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ANNUAL FINANCIAL STATEMENTS<br />

Corporate governance and<br />

approval of<br />

annual financial statements ____________________________________34<br />

Auditors’ report ______________________________________________36<br />

Currency of annual financial statements __________________________36<br />

Directors’ report ______________________________________________37<br />

Accounting policies ___________________________________________39<br />

Income statement _____________________________________________40<br />

Balance sheet ________________________________________________41<br />

Cash flow statement __________________________________________42<br />

Notes to the annual<br />

financial statements ___________________________________________43<br />

Interest in subsidiaries and<br />

associated companies __________________________________________57


CORPORATE<br />

GOVERNANCE and approval of annual financial statements<br />

The Board subscribes to the principles of transparent<br />

and honest corporate governance as set out in the<br />

Code of Corporate Practices and Conduct in the King<br />

Report (“the Code”), and in all material respects complies<br />

with the requirements thereof. In line with their respective<br />

codes of ethics group companies endeavour at all times<br />

t o maintain the highest standard of integrity in dealing<br />

with their clients, staff, shareholders and suppliers and in<br />

doing so to ensure the largest measure of credibility, trust<br />

and stability.<br />

Group structure<br />

Pepkor is an investment holding company with investments<br />

in listed and unlisted companies. These operating<br />

companies have independent boards of directors on which<br />

representatives of Pepkor serve in a non-executive capacity.<br />

All Pepkor’s subsidiaries are committed to the principles of<br />

sound corporate governance as contained in the Code, and<br />

as far as practicable comply with all the essential aspects<br />

thereof. Pepkor encourages these companies to comply<br />

fully with the Code, and to disclose any cases in which such<br />

compliance is not possible.<br />

Board of directors<br />

P e p k o r ’s Board consists of eleven directors, six of whom<br />

hold executive positions in the group. The Chairman of the<br />

Board is an executive director. The composition of the<br />

Board provides for proper deliberation of all matters<br />

requiring the Board’s attention thereby ensuring balance of<br />

power and authority. The Board meets at least four times a<br />

year. Particulars of the members of the Board are furnished<br />

on page 21 of the annual report.<br />

Audit committee<br />

The Pepkor audit committee, normally consisting of three<br />

members, all of whom are non-executive directors, meets<br />

at least twice a year in order to evaluate matters such as<br />

accounting practices, internal control systems, auditing and<br />

financial reporting. The audit committee is also charged<br />

with identifying and reporting to the Board on critical<br />

areas of risk, which includes Y2000 compliance, that have<br />

been identified for the group in collaboration with the<br />

management.<br />

The audit committee functions in terms of a written<br />

mandate from the Board, and the external auditors have<br />

unrestricted access to the committee. Relevant members of<br />

the executive management are also invited to attend<br />

meetings in order to assist the committee in carrying out its<br />

task. The audit committee receives feedback on the activities<br />

of the audit committees of the company’s subsidiaries and<br />

also has access to the minutes of these meetings. It is policy<br />

that all chairmen of the audit committees of the company’s<br />

subsidiaries be directors of P e p k o r.<br />

Remuneration committee<br />

The remuneration of the executive directors is subject<br />

t o the approval of the executive chairman of the comp<br />

a n y and the chairman’s salary is determined by nonexecutive<br />

directors.<br />

Employment equity<br />

The company pursues a policy of equal opportunities and<br />

no discrimination. Since the group’s operations are vested<br />

in separate subsidiary companies, each of which operate in<br />

unique circumstances, those companies implement such<br />

staff development and affirmative action programmes as<br />

are required by their particular circumstances and similarly<br />

provide for employee participation.<br />

Internal control<br />

The directors accept final responsibility for the internal<br />

control systems of the group. As an investment holding<br />

company the adequacy and effectiveness of internal<br />

financial control is regularly appraised independently by<br />

the audit committees of the subsidiary companies and their<br />

external auditors. It is the management’s responsibility to<br />

ensure that relevant legislation and regulations are<br />

complied with and that adequate internal financial control<br />

systems are developed and maintained in order to provide<br />

reasonable assurance regarding:<br />

page 34


– the completeness and accuracy of the accounting records;<br />

– the integrity and reliability of the annual financial<br />

statements; and<br />

– the safeguarding of the business undertaking’s assets.<br />

The effectiveness of any internal financial control system<br />

depends upon strict observance of prescribed measures. Nonobservance<br />

of such measures by staff is always a risk.<br />

Consequently even a strict internal control system can only<br />

provide reasonable assurance as regards financial reporting<br />

and the safeguarding of assets. An evaluation of the group’s<br />

internal financial control systems was made on 30 June 1999,<br />

and on the basis of this evaluation the Board is of the opinion<br />

that the internal control systems in respect of financial<br />

reporting and the safeguarding of assets against unauthorised<br />

use or disposal complied with acceptable criteria.<br />

Year 2000 compliance<br />

Year 2000 compliance is dealt with under the <strong>Financial</strong><br />

review which is to be found on page 22 of the annual<br />

report.<br />

59 have been approved by the Board.<br />

Signed on behalf of the Board of Directors<br />

C H Wiese<br />

Chairman<br />

C Moore<br />

<strong>Financial</strong> director<br />

25 August 1999<br />

Approval of annual financial<br />

statements<br />

The responsibility for preparing and submitting the annual<br />

financial statements was delegated to the management.<br />

The financial statements were prepared in accordance with<br />

generally accepted accounting practice and are in accordance<br />

with the group’s accounting records and policy<br />

which have been applied on a consistent basis.<br />

The directors accept final responsibility for the integrity,<br />

objectivity and reliability of the annual financial statements<br />

and subscribes to the concept of transparency in financial<br />

reporting. The external auditors are responsible for<br />

reporting on the annual financial statements. The directors<br />

are of the opinion that the group has sufficient resources at<br />

its disposal to carry on the undertaking in the foreseeable<br />

future and the annual financial statements have<br />

accordingly been prepared on a going concern basis.<br />

The directors’ report, annual financial statements and<br />

group annual financial statements as set out on pages 37 to<br />

page 35


AUDITORS’<br />

REPORT<br />

Report of the independent auditors<br />

to the members of Pepkor Limited<br />

We have audited the annual financial statements and group<br />

annual financial statements set out on pages 37 to 59 for the<br />

year ended 30 June 1999. These financial statements are the<br />

responsibility of the directors of the company. Our<br />

responsibility is to express an opinion on these financial<br />

statements based on our audit.<br />

Scope<br />

We conducted our audit in accordance with statements of<br />

South African Auditing Standards. These standards<br />

require that we plan and perform the audit to obtain<br />

reasonable assurance that the financial statements are free<br />

of material misstatement. An audit includes<br />

• examining, on a test basis, evidence supporting the<br />

amounts and disclosures included in the financial<br />

statements;<br />

• assessing the accounting principles used and significant<br />

estimates made by management; and<br />

• evaluating the overall financial statement presentation.<br />

We believe that our audit provides a reasonable basis for<br />

our opinion.<br />

Audit opinion<br />

In our opinion, the financial statements fairly present, in all<br />

material respects, the financial position of the company and<br />

the group at 30 June 1999 and the results of their operations<br />

and cash flows for the year then ended in accordance with<br />

generally accepted accounting practice and in the manner<br />

required by the Companies Act.<br />

PricewaterhouseCoopers Inc.<br />

Registered Accountants and Auditors<br />

Chartered Accountants (SA)<br />

Bellville<br />

25 August 1999<br />

CURRENCY OF ANNUAL<br />

FINANCIAL STATEMENTS<br />

The annual financial statements are expressed in South African Rand. The approximate Rand cost of a unit of the<br />

