Directors' report

for the year ended 29 February 2012

 

NATURE OF BUSINESS

The Company, which is domiciled and incorporated in the Republic of South Africa and listed on the JSE, 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 on here and reflects the Group’s operational results.

For a more detailed review of operations for the 2012 financial year, please refer to the review of operations contained within the Pick n Pay Stores Limited’s directors’ report on here.

The Group’s headline earnings from continuing operations for the year is as follows:

Per share – cents 

 2012 


change 

2011 

Headline earnings 

 

79.81 

 

(15.4)

94.29 

Dividends 

 

63.48 

 

(8.4)

69.28 


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.

The final dividend per share of 52.57 cents includes an additional amount to be paid to shareholders in respect of the 10% secondary tax on companies (STC) no longer payable by the Company. This brings the total dividend per share for the year to 63.48 cents, 8.4% down on last year.

The directors consider that the ratio of the dividend paid per share for the year of Pick n Pay Holdings Limited (PWK) of 63.48 cents, to that of Pick n Pay Stores Limited (PIK), 130.85 cents, determines the relative value of a Pick n Pay Holdings Limited share, which, based on these figures, is 48.5% (2011: 48.6%) of a Pick n Pay Stores Limited share.

The final dividend per share of 52.57 cents, includes an additional amount to be paid to shareholders in respect of the 10% STC no longer payable.

The directors have declared a final dividend (number 61) of 52.57 cents per share out of income reserves. The dividend declared is subject to dividend withholding tax at 15%.

The total STC utilised as part of this declaration amounts to R14 525 753. The number of ordinary shares in issue at the date of this declaration is 527 249 082 and consequently the STC credits utilised per share amount to 2.76 cents per share.

DIVIDENDS DECLARED

The directors have declared the following cash dividends during the year: 

 

 2012 
Cents 
per share 

% growth 

2011 
Cents 
per share 

Interim dividend – number 60 

 

10.91 

 

(39.2)

17.94 

Final dividend – number 61 

 

52.57 

 

2.4 

51.34 

Normal dividend 

 

47.79 

 

(6.9)

51.34 

Additional dividend in respect of STC no longer payable 

 

4.78 

   

— 

Total dividend 

 

63.48 

 

(8.4)

69.28 

Normal dividend 

 

58.70 

 

(15.3)

69.28 

Additional dividend in respect of STC no longer payable 

 

4.78 

   

— 


In determining the dividends tax to withhold, STC credits must be taken into account. Accordingly, the dividend to use for determining the dividend tax is 49.81 cents per share. The tax payable is 7.47 cents per share, leaving shareholders who are not exempt from dividends tax with a net dividend of 45.10 cents per share.

The last day of trade in order to participate in the dividend (CUM dividend) will be Friday, 1 June 2012. The shares will trade EX dividend from the commencement of business on Monday, 4 June 2012 and the record date will be Friday, 8 June 2012.

The dividends will be paid on Monday, 11 June 2012.

Share certificates may not be dematerialised or re-materialised between Monday, 4 June 2012 and Friday, 8 June 2012, both dates inclusive.

As dividend number 61 was declared on 17 April 2012, it will only be accounted for in the 2012 financial year.

INVESTMENT

The Company’s sole asset is its 53.6% (2011: 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 53.8% (2011: 53.9%).

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 9 011 002 (2011: 9 103 871) and 1 845 103 (2011: 1 817 003) 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 Company’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

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

SPECIAL RESOLUTIONS

On 10 June 2011 the Company’s shareholders approved the following special resolutions as tabled in the notice to the annual general meeting:

Directors’ fees for the year ended 29 February 2012

Shareholders approved the directors’ fees, which were unchanged from the previous year.

General approval to repurchase Company shares

Shareholders resolved that the Company or any of its subsidiaries may 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 Memorandum of Incorporation of the Company, the provisions of the Companies Act no. 71 of 2008, as amended 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.

Amendment to the Memorandum of Incorporation of the Company

Shareholders approved the amendment to the Memorandum of Incorporation of the Company, removing any borrowing restrictions and providing the Company with unlimited borrowing powers.

On 15 December 2011 the Company’s shareholders approved the following special resolution:

Provision of financial assistance to related or inter-related companies and others

The shareholders resolved, in terms of the provisions of Section 45 of the Companies Act, that the Company may from time to time provide direct or indirect financial assistance to any director, prescribed officer, related company, inter-related company or member of a related or inter-related company on such terms and conditions as determined by the Board.

For all special resolutions passed by subsidiary companies refer to here of Pick n Pay Stores Limited directors’ report.

DIRECTORS AND SECRETARY

In terms of the Company’s Memorandum of Incorporation the directors listed below, retire by rotation and they offer themselves for re-election. Information pertaining to the directors and the Company Secretary appears below. For detailed CVs see here of the 2012 Integrated Annual Report.

Non-executive directors

Raymond Ackerman* – Chairman
Gareth Ackerman
Wendy Ackerman
René de Wet* – Audit committee Chairman
Hugh Herman
Jeff van Rooyen (Appointed 1 May 2011)

Alternate directors

Suzanne Ackerman-Berman
Dave Robins
Jonathan Ackerman

Company Secretary

Debra Muller

*Director to retire in accordance with the Company’s MOI and to offer himself for re-election.

DIRECTORS’ INTEREST IN SHARES 

       
 

 2012 

2011 
  % 

Beneficial 

 

0.9 

 

0.8 

Non-beneficial 

 

50.4 

 

50.4 

Total 

 

51.3 

 

51.2 


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

BORROWINGS

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

CORPORATE GOVERNANCE AND AUDIT COMMITTEE

We refer you to here of the 2012 Integrated Annual Report for 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.