricted access to the Chairman.

Independence

An evaluation of non-executive Directors, in terms of the independence criteria set out in King III and the requirements of the Companies Act, was conducted at the Special Corporate Governance meeting of the Board in March 2013.

The following Directors were accepted as being independent:

• Mr MR Johnston;• Mrs RM Motanyane;• Ms D Naidoo;• Mr NG Payne;• Mr MJD Ruck;• Mr WJ Swain; and• Mr M Tembe.

It was agreed that the following Directors should not be classified as independent:

• The Honorary Chairmen, Messrs SB Cohen and LJ Chiappini, on account of their material shareholdings; and• Mr K Getz, who acts as a professional advisor to the Company.

Sub principle 66 of principle 2.18 of King III states that:

"An independent Director should be independent in character and judgement and there should be no relationships or circumstances which are likely to affect, or could appear to affect this independence. Independence is the absence of undue influence and bias which can be affected by the intensity of the relationship between the Director and the Company rather than any particular fact such as length of service or age.”

In this regard, the Board agreed that, although not classified as independent, Messrs Cohen, Chiappini and Getz do act independently in their service to the Board.

The potential impact that the length of service of a Director has on their independence was considered in respect of Messrs Johnston and Swain, in the form of a more robust evaluation than was applied to other independent Directors. It was concluded that both Directors remain independent. Furthermore, the cyclical nature of retail necessitates the need for Directors with long-serving Board experience. It is therefore not practical, nor in the best interest of its stakeholders, for Directors with more than 9 years service to resign from the Board or to automatically lose their “independent” status.

COMPANIES ACT (71 of 2008)

As detailed in the 2012 Annual Integrated Report, the Group undertook several steps to ensure comprehension of, and compliance with, the new Companies Act (71 of 2008) (“the Companies Act”), which came into operation on 1 May 2011. Matters which were finalised in the year under review are summarised as follows:

• Since its establishment in March 2012, the Social, Ethics, Transformation and Sustainability Committee held 4 meetings during the financial year and a report outlining its structure and scope of responsibilities is contained on page 74; and

• The amended Memorandum of Incorporation, harmonised to the requirements of the Companies Act, was adopted by shareholders at the Annual General Meeting in August 2012.

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

BOARD OF DIRECTORS

Board Structure

Mr Price Group Limited has adopted a unitary Board structure. During the year under review, Mrs SEN Sebotsa retired by rotation and, due to other work commitments, did not offer herself for re-election at the Annual General Meeting in August 2012. After 15 years of serving on the Board, Professor LJ Ring retired as Alternate Director, effective 30 March 2013. Ms D Naidoo joined the Board effective May 2012. Thus, 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 his position as Lead Independent Director, thereby ensuring that a balance of

BOARD OF DIRECTORS 2013



Employment Contracts

The Honorary Chairmen, as founders of the Group, continue to participate in the business and give guidance and direction in general and on strategy, merchandise and Group culture in particular. They attend most Committee meetings as observers/invitees and offer substantial input. The Board has determined that their contribution should be financially rewarded and they therefore operate within the framework of employment contracts. Their remuneration is revised annually, to take into account the planned, gradual reduction of their involvement over time. Details of the remuneration received can be viewed in the Remuneration Report on page 80.

No Directors have fixed-term employment contracts.

Rotation

In accordance with the requirements of the Companies Act and the Group’s Memorandum of Incorporation, one third of non-executive Directors retire by rotation every year, at which time they may be considered for re-election at the Annual General Meeting. At the 2012 Annual General Meeting, 5 Directors retired by rotation, and the 4 who offered themselves for re-election were approved by shareholders. The names of the Directors retiring by rotation in the current financial year can be located in the Notice of Meeting on page 110.

Conflicts of Interest and Share Dealings

The matter of conflicts of interest is a standing Board agenda item and a register of all Directors’ company shareholdings, other directorships and information regarding any potential conflict of interest is tabled at each meeting. Directors are required to recuse themselves from discussion on any matters in which they may have a conflict of interest.

Non-executive Directors cannot partake in the Group’s share incentive schemes. Furthermore, before dealing in Company shares, Directors are obliged to obtain the written consent of the Chairman or (should the Chairman be involved in a transaction) the Lead Independent Director.

Performance Reviews

The Board undertakes a series of assessments so as to monitor performance and identify areas for improvement. These assessments can be summarised as follows:

• Board assessment This is conducted on a bi-annual cycle. Every second year a full review and assessment of the Board’s activities is undertaken by all Board members. From this assessment, a “Steps for Improvement” document is generated. In the alternate years, the Board assesses their performance against the Steps document. A full Board assessment was undertaken in January 2013, with the Steps document being approved by the Board at the Special Corporate Governance Meeting in March 2013.

• Committee evaluations Each Board Committee undertakes a performance self-assessment on an annual basis, for review at their respective meetings in March. The exception for the current financial year was the Social, Ethics, Transformation and Sustainability Committee which did not undertake an assessment due to its infancy.

• Chairman evaluation Upon the anniversary of Mr NG Payne’s appointment as Chairman, a full performance evaluation was conducted by all members of the Board. Any suggestions for improvement were communicated to Mr NG Payne by the Lead Independent Director.

• Peer and self-evaluation Each Director was requested to complete a self-evaluation in respect of their Board performance and an assessment of their peers (excluding the executive Directors, who are annually assessed by the Remuneration and Nominations Committee, and the alternate Directors, who are not required at every Board meeting). Any areas of concern or suggestions for improvement were communicated to the relevant Directors on an individual basis by the Chairman and Lead Independent Director.

• Company Secretary evaluation During the year under review, and in compliance with paragraph 3.84(i) and (j) of the JSE Listings Requirements, the Board evaluated Mrs HE Grosvenor, the Company Secretary, and is satisfied that she is competent, suitably qualified and experienced. Furthermore, since she is not a 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 also undertook a general evaluation of her performance in order to identify possible steps for improvement, which were communicated to her by the Lead Independent Director and the Chairman. Board Meetings

The Board meets at least 4 times annually to conduct its regular business and is responsible for the Group’s overall strategic direction and control. An annual Special Corporate Governance meeting, under the chairmanship of the Lead Independent Director, is held in March to:

• Review and approve the Board Charter;• Review and approve the mandates of the various statutory and Board Committees, Internal Audit and the IT Divisional Board Committee;• Consider the independence of Directors;• Consider the re-appointment of Directors retiring by rotation;• Confirm the appointment of the Board Chairman;

• Propose the Chairman and members of the Audit and Compliance Committee (subject to approval of the membership of this Committee by shareholders at the Annual General Meeting);• Confirm the Chairman and members of other Committees for the forthcoming financial year;• Define levels of materiality, reserving specific powers to the Board and delegating other matters with the necessary written authority to management;• Review and approve the Business Code of Conduct;• Evaluate the Company Secretary in terms of the JSE Listings Requirements; and• Review the level of the Group’s compliance with the King III and JSE Listings Requirements governance principles.

At the March set of meetings, the following year’s budget and 5 year strategy are approved, giving due consideration to the level of risk being undertaken and the sustainability objectives of the Group.

Director Status Main Board

Special Corporate

Governance

Auditand Compliance

Committee

Board Risk Committee

Remuneration and Nominations

Committee

Social, Ethics, Transformation

and Sustainability

Committee

SI Bird Executive 4/4 1/1 4/4

MM Blair Executive 4/4 1/1 4/4

LJ Chiappini Non-executive 3/4 1/1

SB Cohen Non-executive 4/4 1/1

K Getz Non-executive 4/4 1/1 4/4 4/4

MR Johnston Independent non-executive 4/4 1/1 4/4 4/4

RM Motanyane Independent non-executive 4/4 1/1 4/4

D Naidoo 1 Independent non-executive 4/4 1/1 4/4

NG Payne Independent non-executive 4/4 1/1 4/4 4/4

MJD Ruck Independent non-executive 4/4 1/1 4/4 4/4

SEN Sebotsa 2 Independent non-executive 1/2 -

WJ Swain Independent non-executive 4/4 1/1 4/4 4/4 4/4

M Tembe Independent non-executive 3/4 1/1 3/4

N Abrams 4 Alternate non-executive 3/4 1/1

TA Chiappini-Young 4 Alternate non-executive 4/4 1/1

SA Ellis 4 Alternate executive 4/4 1/1

LJ Ring 3/4 Alternate non-executive 0/4 0/1

Attendance of Directors at Board and Committee meetings

1 appointed as non-executive Director on16 May 20122 retired by rotation on 30 August 2012 3 US resident - retired as Alternate Director on 30 March 20134 Alternate Directors are not required to attend every meeting

Non-attendance of Meetings by Directors

Generally, all Directors attend the Annual General Meeting and are available to answer shareholders’ questions. Alternate Directors are not required to attend each meeting. Mr N Abrams (UK) and Professor LJ Ring (US) were kept updated on Board issues by receiving all Board meeting documentation. Messrs Chiappini and Tembe were both unable to attend the August Board meeting due to overseas commitments.

Prescribed Officers

As per the requirements of the Companies Act, the Board determined that the prescribed officers are the CEO, Mr SI Bird and the CFO, Mr MM Blair. These individuals exercise general executive control and management of the business and all divisional heads report directly to them.



An outline of the Board, Statutory and Management Committee structures, together with the mandates/charters of the respective Committees, can be located on the Group’s website.

THE BOARD BELIEVES THAT, IN RESPECT OF THE BUSINESS SPECIFICALLY RESERVED FOR ITS DECISION, IT HAS SATISFACTORILY DISCHARGED ITS DUTIES AND RESPONSIBILITIES DURING THE YEAR UNDER REVIEW. GOVERNANCE AND ASSURANCE

In October 2012, Mrs S Moodley was appointed as Head of Governance and Assurance, with the brief to consolidate, align, integrate and enhance the governance strategy of the Group. The role includes strategic leadership of the Enterprise Risk Management, Legal and Compliance, Internal Audit and Company Secretariat functions. The improved structure and reporting aims to focus the Group’s efforts on a holistic response to its governance agenda and to further enhance the integration of strategy, risk management and sustainability.

The Group has adopted a robust model of combined assurance as it recognises that a co-ordinated approach to risk management is needed, in order to effectively manage, monitor and mitigate its key risks. This model clarifies the roles and co-ordinates the efforts of management, internal assurance providers and independent assurance. In addition, it increases collaboration and facilitates a shared and more holistic view of the Group’s risk profile. Internal Audit's role in this regard and their annual assurance statement can be found on Page 72.

BUSINESS CODE OF CONDUCT

Directors and associates are required to maintain the highest ethical standards. Upon joining the Group, every associate receives a copy of the Business Code of Conduct and is requested to sign as acknowledgement of acceptance of the Code.

On an annual basis, all senior associates of the Group are required to submit a declaration confirming their continued compliance with the Code. The Board believes that the ethical standards embodied in the Code are effectively observed within the business. Appropriate disciplinary action is applied, where necessary, in the event of any breach. The Code is reviewed annually by the Board and was approved at the Special Corporate Governance meeting in March 2013. The Business Code of Conduct is located on the Group's website.

A Supplier Code of Conduct, setting standards and practices to which the Group expects its suppliers to adhere, is distributed to all suppliers and is located on the Group's website.

CLOSED PERIODS

The Group operates a closed period policy in line with the JSE Listings Requirements:

• Between the end of its interim and annual financial periods and the publication of the financial results applicable to those periods. All Directors and senior associates involved in compiling the trading results and forecasts or reviewing such financial information are considered to be in a closed period from the date of dissemination of the aforementioned information to the Board immediately prior to the end of the interim and annual financial periods. This is usually about the 15th of March and 15th of September each year;

• Between the end of the third quarter, including the Christmas trading period, and the publication of a trading update pertaining to that period, usually in the second week in January; and

• During any period when the Mr Price Group Limited security trades under a cautionary announcement.

During these closed periods, Directors, officers and other selected associates are prohibited from dealing in the Company’s shares. Associates who may have access to confidential or price-sensitive information are cautioned against the possibility of insider trading. Regard is also had to other JSE Listings Requirements in respect of the dealings of Directors in the Company’s shares.

STATUTORY, BOARD AND MANAGEMENTCOMMITTEES

To assist the Board in discharging its responsibilities for corporate governance, it functions with 2 Board Committees and 2 statutory committees. During the year under review, an evaluation of the statutory and non-statutory obligations of each Committee was reviewed to reduce overlap and prevent governance fatigue. Details of the composition and key achievements of each committee can be located in the following sections of this Annual Integrated Report:

COMMITTEE NAME PAGE

Board Risk Committee 68

Audit and Compliance Committee 70

Social, Ethics, Transformation and Sustainability Committee 74

Remuneration and Nominations Committee 80

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BOARD COMMITMENT

The Board is committed to business sustainability and to creating and preserving stakeholder value. It recognises that the governance of strategy, risks/opportunities and performance are critical success factors and therefore exercises active oversight over these processes, in order to ensure that the achievement of its strategic objectives is enabled.

COMPOSITION The Board Risk Committee, established in May 2010, operates in terms of a formal mandate. The Committee is comprised of the following Directors:

• Mr NG Payne (Chairman) Independent non-executive Director• Mr WJ Swain Independent non-executive Director• Mr SI Bird Executive Director• Mr MM Blair Executive Director

The Committee mandate is published on the Group's website: www.mrpricegroup.com/governance.

ROLE

The Committee has an independent and advisory role with accountability to the Board. The purpose of the Committee is to assist the Board to fulfill its corporate governance responsibilities relating to the governance of risk.

The Committee is responsible for overseeing risk governance (including risk appetite) and monitoring the effectiveness of the risk management framework and processes. The Committee reviews key opportunities and risks, assesses risk mitigation plans and reports back to the Board. The Committee gives due consideration to the legitimate and fair expectations of all key stakeholders, resource constraints, external pressures and the drivers of the Group’s sustainability.

Management is accountable to the Board for designing, implementing and monitoring the process of risk management and integrating it into the day-to-day activities of the Group. Management is also accountable for building the competencies and capacity required for a sustainable business.

RISK GOVERNANCE AND MANAGEMENT

During the year under review, the Committee fulfilled its mandate by meeting 4 times to discuss the following key issues:

Risk Appetite

The Board recognises that a well-defined risk appetite is the core instrument for aligning overall corporate strategy, capital allocation, risk and performance. Risk appetite and tolerance are the fundamental concepts that provide the context for strategy setting, entrepreneurial behaviour and the pursuit of Group objectives. It is informed by the group risk culture and clarifies what risks the Group can, or is willing to, take and the risks that the Group will avoid. Risk appetite and risk tolerance are inextricably linked to performance over time.

The Board has formally defined its appetite for risk, and an enhanced risk appetite model is in the process of being implemented. This will enable increased consideration of risk capacity, system/process maturity and overall risk capability in relation to the key strategic, financial, operational and compliance focus areas of the Group. The Committee confirms that there were no material deviations from the Group’s risk appetite in the period.

Risk Profile

The Board is satisfied that strategy and business plans do not give rise to risks that have not been thoroughly assessed by management and confirms that there were no undue, unexpected or unusual risks taken by the Group and no material losses were incurred during the year.

Key Business Risks and Opportunities

Key business opportunities and risks were discussed comprehensively by the Committee during the year. Refer to the Business Overview from page 14 for further details.

Enterprise-wide Risk Management (ERM)

The Committee, having evaluated the ERM Framework, which is based on ISO 31000 and Committee of Sponsoring Organisations, is satisfied that it is adequate, and if consistently applied, should guide the Group’s approach to identifying, evaluating and responding to key opportunities and risks that may impact on strategic objectives.