following currencies at year-end was:<br />

1999 1998<br />

USA Dollar 6,06 5,87<br />

Pound Sterling 9,66 9,77<br />

Australian Dollar 4,02 3,73<br />

German Mark 3,29 3,24<br />

Japanese Yen (100) 4,99 4,22<br />

page 36


DIRECTORS’<br />

REPORT<br />

Pepkor Limited and its subsidiaries<br />

Share capital<br />

During January 1999, 5 758 782 shares have been issued at<br />

a premium of 1 995 cents per share in settlement of the<br />

purchase price at the acquisition of the shares in Pep<br />

Limited held by minority shareholders, resulting in Pep<br />

Limited becoming a wholly-owned subsidiary.<br />

Full details of the company’s authorised and issued share<br />

capital are set out in the notes to the annual financial<br />

statements.<br />

Business of the group<br />

Pepkor Limited is an investment holding company with<br />

investments in subsidiaries and associated companies and<br />

at year-end the company controlled mainly the following<br />

investments:<br />

Subsidiaries<br />

– Pep Limited<br />

Pep Stores retailing for cash clothing, footwear,<br />

blankets and household softs/hardware from premises<br />

situated in the Republic of South Africa, Namibia,<br />

Botswana, Lesotho, Swaziland, Zambia, Mozambique<br />

and Ghana.<br />

Power Sales retailing for cash clothing, footwear,<br />

blankets and household textiles from premises situated<br />

i n Zimbabwe.<br />

Pep Manufacturing, manufacturing operations<br />

situated in the Western Cape as well as in Malawi,<br />

allied to the clothing retail.<br />

– Shoprite Holdings Limited<br />

Shoprite Checkers retailing for cash food, clothing and<br />

household softs/hardware from premises situated in<br />

the Republic of South Africa, Botswana, Zambia,<br />

Mozambique and Namibia.<br />

OK Bazaars and Hyperama retailing for cash food,<br />

clothing and household softs/hardware and on credit<br />

in household furniture from premises situated in the<br />

Republic of South Africa, Lesotho and Swaziland.<br />

Shoprite Checkers Properties which owns fixed property<br />

in the Republic of South Africa, Namibia, Zambia<br />

a n d Mozambique strategic to the group’s activities.<br />

– Ackermans Limited<br />

Ackermans retailing for cash clothing, footwear, blankets<br />

and household softs/hardware from premises situated in<br />

the Republic of South Africa, Namibia, Botswana,<br />

Swaziland, Lesotho, Zambia and Mozambique.<br />

– Brown & Jackson plc<br />

Poundstretcher and What Everyone Wants retailing for<br />

cash clothing, toiletries and household softs from<br />

premises situated in the United Kingdom.<br />

Your More Store retailing for cash clothing, footwear,<br />

blankets and household softs/hardware from premises<br />

situated primarily in Scotland.<br />

– Cashbuild Limited<br />

Cashbuild retailing for cash building materials from<br />

premises situated in the Republic of South Africa,<br />

Botswana, Lesotho, Namibia and Swaziland.<br />

– Stuttafords<br />

Stuttafords retailing on credit and for cash, clothing<br />

and household softs/hardware from premises situated<br />

in the Republic of South Africa.<br />

– Best & Less<br />

Best & Less retailing for cash, clothing and household<br />

textiles from premises situated in Australia.<br />

– Sundry<br />

Pepkorfin, which renders certain head office services<br />

in the group.<br />

Associated companies<br />

– Retail Apparel Group Limited<br />

Smart Centre, Bee Gee, Guys & Girls, Patrick Daniel<br />

and Arthur Kaplan Jewellers, retailing on credit and<br />

for cash, clothing, footwear, household softs and<br />

jewellery from premises situated in the Republic of<br />

South Africa, Namibia, Mozambique, Lesotho,<br />

Zambia and Botswana.<br />

page 37


DIRECTORS’<br />

REPORT<br />

Pepkor Limited and its subsidiaries<br />

Pepkor Limited’s interest in its subsidiaries and associated<br />

companies, as well as their individual activities, is set out in<br />

the annual financial statements.<br />

Group results<br />

Earnings<br />

After taking into account the income of associated<br />

companies and outside shareholders’ interest, the group<br />

achieved earnings per share, before exceptional items, of<br />

125,1 cents (1998: 151,8 cents).<br />

Details of the results of Pepkor Limited and the group are<br />

contained in the income statement.<br />

The attributable interest of Pepkor Limited in the taxed<br />

profits and losses, after exceptional items, of its subsidiaries<br />

for the year was as follows:<br />

At 30 June 1999 the directors of Pepkor Limited held a<br />

direct interest of 0,1% (1998: 0,1%) and an indirect, nonbeneficial<br />

interest of 0,4% (1998: 0,7%) of the issued share<br />

capital of the company. Indirect holdings through listed<br />

companies have not been included. No material change in<br />

the shareholding of directors has occurred between the end<br />

of the financial year and the date of this report.<br />

Holding company<br />

The company’s holding company is Pepgro Limited.<br />

Secretary<br />

The name and address of the secretary appear elsewhere in<br />

the annual report.<br />

1999 1998<br />

Total profits R532,8 million R439,0 million<br />

Total losses R345,2 million R145,5 million<br />

Dividends<br />

