Nature of business

The Company, which is domiciled and incorporated in the Republic of South Africa and listed on the JSE Limited, the recognised securities exchange in South Africa, was formed with the sole purpose of holding a controlling interest in Pick n Pay Stores Limited. The Company is entitled to redistribute any dividend received from Pick n Pay Stores Limited.

General review

The Group statement of comprehensive income is presented here and reflects the Group’s operational results.

The Group’s headline earnings from continuing operations and dividends for the years are as follows:

*	The dividend per share presented is the interim dividend paid in the current year and the final dividend declared after year-end, but in respect of current year profit.

Relative share value

The directors consider that the ratio of the dividend paid per share for the year of Pick n Pay Holdings Limited (PIKWIK) of 69.28 cents, to that of Pick n Pay Stores Limited (PICKNPAY), 142.50 cents, determines the relative value of a Pick n Pay Holdings Limited share, which, based on these figures, is 48.6% (2010: 48.7%) of a Pick n Pay Stores Limited share.

Audit committee

We draw your attention to the Company’s corporate governance report.

Investment

The Company’s sole asset is its 53.6% (2010: 53.6%) direct shareholding in its subsidiary, Pick n Pay Stores Limited, and its only source of income is the dividend received from Pick n Pay Stores Limited. After taking into account the Pick n Pay Stores Limited treasury shares held by the Group, the Company’s effective holding in Pick n Pay Stores Limited at year-end is 53.9% (2010: 54.3%).

Dividends paid and declared

A cash dividend (number 57) of 65.63 cents per share was paid to shareholders on 14 June 2010.

A cash dividend (number 58) of 17.94 cents per share was paid to shareholders on 13 December 2010.

For further details refer to note 5.

The directors have declared a cash dividend (number 59) of 51.34 cents per share. The last day of trade in order to participate in the dividend (CUM dividend) will be Friday, 3 June 2011. Shares will trade EX dividend from the commencement of business on Monday, 6 June 2011 and the record date is Friday, 10 June 2011. The dividend will be paid on Monday, 13 June 2011. Share certificates may not be dematerialised or rematerialised between Monday, 6 June 2011 and Friday, 10 June 2011, both dates inclusive.

As dividend number 59 was declared on 15 April 2011 it will only be accounted for in the 2012 financial year. No liability for secondary tax on companies (STC) will be payable on this dividend as the Company will have sufficient STC credits to offset any liability.

Share capital

The issued ordinary share capital remained unchanged during the year at 527 249 082 shares.

As at year-end, the Pick n Pay Employee Share Purchase Trust and a subsidiary company held 9 103 871 (2010: 10 077 639) and 1 817 003 (2010: 1 784 303) shares in the Company, respectively. These shares are reflected as treasury shares in the annual financial statements.

Going concern

These annual financial statements have been prepared on the going-concern basis.

The Board has performed a formal review of the Group’s ability to continue trading as a going concern in the foreseeable future and, based on this review, consider that the presentation of the financial statements on this basis is appropriate.

Legal proceedings

In July 2010, subject to approval by the Australian competition regulator, the Australian Competition and Consumer Commission (ACCC), we accepted an offer from Metcash Trading Limited (Metcash) to acquire our Australian operation, Franklins. The ACCC reviewed the proposed transaction under its informal merger clearance process and opposed the sale to Metcash on the basis that it is likely to have the effect of substantially lessening competition in the Australian market. Following the ACCC’s decision, the parties announced that they proposed to proceed with the transaction and this led the ACCC to commence legal proceedings in the Federal Court of Australia in December 2010, seeking to prevent the parties from completing the transaction. We and Metcash agreed with the ACCC to an expedited hearing, which commenced in mid-March 2011. The judgement of the Court is expected before 30 June 2011. If the Federal Court of Australia prevents the acquisition by Metcash, we remain committed to the sale of Franklins and anticipate selling the Franklins stores, either individually or in groups, under a competitive tender process.

There are no other pending or threatened legal or arbitration proceedings which have had or may have a material effect on the financial position of the Company or the Group.

Special resolutions

On 18 June 2010 the Company’s shareholders approved the following special resolution:

General authority to repurchase Company shares

It was resolved that the Company or any of its subsidiaries may, in accordance with sections 85 and 89 of the Companies Act, acquire issued shares of the Company or its holding company, upon such terms and conditions and in such amounts as the directors of the Company may determine from time to time. Acquisition of such shares is subject to the Articles of Association of the Company, the provisions of the Companies Act and the Listings Requirements of the JSE Limited (JSE), and provided further that acquisitions by the Company and its subsidiaries of shares in the Company may not, in the aggregate, exceed in any one financial year 5% of the Company’s issued share capital.

Subsidiary companies’ special resolutions

• Pick n Pay Stores Limited passed a similar special resolution to repurchase its shares (see here).
• 100% held subsidiary company, Pick n Pay Franchise Financing (Pty) Limited passed a special resolution to sell its business to a fellow 100% held subsidiary company, Pick n Pay Retailers (Pty) Limited.

Directors and Secretary

In terms of the Company’s Articles of Association the directors listed here retire by rotation and they offer themselves for re-election. Information pertaining to the directors and the Company Secretary appear here.

Directors’ interest in shares

The directors’ interest in shares is their effective shareholding in the Company, excluding treasury shares.

Borrowings

The Company’s overall level of borrowings is unchanged from the prior year.

Corporate governance

We refer you to here for a review of the Company’s corporate governance processes.

Subsequent events

There have been no facts or circumstances of a material nature that have arisen between the financial year-end and the date of this report.