The Group recognisesthat a co-ordinated approach to risk/opportunity management is needed in order to create and sustain value in the longer-term and to enable the achievement of its vision.

Integrated and aligned strategy, risk management, performance and sustainability

Implemented an effective risk management system, which enables an effective identification, assessment and response to risks and opportunities

Managed risks within the approved appetite and tolerance levels

Embedded risk management into the day-to-day activities of the Group

The Board of Directors is accountable and responsible

for the governance of risk and strategy, and is satisfied

that the Group’s management has:

For this reason, the Group has adopted the globally recognised, three-lines-of-defense Combined Assurance Model. The model optimises the skills and expertise of management, second-line-of-defense functions and assurance providers to increase collaboration and to facilitate a shared and more holistic view of the Group’s risk profile.

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BOARD RISK COMMITTEE REPORT

71

Mr Price Group remains committed to the principles of good governance, ethical

leadership and exemplary corporate citizenship. To this end, the Audit and Compliance Committee

assists and supports the Board in discharging its duties.

REPORTA U D I T a n d C O M P L I A N C E C O M M I T T E E

COMPOSITION

The Committee is constituted as a statutory Mr Price Group Limited Committee in respect of its duties in terms of section 94(7) of the Companies Act (71 of 2008), and has been delegated the responsibility to provide meaningful oversight, particularly over the audit, finance, IT and compliance functions.

The Committee is comprised of the following 4 Directors:

• Mr WJ Swain (Chairman) Independent non-executive Director

• Mr MR Johnston Independent non-executive Director• Ms D Naidoo Independent non-executive Director• Mr MJD Ruck Independent non-executive Director

ROLE

• Assists the Board to discharge its responsibility to:- safeguard the Group’s assets;- operate adequate and effective systems of internal control,

financial risk management and governance;- prepare materially accurate financial reporting

information and statements in compliance with applicable legal/regulatory requirements and accounting standards;

- monitor compliance with laws and regulations; and- provide oversight of the external and internal audit

functions and appointments.

• Provides a communication channel between the Board, the internal and external auditors and other assurance providers; and

• Assists the Board to monitor management’s system of controls, particularly over enterprise-wide risks.

The Committee mandate is published on the Group's website: www.mrpricegroup.com/governance.

ANNUAL REPORT OF THE COMMITTEE

During the year under review, the Committee fulfilled its mandate by meeting 4 times to deal with comprehensive agendas. It received the appropriate information from internal audit, external audit, management and other sources deemed necessary to fulfill its obligations. Pursuant to these activities and the investigations it conducted, the Committee can report satisfaction with the external auditor’s independence and established principles governing the auditor’s employment for non-audit services.

HAVING GIVEN DUE CONSIDERATION, THE COMMITTEE BELIEVES THAT:

• Mr MM Blair, who is the Financial Director and carries the title of Chief Financial Officer, possesses the appropriate expertise and experience to meet his responsibilities and that the Company’s financial function incorporates the necessary expertise, resources and experience to adequately carry out its responsibilities;

• The Company’s accounting practices and the effectiveness of the internal controls have been maintained at a high standard and fully support the accuracy of the financial and related information presented to stakeholders in the integrated report;

• It has satisfactorily carried out its obligations in terms of its mandate;

• It can confirm that there were no material or frequently repeated instances of non-compliance by either the Group or the Directors during the year; and

• The Designated Auditor attended a meeting of the Committee not more than a month before the Board met to approve the integrated report to discuss matters of importance to the auditor and the Committee regarding the Company’s financial statements and general affairs.

The Directors believe that the Committee has satisfied its responsibilities under its mandate. Under the sponsorship of the Committee’s Chairman, a self-evaluation assessment was undertaken during the year and action to address certain issues requiring attention was determined.

The Chairman of the Committee, Mr WJ Swain, attends the Annual General Meeting and is available to answer shareholders’ questions.


AUDIT AND COMPLIANCE COMMITTEE REPORT

COMPOSITION

The Mr Price Group Internal Audit Division (Internal Audit) is an integral part of the Group’s governance structure. The centralised division operates in terms of a formal mandate, in full conformance to the International Professional Practices Framework for Internal Audit (Standards) and with a risk-based and integrated methodology. The function was established to assist the Board and executive management with the achievement of their objectives, by providing them with reasonable assurance on the adequacy, effectiveness and efficiency of the Group’s network of governance, risk management and internal control processes and systems.

PROFESSIONAL POSITIONING AND RECOGNITION

In accordance with the Standards, it has been determined that Internal Audit would be subjected to an independent external quality assurance review (QAR) at least once in 5 years. The QAR primarily covers compliance with the Standards and Code of Ethics, organisational positioning and independence, skills and proficiency, nature and quality of work and the ability of Internal Audit to meet the Board’s and management’s expectations.

Internal Audit has been subjected to 2 independent external reviews, in 2007 and 2011. It was recognised as the first internal audit activity in South Africa with full conformance to all Standards; and in 2011 was confirmed as the only activity in South Africa with the exceptional rating of full conformance in an independent external quality review. This result placed the Internal Audit activity in the top QAR results globally.

The independent external QAR team recognised that this level of operations could only have been sustained by a combination of strategic leadership of Internal Audit, an alignment of interests and incentives; the maturity and mutual respect of the Audit and Compliance Committee, executive and senior management and the external auditor towards Internal Audit; and Internal Audit’s ability to deliver a highly professional audit product over time.

This review concluded that Internal Audit has continued to be a leading professional activity, characterised by innovation, development of leading practices ahead of the theory or requirements to do so, wide adoption of global best practices and unequivocally demonstrating a commitment to upholding the international professional practices framework.

INDEPENDENCE AND AUTHORITY

Internal Audit is independent of all other organisational functions and reports functionally to the Audit and Compliance Committee and administratively to the Chief Financial Officer. Internal Audit has access to the Chairman of the Board, as well as free and unrestricted access to all areas within the Group.

In order to facilitate strategic positioning and alignment of Internal Audit, Internal Audit has had a standing invitation to Executive and Board Committee meetings for many years, including meetings of the Managing Directors, Divisional Boards and Main Board Committees (Audit and Compliance Board, Board Risk and Social, Ethics,Transformation and Sustainability Committee).

COMBINED ASSURANCE

Internal Audit is an integral part of the Group’s combined assurance model as an independent assurance provider. There is a spirit of co-operation and collaboration with management, other internal assurance providers and the Company’s external auditor, in order to ensure optimal coverage of the key risks and minimal duplication of effort. There has been extensive co-ordination and sharing of information with the Company’s external auditor, who continues to place substantial reliance on internal audit work.

ANNUAL INTERNAL AUDIT ASSURANCE STATEMENT Internal Audit assurance can only be reasonable and not absolute and does not supercede the Board’s and management’s responsibility for the ownership, design, implementation, monitoring and reporting of governance, risk management and internal controls.

Risk-based methodology

The Internal Audit function has adopted a risk-based methodology for many years in order to ensure appropriate coverage of governance, risk management and control processes which are key to the realisation of the Group’s strategic goals. The Internal Audit Plan approved for the year under review has been completed except for a few business areas/systems which are in the process of development or change. The Audit and Compliance Committee considered these areas at the meeting on 18 March 2013 and these audits, not considered critical, were rescheduled for the 2014 financial year. Extensive adhoc work was conducted during 2013, particularly in respect of E-commerce, ERP and Continuous Auditing, to ensure that the Internal Audit Plan remained of strategic relevance, risk-aligned, agile and responsive to management requests and changes in systems and processes.

AREA GRADE DESCRIPTION

OVERALL OPINION

Very Good Based on the work completed during 1 April 2012 to 30 March 2013, which has been carried out in accordance with the International Professional Practices Framework for Internal Audit and the approved Internal Audit Plan; and provided that management 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, in all material respects, controls evaluated were generally adequate, appropriate and effectively implemented to provide reasonable assurance that risks are being managed and that the Group objectives should be met.

TONE AT THE TOP

Very Good Internal Audit has continued to note a constructive tone at the top. Divisional management generally responds immediately and appropriately to reported weaknesses and demonstrates a willingness to adopt recommended improvements. Executive management and the Board require, encourage and monitor quality and continuous improvement in the Group’s network of governance, risk management and control.

GOVERNANCE Very Good There are very good governance structures and processes in place to:• Promote appropriate Group ethics and values;• Ensure effective organisational performance and accountability; and • Adequately co-ordinate Group strategies, communication and activities among the Board,

Management, second-line-of-defense functions and External and Internal Audit.

In October 2012, the Group consolidated the second-line-of-defense functions into a Governance and Assurance Division with the mandate to consolidate, align, integrate and enhance the governance strategy of the Group. The improved structure and reporting aims to focus the Group’s efforts on a holistic response to its governance agenda and to further enhance the integration of strategy, risk management and sustainability.

RISK MANAGEMENT

Adequate(85%)

The risk management infrastructure, framework and processes are adequate to identify, assess and mitigate key risks and to support the achievement of the Group’s strategic goals. There has been continuous improvement in integrating the Group’s strategy, risk management and the business sustainability agenda, however, significant focus in this area will ensure further improvements over the next year.

INTERNAL CONTROLS

Very Good 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.

SCOPE OF WORK

Internal Audit can report that there were no undue scope limitations or impairments to independence. In their professional judgement, sufficient and appropriate audit procedures have been conducted and evidence gathered to support the accuracy of the conclusions contained in this report.

INTERNAL AUDITR E P O R T

SHERENE MOODLEY HEAD OF GOVERNANCE AND ASSURANCE

INTERNAL AUDIT OPINION

GRADE DESCRIPTION

Low-risk/ Very Good(≥ 90%)

Controls evaluated are adequate, appropriate and effectively implemented to provide reasonable assurance that risks are being managed and objectives should be met.

Medium risk/ Adequate (75-89%)

A few specific control weaknesses were noted, but generally controls evaluated are adequate, appropriate, and effectively implemented to provide reasonable assurance that risks are being managed and objectives should be met.

High-risk/ Poor(≤74%)

Numerous specific control weaknesses were noted. Controls evaluated are unlikely to provide reasonable assurance that risks are being managed and objectives should be met.

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:

AUDIT AREA 2013 2012 2011

Continuous Audits and Forensics Very Good Adequate N/A

Corporate Audits (91%) (91%) (91%)

IT Audits (91%) (89%) (87%)

Operational Audits (92%) (90%) (93%)


INTERNAL AUDIT REPORT

The responsibility of monitoring the Group's governance of ethics and transformation matters were transferred to the Committee with the dissolving of the Board Transformation Committee in March 2012.

The mandate of the Committee incorporates the responsibility to draw matters within its mandate to the attention of the Board and to shareholders of the Company. It can be viewed on the Group's website: www.mrpricegroup.com/governance.

MEETINGS

The Committee met 4 times during the year. Meetings are convened and conducted in terms of a detailed agenda accompanied by supporting documents and reports, in particular the reports of the permanent attendees. These representations cover the core mandate of the Committee and serves as a material tool used by the Committee to monitor its responsibilities. The Committee actively engages with management during these presentations.

Matters considered by the Committee (and reported to the Board) include:

• Review of the Group’s Code of Conduct to determine if it was fully compliant with statutory requirements. An assessment was made to ensure that it was aligned to the culture of the Group and that it was comprehensive in addressing ethical matters. Steps were agreed to ensure that the content of the Code was adequately communicated throughout the Group;

• Report on the Group’s compliance with applicable legislation, codes of good practice and other legal requirements;

• Monitoring and assessment of the Group’s transformational progress (including consideration of the Employment Equity Act and the Broad-Based Economic Empowerment Act). The Committee is materially assisted in monitoring transformation by the Executive Transformation Committee, chaired by the CEO, and the input of the Board;

• Review of the impact of the proposed revisions to the B-BBEE Codes of Good Practice;

• Review of the corporate social initiatives undertaken by RedCap Foundation and RedCap Sport. For details on the projects undertaken, refer to www.redcapfoundation.org and www.redcapsport.org; and

• Monitoring of matters relating to its statutory obligation and good corporate governance and corporate citizenship.

SOCIAL, ETHICS TRANSFORMATION & SUSTAINABILITY

In compliance with the requirements of the Companies Act (71 of 2008), the Social, Ethics, Transformation and Sustainability Committee was established in March 2012 and held its inaugural meeting in May 2012.

COMMITTEE REPORT

It operates in terms of a formal mandate, which contains detailed provisions relating to the terms of reference, duties, composition, role and responsibilities of the Committee.

THE COMMITTEE IS COMPRISED OF THEFOLLOWING DIRECTORS:

• Mr K Getz (Chairman) Non-executive Director• Mr M Tembe Independent non-executive Director• Mrs RM Motanyane Independent non-executive Director

In addition, all Board members are permanent invitees to meetings and this invitation is duly taken up on occasion by certain Board members (including by the Board Chairman and CEO). The following senior executives are permanent attendees at the meeting:

• Mrs VT Botha-Richards Corporate Services and Sustainability Executive• Mrs N Ambrosio Sustainability Manager• Mrs T Clarke Group Legal and Compliance Officer• Mr S Glendinning Group People Director• Mrs HE Grosvenor Company Secretary• Mrs S Moodley Head of Governance and Assurance

ROLE

The Committee is responsible for assisting the Board with the monitoring and reporting of social, ethical, transformational and sustainability practices that are consistent with good corporate citizenship, as well as assisting the Group in discharging its business responsibilities in relation thereof.

Statutorily, the Committee is responsible for monitoring the Group's activities as per the Company's Act with regard to matters relating to:

• Social and economic development;• Good corporate citizenship;• Environment, health and public safety;• Consumer relationships; and• Labour and employment practices.


SOCIAL, ETHICS, TRANSFORMATION AND SUSTAINABILITYCOMMITTEE REPORT 75

Businesses across the globe have identified the impacts of climate change and how resources can be more efficiently and effectively utilised. The Group’s ability to drive value, fundamental to its business model, is impacted by the global markets of cotton, wood, leather, oil, fuel and currency exchange rates, which are critical inputs affecting product prices. The better utilisation of resources, such as energy, water and fuel, enables the mitigation of rising costs as well as the reduction of the Group’s carbon footprint and overall impact on the environment. The Group’s usage of these resources is currently under scrutiny, through energy and supply chain initiatives.

Energy and carbon footprint

Due to increasing electricity costs, better energy efficiency has been identified as an opportunity area for the Group. A Utilities Management Committee has been established to focus on reducing energy costs and improving energy efficiencies. An important part of this Committee’s mandate is to reduce the Group’s carbon footprint over the medium-term. A number of carbon management initiatives have been established and are presently being rolled out, including the retrofitting of lighting to more energy efficient technology in large stores and an associate awareness programme to encourage behavioural change towards energy usage.

Although there is no requirement for carbon emissions to be assured at this point, the Group continues to improve the accuracy of its total carbon emission and this year partnered with a specialist energy consultant to assist with the accurate identification and recording of energy usage, and calculation of the carbon footprint. Meters have been installed in selected stores to enable the Group to obtain accurate consumption data for the purposes of corrective decision making and reporting. Further system enhancements will also contribute to a more accurate carbon footprint.

The Group has appointed an Energy Manager to facilitate these initiatives.

The Group is committed to reducing its carbon footprint by 10% over the medium-term (on baseline year 2013) and has established internal targets by division as well as the monitoring of their carbon management initiatives.