An interim dividend of 40 cents (1998: 36 cents) per share<br />

w a s paid on 26 March 1999. A final dividend of 10 c e n t s<br />

( 1998 : 14 cents) per share is payable on 23 September 1999 to<br />

shareholders registered in the company’s register at the close<br />

of business on Friday, 10 September 1999. This brings the total<br />

dividend for the year to 50 cents (1998: 50 cents) per share.<br />

Directorate<br />

The names of the directors are listed elsewhere in the annual<br />

report. On 1 February 1999 Mr T R Hlongwane was<br />

appointed as a director. Mr J F le Roux resigned as a director<br />

on 30 May 1999, whereas Mr M G Loubser retired as a<br />

director on 30 June 1999.<br />

In terms of the articles of association of the company<br />

M e s s r s J W B a s s o n , J J Fouché, T R Hlongwane and W C<br />

van der Merwe retire as directors of the company at the<br />

annual general meeting, but being eligible offer themselves<br />

for re-election.<br />

page 38


Pepkor Limited and its subsidiaries for the year ended 30 June 1999<br />

The annual financial statements are prepared on the<br />

historical cost basis, with the exception of certain<br />

fixed assets which are adjusted for revaluations as detailed<br />

b e l o w, and incorporate the following principal policies<br />

which are in all respects consistent with those of the<br />

previous year:<br />

1. Consolidated annual financial statements<br />

The consolidated annual financial statements include<br />

the accounts of the company and all its subsidiaries.<br />

The excess of cost over net asset value at the date of<br />

acquisition of interests in subsidiaries is written off<br />

against retained income.<br />

2. Associated companies<br />

All companies, except subsidiaries, in which the group<br />

has a long-term interest and where it has the ability to<br />

exercise significant influence over financial and<br />

operating decision making, are regarded as associated<br />

companies and being equity accounted. The excess of<br />

cost over net asset value at the date of acquisition of<br />

interests in associated companies is written off against<br />

retained income.<br />

3. Foreign currency<br />

Amounts in foreign currency, resulting from trading,<br />

are converted to Rand at the contracted exchange rate.<br />

Exchange rate differences which occur at settlement<br />

o r conversion are fully accounted for in the income<br />

statement in the period in which it occurred.<br />

4. Foreign subsidiaries<br />

Assets and liabilities of foreign subsidiaries are<br />

converted to Rand at the exchange rates ruling at yearend,<br />

whereas their income statement and cash flow<br />

statement items are converted to Rand at weighted<br />

average rates of exchange during the financial year.<br />

Differences arising on conversion are taken directly to<br />

non-distributable reserves.<br />

5. Turnover<br />

Turnover of the group is the total of all sales of the<br />

c o m p a n y ’s subsidiaries, after elimination of intergroup<br />

sales.<br />

6. Income<br />

Some subsidiaries sell household furniture on instalment<br />

sale agreement. Profit on instalment sale agreements is<br />

accounted for on the date of sale. Financing income is<br />

recognised as income on the sum of digits method.<br />

7. Deferred taxation<br />

Deferred taxation is provided at prevailing rates on the<br />

comprehensive basis on all timing differences, after<br />

taking into account estimated or assessed losses.<br />

Deferred taxation debits are only created to the extent<br />

that it does not result in a net deferred taxation debit.<br />

ACCOUNTING<br />

POLICIES<br />

8. Fixed assets<br />

Land and buildings are regarded as investment properties<br />

and reflected at cost or valuation. Land and<br />

buildings are not depreciated.<br />

M a c h i n e r y, equipment, vehicles and aircraft are depreciated<br />

at rates appropriate to the various classes<br />

o f assets involved, taking into account the estimated<br />

useful life of the individual items.<br />

Improvements to leasehold property are carried at cost<br />

and written off over the period of the lease.<br />

Assets obtained in terms of finance lease agreements<br />

are capitalised.<br />

Fixed assets are depreciated over the following periods:<br />

Machinery:<br />

3 to 10 years<br />

Equipment:<br />

3 to 10 years<br />

Vehicles:<br />

3 to 5 years<br />

Aircraft:<br />

25 years<br />

9. Bank balances<br />

Actual bank balances are reflected. Outstanding<br />

cheques are included in accounts payable and<br />

provisions and outstanding deposits in bank balances<br />

and cash.<br />

10.Inventories<br />

Inventories are valued at the lower of cost or net<br />

realisable value. Cost for the group is determined on<br />

the following bases:<br />

– Raw material<br />

The lower of a predetermined standard cost or<br />

actual cost.<br />

– Work in progress<br />

Direct costs which include raw material, direct<br />

labour and attributable production overheads.<br />

– Merchandise<br />

Manufactured in the group’s factories:<br />

Direct costs which include raw material, direct<br />

labour and attributable production overheads.<br />

Purchased from other suppliers:<br />

Average cost less an adjustment for obsolete and<br />

