Mr Price Group (MRP) Status update summary

Transaction Overview and Strategic Rationale

• Regulatory approvals for the NKD acquisition are complete, with closing set for March 31, 2026, and a purchase consideration up to €487 million, funded by cash and debt facilities.

• The acquisition is the largest in group history, providing a significant entry into the resilient European value apparel and homeware market and diversifying earnings beyond South Africa.

• NKD aligns closely with strategic criteria: scale, culture, customer base, and financial metrics, and fits the value retail model with private label, cash-based sales, and disciplined expense management.

• The acquisition is expected to be earnings accretive in year two, supported by strong cash generation and capital discipline from both entities.

• Local management expertise will be retained, with strategic oversight and phased integration from the acquiring group.

Financial Guidance and Capital Management

• Purchase consideration is €478–487 million, funded by a mix of cash and debt, with term debt facilities up to ZAR 7 billion arranged.

• Net debt to EBITDA is expected to settle between 1.5x and 1.75x, with strong cash generation enabling rapid deleveraging.

• NKD is highly cash generative, able to self-fund capex and store expansion, with free cash flow after capex projected at €25–40 million per annum.

• Dividend payout ratio of 63% of HEPS is expected to remain unchanged.

• Earnings accretion is anticipated in year two post-acquisition, with significant multiple unwind expected as the business plan is executed.

NKD Business Model and Growth Plan

• NKD operates over 2,178 stores in seven Central and Eastern European countries, focusing on value apparel and homeware, with 95% private label products.

• The business targets €1 billion in sales and double-digit operating margins by 2030, driven by like-for-like growth and accelerated store openings to reach ~2,700 stores.

• Sales growth is targeted at 6–7% per annum, with 3% like-for-like and 3–4% net space growth, supported by data-driven site selection and margin optimization.

• Store formats are capital-light, with payback periods under 2.4 years and rapid maturity within three years.

• The business is resilient, benefiting from mid-market customers trading down and strong brand recognition.