Waste recycling

Due to increased efforts in waste recycling at the Group Head Office and Distribution Centres, the output of recycled waste has increased threefold, thereby saving 5 312m3 landfill space and reducing the Group's carbon emission by 1 582 tons of CO2.

Scorecard Commentary

The Group achieves ownership points through the Mr Price Partners Share Trust (which has approximately 95% black participants).

The Group is commited to employment equity and acknowledges the need for a diversified workforce. Refer to the Report on Our People on page 38 for more information.

The Red Cap Academy continues to achieve success, particularly in the number of previously-disadvantaged associates developed. Refer to the Report on Our People on page 38 for more details.

While the Group sources a proportion of its merchandise from local suppliers, its efforts are hampered by the lack of competitiveness of the local manufacturing industry. In response to the opportunity to assist local manufacturers and enhance the ability of the Group to quickly respond to merchandise requirements, an Enterprise Development Strategy was developed. The aim is to reduce merchandise lead times through an agile and flexible local supply base. The Group has already entered into a strategic relationship with a local footwear manufacturer to increase production capacity and supply. It intends to identify further opportunities to assist local suppliers in the year ahead, as it believes that these initiatives are critical in contributing to growing the local economy. The Enterprise Development scorecard points are achieved through loans to strategic qualifying beneficiaries as well as early payment terms to a limited number of qualifying beneficiaries.

The Committee believes that the Group is substantively addressing the issues monitored by the Committee, in terms of its statutory mandate and the additional mandates referred to it by the Board, in a beneficial and positive manner.

The Committee recognises that issues within its mandate are constantly evolving and challenging but it is satisfied that management of the Group is committed and responding positively to this.

As Chairman of the Social, Ethics, Transformation and Sustainability Committee, Mr K Getz will be available at the Annual General Meeting to answer any questions relating to the statutory obligations of the Committee.

TRANSFORMATION

The Group is committed to driving social transformation and B-BBEE in a way that is both meaningful and sustainable. The Group’s B-BBEE Scorecard has been independently verified against the DTI’s B-BBEE generic scorecard by BEESCORE (Pty) Ltd, a SANAS accredited verification agency.

ELEMENT TOTAL WEIGHTING 2013 2012 2011

Ownership 20 6.47 5.46 11.29

Management 10 3.38 3.68 2.97

Employment Equity 15 6.18 6.01 6.09

Skills Development 15 12.00 12.00 10.43

Preferential Procurement 20 14.54 11.20 17.79

Enterprise Development 15 7.09 8.80 0.77

Socio-Economic Development 5 5.00 5.00 4.26

Total 100 54.66 52.15 53.60

B-BBEE contributor level 6 6 6

B-BBEE SCORECARD

Social investment is important to the Group, as it understands that a healthy business depends on a healthy society and that making a contribution ultimately reflects positively on the bottom line. Refer to the Social Report (page 78) for the details of the Group's social investment.

SOCIAL AND ENVIRONMENTAL RESPONSIBILITY

The Group's values recognise that it is in partnership with society (primarily associates, customers, suppliers and the community), and therefore consideration is given to the Group’s impact on the community and the environment.

The Group’s Social Strategy aims to ensure that, throughout its operations and partnership networks, its values influence the way in which people are treated. The social investment aims to build towards a sustainable market and labour force in South Africa and therefore it is viewed as a strategic investment. The social investment initiatives are implemented by RedCap Foundation and RedCap Sport.


SOCIAL, ETHICS, TRANSFORMATION AND SUSTAINABILITYCOMMITTEE REPORT

During the year, the JumpStart Project was awarded the first tranche of the R17.5 million grant from the JobsFund. These funds will assist the project to scale up its offer of retail and manufacturing skills training for 6 000 unemployed youth over a 3 year period, with a commitment to assist them in accessing job opportunities in the sector. Future plans include the expansion of the JumpStart programme to developing skills required by the South African clothing and footwear manufacturing sector.

The RedCap Schools Project is in its second year of implementation at 5 primary schools in KwaDukuza. During the 2012 Annual National Assessments (ANA), learner results in these schools showed an overall improvement of 10% in numeracy and 13% in literacy, up from the results showed in 2011. Teacher content knowledge improved by 15% in English and 17% in Maths from the baseline tests done at the start of the project. The next phase of teacher development will focus more on teacher classroom practice as a key focus with mentors assisting teachers to further improve learner performance in their schools.

The RedCap Centres of Excellence, implemented in partnership with the National Department of Education, expanded the YoungHeroes programme (focusing on physical education and school sport) to 6 provinces in 2012 and plans are underway for another 2 provinces to be added in 2013. One of the first schools involved in the RedCap Centres of Excellence in Soweto will start to run independently from 2013, and will serve as a test of the true sustainability of this programme.

The Life Academy Programme, focusing on the children of Mr Price Group associates, offered a mathematics programme during school holidays. Parents saw great value in the programme and all reported that their children understood certain mathematical concepts better. Based on this success, a Saturday School was launched in February 2013, with 129 children (from grades 2-12), attending Maths and English classes on Saturday mornings at the Group Head Office facility.

The Foundation awarded 259 educational bursaries to support children from Early Childhood Development to Tertiary Education - an investment of approximately R850 000 to date. The table below shows the number of bursaries issued by educational level:

What we did andwhere we are going:

The Group’s values recognise that it is in partnership with society (associates, customers, suppliers and community) and thereby consideration is given to the Group’s impact on the community and its environment. The Group’s social strategy aims to invest in a future South Africa with a sustainable market and labour force, and therefore social funds are strategically invested in a way that will unlock empowerment in the hands of people rather than creating a cycle of dependence.

The Group's social investment initiatives are implemented through the work of RedCap Foundation and RedCap Sport, both registered Non-Profit and Public Benefit Organisations. Partnerships with various partners, including the National Department of Basic Education (DBE) and the JobsFund, remain focused on delivering innovative solutions while building towards systemic change at a national level.

Who we are:

Fundraising efforts, in partnership with the Group’s divisions, assisted RedCap Foundation to raise R2.3 million over and above the Group’s donation to the Foundation, enabling in the expansion of the programmes to additional communities in South Africa.

SOCIALREPORT

RedCap Sport is focused on sport for development programmes that benefit high school learners from public schools situated in low-income communities in South Africa.

The programmes are delivered through the implementation of structured school sport for learners, targeting schools with no after-school sport or inter-school participation. Sport is a powerful tool through which important life skills such as teamwork, discipline, respect, dedication and camaraderie can be learnt and many children improve their state of health and self-esteem through participating in sport. This year, the high school programme expanded to 6 provinces (Western Cape, KwaZulu-Natal, Gauteng, Mpumalanga, Limpopo and Northern Cape) with a further 2 provinces committed for implementation later in 2013. Future plans include the expansion of the Physical Education programme into these schools, to ensure that all learners benefit from regular physical activity and skills that teach the basics of coaching and sport administration, as per the curriculum requirements for high school learners.

Educational Level Number of bursaries

Early Childhood Development 37

Primary Schools 159

Senior Secondary Schools 49

Tertiary 14

Total 259


SOCIAL REPORT

The Group has reviewed its remuneration practices in relation to King III and, to maintain its competitive edge, has applied the principles that are appropriate for the business. There have been no material changes to the principles during the year under review. The disclosure of the remuneration of executive Directors is governed by the JSE Listings Requirements and the Companies Act (71 of 2008) with additional recommendations from King III. The Group complies with all disclosure aspects, except the recommendation of paragraph 180 of King III. This relates to the present value of long-term incentives which are not disclosed due to the varied valuation models and the unpredictable forecasting element required to determine the value of the share options when vesting. The Group’s opinion is that to view the present value option awards as remuneration is misleading, in that the present value does not reflect the value paid to or receivable by the executive. Such gains in option values can only be determined upon exercise of the shares. However, share option disclosure has been enhanced in order to aid shareholder evaluation (refer to page 88).

The following proposals were approved by shareholders at the Annual General Meeting held in August 2012:

• Fees for the non-executive Directors;• Remuneration Policy (non-binding vote); and • Various amendments to the share schemes.

REMUNERATION

REPORT

THE REMUNERATION REPORT PROVIDES AN OVERVIEW OF THE GROUP’S REMUNERATION PHILOSOPHY, POLICY, PRACTICES AND GOVERNANCE, WITH PARTICULAR FOCUS ON EXECUTIVE AND NON-EXECUTIVE DIRECTORS.

he Group is appreciative of the input and feedback received from shareholders. The general feedback has been that the level of disclosure

on remuneration matters is detailed and clearly laid out. Specific issues raised relating to long-term incentives are detailed on page 84, while other suggestions for improved

disclosure have been incorporated into this report.

REMUNERATION PHILOSOPHY

Driven by the principles of Passion, Value and Partnership, the Group culture encourages and incentivises high performance and sustainability as the key drivers of business success. To support this, an entrepreneurial management style is encouraged, providing all associates with the room to innovate and grow, effectively enabling ordinary people to achieve extraordinary things.

The ability to attract, retain and motivate competent people is critical to the Group’s continued growth and long-term sustainability and is therefore the core of the remuneration philosophy. This philosophy aims to create partnerships with associates in the journey of continued growth through market-related base pay and benefits, attractive performance-driven incentives, recognition and reward programmes and share option schemes.

Being a value retailer, the Group aims to pay basic salaries and benefits at the market median. In the case of newly-appointed associates whose remuneration is below the median, the intention is that adjustments will be made to raise them to the median over a 3 year period, commensurate with their increased experience. Associates are provided with the opportunity to earn well above the median through generous incentives. This is achieved by reaching stretch performance targets, whereby associates’ efforts are aligned with strong corporate performance and increased shareholder value. Each incentive measure is within the scope and control of the individual concerned, with only certain executive Directors’ measures including an element based on headline earnings per share.

REMUNERATION POLICY AND PRACTICES

The Group’s remuneration policy is to reward executives for their contribution to the performance of the business, taking into consideration an appropriate balance between long and short-term benefits and between entrepreneurship and risk.

Remuneration levels are influenced by work performance and scarcity of skills, especially in the area of merchandising. Given that performance-related incentives form a material part of

remuneration packages, ongoing performance feedback is vital. Associates annually participate in performance and career development evaluations, focusing on work achievements, learning and development needs and values and cultural alignment. Remuneration is not influenced by race, creed or gender, with the emphasis on equal pay for equal work.

External service providers assist the Remuneration and Nominations Committee from time to time. Where this involves the remuneration of non-executive Directors, share option awards and remuneration of executive Directors and senior management, appropriate benchmarking comparatives are made. This benchmarking exercise takes place every 2 years, with inflationary adjustments made in alternate years. A benchmark assessment was conducted during the 2013 financial year, for implementation on 1 April 2013.

In the case of senior management, roles were graded according to the Paterson and Towers Watson global grading job evaluation methodology. The benchmarks included PE Corporate Services’ Total Executive Remuneration Survey (which comprises approximately 800 companies listed on the JSE, private companies and parastatals), as well as the JSE database which contains information extracted from annual reports of listed companies. Each position is strictly benchmarked against like-for-like criteria and necessary adjustments are made to ensure competitive pay. In establishing an appropriate peer group for organisational benchmarking, the individual’s role and business size, including turnover, profit before tax, total assets, number of employees and annual salary and wage bill, are taken into account, as well as the level of the individual’s decision-making.

In conjunction with PwC, a peer group of companies was selected to benchmark the remuneration of executive Directors, including, where applicable, basic pay, short-term incentives and share option awards. In the case of executive Directors, this included 8 retail companies, 4 companies with a similar market capitalisation and 4 companies that had achieved similar total shareholder returns. In respect of non-executive Directors, due to this new peer group only being finalised after the distribution of the 2012 Annual Integrated Report, which contained the preposed fees for the 2013 financial year, fees were benchmarked against a pre-existing peer group. The peer groups will be aligned when the next external benchmark study is conducted.

There is strong alignment between the types of benefits offered to permanent associates. The Group can justify areas where differentiation has been applied, specifically where consideration has been given to the position’s seniority and the need to attract and retain key skills.

T


REMUNERATION REPORT

EMPLOYMENT CONTRACTS

All associates sign letters of employment, which stipulate the notice period. The contract may be terminated by either party giving written notice of 1 month for a store or head office associate, 3 months for a divisional Director and 6 months for executive Directors.

Despite the abovementioned provisions, either party may terminate the contract of employment without notice for any cause recognised by law or by agreement by both parties to waive the notice period. Contracts are also terminated in the event of a dismissal, without the associate having an entitlement for compensation.

Employment contracts do not contain provisions relating to the compensation of executives for a change of control of the Company or providing ‘balloon’ payments on termination or retirement.

REMUNERATION STRUCTURE Remuneration and reward structures comply with the remuneration philosophy and are categorised into 3 elements: • Fixed remuneration: base pay, medical aid benefits, retirement benefits and vehicle allowances and expenses (where appropriate);• Variable remuneration: short-term performance-related incentives; and• Long-term incentives: shares and share options. Refer to page 87 for the breakdown of executive Directors’ remuneration for the year.

Fixed Remuneration

All associates, including executive Directors, receive a fixed remuneration package based on their roles, individual performance and the Group’s performance. Increases are based on a review of market data and consideration of individual performance and potential.

Basic Pay

Fixed salary and benefits are reviewed at least annually. Where the Group needs to urgently attract core skills, pay above the median would be considered, as long as internal equity was not disrupted and the employment achieved the Group’s commitment to ensuring the right candidate fit. All associates earn above legislated minimum wages.

Medical Aid Benefits

Group medical aid scheme membership is offered to all full-time associates, but is not a condition of service. Due to many associates either already being on spouses’ medical aid schemes, or for affordability reasons, the historical take-up rate has not been high. At year end, there were 2 986 associates covered by the Group medical aid. Associates are approached to join the cost-effective Discovery KeyCare Plus scheme to gain access to hospital care, chronic illness benefits (including HIV/Aids care) and daily benefits (including doctors and medicines). The scheme is offered to associates and contributions are linked to income levels to improve affordability. During the past year, Discovery KeyCare Access was introduced as a further cost-effective and affordable offering to associates.

Post-retirement medical aid benefits, which are no longer a condition of service, are available to a limited number of associates who remain members of the closed defined benefit pension fund. These benefits are no longer available to new associates.

Retirement Fund Benefits

Retirement benefits for the majority of associates employed in South Africa, Swaziland and Lesotho are provided in a funded defined benefit fund and 2 funded defined contribution funds. Associates employed in Namibia, Botswana, Ghana and Nigeria are members of separate defined contribution funds in those countries. The defined benefit pension fund was closed to new entrants with effect 1 June 1997. The funds provide for pensions and related benefits for permanent associates and membership is compulsory after the first year of service. At year end, 9 348 out of a total of 11 513 permanent associates (81.2%) were members of one of the above mentioned retirement arrangements.

Vehicle Allowances and Expenses

These benefits, which include a motor vehicle allowance or company car, fuel, maintenance and insurance costs, are offered to senior associates and certain associates whose position requires them to travel for business purposes. Certain associates who are required to travel less frequently for business purposes are reimbursed for this cost. The benefit value is commensurate with the level of seniority. No material ex-gratia payments are routinely paid.

Variable Remuneration

All associates, including executive Directors, participate in an annual short-term incentive scheme which is related to performance. Although challenging targets are set, the incentive schemes are potentially generous to encourage the achievement of targets that can be directly influenced by superior performance.