slow moving inventories.<br />

– Goods in transit<br />

Invoice value of raw material and merchandise not<br />

yet received.<br />

– Consumable goods<br />

Actual cost.<br />

The basis of determining cost by some of the non-RSA<br />

subsidiaries is the last-in-first-out-method, but is adjusted<br />

for the group to the abovementioned bases of<br />

valuation. The group’s interest in the profit after taxation,<br />

resulting from the adjustment originating outside the<br />

RSA, is transferred to non-distributable reserves.<br />

page 39


INCOME<br />

STATEMENT<br />

Pepkor Limited and its subsidiaries for the y ear ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 Notes R’000 R’000<br />

Turnover 25 501 404 20 769 406<br />

(731) (896) Operating profit/(loss) 1 518 540 458 877<br />

(139 793) (88 123) Net finance charges 2 79 233 (18 023)<br />

139 062 87 227 Profit before exceptional items 439 307 476 900<br />

(1 157) – Exceptional items 3 (64 871) 3 746<br />

137 905 87 227 Profit before income of associated companies 374 436 480 646<br />

Income of associated companies 4 904 35 386<br />

137 905 87 227 Profit before taxation 375 340 516 032<br />

Taxation 5 39 231 43 792<br />

137 905 87 227 Profit after taxation 336 109 472 240<br />

Outside shareholders’ interest 6 129 943 128 677<br />

137 905 87 227 Net profit 206 166 343 563<br />

433 667 462 280 Retained income at beginning of the year 316 570 627 062<br />

571 572 549 507 Retained income 522 736 970 625<br />

109 292 110 968 Appropriated 144 237 654 055<br />

109 292 110 968 Dividends distributed to ordinary shareholders 110 968 109 292<br />

Excess of cost over net asset value on<br />

acquisition of interests in subsidiaries<br />

and associated companies written off 76 162 511 287<br />

Transfer (from)/to non-distributable reserves 7 (42 893) 33 476<br />

462 280 438 539 Retained income at end of the year 378 499 316 570<br />

Earnings per share (cents)<br />

– before exceptional items 8.1 125,1 151,8<br />

– after exceptional items 8.2 94,1 159,5<br />

– headline earnings 8.3 124,1 157,8<br />

Dividend (cents per share) 50,0 50,0<br />

page 40


BALANCE<br />

SHEET<br />

Pepkor Limited and its subsidiaries at 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 Notes R’000 R’000<br />

1 611 121 1 702 233 Ordinary shareholders’ funds 2 149 453 2 052 275<br />

10 809 11 097 Share capital 9 11 097 10 809<br />

1 133 050 1 247 615 Share premium 10 1 247 615 1 133 050<br />

467 262 443 521 Reserves 11 890 741 908 416<br />

Outside shareholders’ interest 12 737 788 716 097<br />

Interest-bearing debt 1 308 666 1 288 392<br />

Long-term loans 13 186 248 328 153<br />

Short-term loans 14 551 701 533 925<br />

Bank overdrafts 570 717 426 314<br />

1 611 121 1 702 233 Capital employed 4 195 907 4 056 764<br />

Represented by –<br />

Fixed assets 15 2 269 948 2 159 480<br />

1 602 797 1 687 301 Investments 469 695 690 524<br />

1 567 109 1 651 613 Interest in subsidiaries 16<br />

Interest in associated companies 17 123 045 130 659<br />

35 688 35 688 Other investments 18 346 650 559 865<br />

50 326 48 765 Current assets 6 741 353 6 127 864<br />

Inventories 19 3 762 036 3 838 256<br />

50 326 48 765 Amounts owing by subsidiaries 16<br />

Accounts receivable 20 1 600 269 1 596 053<br />

Bank balances and cash 1 379 048 693 555<br />

1 653 123 1 736 066 Total assets 9 480 996 8 977 868<br />

42 002 33 833 Interest-free liabilities 5 285 089 4 921 104<br />

11 737 11 639 Accounts payable and provisions 21 5 232 821 4 850 710<br />

30 265 22 194 Dividends declared 52 268 45 851<br />

Deferred taxation – 24 543<br />

1 611 121 1 702 233 Employment of capital 4 195 907 4 056 764<br />

page 41


CASH FLOW<br />

STATEMENT<br />

Pepkor Limited and its subsidiaries for the y ear ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 Notes R’000 R’000<br />

31 106 (31 910) Cash retained from operations 933 183 570 033<br />

(731) (895) Operating profit/(loss) 518 540 458 877<br />

Non-cash items 22.1 320 446 471 983<br />

134 (98) Decrease/(increase) in working capital 22.2 438 919 (116 449)<br />

139 793 88 123 Net finance charges (72 706) 18 023<br />

(1) – Taxation paid 22.3 (49 402) (115 080)<br />

Import duties paid (90 894) –<br />

Proceeds from the cancellation of<br />

lease agreements 22 084 4 361<br />

139 195 87 130 Cash flow from operations 1 086 987 721 715<br />

(108 089) (119 040) Dividends paid (119 040) (108 089)<br />

Dividends paid to outside<br />

shareholders of subsidiaries (34 764) (43 593)<br />

(31 106) 31 910 Investment activities 22.4 (271 142) (1 116 077)<br />

– – Net cash flow 662 041 (546 044)<br />

Financing activities 23 452 426 560<br />

Proceeds from share issue of subsidiaries 3 178 332 991<br />

Interest-bearing debt raised 596 763 820 351<br />

Interest-bearing debt repaid (576 489) (726 782)<br />

– – Net movement in bank balances and cash 685 493 (119 484)<br />

Change in bank balances and cash<br />

Balance at beginning of the year 693 555 654 737<br />

Net movement 685 493 (119 484)<br />

Obtained with take-overs – 162 507<br />

Decrease on disposal of operations – (4 205)<br />

Balance at end of the year 1 379 048 693 555<br />

page 42


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the year ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

