Mr Price : VOLUNTARY ANNOUNCEMENT RELATING TO THE ACQUISITION OF POWER FASHION

Mr Price Group Limited

(Registration number 1933/004418/06) Incorporated in the Republic of South Africa ISIN: ZAE000200457

LEI number: 378900D3417C35C5D733

JSE and A2X share code: MRP ("Mr Price" or "the group")

VOLUNTARY ANNOUNCEMENT RELATING TO THE ACQUISITION OF POWER FASHION

INTRODUCTION

Mr Price is pleased to announce that on 20 November 2020 it concluded an agreement to acquire high performing value retailer, Power Fashion, which currently has 170 stores across Southern Africa. Its differentiated business model gives the group access to a wider customer base and the opportunity to significantly scale further.

POWER FASHION

Power Fashion was founded in the 1950's and is a high growth, family owned apparel retailer based in Durban, South Africa. It is value-focused and cash-based, servicing low to middle income households. It offers merchandise for the whole family, retailing largely apparel merchandise but also offering cellular products, basic household items, value cosmetics, electricity and other opportunistic products.

Power Fashion merchandise is fashionable, but not fashion forward. It focuses on the deep value segment of the market and its price positioning is strongly aligned to its target customer base. Stores are typically high street and community centred malls rather than regional and super regional locations.

INVESTMENT CASE

The group's strategic research has helped identify clear opportunities for growth, both organic and acquisitive. It has frequently communicated to shareholders its strict investment criteria for an acquisition, which has guided it as it has considered several opportunities in the last year. In Power Fashion, the group will acquire a business that meets each of these closely researched criteria:

• Value focused business that predominantly trades in cash and is aligned to the group's core capabilities
• Fits within the group's capital allocation strategy and is bolt-on in nature (the size of the transaction is approximately 4% of market capitalisation)
• High performing business with a strong track record, eliminating the need for any turnaround strategy and avoiding the associated management distraction and integration costs
• An existing business of attractive scale which is available at a reasonable valuation. Immediately earnings accretive and not dependant on synergies
• Opportunity for significant future growth in footprint and categories
• Low risk as opposed to acquiring an unknown territory with additional foreign exchange risk
• Strong management and skilled team to prevent distraction and ensure continuity

Mr Price CEO, Mark Blair, said: "Mr Price and Power Fashion share a similar set of values which makes this acquisition a great fit. Power Fashion was built on a similar entrepreneurial mindset to Mr Price and also offers exceptional value to its customers. We both have high performance cultures and are equally focused on strategic growth. Our sufficiently differentiated business models and target customers will enable strong positioning in both the deep-value and fashion- value segments of the market. We are pleased that we will provide immediate returns to our shareholders, as well as continue to deliver on our respective promises to our customers."

Noel Otto, CEO and majority shareholder of Power Fashion, said: "It has been an incredible journey building our business into what it is today. Our team is immensely proud of what we have achieved. In some ways, the journey has only just begun, and I couldn't think of a better way forward than for Mr Price to take the baton and continue the growth trajectory. Both companies are driven by a strong entrepreneurial spirit and I look forward to seeing Power Fashion grow into a significant contributor to the Mr Price growth story. We have kindred cultures and along with the continuity provided by my management team, I believe that the transition will be a smooth one."

IMPLEMENTATION

The targeted effective date of the transaction will be April 2021 to align with the start of the group's new financial year (FY22). However, this is subject to the fulfilment of both regulatory and commercial suspensive conditions, as are usual for such transactions. These conditions include competition authority approval in South Africa and Eswatini. The transaction will be settled in cash.

The existing management team and all Power Fashion employees will transfer to Mr Price, and a new managing director will be appointed in due course. Noel Otto will retire on the effective date but will conclude a consulting agreement for a period post the effective date to provide continuity.

Durban

26 November 2020 Sponsor

RAND MERCHANT BANK (A division of FirstRand Bank Limited)