In setting the performance targets, the Remuneration and Nominations Committee ensures targets are linked to the Group or Division’s annual key imperatives, are substantially within the associate’s control, do not expose the organisation to undue risk caused by their behaviour and that there is an appropriate balance between short-term and long-term incentivisation. Through the incentive bonus system, the Group rewards associates who have contributed to meeting short-term targets. Bonus payments are not deferred, as it is essential to attract and retain bright young talent, many of whom are at the age that they are committing to their first property purchase or financing their children’s education.

Associates have to be in the Company’s employ at financial year end to receive incentive bonuses, unless due to specific circumstances, alternative arrangements have been approved by the Remuneration and Nominations Committee.

All associates participate in a 'December bonus' scheme that generally commences at the level of 20% of an associate’s monthly salary per completed year of service and increases up to 80% (after 4 years), followed by an additional 20% after the completion of 10 years' service. This incentive is not guaranteed and is payable at the discretion of the Company.

Incentives are tied to specific areas under the individual’s control, as follows: Divisional Executives

The incentive schemes for the 2013 financial year were further enhanced to provide a better balance between short-term results and the achievement of key imperatives to build a sustainable business. Further amendments were made to take into account changed business conditions and areas of focus, but this did not result in any increase to the maximum level of incentives awarded.

Divisional executives are measured on divisional profitability, stock turn, shrinkage, internal audit results, cost curtailment, profitability of franchise stores, net bad debt write-off percentage and the achievement of certain strategic key imperatives. In the case of service divisions, like Systems and People, particular deliverables such as budgeted costs, service delivery, innovative business improvements and achievement of key imperatives are considered. Real Estate is measured relative to the success achieved in meeting divisional trading space targets, rent per square metre paid for new or renewed leases, the cost per square metre of developed store space and the introduction of energy efficient solutions. The methodology also includes penalty clauses - if there is a decline in internal audit score, shrinkage or stock turn to below a certain threshold, then a negative score is allocated, reducing the overall incentive payable.

The awards are only made if the division achieves its budgeted half year and annual profit targets. In that event, a maximum award of 3 months' salary is awarded at senior management level. The bulk of the short-term incentive award depends on exceeding budget and achieving stretch performance targets. The maximum that can be earned varies between 6 and 12 months basic salary, depending on the position and division.

Personal performance, incorporating areas of demonstrated performance contribution like leadership, innovation, effort and teamwork, is also assessed. For senior management, ‘soft’ awards are generally capped at 2 months basic salary, although in deserving circumstances, the CEO can propose a higher award. A poor personal performance evaluation can reduce or eliminate the incentive due under measurable company performance.

Executive Directors

The incentive portion of Directors’ earnings is tied to financial targets and is measured as a multiple of monthly salary. The achievement of predetermined targets is a function of:

• Measurable company performance, dependent on the executive’s work function. Targets are linked to the Group’s performance and are tailored annually to ensure alignment with key imperatives for the year.

The awards are only made if the Group achieves its budgeted half year and annual profit targets. In that event, a maximum award of 4 months' salary is made. The bulk of the short-term incentive award therefore depends on exceeding budget and achieving stretch performance targets.

For the 2013 financial year, the executive Directors’ targets included: growth in headline earnings per share, return on equity, return on operating assets and the Group maintaining its B-BBEE compliance at a predetermined level. In addition to profitability targets, the Group Supply Chain Director was also measured on strategic imperatives including utilisation of offshore merchandise consolidation centres and the new distribution centre in South Africa. The maximum that can be earned is equal to 12 month’s basic salary.

For the 2014 financial year the incentive scheme has been amended to achieve a more appropriate balance between short and long-term performance – refer page 91 for details.

• Personal performance, incorporating areas of demonstrated performance contribution like leadership, innovation, effort and teamwork.

Measuring these ‘soft’ issues necessitates more subjective judgement and is determined via individual and peer reviews. For executive Directors, ‘soft’ awards are capped at 12 months basic salary. A poor personal performance evaluation can reduce or eliminate the incentive due under measurable company performance.

A STRONG RELATIONSHIPEXISTS BETWEEN EXECUTIVE INCENTIVES AND SUSTAINABLE VALUE CREATED FOR SHAREHOLDERS.


REMUNERATION REPORT

A summary of the current vesting and exercise periods of the share schemes is detailed below:

TRUST VESTING PERIOD EXERCISE PERIOD FREQUENCY OF ALLOCATIONS

Partners Share Trust Unconditional vesting occurs 60 days after the death or retirement of the recipient associate

Immediate upon unconditional vesting

A once-off initial allocation is made with no further top up allocations being awarded

General Staff Share Trust 3 years from date of offer within 90 days of vesting Annually

Senior Management Share Trust 5 years from date of offer within 90 days of vesting Annually

Executive Share Trust 5 years from date of offer within 5 years of vesting Annually

Executive Director Share Trust 5 years from date of offer within 5 years of vesting Annually

LONG-TERM INCENTIVES

Partnership and reward for performance are among the Group’s key beliefs. The Group has ambitious growth plans that will require substantial capital expenditure and the continued dedication of its associates. The long-term incentives are to retain people critical to the achievement of these goals. To that end, various share and share option schemes have been established to enable all permanent associates within the SADC region to share in the long-term success of the Group. These incentives aim to retain key skills and motivate executives over the long term, which is essential to sustainable performance.

Currently, there are 5 share option schemes in addition to the Mr Price Partners Share Scheme, where shares are awarded instead of options. Associates in junior positions, where staff turnover is relatively high, are only awarded shares or options after being permanently employed for 12 months. The share schemes are subjected to an annual review to confirm their efficacy and affordability. An outline of the various schemes in operation can be found on the Group’s website www.mrpricegroup.com/remunerationphilosophy.

Mr Price Employees Share Investment Trust

Over and above these share schemes, the Mr Price Employees Share Investment Trust gives all permanent associates the opportunity to purchase shares on a monthly basis through a salary sacrifice, with an additional contribution of 15% from the Company.

Mr Price Partners Share Scheme

At the time of designing the new share schemes in 2006, a key factor was that the share and share option schemes would, in essence, incorporate the Group’s intentions regarding the ownership criteria of Broad-Based Black Economic Empowerment (B-BBEE). Rather than enter into an ownership deal with external parties, the Board resolved to embrace the true spirit of B-BBEE and, subject to certain qualifying criteria, included all associates in its various share and share option schemes. In this way, those responsible for contributing to the Group's success become partners in the business and are rewarded for sustained high performance.

Since an upfront free allocation of shares, and not share options, is awarded under the Mr Price Partners Share Scheme, participants of this scheme receive bi-annual dividends and are eligible to vote on their shares at the AGM. Furthermore, 50% of the trustees overseeing the operation of this scheme were elected by the participants in March 2011, which serves to ensure greater understanding and enhanced two-way communication between partners, the trustees and the Board. Black ownership in this scheme is 95% and the average value of shares held on behalf of each individual associate is R87 000. During the financial year, dividends received by each associate averaged R2 800.

Share Option Schemes

The share option schemes operate on a “rolling” basis, in that annual awards are made according to benchmarked criteria and the timing of these awards coincides with a tranche vesting. This “Rand averaging” mechanism spreads the market risk, avoiding

the situation where all options could be out of the money, which is a disincentive to associates. Re-pricing of strike prices is not permitted and options are not awarded to or exercised by key personnel in the Executive and Executive Director Share Schemes during closed periods.

The strike price mechanism for all share option schemes is calculated at the lower of the 30 day volume-weighted average price (VWAP) for the period preceding the offer date, or the price on the day prior to the offer.

Specific issues raised by shareholders during the year regarding long-term incentives include:

• The absence of performance conditions - the amendment approved at the Annual General Meeting introduced minimum performance conditions that must be satisfied in order for shares to vest. Performance conditions will be considered should the Company implement a forfeitable share plan (refer page 91).

• High share-usage limit - the Group’s partnership approach results in all associates within the SADC region participating in the share schemes, which is unique in South Africa and critical to the success of the Company. Over 8 800 associates are members of the various share schemes in operation, which has resulted in a large number of shares or options being awarded. Participation is expected to reduce over time, as there is a shift to an allocation formula which will take into account annual guaranteed remuneration and the prevailing share price. Going forward, this should lead to smaller tranches being offered. Furthermore, the Board is of the opinion that it is not appropriate to include shares allocated under the Partners Share Scheme, which effectively operates as the Group's B-BBEE scheme. Excluding this scheme, the total number of shares committed under the various equity incentive schemes equates to 8.8% of the issued share capital. It is not anticipated that any new shares will be issued to satisfy any options granted, so no shareholder dilution will take place.

Concerning the vesting of shares on retirement or for other reasons for ending employment, the share trusts' rules stipulate:

• Associates retiring at the age of 65 may retain unvested share options that will vest according to their original timeframes. However, given that associates are entitled to take early retirement from the age of 50, guidelines were established taking into account the age and years’ service of associates retiring before 65. These guidelines permit the retention post-retirement of unvested options on a sliding scale, whereby associates can take early retirement from 50 and retain their options if they have a minimum 25 years’ service, to retirement at 64 which requires 11 years’ service. Retirement at 65 does not require a minimum service period. In all other retirement or dismissal situations, unvested options will lapse unless the Board exercises its discretion and permits the exercise of any or all of the unexercised options.

• In the Mr Price Partners Share Scheme, retirement causes the shares to vest unconditionally. The age and length of service guidelines detailed above have also been applied to those associates retiring before 65.

Since the inception of the share option schemes, the Board has exercised its discretion on an exceptional basis, and has allowed 4 associates to retain unvested options post resignation. In using its discretion, the Board considered the associate’s length of service, resignation circumstances, past services to the Group and the vesting period remaining on all offered tranches. In 3 cases, the tranche closest to maturity was retained while the remaining unvested tranches were forfeited. No accelerated vesting of share options is permitted.

The risk of dilution is reduced by the Group purchasing (rather than issuing) shares on the open market to meet its various obligations under the share schemes.

Other share scheme amendments that were implemented during the year were as follows:

• Variable vesting periods – allowing ‘upfront’ awards in order to attract key individuals, for which shares will vest in equal tranches over a number of years; as well as allowing smaller annual awards that will vest in one tranche at a fixed future date;

• Prevention of vesting in the event of poor performance - the potential for the Remuneration and Nominations Committee to prevent vesting in circumstances where the individual is deemed to have demonstrated poor personal performance;

• Extension of exercise period for vested options – previously the options had to be exercised within 90 days of vesting, failing which they lapsed. This was extended to 5 years in respect of the Executive and Executive Director Share Schemes;

• Increase in maximum individual allocation - the maximum cumulative number of shares that could be awarded to any one participant under all share schemes was increased to 3 000 000. This number is inclusive of options which have already vested and been exercised; and

• Reduction of strike price discount – performance targets, which were based on core HEPS were amended to include divisional performance, in order for participants to not benefit unfairly from Group performance if their division did not meet target. The discount percentages were also reduced.

In terms of specific authority received from shareholders, the Company may issue 46 548 430 shares to satisfy the requirements of its share schemes. Since the schemes were introduced in 2006, the Company has issued 9 463 292 shares and therefore still has 37 085 138 shares that may be issued for this purpose. The Group’s current policy is to purchase shares on the open market to satisfy the requirements of the various share schemes, as opposed to issuing new shares.

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 giving the market 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.

SINCE THE INCEPTION OF THE NEW SHARE SCHEMES IN 2006, PARTICIPANTS IN THE PARTNERS SHARE SCHEME HAVE BENEFITTED BY A RISING SHARE PRICE AND A CONSISTENT INCREASE IN DIVIDENDS, IN LINE WITH COMPANY PERFORMANCE.


REMUNERATION REPORT

The emoluments of executive Directors for the year were as follows (R'000):

Percentage reduction over prior year (24.3%)

Salary

Bonus and performance

related payments

Vehicle allowances

and expenses

Pension contributions

Other benefits

Total 2013

Total 2012

SI Bird* 3 784 6 621 160 791 166 11 522 10 783

MM Blair* 2 795 4 379 331 600 109 8 214 7 683

SA Ellis 2 419 2 217 261 531 94 5 522 5 169

AE McArthur - - - - - - 9 712

TOTAL 8 998 13 217 752 1 922 369 25 258 33 347

The extent to which the Company is hedged against further share price appreciation and details of unvested/unexercised shares and options at the reporting date is as follows:

*1 Issued share capital includes 13 445 081 B ordinary shares convertible into ordinary shares at the instance of the B ordinary shareholder on a one-for-one basis.*2 Future obligations are partly hedged as the Group has acquired these shares in the open market.*3 The Partners Share Trust is effectively the Group’s B-BBEE scheme, excluding which, the total reduces to 8.82% of issued share capital.*4 In terms of cash flow, the Company's unhedged commitments, at a closing share price of R116.99 amounts to R1.2 billion. In comparison the strike price payable by participants amounts to R1.1 billion.

SHARE SCHEMENumber of

Participants

Number of Options/

Shares% of Total

Options

% of Issued Share

Capital *1

Shares Held by the Trusts

to Satisfy Obligations*2

% of Total Obligation

Hedged

Mr Price Share Option Scheme 91 151 569 1 0.06

Mr Price General Staff Share Trust 1 713 11 790 590 41 4.46

Mr Price Senior Management Share Trust 198 4 634 677 16 1.75

Mr Price Executive Share Trust 29 3 200 427 11 1.21

Mr Price Executive Director Share Trust 5 3 550 338 12 1.34

SUB TOTAL 2 036 23 327 601 81 8.82

Mr Price Partners Share Trust 6 851 5 419 806 19 2.05

TOTAL *3 8 887 28 747 407 100 10.87 18 550 769 64.5*4

REMUNERATION GOVERNANCE STRUCTURE

Board

The Board is ultimately responsible for the Group’s remuneration policy and applies it with the assistance of the Remuneration and Nominations Committee.

Remuneration and Nominations Committee

The Committee oversees the remuneration of executive Directors and divisional executives. It operates according to a formal Board mandate, which can be found on the Group's website www.mrpricegroup.com.

THE COMMITTEE IS COMPRISED OF THEFOLLOWING DIRECTORS:

• Mr MR Johnston (Chairman) Lead Independent non-executive Director• Mr K Getz Non-executive Director• Mr NG Payne Independent non-executive Director•Mr MJD Ruck Independent non-executive Director• Mr WJ Swain Independent non-executive Director

Other executive and non-executive parties attend the Committee meetings where appropriate, but no individual is present when their remuneration is discussed. Meeting attendance is disclosed under the Corporate Governance Report on page 65. The Chairman, Mr MR Johnston, attends the Annual General Meeting (AGM) and is available to answer shareholders’ questions regarding the remuneration policy, its application and the Committee’s activities.

Annual fees payable to Committee members during the 2013 financial year and approved at the AGM in August 2012 were:

• Chairman R107 000• Member R68 000

The Committee met 4 times during the year under review. In respect of its nominations activities, the philosophy guiding the Committee on Board appointments and annual evaluations as outlined in the Corporate Governance Report on pages 62 - 64. In satisfying its mandate in remuneration focused matters, the main activities undertaken were to:

• Approve base increases for general staff and senior management throughout the Group;• Approve, on the basis of the market benchmark exercise undertaken, the executive Director and divisional executive management remuneration, including the basis for determination of bonuses;• Propose non-executive Director fees for approval by shareholders at the AGM;• Review employment contracts of the Honorary Chairmen and approved remuneration payable in terms of the contracts;• Review the performance of the Chairman, executive Directors and divisional management;• Conduct an annual self-evaluation review, from which steps and targets for the improvement of processes and operational methods were agreed;• Review and update the mandate for approval at the Special Corporate Governance meeting in March 2013;• Review the Human Capital Management Project progress, which addressed the Group’s most crucial needs through the implementation of the workforce management, and payroll solutions;

• Review the responses received from shareholders to the 2012 Remuneration Report contained in the Annual Integrated Report and identified opportunities to improve the determining methodology and future disclosure;• Review all new allocations of shares and share options under the various share schemes operated by the Group; and• Review the efficacy of the existing share schemes and propose changes (as detailed on page 91).