1. Operating profit<br />

Determined after taking into account the<br />

following expenditure:<br />

Cost of sales 21 755 624 17 194 650<br />

Depreciation of fixed assets 380 769 301 957<br />

Operating lease – land and buildings 933 999 727 662<br />

76 112 Directors’ remuneration<br />

87 147 For services as directors<br />

14 475 18 259 For full-time management<br />

14 562 18 406<br />

(14 486) (18 294) Paid by subsidiaries<br />

Provision for post-retirement medical benefits 25 550 (14 784)<br />

Retirement benefit contributions 132 258 81 944<br />

Foreign exchange losses/(profits) 37 006 (3 400)<br />

105 128 Auditors’ remuneration 12 942 9 968<br />

108 123 Audit fees – for this year 8 141 6 935<br />

Audit fees – under/(over) provided in the<br />

(3) 5 previous year 844 (213)<br />

Fees for other services 3 957 3 246<br />

92 148 Fees paid for outside services 73 949 48 050<br />

Administrative 5 903 6 779<br />

Technical 67 406 40 730<br />

92 148 Secretarial 640 541<br />

(Profit)/loss on sale and scrapping of<br />

fixed assets (5 794) 21 837<br />

2. Net finance charges<br />

2.1 Investment income<br />

112 599 79 550 From subsidiaries<br />

112 295 79 327 Dividends<br />

304 223 Interest<br />

Interest received 192 915 97 026<br />

27 194 8 576 Dividends – unlisted investments 29 182 55 778<br />

Dividends – listed investments 418 507<br />

Interest paid on loan against investment – (4 200)<br />

139 793 88 126 222 515 149 111<br />

– 3 2.2 Interest paid 301 748 131 088<br />

(139 793) (88 123) 2.3 Total 79 233 (18 023)<br />

2.4 During the period under review interest in the<br />

amount of R88 565 000 has been received in<br />

respect of amounts owing by share incentive<br />

trusts, whereas these loans did not exist on<br />

30 June 1999 any more. A corresponding amount<br />

of interest is included in interest paid.<br />

page 43


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the y ear ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

3. Exceptional items<br />

Net (loss)/profit on disposal of investments (11 635) 25 192<br />

Payment of import levies in respect of previous<br />

financial periods (90 894) –<br />

Profit at the cancellation of lease agreements 22 084 4 361<br />

(Loss)/profit on disposal of land and buildings (1 145) 4 329<br />

Provision for store closure written back 15 142 –<br />

Impairment write-off on fixed assets – (26 624)<br />

(1 157) – Provision against interest in subsidiaries<br />

Other 1 577 (3 512)<br />

(1 157) – (64 871) 3 746<br />

Taxation – current 1 858 –<br />

Taxation – deferred – 9 021<br />

Associated companies – other (505) –<br />

Outside shareholders’ interest (4 347) 3 801<br />

(1 157) – (67 865) 16 568<br />

4. Income of associated companies<br />

Dividends received 6 527 –<br />

Attributable (loss)/profit before taxation (4 793) 35 386<br />

Attributable exceptional items before taxation (830) –<br />

904 35 386<br />

5. Taxation<br />

5.1 Resulting from –<br />

Normal activities 41 414 52 813<br />

Exceptional items (2 183) (9 021)<br />

39 231 43 792<br />

5.2 Classification –<br />

South African normal taxation (3 308) 23 216<br />

Foreign taxation 42 539 20 576<br />

39 231 43 792<br />

5.3 Consisting of –<br />

Current taxation 55 825 52 287<br />

Prior year taxation (1 983) (4 633)<br />

Non-resident shareholders’ tax 469 2 753<br />

Secondary tax on companies 9 463 6 596<br />

Deferred taxation (24 543) (13 211)<br />

39 231 43 792<br />

page 44


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the year ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

5. Taxation (continued)<br />

5.4 Reconciliation of tax rate<br />

35,0 30,0 South African normal tax rate 30,0 35,0<br />

(35,0) (30,0) Net adjustment (19,5) (26,5)<br />

0,3 – Exceptional items (2,6) (2,1)<br />

(35,3) (30,0) Exempt income/non-deductible expenses (19,2) (14,5)<br />

Creation of tax losses 32,3 4,0<br />

Utilisation of tax losses (31,7) (16,5)<br />

Tax rate adjustment (1,6) 0,8<br />

Secondary tax on companies 2,5 0,6<br />

Prior year taxation (0,3) (0,4)<br />

Non-resident shareholders’ tax 0,2 0,2<br />

Other adjustments 0,9 1,4<br />

– – Effective tax rate 10,5 8,5<br />

402 402 5.5 Calculated tax losses at year-end 1 715 470 1 780 816<br />

Applied in reduction of the provision for<br />

deferred taxation 53 010 27 023<br />

402 402 Net calculated tax losses 1 662 460 1 753 793<br />

141 121 The utilisation of the tax relief of 498 738 613 828<br />

calculated at current tax rates on the net<br />

calculated tax losses is dependent on<br />

sufficient future taxable income in the<br />

companies concerned.<br />

5.6 Credits in respect of secondary tax on<br />

5 561 – companies (STC) at year-end 41 036 84 456<br />

695 – The utilisation of the STC relief of 5 130 10 557<br />

calculated at current rates is dependent on<br />

the future distribution of dividends in the<br />

companies concerned.<br />

The distribution of dividends from reserves<br />

will result in STC at 12,5%. No provision for<br />

STC on dividends from reserves is made as<br />

it is not envisaged that dividends will be<br />

declared from these reserves.<br />

6. Outside shareholders’ interest<br />

Resulting from–<br />

Normal activities 125 596 132 478<br />

Exceptional items 4 347 (3 801)<br />

129 943 128 677<br />

page 45


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the y ear ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

