Mr Price Group Limited · JSE:MRP
Mr Price — Merger or Acquisition (April 2022)
21 slides from Mr Price's merger presentation, Apr 13, 2022
Slide 1: Acquisition of Studio 88 Group
ACQ U IS IT ION O F STUDI O 88 GROUP 13 April 2022
Slide 2: Who we are: vision and purpose
WHO W E A R E V IS I O N To be the most valuable retailer in Africa PU RPO S E Your Value Champion Valuable = market capitalisation 2
Slide 3: Organisational overview
WHO W E A R E Our group Our divisions ORGANISATIONAL OVERVIEW Retail sales & other income (RSOI) Apparel segment R22.6 bn 69 % Home segment 1 702 stores +19 500 associates SOUTH AFRICA 92 % AFRICA 8 % 24 % Financial services & Telecoms 3 7 % Financial information to year end 3 April 2021
Slide 4: Performance & returns: market leaders
P E RFO RM ANCE & RE T U R N S Market HEPS growth leaders 19.4 10.2 -1.4 % % % COMPETITORS 35 Year CAGR 10 Year CAGR 10 Year CAGR Total shareholder returns 12.1 % 10 Year CAGR 5.2 % 10 Year CAGR COMPETITORS P R OF ITA BIL IT Y Return on equity Return on assets 27.3% 13.0% 14.9% 5.2% COMPETITORS COMP
Slide 5: Execution and growth
STRATEGY Execution and growth Driven by a multi-pronged strategy Comparative growth Non-comparative growth • Focused on SA and gaining market share • New store growth. All divisions, store footprint • Retail science applied to maximise densities and margins can extend to the whole country • Omni-cha
Slide 6: Grow brand value
B R A N D PRO M ISE OUR DEFINITION OF VALUE Grow brand value c e Pri Qu by surprising and delighting ali ty customers with the Exp wanted item at great value erie nce and a satisfying all-round hion experience. Fas Convenience 6
Slide 7: Aspirational value segment identified as an attractive investment area
The aspirational value segment within the apparel Identified opportunities O P P O RTU N ITIES M ATR IX sector was identified as an attractive investment area Existing categories Focused opportunity in which the group is currently under-represented Recently acquired Luxury Premium Focused opportunit
Slide 8: Studio 88 Group
S O U T H A F R I C A’ S largest independent retailer of branded ABOU T leisure, lifestyle and Studio 88 sporting apparel & footwear Group 8
Slide 9: Strategically aligned
Strategically aligned MEETS OUR STRICT INVESTM E NT CRI T E RI A Complementary to Mr Price’s existing customer positioning - broad 1 Material entry into the high-growth urbanwear and athleisure segments of the market - currently under-represented 2 appeal to aspirational and trend conscious customer
Slide 10: Store footprint
Store footprint South Africa Positioned in central business districts‚ regional malls and rural high streets, and via its e-commerce platforms 92 % Rest of Africa Namibia 8 Botswana % Mozambique Lesotho Zambia TOTAL 711 STORES (173 869m ) 2 eSwatini Financial year ended 30 September 2021 GRO UP TRA
Slide 11: Studio 88 Group delivers on Mr Price's strategic positioning
Studio 88 Group delivers on Mr Price’s strategic Identified opportunities O P P O RTU N ITIES M ATR IX positioning across price-value, fashion-value and Existing categories aspirational value segments Acquired Recently acquired Luxury Premium Aspirational yuppiechef.com value/Niche Opportunity milad
Slide 12: Market Positioning
Market Positioning Studio 88 Group has broad appeal to aspirational and trend conscious FY2021 customers across a wide range of age profiles and affordability levels Younger customer Older customer 3.6% 5.4% Luxury 11.8% Premium SPECIALITY Aspirational value/Niche 16.0% 63.2% Fashion value Price val
Slide 13: Market Positioning Continued
Market Positioning Continued Aspirational value/Niche STUDIO 88 Younger customer • LSM 4-7. Customer is 18-35 years old • Very trendy and fashion aware Studio 88 Group has broad appeal to aspirational and trend conscious • Stores tend to be larger and spearhead the group customers across a wide rang
Slide 14: Brands
Brands Studio 88 Group’s merchandise range is a mix of international brands, some under exclusive license agreements, supplemented with private label ranges NO N -EXC L U S IVE BRANDS* E XC L U S IVE BRANDS* O W N L A BEL S 14 *Trademark under license
Slide 15: Financial performance
SA LES Financial R5.6 bn performance Financial year ended 30 September 2021 LO NG T ER M S A L ES P ER F O R M A N C E 10-year compound growth rate of 22.2% R5.6bn E B I TD A (PR E IFRS 16 BASIS) R630 m 2011 113 2012 134 2013 238 2014 303 2015 378 2016 427 2017 474 2018 492 2019 536 2020 579 2021 71
Slide 16: Material contributor to Mr Price Group
Material contributor to Mr Price Group MR PR IC E GROUP P RE-ACQUISIT I O N M R P R I C E GR O U P I N C L U D I N G S T U D I O 8 8 GR O U P coms: 6.3 % lecoms: 5.1 % Reduced reliance & Tele &Te on one division FS FS % & diversification % 0.4 into differentiated .1 6.3% :2 5.1% product segment 25 n
Slide 17: Transaction summary: acquisition price
Transaction summary Acquisition price • Enterprise value (“EV”) of R4.7 billion (on a 100% basis) • Acquisition of 70% of the issued share capital of the Studio 88 Group for R 3.3 billion purchase consideration P RE I FRS 1 6 IFRS 16 7.5x based on seller’s Y EAR E ND 30 SEP TEM B ER 2 0 2 1 previous
Slide 18: Transaction summary: structure and mechanism
Transaction summary Transaction structure and mechanism • Acquisition of 70% of the issued share capital of the Studio 88 Group from RMB Ventures and current management as part of the initial acquisition (“Initial Acquisition”), to be effected as follows: - Mr Price will acquire 100% of RMB Ventures
Slide 19: Transaction summary: acquisition of future tranches
Transaction summary Transaction structure and mechanism ACQUISITION OF FUTURE TRANCHES: • Same multiple as Initial Acquisition • Flexible to allow for earlier/later dates • Aligned with the intention to retain management for the long-term Remaining 30% management shareholding will be settled as foll
Slide 20: Transaction summary: funding and conditions precedent
Transaction summary Funding of purchase consideration & Conditions precedent F U N D IN G OF P URCHASE CONSI DE RAT I O N • The transaction will be fully funded by utilising existing cash resources of the Mr Price Group C ON D ITIO NS P RE CEDE NT • Subject to the fulfillment of both regulatory and
Slide 21: od P= £ ro ho oy o h_ So. ‘“
3 od P= £ ro 5 3 ho oy o 2 h_ So. ‘“ 6