PEOPLE DIVISION

The People Division is an integrated team responsible for implementing and monitoring human resources policies and processes. The Group People Director heads the division and, reporting directly to the CEO, attends divisional board meetings.

Key responsibilities include researching market trends in employee remuneration, benchmarking remuneration policies and practices to retail and other sectors and making remuneration recommendations to management. The main activities undertaken during the year under review were:

• Maintaining personalised communications to every associate, indicating in detail their total cost-to-company breakdown. This has allowed associates to fully understand the true value and benefit of their employment contract with the Group and is a key retention mechanism;• Communicating share scheme changes to associates and, where requested, the provision of externally conducted personal financial counseling for those associates receiving substantial share scheme payouts;• Assisted by PE Corporate Services SA, conducting a comprehensive and in-depth salary benchmarking exercise for key positions. This has allowed accurate external market comparisons by position, and detailed evaluation of internal remuneration equity across divisions. This exercise

confirmed that, relative to the market, the Group reimburses associates in line with its stated remuneration philosophy of basic salary and benefits at the median, supplemented by generous performance incentives and rewards;• A review of payroll processes and procedures leading to the selection and implementation of the VIP Payroll system, which will provide improved functionality in the processing and administration of pay and incentive schemes; and• Selection of a suitable workforce management system in order to improve store efficiency. After substantial research and due diligence, this resulted in the Ceridian Dayforce Labour Scheduling System being rolled out to 114 stores during the 2nd half of the year, with the remainder to follow in the new financial year.

EXECUTIVE DIRECTORS’ REMUNERATION

The Remuneration and Nominations Committee annually reviews executive Directors’ remuneration, set at the market median, to attract and retain the calibre required to successfully direct the Group’s business. In line with the remuneration philosophy, performance-related incentives form a material part of the remuneration package and share option awards align the Director and Group interest in attaining profitable long-term growth.

Where appropriate, the Company enters into restraint and retention agreements with key executives (including divisional executives) to secure their services. Historically, the Group has entered into 10 such contracts with certain executive Directors and certain divisional Directors. Although the retention elements of these contracts has expired, the restraint clauses remain, stipulating that the executive concerned cannot join a competing retailer in any capacity for 3 years after leaving the Group. The costs associated with these contracts have been fully expensed in prior years and the Company has not entered into any such contracts in the current or previous financial year.

*Considered to be prescribed officers


REMUNERATION REPORT

The increase in fees of 16.8% over the prior year is due to the appointments of an independent Chairman, Mr NG Payne (the previous Chairman was an executive Director), a new Director, Ms D Naidoo, and payment to Professor Larry Ring for consulting services performed prior to his retirement from the Board. If these appointments are excluded, the increase is 5.4%. Total executive and non-executive Director remuneration reflects a decrease of 15.6% over the prior year.

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NON-EXECUTIVE DIRECTORS’ REMUNERATION

Non-executive Directors’ fees, which comprise separate remuneration for Board activity and committee participation, are approved at the AGM. Every 2 years, the fees are benchmarked against a peer group which includes listed companies in the retail sector, certain Durban based companies and companies with a similar market capitalisation, and then proposed at the median. Increases in the intervening years are linked to the Group’s general inflationary salary increase percentage.

The Company does not pay an attendance fee per meeting, as historically, the attendance at meetings has been good and the performance of non-executive Directors is reviewed annually via peer evaluation. In addition, the Board has always felt that Directors contribute as much outside of meetings as they contribute within meetings. Proposed fees are detailed in the Notice of Meeting set out on pages 110 and 111 for approval at the forthcoming AGM. Non-executive Directors do not participate in any short-term incentive schemes and do not receive share option awards.

2013

Salary

Vehicle allowances & expenses

Pension contributions

Otherbenefits Fees

Total 2013

Total 2012

LJ Chiappini 1 902 303 472 86 431 3 194 3 017

SB Cohen 2 029 254 450 86 431 3 250 3 043

K Getz - - - - 377 377 254

MR Johnston - - - - 534 534 466

RM Motanyane - - - - 270 270 300

D Naidoo - - - - 279 279 -

NG Payne - - - - 1 000 1 000 470

LJ Ring - - - 202 - 202 -

MJD Ruck - - - - 372 372 396

SEN Sebotsa - - - - 84 84 190

WJ Swain - - - - 537 537 505

M Tembe - - - - 270 270 236

Total 3 931 557 922 374 4 585 10 369 8 877

The emoluments of non-executive Directors for the year were as follows (R'000):

2012

43% LONG-TERM INCENTIVE

30% SHORT-TERM INCENTIVE

27% SALARY &BENEFITS

52% LONG-TERM INCENTIVE

25% SHORT-TERM INCENTIVE

23% SALARY &BENEFITS

Composition of executive Directors' total remuneration for the year:

Det

ails

of

the

inte

rest

of

exec

utiv

e D

irec

tors

in s

hare

optio

ns a

re a

s fo

llow

s:


REMUNERATION REPORT

*1 A total fee for the non-executive Chairman was approved by the Remuneration and Nominations Committee in March 2013, which includes his duties as Chairman of both the Board and the Board Risk Committee.

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

2013 ACTUAL 2014 PROPOSED

BOARD OR COMMITTEE CHAIRMAN MEMBER CHAIRMAN MEMBER

Main Board 1 000 000 202 000 1 050 000 212 000

Main Board - Honorary Chairman 431 000 N/A 625 000 N/A

Main Board - Lead Independent Director 325 000 N/A 341 000 N/A

Audit and Compliance Committee 182 000 102 000 182 000 102 000

Board Risk Committee N/A 85 000 N/A*1 89 000

Remuneration and Nominations Committee 107 000 68 000 112 500 71 500

Social, Ethics, Transformation and Sustainability Committee

107 000 68 000 112 500 71 500

The Honorary Chairmen have employment contracts with the Company and the remuneration payable in terms of these contracts is decided by the Remuneration and Nominations Committee. Details explaining the role of the Honorary Chairmen, in support of their remuneration, are provided in the Corporate Governance Report on page 64. Their total remuneration will decrease over a 3 year period (commencing in the 2014 financial year) to the level that the Lead Director’s total fees are expected to be in 2016, which is approximately R625 000 per annum. This was calculated by applying an inflationary increase of 6% per annum to the proposed Lead Director’s total fees for the forthcoming year.

This has been implemented by increasing the Honorary Chairmen’s fees to R625 000 in 2014, a level which will remain unaltered until 2016. Commencing 1 April 2014, the balance of their remuneration, represented by the total cost to company less the fees of R625 000, will be reduced in annual installments to 2016. Therefore in 2016, the Honorary Chairmen’s salary and benefits will be Rnil, and their total remuneration, in the form of fees, will amount to R625 000.

PROPOSALS FOR FUTURE REMUNERATION POLICY

Many of the changes made to the Remuneration Policy and Practices are in response to constructive stakeholder engagement. The Group appreciates these external views and opinions and hopes that this interaction will continue.

FIXED REMUNERATION:No material changes are anticipated in the forthcoming year to base pay, medical aid benefits, car allowance and retirement benefits.

VARIABLE REMUNERATION:Short-term performance-related incentives.

The executive Director incentive scheme for the 2014 financial year will be enhanced to:

• Provide a better balance between short-term results and the achievement of key imperatives that will result in building a sustainable business, by incorporating the Group’s strategic plans; and• Ensure an appropriate mix between incentives payable at ‘target’ versus ‘stretch target’.

17%1 (2 MONTHS)GROUP KPI'sLONG-TERM

PERFORMANCE

83% (10 MONTHS)SHORT-TERM

PERFORMANCE

33%2 AT TARGET

67%STRETCH TARGETS

The revised structure would result in the following splits (excludes personal performance):

1 It is envisaged that the proportion allocated to the Group strategic KPI's being achieved will increase in future in line with the improved KPI measurement criteria that are currently being developed.

2 Based on HEPS growth target.

LONG-TERM INCENTIVES

THE FOLLOWING AMENDMENTS TO THE SHARE SCHEMES ARE PROPOSED:

• Reduction of the option awards closer to retirement date in respect of the General Staff and Senior Management Share Schemes. As the duties and work contributions of these participants are more short-term in nature than that of the participants in the executive and executive Director shares schemes, there is less of an enduring benefit and therefore options which vest well into retirement should not be awarded to the same extent as previously, as retirement approaches;

• Following a review by PwC, the Company is researching the feasibility of introducing a forfeitable share plan (FSP). FSP’s are an upfront award of shares which vest at a fixed future date and aid in incentivisation and retention. These types of schemes are becoming increasingly popular and only 18% of listed companies have option-only type share plans; and

• In light of share price performance since inception of the new share schemes in 2006, the Company has reduced the level of strike price discounts in respect of the senior management and executive share schemes and has applied more stringent criteria to the hurdle rates at which they apply. This will be further considered in 2014.


REMUNERATION REPORT

93

HONORARY CHAIRMAN

HONORARY CHAIRMAN

CHAIRMAN

LEAD INDEPENDENT DIRECTOR

CHIEF EXECUTIVE OFFICER

CHIEF FINANCIAL OFFICER

DIRECTOR

DIRECTOR

DIRECTOR

DIRECTOR

DIRECTOR

DIRECTOR

ALTERNATE DIRECTOR

ALTERNATE DIRECTOR

ALTERNATE DIRECTOR

STEWART COHEN

LAURIE CHIAPPINI

NIGEL PAYNE

BOBBY JOHNSTON

STUART BIRD

MARK BLAIR

KEITH GETZ

MAUD MOTANYANE

DAISY NAIDOO

MYLES RUCK

JOHN SWAIN

MOSES TEMBE

NEILL ABRAMS

TRACEY CHIAPPINI-YOUNG

STEVE ELLIS


BOARD OF DIRECTORS

- S T E W A R T C O H E N

6 years of service53 years of age

Nigel qualified as a CA(SA) and has an MBL degree. He joined the Board in 2007 and was appointed independent non-executive Chairman in January 2012. Nigel has no executive responsibilities in any company. He also holds non-executive directorships in:

• JSE Limited• The Bidvest Group Limited• Bidvest Bank Limited• BSi Steel Limited• Vukile Property Fund Limited• Strate Limited• Free State Maize (Pty) Ltd• PPS Insurance Company Limited

NIG

ELPA

YN

E

CHAIRMAN

BCom, LLB, MBA27 years of service68 years of age


LAU

RIE

CHIA

PPIN

I

HONORARYCHAIRMAN

STEW

ART

COH

EN

HONORARYCHAIRMAN

Founders Stewart Cohen and Laurie Chiappini both started out on shop floors and when they met in autumn 1979, a relationship evolved based on mutual trust and a positive vision. They felt clothing prices were too high and dreamt of a new kind of factory shop selling quality merchandise at substantially lower prices.

The very first Mr Price Apparel stores were opened as franchised operations in 1985. In 1986 Laurie and Stewart, in partnership with BOE, acquired John Orrs Limited, a JSE listed entity since 1952. The Miladys operations were retained but in less than 12 months, the John Orr’s Department Stores were disposed of, providing much needed capital for the acquisition of the franchised Mr Price stores and the expansion of corporate-owned stores. In 1991, Laurie and Stewart bought out BOE’s stake in the business, which was then operating under the name Specialty Stores Limited. In 2000, the name was changed to Mr Price Group Limited, reflecting the Group’s largest division.

Stewart and Laurie served as Joint Managing Directors of the Group until 1998, when they were appointed Joint Chairmen. In August 2010, they stepped into the role of Joint Honorary Chairmen, where they have served as advisors to both the Board and Management of the Group.

CA(SA) 19 years of service64 years of age

OTHER DIRECTORSHIPS INCLUDE:• JSE Limited• Strate Limited

LEAD INDEPENDENT

DIRECTOR

BOBB

YJO

HN

STO

N


Mark qualified as a CA(SA) in 1989 whereafter he worked for 2 years at the South African Revenue Services. In 1991 he joined H Lewis Trafalgar (Pty) Ltd as their Group Financial Manager. He held this position for 2 years before moving to Ernst & Young Inc in 1994. After working with the firm in both the Cape Town and Brisbane offices, he was made a Director in 1999 and Partner in their Durban office in 2001. He joined the Group and the Board in 2006 as an executive Director of Special Projects and after a year was appointed CFO.


Stuart qualified in both BAgric. Management and as a CA(SA). He joined the Group in 1993 and has accumulated in excess of 20 year’s retail experience to date. His first position with the Group, then known as Specialty Stores, was as Financial Director of the Hub division and he was then appointed Managing Director of the Hub in 1998. In 2000 he moved across to the Mr Price Apparel division, where he served as Managing Director until 2009. In March 2009 he was appointed Deputy CEO, and in August 2010 CEO of the Group.

MA

RK

BLA

IR

CHIEF FINANCIAL

OFFICER

STU

ART

BIRD

CHIEF EXECUTIVE OFFICER

BProc, LLM8 years of service57 years of age

OTHER DIRECTORSHIPS INCLUDE:• BVPG Consulting (Pty) Ltd• Steak Ranches International BV• Spur International Limited• Spur Corporation Limited• Spur Corporation UK Limited• Cape Union Mart Group (Pty) Ltd

DIRECTOR

KEITH GETZ

Diploma Library Science, WPI fellow 5 years of service61 years of age

OTHER DIRECTORSHIPS INCLUDE:• Kagiso Media• G4S Secure Solutions• G4S Aviation• Jet Education Trust

DIRECTOR

MAUD MOTANYANE

DIRECTOR

JOHNSWAIN

CA(SA) 19 years of service72 years of age

OTHER DIRECTORSHIPS INCLUDE:• The Sharks (Pty) Ltd

BA Public Administration and Political Science, Graduate of Caltex Business Management Programme (UCT) 5 years of service51 years of age

OTHER DIRECTORSHIPS INCLUDE:• Beige Holdings Limited• Crescendo Management Services• Geochem (Pty) Ltd• Ocs (SA) (Pty) Ltd

DIRECTOR

MOSESTEMBE

DIRECTOR

DAISYNAIDOOCA(SA), MCom (Tax)1 year of service40 years of age

OTHER DIRECTORSHIPS INCLUDE:• Strate Limited • Hudaco Industries Limited• OMNIA Holdings Limited• Marriott Unit Trust Management Company Limited• Old Mutual Unit Trust Managers Limited • Mercantile Bank Holdings Limited

BBusSc, PMD (Harvard)6 years of service57 years of age

OTHER DIRECTORSHIPS INCLUDE:• Standard Bank Group Limited• The Standard Bank of South Africa Limited• Standard Bank Argentina SA• Aveng Limited

DIRECTOR

MYLESRUCK

ALTERNATE DIRECTOR

TRACEYCHIAPPINI-YOUNG

ALTERNATE DIRECTOR

STEVEELLIS

ALTERNATE DIRECTOR

NEILLABRAMS

CA(SA)21 years of service51 years of age

Steve qualified as a CA(SA) in 1986 whereafter he worked for 4 years at the South African Revenue Services. He spent 18 months with Ernst & Young Inc in London before joining the Group as Deputy Group CFO in 1992. He subsequently held the positions of MD of Mr Price Apparel, Chief Retail Officer, Joint Group MD, Chief Information Officer and is currently Group Supply Chain Director.