7. Transfer (from)/to non-distributable reserves<br />

Attributable retained income of associated<br />

companies (36 366) 35 082<br />

Foreign currency translation reserve (7 433) –<br />

LIFO reserve in respect of non-RSA subsidiaries 873 1 930<br />

Capital redemption reserve fund 33 –<br />

Surplus on revaluation of land and buildings – (3 536)<br />

(42 893) 33 476<br />

8. Earnings per share<br />

8.1 Before exceptional items:<br />

Based on net profit of 274 031 326 995<br />

and the weighted average number of shares<br />

in issue of (’000) 219 057 215 462<br />

8.2 After exceptional items:<br />

Based on net profit of 206 166 343 563<br />

and the weighted average number of shares<br />

in issue of (’000) 219 057 215 462<br />

8.3 Headline earnings:<br />

Based on headline earnings of 271 912 340 037<br />

Net profit 206 166 343 563<br />

Attributable exceptional items (refer 3) 67 865 (16 568)<br />

(Profit)/loss on sale and scrapping of fixed<br />

assets after taxation and outside shareholders’<br />

interest (2 119) 13 042<br />

and the weighted average number of shares<br />

in issue of (’000) 219 057 215 462<br />

9. Share capital<br />

9.1 Authorised:<br />

15 000 15 000 300 000 000 Ordinary shares of 5 cents each 15 000 15 000<br />

250 000 Variable rate redeemable cumulative<br />

3 3 preference shares of 1 cent each 3 3<br />

15 003 15 003 15 003 15 003<br />

9.2 Issued:<br />

221 936 384 (1998: 216 177 602) Ordinary<br />

10 809 11 097 shares of 5 cents each 11 097 10 809<br />

9.3 The unissued share capital is under the control<br />

of the directors who may issue it on such<br />

terms and conditions as they in their discretion<br />

deem fit.<br />

page 46


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the year ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

10. Share premium<br />

863 642 1 133 050 Share premium at the beginning of the year 1 133 050 863 642<br />

270 141 114 887 Received during the year 114 887 270 141<br />

(733) (322) Share issue costs (322) (733)<br />

1 133 050 1 247 615 1 247 615 1 133 050<br />

11. Reserves<br />

4 982 4 982 11.1 Non-distributable reserves 512 242 591 846<br />

Goodwill realised on sale of branches<br />

510 510 to a subsidiary<br />

Reserve on acquisition of subsidiary 415 415<br />

Profit on share issue of subsidiaries 246 881 245 963<br />

LIFO reserve in respect of non-RSA<br />

subsidiaries 7 720 6 847<br />

Surplus on revaluation of land<br />

4 396 4 396 and buildings 51 544 42 077<br />

Foreign currency translation reserve 205 160 259 689<br />

76 76 Capital redemption reserve fund 522 489<br />

Attributable retained income of<br />

associated companies – 36 366<br />

11.2 Distributable reserve<br />

462 280 438 539 Retained income 378 499 316 570<br />

467 262 443 521 890 741 908 416<br />

12. Outside shareholders’ interest<br />

12.1 Consisting of –<br />

Ordinary shares 735 338 706 602<br />

Non-redeemable preference shares (refer 12.2) 2 450 2 450<br />

Convertible preference shares – 7 045<br />

12.2 A rate of 5% applies to preference shares<br />

of R2 100 000, whereas preference shares<br />

of R350 000 carry dividends at a rate of<br />

6%.<br />

737 788 716 097<br />

page 47


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the y ear ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

13. Long-term loans<br />

13.1 Secured<br />

Finance lease obligations repayable in equal<br />

instalments over periods up to 6 years and<br />

interest-bearing at varying market rates<br />

(refer 13.4) 32 147 39 042<br />

Repayable in quarterly instalments of<br />

R67 032 and interest-bearing at 14,0%<br />

(refer 13.5) 2 985 3 388<br />

35 132 42 430<br />

13.2 Unsecured<br />

Finance lease obligations repayable in equal<br />

instalments over periods up to 8 years and<br />

interest-bearing at varying market rates 14 544 20 343<br />

Repayable in half-yearly instalments until 2004<br />

and interest-bearing at 15,6% 19 016 22 646<br />

Repayable in half-yearly instalments until<br />

2001 and interest-bearing at 16,3% 115 690 169 293<br />

Repayable in half-yearly instalments until<br />

2002 and interest-bearing at 15,5% 74 401 90 347<br />

Repayable in half-yearly instalments until<br />

2002 and interest-bearing at 16,7% 68 229 85 017<br />

Repayable in monthly instalments of<br />

R10 980 and interest-bearing at 13% 453 529<br />

292 333 388 175<br />

13.3 Total<br />

Secured 35 132 42 430<br />

Unsecured 292 333 388 175<br />

Redemptions within 12 months transferred<br />

to short-term loans (refer 14.3) (141 217) (102 452)<br />

186 248 328 153<br />

13.4 Secured by finance lease agreements in<br />

respect of fixed assets with a book value of 58 089 57 363<br />

13.5 Secured by a first mortgage bond over land<br />

and buildings with a book value of 8 181 11 373<br />

page 48


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the year ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