BA, LLB (Wits), LLM (Cambridge)3 years of service48 years of age

OTHER DIRECTORSHIPS INCLUDE:• Ocado Group Plc• Ocado Limited• Ocado Polska SP. Z.o.o

BBusSci (UCT), CFA, Associate in Applied Science (FIT), TRIUM EMBA (NYU, HEC, LSE)3 years of service41 years of age

OTHER DIRECTORSHIPS INCLUDE:• Taunina (Pty) Ltd• Taunina LLC


DECLARATION OF FINAL CASH DIVIDEND 95

DECLARATION OF FINAL CASH DIVIDENDfor the 52 week period ended 30 March 2013

Notice is hereby given that a final cash dividend of 265.0 cents per share has been declared, an increase of 20.2% As the dividend has been declared from income reserves and no STC credits are available for utilisation, shareholders, unless exempt or who qualify for a reduced withholding tax rate, will receive a net dividend of 225.25 cents per share.

The issued share capital at the declaration date is 251 183 867 listed ordinary and 13 445 081 unlisted B ordinary shares. The tax reference number is 9285/130/20/0. THE FOLLOWING DATES ARE APPLICABLE: Last date to trade ‘cum’ the dividend Thursday 13 June 2013Shares trade ‘ex’ the dividend Friday 14 June 2013Record date Friday 21 June 2013Payment to shareholders on Monday 24 June 2013

Shareholders may not dematerialise or rematerialise their share certificates between Friday, 14 June 2013 and Friday, 21 June 2013, both dates inclusive.

SHAREHOLDER INFORMATIONfor the 52 week period ended 30 March 2013

Shareholders’ diary May Announcement of annual results and declaration of final dividend to shareholders June Publication of 2013 Annual Integrated Report Settlement of final dividend to shareholders August Annual General Meeting of shareholders November Announcement of interim dividend to shareholders Publication of interim report covering the 26 weeks ended 28 September 2013 December Settlement of interim dividend to shareholders

ORDINARY AND B ORDINARY SHARE OWNERSHIP AS AT 30 MARCH 2013

Ordinary shares B ordinary shares Number of Number of Number of Number of Holdings shareholders % shares % shareholders % shares % 1 - 1 000 11 039 65.89 4 390 335 1.75 1 20.00 200 0.001 001 - 10 000 4 785 28.56 14 361 855 5.72 10 001 - 100 000 736 4.39 20 675 052 8.23 100 001 - 1 000 000 160 0.95 51 497 525 20.50 1 000 001 and over 35 0.21 160 259 100 63.80 4 80.00 13 444 881 100.00 16 755 100.00 251 183 867 100.00 5 100.00 13 445 081 100.00 Number of Number of Number of Number of Category shareholders % shares % shareholders % shares % Pension funds 150 0.90 43 563 329 17.35 Nominee companies

and corporate bodies 1 465 8.74 151 826 724 60.44 Individuals and trusts 15 133 90.32 36 933 473 14.70 5 100.00 13 445 081 100.00Staff share schemes 7 0.04 18 860 341 7.51 16 755 100.00 251 183 867 100.00 5 100.00 13 445 081 100.00

Public and non-public shareholdersAt 30 March 2013, the percentage direct or indirect shareholdings of public and non-public shareholders in the listed ordinary shares of the Company was as follows: Number of % holding shareholders Public shareholders 16 719 66.02Non-public shareholders 36 33.98Shareholders holding more than 10%* 12 25.83Directors of the Company or its subsidiaries 17 0.64Trustees of employees’ share schemes or retirement benefit schemes** 7 7.51 *7 underlying shareholders under Public Investment Corporation Limited and 5 underlying shareholders under American Funds.**7 underlying shareholders constitute the overall shareholdings of Mr Price Share Trusts. Major shareholders To the Company’s best knowledge and belief, the following shareholders or fund managers held discretionary beneficial interest and/or administered client portfolios amounting to 5% or more of the issued ordinary shares of the company at 30 March 2013:

Beneficial holding Portfolio administration Discretionary

% Shares % Shares

Public Investment Corporation 15.16 38 090 688 - - American Funds 10.67 26 793 323 - - Mr Price Share Trusts 7.51 18 860 341 - -

Details of the beneficial interest in B ordinary shares are reflected on page 101.

97MR PRICE GROUP LIMITEDANNUAL INTEGRATED REPORT 2013

REPORT OF THE INDEPENDENT AUDITORfor the 52 week period ended 30 March 2013

APPROVAL OF THE ANNUAL FINANCIAL STATEMENTSfor the 52 week period ended 30 March 2013

The preparation and presentation of the Annual Financial Statements (as published on the Group’s website) and all information included in this Annual Integrated Report are the responsibility of the Directors. The information provided in this Annual Integrated Report has been derived from the audited Annual Financial Statements which were prepared in accordance with the provisions of the Companies Act and complies with International Financial Reporting Standards and the AC 500 Standards as issued by the Accounting Practices Board and its successors. In discharging their responsibilities, both for the integrity and fairness of these statements, the Directors rely on the internal controls and the risk management procedures applied by management.

Based on the information and explanations given by management and the internal auditors and on comment by the independent auditor on the results of their statutory audit, the Directors are of the opinion that:

• the internal controls are adequate;• the financial records may be relied upon in the preparation of the Annual Financial Statements;• appropriate accounting policies, supported by reasonable and prudent judgements and estimates, have been applied; and• the Annual Financial Statements fairly present the results and the financial position of the Company and the Group.

The Annual Financial Statements are prepared on the going concern basis and nothing has come to the attention of the Directors to indicate that the Company and the Group will not remain a going concern.

The abridged and detailed Annual Financial Statements have been prepared under the supervision of the Chief Financial Officer, Mr MM Blair, CA(SA). Included hereafter are the abridged Annual Financial Statements which summarises the detailed Audited Financial Statements as at 30 March 2013. The Annual Financial Statements of the Company and the Group were approved by the Board of Directors on 22 May 2013 and are signed on its behalf by:

The report of the independent auditor can be found on page 5 of the Annual Financial Statements which are located on Mr Price Group Limited’s website: www.mrpricegroup.com.

COMPANY SECRETARY STATEMENT

I hereby certify that the Company has lodged with the Companies and Intellectual Property Commission all such returns as are required of a public company in terms of the Companies Act and that all such returns are true, correct and up to date.

SI BirdChief Executive Officer

NG PayneChairman

HE GrosvenorCompany Secretary

22 May 2013


REPORT OF THE DIRECTORS 99CONSOLIDATED ENTITIES

The aggregate amount of Group profits and losses after taxation attributable to consolidated entities was:

R’000 2013 2012

Profits 122 525 90 121Losses (3 005) (2) 119 520 90 119

NET SHAREHOLDERS’ EQUITY

Authorised and issued share capital

There were no changes in the authorised share capital during the year. During the year, 1 433 457 B ordinary shares were converted to ordinary shares on a one-for-one basis.

SUBSEQUENT EVENTS

No events, material to the understanding of this report, have occurred between the financial year end and the date of this report.

DIRECTORATE

The following changes in the directorate of the Company took place during the year:

Ms D Naidoo was appointed as a non-executive Director on 16 May 2012.

In terms of the Company’s articles of association, LJ Chiappini, MR Johnston, NG Payne and RM Motanyane retired by rotation as Directors and were re-elected at the Annual General Meeting of the Company on 30 August 2012.

Ms SEN Sebotsa retired as a non-executive Director on 30 August 2012.

Prof. LJ Ring retired as an alternate non-executive Director on 30 March 2013.

Particulars of the present Directors and Company Secretary are provided on pages 93 and 64 respectively of the integrated report. None of the Directors have long-term service contracts with the Company or any of its consolidated entities.

EMOLUMENTS

Details of emoluments paid to executive and non-executive Directors are set out in the Remuneration Report on pages 87 and 89.

REPORT OF THE DIRECTORSfor the 52 week period ended 30 March 2013

NATURE OF BUSINESS

The main business of the Group is retail distribution through 1 029 corporate-owned and 26 franchised stores in Africa. The retail chains focus on clothing, footwear, sportswear, sporting goods, accessories and homeware. Refer to pages 46 to 59 for more detailed information.


The Directors subscribe to the values of good corporate governance as set out in the King Code of Governance for South Africa 2009 (King III). By supporting the Code, the Directors have recognised the need to conduct the business with integrity and to account to stakeholders in accordance with International Financial Reporting Standards.

RETAIL CALENDAR

The Group reports on the retail calendar of trading weeks incorporating trade from Sunday to Saturday each week. Accordingly the results for the financial year under review are for a 52 week period from 1 April 2012 to 30 March 2013 (2012: 52 week period from 3 April 2011 to 31 March 2012).

FINANCIAL RESULTS

The financial results of the Group are set out in the statement of comprehensive income on page 103.

DIVIDENDS

Ordinary and B ordinary dividends

It is the Group’s policy to make 2 dividend payments each year, an interim in December and a final in June.

Interim: A cash dividend of 133.0 cents per share (2012: 93.6 cents per share) was made payable on 18 December 2012 to shareholders registered on 14 December 2012.

Final: A cash dividend of 265.0 cents per share (2012: 220.4 cents per share) has been declared, payable on 24 June 2013 to shareholders registered on 21 June 2013.

REPORT OFTHE DIRECTORS


REPORT OF THE DIRECTORS 101R

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l iss

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ordi

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es

25

1 18

3 86

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2

49 7

50 4

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NO

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ing

the

year

, 1 4

33 4

57 B

ord

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ares

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rdin

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shar

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n a

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for-o

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resu

lting

in a

dec

reas

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the

B-or

dina

ry is

sued

cap

ital

and

a co

rresp

ondi

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crea

se in

the

ordi

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re c

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1 39

7 81

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ordi

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not d

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long

to:

- (

a) tr

usts

(1 3

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hare

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f whi

ch M

r MR

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ston’

s m

ajor

chi

ldre

n ar

e be

nefic

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s. M

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hnsto

n ha

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dire

ct o

r ind

irect

ben

efici

al o

wne

rshi

p in

thes

e sh

ares

and

has

relin

quish

ed a

ll vo

ting

right

s th

eret

o; a

nd

- (

b) M

r AE

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(200

sha

res)

.

3.

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e ha

ve b

een

no c

hang

es in

the

abov

e in

tere

sts b

etw

een

the

year

end

and

the

date

of a

ppro

val o

f the

se fi

nanc

ial s

tate

men

ts.

NO

TES:

1.

Retir

ed a

s A

ltern

ate

Dire

ctor

on

30 M

arch

201

3.

2.

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s D

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n 30

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dire

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ld b

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Held

by

2012

be

nefic

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bene

ficia

las

socia

teTo

tal

%be

nefic

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bene

ficia

las

socia

teTo

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%

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ry sh

ares

LJ Ch

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-6

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3-

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8-

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845

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000

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8-

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ston

--

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--

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rdin

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38


ABRIDGED FINANCIAL STATEMENTSABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITIONas at 30 March 2013

ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the 52 week period ended 30 March 2013

Group 2013 2012 R’m R’m

Revenue 13 720 12 122

Retail sales and other income 13 664 12 062

Interest received 56 60

Retail sales and other income 13 664 12 062

Retail sales 13 266 11 767

Interest on trade receivables 261 197

Premium income 106 71

Club fees 12 12

Service fee revenue 8 8

Other revenue 11 7

Costs and expenses 11 592 10 321

Cost of sales 7 664 6 843

Selling expenses 2 996 2 646

Administrative and other operating expenses 932 832

Profit from operating activities 2 072 1 741

Finance costs - (15)

Finance interest received 56 60

Profit before taxation 2 128 1 786

Taxation 591 569

Profit attributable to shareholders 1 537 1 217

Other comprehensive income

Currency translation adjustments 6 (3)

Defined benefit fund actuarial gains/(losses) 3 (7)

Deferred taxation thereon (1) 2

Total comprehensive income for the year 1 545 1 209

Earnings per share cents per cents per % share share change

Basic 627.6 500.9 25.3

Headline 635.5 503.0 26.3

Diluted basic 577.6 462.5 24.9

Diluted headline 584.8 464.5 25.9

The calculation of basic and headline earnings per share is based on:

Basic earnings - profit attributable to shareholders 1 537 1 217

Loss on disposal, scrapping and impairment of property, plant and equipment and intangible assets 27 7

Taxation (7) (2)

Headline earnings 1 557 1 222

Group 2013 2012 R’m R’m

Assets

Non-current assets 927 744

Property, plant and equipment 660 540

Intangible assets 105 102

Long-term receivables 8 10

Defined benefit fund asset 20 16

Deferred taxation assets 134 76

Current assets 3 970 3 552

Inventories 1 236 1 168

Trade and other receivables 1 513 1 183

Cash and cash equivalents 1 221 1 201

Total assets 4 897 4 296

Equity and liabilities

Equity attributable to shareholders 3 316 2 781

Capital reserves 169 141

Treasury share transactions (1 059) (869)

Retained income 4 223 3 537

Foreign currency translation reserve (16) (22)

Defined benefit fund actuarial gains and losses (8) (10)

Insurance reserve 7 4

Non-current liabilities 206 195

Lease obligations 179 171

Deferred taxation liabilities 5 1

Long-term provisions 6 8

Post retirement medical benefits 16 15

Current liabilities 1 375 1 320

Trade and other payables 1 276 1 234

Current provisions 4 6

Current portion of lease obligations 34 29

Taxation 61 51

Total equity and liabilities 4 897 4 296


ABRIDGED FINANCIAL STATEMENTS

Group 2013 2012 R’m R’m

Cash flows from operating activities Operating profit before working capital changes 2 127 1 850 Working capital changes (386) (517) Cash generated from operations 1 741 1 333 Interest on trade receivables 261 197 Net finance income received 56 45 Taxation paid (607) (516)

Net cash inflows from operating activities 1 451 1 059 Cash flows from investing activities

Net inflows/(outflows) in respect of long-term receivables 2 (10)

Replacement of intangible assets (5) (6)

Additions to intangible assets (44) (43)

Replacement of property, plant and equipment (173) (127)

Additions to property, plant and equipment (116) (126)

Proceeds on disposal of property, plant and equipment 1 1

Net cash outflows from investing activities (335) (311)

Cash flows from financing activities Decrease in short-term liability - (10) Dividends to shareholders (888) (670)Treasury share transactions (213) (233)

Net cash outflows from financing activities (1 101) (913) Net increase/(decrease) in cash and cash equivalents 15 (165) Cash and cash equivalents at beginning of the year 1 201 1 369 Exchange gains/(losses) 5 (3)Cash and cash equivalents at end of the year 1 221 1 201

ABRIDGED CONSOLIDATED STATEMENTOF CASH FLOWSfor the 52 week period ended 30 March 2013


ABRIDGED FINANCIAL STATEMENTS

Tr

easu

ry s

hare

tra

nsac

tio

ns

P

articipa

nts

Deficit

Taxation

De

fined

in

Shared

-Tre

asury

on

relating

to

Foreign

be

nefitfu

nd

staffshare

based

shares

treasury

grantsto

curre

ncy

actua

rial

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are

investm

entpayments

at

share

share

translation

gain

sIns

urance

Retaine

d

R’m

prem

ium

trust

reserve

cost

transactions

trusts

reserve

and los

ses

reserve

incom

eTo

tal

Bala

nce

at 2

Apr

il 20

11

1

2

10

14

6

(528

) (1

79)