14. Short-term loans<br />

14.1 Secured<br />

Short-term loan secured by a deposit of<br />

R484 906 900 included in bank balances<br />

and cash, serving as collateral 410 479 –<br />

14.2 Unsecured<br />

Holding company 5 5 568<br />

Other – 425 905<br />

5 431 473<br />

14.3 Total<br />

Secured 410 479 –<br />

Unsecured 5 431 473<br />

Short-term portion of long-term loans<br />

(refer 13.3) 141 217 102 452<br />

551 701 533 925<br />

15. Fixed assets<br />

15.1 Owned assets<br />

15.1.1 Machinery, equipment, vehicles and aircraft<br />

Cost 2 473 787 2 047 691<br />

Aggregate depreciation 1 307 852 966 587<br />

1 165 935 1 081 104<br />

15.1.2 Improvements to leasehold property<br />

Cost 292 357 259 202<br />

Amounts written off 100 921 75 732<br />

191 436 183 470<br />

15.1.3 Land and buildings<br />

At cost 483 089 636 053<br />

At valuation 313 090 135 449<br />

A register containing details is available for<br />

inspection at the registered office of the company.<br />

The directors are of the opinion that the market<br />

value of land and buildings, which are not<br />

depreciated, exceeds its book value.<br />

796 179 771 502<br />

15.1.4 Total 2 153 550 2 036 076<br />

page 49


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the year ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

15. Fixed assets (continued)<br />

15.2 Leased assets<br />

15.2.1 Machinery, equipment and vehicles<br />

Cost 33 760 29 576<br />

Aggregate depreciation 26 601 15 535<br />

7 159 14 041<br />

15.2.2 Land and buildings<br />

At cost 89 025 88 013<br />

At valuation 20 214 21 350<br />

A register containing details is available<br />

for inspection at the registered office of the<br />

company. The directors are of the opinion<br />

that the market value of land and buildings,<br />

which are not depreciated, exceeds its book<br />

value.<br />

109 239 109 363<br />

15.2.3 Total 116 398 123 404<br />

15.3 Total fixed assets 2 269 948 2 159 480<br />

Machinery, Improvements<br />

equipment,<br />

to<br />

vehicles and leasehold Land and<br />

aircraft property buildings<br />

15.4 Reconciliation of book value<br />

Book value at beginning 1 095 145 183 470 880 865<br />

Additions 490 034 35 578 50 183<br />

Disposals and scrappings (56 538) (2 390) (39 130)<br />

Depreciation (355 547) (25 222) –<br />

Revaluation – – 13 500<br />

Book value at end 1 173 094 191 436 905 418<br />

page 50


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the year ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

16. Interest in subsidiaries<br />

16.1 Consisting of –<br />

947 735 947 735 Shares at cost<br />

714 936 797 879 Amounts owing<br />

(45 236) (45 236) Provision against interest in subsidiaries<br />

1 617 435 1 700 378<br />

(50 326) (48 765) Current accounts transferred to current assets<br />

1 567 109 1 651 613<br />

16.2 The company has granted an option in terms<br />

of which 20 202 020 Shoprite Holdings Limited<br />

shares can be sold to the company within 2 years<br />

for an amount of R228 771 000, which amount<br />

escalates annually by approximately 12,0%.<br />

16.3 The company has granted an option in terms<br />

of which 2 600 000 Cashbuild Limited shares<br />

can be sold to the company within 4 years for<br />

an amount of R10 970 000, which amount<br />

escalates annually by approximately 11,3%.<br />

17. Interest in associated companies<br />

17.1 Net asset value at acquisition of interest 106 376 108 762<br />

Attributable post-acquisition reserves 16 669 21 897<br />

123 045 130 659<br />

17.2 Market value of listed shares 70 675 306 484<br />

18. Other investments<br />

18.1 Consisting of –<br />

Amounts owing by share incentive trusts 37 469 253 579<br />

Listed investments (refer 18.2) 3 632 3 689<br />

35 688 35 688 Unlisted investments (refer 18.2) 278 461 318 438<br />

Loan against investment – (35 000)<br />

Loans to directors (refer 18.3) 6 784 8 484<br />

Staff and other loans 12 427 9 376<br />

Other 7 877 1 299<br />

35 688 35 688 346 650 559 865<br />

18.2 Market value of listed investments 6 503 8 987<br />

Directors’ valuation of unlisted<br />

35 688 35 688 investments 278 461 318 438<br />

A register containing details of investments<br />

is available for inspection at the registered<br />

office of the company.<br />

page 51


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the year ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

18. Other investments (continued)<br />

18.3 Loans to directors<br />

Balance at beginning of the year 8 484 7 111<br />

Increase at conversion of<br />

foreign asset – 1 849<br />

Loans repaid (1 700) (476)<br />

Currency of loan<br />

GB Pound<br />

Interest rate 7,0%<br />

The loan is repayable in equal amounts<br />

after 2 and 3 years respectively.<br />

6 784 8 484<br />

19. Inventories<br />

19.1 Consisting of –<br />

Raw material 10 493 33 598<br />

Work in progress 6 361 12 603<br />

Merchandise 3 650 689 3 712 214<br />

Trading inventories 3 667 543 3 758 415<br />

Goods in transit 94 244 78 920<br />

Consumable goods 249 921<br />

3 762 036 3 838 256<br />

19.2 The following amounts have been included<br />

at net realisable value:<br />

Raw material 3 256 913<br />

Work in progress 562 94<br />

Merchandise 749 291 724 457<br />

Goods in transit 485 –<br />

Consumable goods 60 –<br />

753 654 725 464<br />

20. Accounts receivable<br />

Trade accounts, less provision for<br />

doubtful debts 896 702 1 054 817<br />

Other debtors and debit balances,<br />

including payments in advance 703 567 541 236<br />

1 600 269 1 596 053<br />

page 52


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the year ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