44

(1

9)

(5)

4

2 91

0

2 39

5

Tota

l com

preh

ensiv

e in

com

e

(3)

(5)

1

217

1

209

Profi

t for

the

year

1

217

1

217

Oth

er c

ompr

ehen

sive

inco

me:

(3)

(5)

(8)

Cur

r enc

y tra

nsla

tion

adju

stmen

ts

(3)

(3

)De

fined

ben

efit f

und

actu

aria

l los

ses

(7)

(7

)De

ferre

d ta

xatio

n th

ereo

n

2

2

Trea

sury

shar

es a

cqui

red

(260

)

(2

60)

Taxa

tion

rela

ting

to g

rant

s to

shar

e tru

sts

32

32

Ef

fect

of c

onso

lidat

ion

of st

aff s

hare

trus

ts

5

(5

)

-

Defic

it on

trea

sury

shar

e tra

nsac

tions

(81)

(81)

Re

cogn

ition

of sh

are-

base

d pa

ymen

ts

48

4

8 Sh

are-

base

d pa

ymen

ts re

serv

e re

leas

ed to

reta

ined

inco

me

for v

este

d op

tions

(80)

80

-

Trea

sury

shar

es so

ld

108

1

08

2011

fina

l divi

dend

to sh

areh

olde

rs

(436

) (4

36)

2012

inte

rim d

ivide

nd to

shar

ehol

ders

(2

34)

(234

)

Bala

nce

at 3

1 M

arch

201

2

12

1

5

114

(6

85)

(260

) 7

6

(22)

(1

0)

4

3 53

7

2 78

1

Tota

l com

preh

ensiv

e in

com

e

6

2

3

1 53

4

1 54

5

Profi

t for

the

year

1

537

1

537

Oth

er c

ompr

ehen

sive

inco

me:

6 2

3 (3

) 8

Cur

renc

y tra

nsla

tion

adju

stmen

ts

6

6

Incr

ease

in in

sura

nce

rese

rve

3

(3

) -

Defin

ed b

enefi

t fun

d ac

tuar

ial g

ains

3

3

De

ferre

d ta

xatio

n th

ereo

n

(1

)

(1

)

Trea

sury

shar

es a

cqui

red

(279

)

(2

79)

Taxa

tion

rela

ting

to g

rant

s to

shar

e tru

sts

29

2

9

Effe

ct o

f con

solid

atio

n of

staf

f sha

re tr

usts

5

(5)

-De

ficit

on tr

easu

ry sh

are

trans

actio

ns

(1

13)

(1

13)

Reco

gnitio

n of

shar

e-ba

sed

paym

ents

63

63

Sh

are-

base

d pa

ymen

ts re

serv

e re

leas

ed to

reta

ined

inco

me

for v

este

d op

tions

(40)

40

-

Trea

sury

shar

es so

ld

178

17

8 20

12 fi

nal d

ivide

nd to

shar

ehol

ders

(5

51)

(551

)20

13 in

terim

divi

dend

to sh

areh

olde

rs

(337

) (3

37)

Bala

nce

at 3

0 M

arch

201

3

12

2

0

137

(7

91)

(373

) 1

05

(16)

(8

) 7

4

223

3

316

AB

RID

GED

CO

NSO

LID

ATE

D S

TATE

MEN

T O

F C

HA

NG

ES IN

EQ

UIT

Yfo

r the

52

wee

k pe

riod

ende

d 30

Mar

ch 2

013

Appa

rel

Hom

e C

entr

al S

ervi

ces

Elim

inat

ions

T

otal

20

13

2012

20

13

2012

20

13

2012

2

013

2012

20

13

2012

R’m

R’

m

R’m

R’

m

R’m

R’

m

R’m

R’

m

R’m

R’

m

Re

venu

e

9

759

8 67

3 3

893

3 37

9 15

6 1

45

(144

) (1

35)

13 6

64

12

062

Ex

tern

al

9 75

9 8

673

3 89

3 3

379

12

10

-

- 13

664

1

2 06

2

In

tern

al

- -

- -

144

13

5 (1

44)

(135

) -

-

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ofit f

rom

ope

ratin

g ac

tivitie

s

1

728

1 51

5 4

92

373

(148

) (1

47)

- -

2 07

2 1

741

N

et fi

nanc

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com

e

56

45

Pr

ofit b

efor

e ta

xatio

n

2 12

8 1

786

Ta

xatio

n

59

1 5

69

Pr

ofit a

ttrib

utab

le to

shar

ehol

ders

1

537

1 2

17

Di

visio

nal a

sset

s

2 51

0 2

102

721

657

1 66

6 1

537

- -

4 89

7 4

296

Di

visio

nal l

iabi

lities

903

908

482

451

201

160

(5

) (4

) 1

581

1 5

15

C

apita

l exp

endi

ture

174

124

45

43

119

135

- -

3

38

302

De

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d am

ortis

atio

n

89

86

38

43

62

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-

- 18

9 1

90

G

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cal s

egm

ents

Sout

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fric

a O

ther

Afr

ica

Tot

al

20

13

2012

2

013

2012

20

13

2012

R’m

R’

m

R’m

R’

m

R’m

R’

m

Re

venu

e

12

946

11

513

71

8 54

9 13

664

12

062

As

sets

4 59

5 4

075

302

22

1 4

897

4 2

96

C

apita

l exp

endi

ture

326

292

12

10

338

302

OP

ERA

TIN

G S

EGM

ENTS

for t

he 5

2 w

eek

perio

d en

ded

30 M

arch

201

3

Busi

ness

seg

men

ts

For m

anag

emen

t pur

pose

s, th

e G

roup

is o

rgan

ised

into

bus

ines

s un

its b

ased

on

thei

r pro

duct

s an

d se

rvic

es, a

nd h

as 3

repo

rtabl

e se

gmen

ts as

follo

ws:

– Th

e A

ppar

el s

egm

ent r

etai

ls cl

othi

ng, s

ports

wea

r, fo

otw

ear,

spor

ting

equi

pmen

t and

acc

esso

ries;

– Th

e H

ome

segm

ent r

etai

ls ho

mew

are;

and

– Th

e C

entra

l Ser

vice

s se

gmen

t pro

vide

s se

rvic

es to

the

tradi

ng s

egm

ents

incl

udin

g in

form

atio

n te

chno

logy

, int

erna

l aud

it, h

uman

reso

urce

s, g

roup

real

est

ate

and

finan

ce.

Man

agem

ent m

onito

rs th

e op

erat

ing

resu

lts o

f its

busin

ess

units

sep

arat

ely

for t

he p

urpo

se o

f mak

ing

deci

sions

abo

ut re

sour

ce a

lloca

tion

and

perfo

rman

ce a

sses

smen

t. Se

gmen

t per

form

ance

is e

valu

ated

bas

ed o

n op

erat

ing

profi

t or l

oss.

Net

fina

nce

inco

me

and

inco

me

taxe

s ar

e m

anag

ed o

n a

Gro

up b

asis

and

are

not a

lloca

ted

to o

pera

ting

segm

ents.


DEFINITIONS AND GLOSSARYADMINISTRATION AND CONTACT DETAILS 109DEFINITIONS AND GLOSSARY

AMPS - A measure of through-the-door shoppers

B-BBEE - Broad-Based Black Economic Empowerment

CAGR - Compound annual growth rate

Comparable sales - Like-for-like location store sales

DC - Distribution Centre

DPS - Dividends per share

ERP - Enterprise Resource Planning

Gross margin - Gross profit as a percentage of retail sales

HCM - Human Capital Management

HEPS - Headline earnings per share

Inventory turn - Cost of sales as a ratio of average inventories

JSE - Johannesburg Stock Exchange

LSM - Living Standard Measures

MPC - Mr Price Group

Operating margin - Profit from operating activities as a percentage of retail sales

PMO - Price mark on

Return on average shareholders equity - Headline earnings attributable to ordinary and B ordinary shareholders as a percentage of average equity attributable to shareholders

Return on net worth - Profit attributable to shareholders as a percentage of equity attributable to shareholders

Return on operating assets - Profit from operating activities as a percentage of average equity attributable to shareholders and interest-bearing loan finance

Sales density - Retail sales per weighted average net square metre

Company Secretary and registered office

Mrs HE GrosvenorUpper Level, North Concourse,65 Masabalala Yengwa Avenue, Durban, 4001.PO Box 912, Durban, 4000.

Registration number

1933/004418/06

Domicile and country of incorporation

Republic of South Africa

Transfer secretaries

Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001. PO Box 61051, Marshalltown, 2107.

Independent auditor

Ernst & Young Inc.

Bankers

ABSA Bank Limited The Standard Bank of South Africa LimitedFirst National Bank (A division of FirstRand Bank Limited)Investec Bank Limited

Sponsor

Rand Merchant Bank (A division of FirstRand Bank Limited)

Corporate, Mr Price Apparel, Mr Price Home, Mr Price Sport, Sheet Street, Mr Price International, RedCap Foundation and RedCap Sport

Upper Level, North Concourse, 65 Masabalala Yengwa Avenue, Durban, 4001. Private Bag X04, Snell Parade, Durban, 4074.

Miladys

30 Station Drive, Durban, 4001.PO Box 3562, Durban, 4000.

Financial Services

380 Dr Pixley KaSeme Street Durban, 4001.PO Box 4996, Durban, 4000.

Whistle Blowers

PO Box 51006, Musgrave, 4062.

Phone numbers

Corporate : (031) 310 8000Mr Price Apparel : (031) 310 8638Mr Price Home : (031) 310 8809Mr Price Sport : (031) 310 8545Sheet Street : (031) 310 8300Miladys : (031) 313 5500Financial Services : (031) 367 3311RedCap Foundation : (031) 310 8242RedCap Sport : (031) 367 9570Mr Price International : (031) 310 8038Whistle Blowers : 0860 005 111Customer Care line : 0800 212 535Account Services : 0861 066 639

Fax numbers

Corporate : (031) 304 3725Mr Price Apparel : (031) 304 3358Mr Price Home : (031) 328 4138Mr Price Sport : (031) 306 9347Sheet Street : (031) 310 8317 Miladys : (031) 313 5620Financial Services : (031) 306 0164RedCap Foundation : (031) 328 4609

Websites

Corporate : www.mrpricegroup.comMr Price Apparel : www.mrp.comMr Price Sport : www.mrpricesport.co.zaMiladys : www.miladys.co.zaMr Price Home : www.mrpricehome.co.zaSheet Street : www.sheetstreet.co.zaRedCap Foundation : www.redcapfoundation.orgRedCap Sport : www.redcapsport.orgMr Price blog : www.inthefashionloop.comFinancial Services : www.mrpricemoney.co.zaWhistle Blowers : www.whistleblowing.co.zaCareers : www.mrpricegroup.careers.comTwitter : www.twitter.com/MrPriceFashion/Facebook : www.facebook.com/mrpriceofficial


NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 80th Annual General Meeting of shareholders will be held in the boardroom of the Company, Upper Level, North Concourse, 65 Masabalala Yengwa Avenue, Durban on Wednesday 21 August 2013 at 14h30. The following business will be conducted and resolutions proposed, considered and, if deemed fit, passed with or without modification:●1. Ordinary resolution No. 1 – Adoption of the Annual Financial Statements“Resolved that the Annual Financial Statements for the 52 weeks ended 30 March 2013, incorporating the Report of the Directors and the Report of the Audit and Compliance Committee, having been considered, be adopted.”

●2. Ordinary resolution No. 2.1 to No. 2.4 – Re-election of Directors retiring by rotation“Resolved to re-elect, each by way of a separate vote, the following non-executive Directors, who retire by rotation in terms of the Company’s Memorandum of Incorporation (MOI), but being eligible, offer themselves for re-election:

2.1 Mr K Getz;2.2 Mr MR Johnston;2.3 Mr MJD Ruck; and2.4 Mr M Tembe.”

Abbreviated biographical details of the above Directors are set out on page 93 of this Annual Integrated Report.

●3. Ordinary resolution No. 3.1 to No. 3.3 – Election of retiring alternate Directors“Resolved to elect, each by way of a separate vote, all of the alternate Directors, who retire but who, being eligible, offer themselves for election in terms of Section 66 (4)(b) of the Companies Act 71 of 2008 (“the Act”). Such alternate Directors are:

3.1 Mr N Abrams (alternate to Mr SB Cohen);3.2 Mrs TA Chiappini-Young (alternate to Mr LJ Chiappini); and3.3 Mr SA Ellis (alternate to Mr MM Blair).”

Abbreviated biographical details of the above Alternate Directors are set out on page 93 of this Annual Integrated Report.

●4. Ordinary resolution No. 4 – Re-election of independent auditor“Resolved that, as recommended by the Audit and Compliance Committee, Ernst & Young Inc. be re-elected as the independent registered auditor of the Company for the ensuing year.”

●5. Ordinary resolution No. 5.1 to No. 5.4 – Election of members of the Audit and Compliance Committee“Resolved that, subject to the passing of ordinary resolutions 2.2 and 2.3, the following independent non-executive Directors be elected, each by way of a separate vote, as members of the Audit and Compliance Committee of the Company for the period from 22 August 2013 until the conclusion of the next Annual General Meeting of the Company:

5.1 Mr MR Johnston;5.2 Ms D Naidoo; 5.3 Mr MJD Ruck; and 5.4 Mr WJ Swain.”

Abbreviated biographical details of the above Directors are set out on page 93 of this Annual Integrated Report.

●6. Ordinary resolution No. 6 – Non-binding advisory vote on the Remuneration Policy of the Company“Resolved that in terms of the recommendations of the King Code of Governance for South Africa 2009 (King III), the Remuneration Policy of the Company, as set out on pages 80 to 91 of this Annual Integrated Report under the heading “Remuneration Report” be and is hereby adopted.”

●7. Ordinary resolution No. 7 – Adoption of the Report of the Social, Ethics, Transformation and Sustainability Committee“Resolved that the Report of the Social, Ethics, Transformation and Substainability Committee, as set out on pages 74 to 77 of this Annual Integrated Report, be and is hereby adopted.”

●8. Ordinary resolution No. 8 – Signature of documents“Resolved that any one Director or the Secretary of the Company be and are hereby authorised to do all such things and sign all documents and take all such action as they consider necessary to implement the resolutions set out in the notice convening this Annual General Meeting at which this ordinary resolution will be considered.”

●9. Special Resolution No.1.1 to No. 1.11 – Remuneration of non-executive Directors “Resolved that the annual remuneration of each non-executive Director of the Company be approved, as a special resolution in terms of Section

66 of the Act, with effect from 1 April 2013 as follows: 1.1 Independent non-executive Chairman of the Company1 R1 050 0001.2 Honorary Chairman of the Company2 R625 0001.3 Lead Director of the Company R341 0001.4 Other Director of the Company R212 0001.5 Chairman of the Audit and Compliance Committee R182 0001.6 Member of the Audit and Compliance Committee R102 000

1.7 Member of the Board Risk Committee R89 0001.8 Chairman of the Remuneration and Nominations Committee R112 5001.9 Member of the Remuneration and Nominations Committee R71 5001.10 Chairman of the Social, Ethics, Transformation and Sustainability Committee R112 5001.11 Member of the Social, Ethics, Transformation and Sustainability Committee R71 500

Notes1 The Chairman’s fee is inclusive of a fee for his services as Chairman of the Board Risk Committee.2 In addition to the above fee structure, the Honorary Chairmen have employment contracts with the Company and the remuneration payable in terms of these contracts is decided by the Remuneration and Nominations Committee and is reported retrospectively in the Annual Integrated Report. Refer to page 90 for additional information.

Reason and effect

The reason for and effect of special resolutions number 1.1 to 1.11 is to grant the Company the authority to pay fees to its non-executive Directors for their services as Directors, in line with the recommendations of King III and the Act.

●10. Special resolution No. 2 – General authority to repurchase shares “Resolved that the Board of Directors of the Company be and is hereby authorised, by way of a renewable general authority, to approve the

purchase from time to time of its own issued ordinary shares by the Company, or approve the purchase of ordinary shares in the Company by any subsidiary of the Company upon such terms and conditions and in such amounts as the Directors of the Company may from time to time determine, but always subject to the provisions of the Act, the MOI and the Listings Requirements of the JSE, when applicable, and any other relevant authority, provided that:a) a resolution has been passed by the Board of Directors confirming that the Board has authorised the general repurchase, that the

Company passed the solvency and liquidity test and that since the test was done, there have been no material changes to the financial position of the Company;

b) the Company is authorised by shareholders in terms of a special resolution of the Company in a general meeting, which authorisation shall be valid only until the next Annual General Meeting, provided it shall not extend beyond 15 months from the date of passing of this special resolution;

c) the general repurchase of securities will be affected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between the Company and the counter party (reported trades prohibited);

d) in determining the price at which the Company’s ordinary shares are acquired by the Company in terms of this general authority, the maximum premium at which such ordinary shares may be acquired will be 10% of the weighted average of the market value of the Company’s securities over the five business days immediately preceding the date of the repurchase of such ordinary shares by the Company. The JSE should be consulted for a ruling if the Company’s securities have not traded in such five business day period;

e) the acquisition of ordinary shares in aggregate in any one financial year does not exceed 20% of the Company’s issued ordinary share capital in that financial year;

f) the Company or consolidated entity are not repurchasing securities during a prohibited period as defined in paragraph 3.67 of the Listings Requirements of the JSE unless they have in place a repurchase programme where the dates and quantities of the Company’s securities to be traded during the relevant period are fixed (not subject to any variation) and full details of the programme have been disclosed in an announcement on SENS prior to the commencement of the prohibited period;

g) when the Company has cumulatively repurchased 3% of the initial number of the relevant class of securities, and for each 3% in aggregate of the initial number of that class acquired thereafter, an announcement will be made;

h) at any point in time, the Company will only appoint one agent to effect any repurchase(s) on its behalf;i) any such general repurchases are subject to exchange control regulations and approval at that point in time; and j) the number of shares purchased and held by a consolidated entity or consolidated entities of the Company shall not exceed 10%

in the aggregate of the number of issued shares in the Company at the relevant times.”

Reason and effect

The reason for and effect of special resolution number 2 is to authorise the Company and/or any consolidated entity of the Company, by way of general approval, to acquire the Company’s issued shares on the terms and conditions and in such amounts to be determined from time to time by the Directors of the Company, subject to the limitations set out above.

Statement of Board’s intentionThe Directors of the Company have no specific intention to effect the provisions of the special resolution but will, however, continually review the Group’s position, having regard to prevailing circumstances and market conditions, in considering whether to effect the provisions of the special resolution.

Statement of DirectorsAs at the date of this Annual Integrated Report, the Company’s Directors undertake that, having considered the effect of repurchasing the maximum number of shares (as contemplated in special resolution number 2), they will not implement any such repurchase unless for a period of 12 months following the date of the general repurchase:

a) the Company and the Group are in a position to repay its’ debts in the ordinary course of business;b) the assets of the Company and the Group, being fairly valued in accordance with International Financial Reporting Standards,

are in excess of the liabilities of the Company and the Group;c) the share capital and reserves of the Company and the Group are adequate for ordinary business purposes;d) the available working capital is adequate to continue the ordinary business purposes of the Company and the Group; ande) upon entering the market to proceed with the repurchase, the Company’s sponsor has confirmed the adequacy of the Company’s

and the Group’s working capital for the purposes of undertaking a repurchase of shares in writing to the JSE.

NOTICE OF ANNUAL GENERAL MEETING NOTICE OF ANNUAL GENERAL MEETING

.”


NOTICE OF ANNUAL GENERAL MEETING

Additional disclosure in terms of the Listings Requirements of the JSE Section 11.26

The Listings Requirements of the JSE require the following disclosures, which are provided elsewhere in the Annual Integrated Report of which this notice forms part as set out below:- Directors - on the insert to page 93- Major shareholders of the Company - page 94- Share capital of the Company - page 94 - Directors’ interests in securities - pages 100 and 101

Litigation statementIn terms of section 11.26 of the Listings Requirements of the JSE, the Directors, whose names are given on the insert to page 93 of the Annual Integrated Report of which this notice forms part, are not aware of any legal or arbitration proceedings, including proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the Group’s financial position.

Directors’ responsibility statementThe Directors, whose names are given on the insert to page 93 of the Annual Integrated Report, collectively and individually accept full responsibility for the accuracy of the information pertaining to the abovementioned resolution and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the abovementioned resolution contains all information required by law and the Listings Requirements of the JSE.

Material changeOther than the facts and developments reported on in the Annual Integrated Report, there have been no material changes in the financial position of the Company and its consolidated entities since the date of signature of the audit report and the date of this notice.●11. Special resolution No. 3 – Financial assistance to related or inter-related Company or Corporation

“Resolved that the Directors, in terms of and subject to the provision of Section 45 of the Act, be authorised to cause the Company to provide any financial assistance to any Company or corporation which is related or inter-related to the Company.”

Reason and effect The reason for and effect of special resolution number 3 is to grant the Directors of the Company the authority to cause the Company to

provide financial assistance to any Company or corporation which is related or inter-related to the Company. It does not authorise the provision of financial assistance to a Director or Prescribed Officer of the Company.

●12. To transact such other business as may be transacted at an Annual General MeetingVoting and proxies

Shareholders who have not dematerialised their shares or who have dematerialised their shares with ‘own name’ registration are entitled to attend and vote at the meeting and are entitled to appoint a proxy or proxies to attend, speak and vote in their stead. The person so appointed need not be a shareholder. Proxy forms must be forwarded to reach the Company’s transfer secretaries, Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001 or be posted to the transfer secretaries at PO Box 61051, Marshalltown, 2107 to be received by them by 14h30 on 19 August 2013, being not less than 48 hours before the time fixed for the holding of the meeting (excluding Saturdays, Sundays and public holidays). Proxy forms must only be completed by shareholders who have not dematerialised their shares or who have dematerialised their shares with ‘own name’ registration.

On a show of hands, every shareholder of the Company present in person or represented by proxy shall have one vote only. On a poll, every shareholder of the Company holding an ordinary share shall have one vote for every ordinary share held in the Company by such shareholder and every shareholder holding a B ordinary share shall have 12 votes per share for every B ordinary share held in the Company by such shareholder. Shareholders who have dematerialised their shares, other than those shareholders who have dematerialised their shares with ‘own name’ registration, should contact their CSDP or broker in the manner and time stipulated in their agreement:

- to furnish them with their voting instructions; and- in the event that they wish to attend the meeting, to obtain the necessary authority to do so.

Voting percentages required for the passing of resolutions: - ordinary resolutions numbers 1 to 8: more than 50% of votes cast - special resolutions numbers 1 to 3: more than 75% of votes cast

Participation in the meetingThe Board of Directors of the Company has determined that the record date for the purpose of determining which shareholders of the Company are entitled to receive notice of the 80th Annual General Meeting is Friday 21 June 2013 and the record date for purposes of determining which shareholders of the Company are entitled to participate in and vote at the Annual General Meeting is Friday 16 August 2013. Only shareholders who are registered in the register of members of the Company on Friday 16 August 2013 will be entitled to participate in and vote at the Annual General Meeting. Accordingly, the last day to trade in order to be entitled to participate in and vote at the Annual General Meeting is Thursday 8 August 2013.

In compliance with the provisions of the Act, the Company intends to offer shareholders reasonable access through electronic facilities to participate in the Annual General Meeting. Shareholders, through means of conference call and webcast facilities, will be able to listen to the proceedings and raise questions should they wish to do so and are invited to indicate their intention to make use of these facilities by registering online at www.mrpricegroup.com. Information enabling participation in the call and webcast facilities will be sent via email to those shareholders who have registered.

Voting will not be possible via the electronic facilities and shareholders wishing to vote their shares will need to be represented at the meeting either in person, by proxy or by letter of representation, as provided for in this Notice of Meeting.

Equity securities held by a share trust or scheme will not have their votes at the Annual General Meeting taken into account for the purposes of resolutions proposed in terms of the JSE Listings Requirements.

Kindly note that meeting participants (including proxies) are required to provide reasonably satisfactory identification before being entitled to attend or participate in a shareholders’ meeting. Forms of identification include valid identity documents, driver’s licenses and passports.

Shareholders are encouraged to attend the Annual General Meeting.

By order of the Board

Mrs HE GrosvenorCompany Secretary22 May 2013

Registered office:Upper Level, North Concourse, 65 Masabalala Yengwa Avenue (previously NMR Avenue), Durban, 4001.

Transfer secretaries: Computershare Investor Services (Proprietary) Ltd, 70 Marshall Street, Johannesburg, 2001.PO Box 61051, Marshalltown, 2107.

NOTICE OF ANNUAL GENERAL MEETING NOTICE OF ANNUAL GENERAL MEETING

(Registration number 1933/004418/06) (Incorporated in the Republic of South Africa) (‘Mr Price’ or ‘the Company’)FORM OF PROxY FOR uSE BY MR PRICE GROuP LIMITED ORDINARY SHAREHOLDERS

ForusebyMrPriceordinaryshareholders(‘ordinaryshareholders’)atthe80thAnnualGeneralMeetingoftheCompanytobeheldintheboardroomofMrPriceGroupLimitedatUpperLevel,NorthConcourse,65MasabalalaYengwaAvenue,Durban,onWednesday21August2013at14h30(Seenote1overleaf).I/We

of address

being the holder/s of ordinary shares in the company, hereby appoint

(see instruction 1 overleaf):

1. or failing him/her,

2. or failing him/her,

3. the Chairman of the meeting,

as my/our proxy to attend, speak and vote for me/us and on my/our behalf or to abstain from voting at the Annual General Meeting of the Company and at any adjournment thereof, as follows (see note 3 and instruction 2 overleaf):

Insert an ‘X’ or the number of ordinary shares you wish to vote

In favour of Against Abstain

1. Ordinary resolution No. 1 Adoption of the Annual Financial Statements.

2. Ordinary resolution No. 2.1 to No. 2.4 Re-election of Directors retiring by rotation

2.1 Mr K Getz;

2.2 Mr MR Johnston;

2.3 Mr MJD Ruck; and

2.4 Mr M Tembe.

3. Ordinary resolution No. 3.1 to No. 3.3 Re-election of Alternate Directors

3.1 Mr N Abrams (alternate to Mr SB Cohen);

3.2 Mrs TA Chiappini-Young (alternate to Mr LJ Chiappini); and

3.3 Mr SA Ellis (alternate to Mr MM Blair).

4. Ordinary resolution No. 4 Re-election of independent auditor.

5. Ordinary resolution No. 5.1 to No. 5.4 Election of members of the Audit and Compliance Committee

5.1 Mr MR Johnston;

5.2 Ms D Naidoo;

5.3 Mr MJD Ruck; and

5.4 Mr WJ Swain.

6. Ordinary resolution No. 6 Non-binding advisory vote on the Remuneration Policy of the Company.

7. Ordinary resolution No. 7 Adoption of the Report of the Social, Ethics, Transformation and Sustainability Committee.

8. Ordinary resolution No. 8 Signature of documents.

9. Special resolution No. 1.1 to No. 1.11 Non-executive Director remuneration:

1.1 Independent non-executive Chairman of the Company R1 050 000

1.2 Honorary Chairman of the Company R625 000

1.3 Lead Director of the Company R341 000

1.4 Other Director of the Company R212 000

1.5 Chairman of the Audit and Compliance Committee R182 000

1.6 Member of the Audit and Compliance Committee R102 000

1.7 Member of the Board Risk Committee R89 000

1.8 Chairman of the Remuneration and Nominations Committee R112 500

1.9 Member of the Remuneration and Nominations Committee R71 500

1.10 Chairman of the Social, Ethics, Transformation and Sustainability Committee R112 500

1.11 Member of the Social, Ethics, Transformation and Sustainability Committee R71 500

10. Special resolution No. 2 General authority to repurchase shares.

11. Special resolution No. 3 Financial assistance to related or inter-related Company or Corporation.

Signed at on 2013

Signature/s

Assisted by me (where applicable)

Please read the notes and instructions overleaf

NoteS:

1. Attendance and voting at meetings and appointing of proxies is only automatically open to shareholders who have not dematerialised their shares or who have dematerialised their shares and registered them in their own name. All other shareholders should contact their CSDP or broker to make the relevant arrangements to attend and vote at the meeting.

2. An ordinary shareholder entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend, speak, and vote in his/her stead. A proxy need not be an ordinary shareholder of the Company.

3. Every ordinary shareholder present in person or by proxy and entitled to a vote at the meeting shall, on a show of hands, have one vote only, irrespective of the number of shares such ordinary shareholder holds and, in the event of a poll, every ordinary share in the company shall have one vote.

INStRuCtIoNS oN SIgNINg ANd lodgINg thIS foRM of PRoXy:

1. An ordinary shareholder may insert the name of a proxy or the names of two alternative proxies of the ordinary shareholder’s choice in the space/s provided overleaf, with or without deleting ‘the Chairman of the meeting’, but any such deletion must be initialled by the ordinary shareholder. Should this space be left blank, the proxy will be exercised by the Chairman of the meeting. The person whose name appears first on the form of proxy and who is present at the meeting will be entitled to act as proxy to the exclusion of those whose names follow.

2. An ordinary shareholder’s voting instructions to the proxy must be indicated by the insertion of an ‘X’ or, alternatively, the number of ordinary shares such ordinary shareholder wishes to vote, in the appropriate spaces provided overleaf. Failure to do so will be deemed to authorise the proxy to vote or to abstain from voting at the meeting as he/she thinks fit in respect of all the ordinary shareholder’s ordinary shares. An ordinary shareholder or his/her proxy is not obliged to use all the ordinary shares held by the ordinary shareholder, but the total number of ordinary shares voted, or those in respect of which abstention is recorded, may not exceed the total number of ordinary shares held by the ordinary shareholder.

3. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the transfer secretaries.

4. To be valid the completed form of proxy must be lodged with the transfer secretaries of the Company, Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001, (PO Box 61051, Marshalltown, 2107), to be received by them not later than Monday, 19 August 2013 at 14h30.

5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the transfer secretaries or waived by the Chairman of the meeting.

6. The completion and lodging of this form of proxy will not preclude the relevant ordinary shareholder from attending the Annual General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such ordinary shareholder wish to do so.

7. The completion of any blank spaces overleaf need not be initialled. Any alterations or corrections to this form of proxy must be initialled by the signatory/ies.

8. The Chairman of the meeting may accept any form of proxy which is completed, other than in accordance with these instructions and notes, provided that the Chairman is satisfied as to the manner in which an ordinary shareholder wishes to vote.

B E L I E V E

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Documents

APRIL MARCH 2012 2013 - Mr Price Group