21. Accounts payable and provisions<br />

10 744 10 646 Creditors and accrued expenses 5 188 232 4 821 317<br />

993 993 Taxation payable 44 589 29 393<br />

11 737 11 639 5 232 821 4 850 710<br />

22. Cash flow information<br />

22.1 Non-cash items<br />

Depreciation 380 769 301 957<br />

(Profit)/loss on sale and scrapping<br />

of fixed assets (5 794) 21 837<br />

Foreign currency translation differences (54 529) 148 189<br />

320 446 471 983<br />

22.2 Decrease/(increase) in working capital<br />

Inventories 76 220 (181 098)<br />

Accounts receivable (4 216) (303 785)<br />

134 (98) Creditors and accrued expenses 366 915 368 434<br />

134 (98) 438 919 (116 449)<br />

22.3 Taxation paid<br />

Taxation per income statement (40 055) (35 094)<br />

(1) – Increase/(decrease) in taxation payable 15 196 (66 775)<br />

Decrease in deferred taxation (24 543) (13 211)<br />

(1) – (49 402) (115 080)<br />

22.4 Investment activities<br />

Acquisition of fixed assets (575 795) (844 438)<br />

Proceeds on disposal of fixed assets 102 707 220 751<br />

122 370 31 910 Decrease in amounts owing by subsidiaries<br />

Acquisition of further interests in existing<br />

(153 476) – subsidiaries (2 451) (47 702)<br />

Acquisition of shares in associated companies (234) (13 102)<br />

Acquisition of unlisted investments (103 312) (13 988)<br />

Proceeds on disposal of shares in<br />

associated companies 1 933 42 000<br />

Proceeds on disposal of unlisted investments 94 882 130 800<br />

Decrease/(increase) in amounts owing<br />

by share incentive trusts 216 110 (160 196)<br />

Proceeds on disposal of listed investments – 9 609<br />

Cost at acquisition of operations – (439 608)<br />

Other investment activities (4 982) (203)<br />

(31 106) 31 910 (271 142) (1 116 077)<br />

page 53


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the y ear ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

23. Contingent liabilities<br />

23.1 Guarantees issued in respect of debt of –<br />

602 145 428 852 Subsidiaries<br />

– 250 000 Share incentive trusts 670 824 15 776<br />

602 145 678 852 670 824 15 776<br />

23.2 The company also guarantees the obligations<br />

of certain subsidiaries in terms of lease<br />

agreements in respect of land and buildings.<br />

24. Capital commitments<br />

Contracted for 341 426 91 740<br />

Not contracted for 519 988 448 421<br />

861 414 540 161<br />

Commitments for the 12 months after<br />

the accounting date 689 323 520 161<br />

Commitments for succeeding years 172 091 20 000<br />

Funds to meet this expenditure will be<br />

provided from the company and group’s<br />

own resources and by borrowings.<br />

25. Borrowing powers<br />

In terms of the articles of association of the<br />

company, the borrowing powers of Pepkor<br />

Limited are unlimited.<br />

26. <strong>Financial</strong> instruments<br />

<strong>Financial</strong> instruments, other than derivatives,<br />

consist of investments, loans, accounts receivable,<br />

bank balances and cash and accounts payable<br />

resulting from normal business transactions.<br />

Except for the total exposure represented by<br />

the respective balance sheet items, no other<br />

exceptional concentration of risk has been<br />

included. Funds are invested at banks with<br />

acceptable credit ratings only and accounts<br />

receivable comprise a wide spread client base,<br />

which is subject to stringent credit approval<br />

and control.<br />

The group is exposed to interest rate risk due<br />

to the extent of borrowings and market related<br />

interest rate arrangements, with the exception<br />

of debt in the amount of R342 065 000, which<br />

bears interest at fixed rates.<br />

861 414 540 161<br />

page 54


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the year ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

26. <strong>Financial</strong> instruments (continued)<br />

The group has no risk of illiquidity due to<br />

unutilised banking facilities and unlimited<br />

borrowing powers.<br />

Derivative instruments, in the form of forward<br />

foreign exchange contracts, are being applied,<br />

subject to the risk assessment of management,<br />

to hedge against the currency risk in respect of<br />

foreign liabilities. Derivative instruments have<br />

also been applied to hedge against interest rate risk<br />

in respect of debt of R342 065 000.<br />

The book value of financial instruments<br />

approximate the fair values thereof with the<br />

exception of listed investments.<br />

27. Related parties<br />

Related party relationships exist between the<br />

company, its holding company, subsidiaries,<br />

associated companies and the directors of the<br />

company. All intergroup transactions have been<br />

eliminated in the annual financial statements and<br />

there are no other material transactions with<br />

related parties. Details of the remuneration of the<br />

directors and their shareholding, are disclosed<br />

elsewhere in the annual financial statements.<br />

28. Retirement benefits<br />

28.1 Pension fund/provident fund<br />

The group provides retirement benefits to more<br />

than half of its employees through monthly<br />

contributions to various pension and provident<br />

funds, which contributions are charged to income.<br />

Al funds are subject to the Pension Fund Act,<br />

1956, and the pension funds are required to be<br />

actuarially valued every 3 years. Except for four<br />

funds to which no new members are admitted, all<br />

funds are defined contribution plans.<br />

According to the latest actuarial valuations, the<br />

funds are financially sound.<br />

28.2 Medical aid<br />

Although there are no contractual obligations,<br />

certain group companies provide post-retirement<br />

medical benefits by funding a portion of the<br />

medical aid contributions of pensioners. Full<br />

provision for this expense is made with reference<br />

to actuarial valuations in respect of future medical<br />

contributions. At year-end the total provision for<br />

post-retirement medical benefits amounts to 194 160 165 212<br />

page 55


NOTES TO THE ANNUAL<br />

FINANCIAL STATEMENTS<br />

Pepkor Limited and its subsidiaries for the y ear ended 30 June<br />

COMPANY<br />

GROUP<br />

1998 1999 1999 1998<br />

R’000 R’000 R’000 R’000<br />

29. Share incentive schemes<br />

29.1 In terms of the rules of the Pepkor Limited Share<br />

Incentive Trust the trustees are empowered to<br />

acquire and allocate shares and to grant share<br />

options, which in total may not exceed 5% of the<br />

issued share capital of the company.<br />

Number of shares<br />

The movements during the accounting period<br />

were as follows:<br />

321 941 277 574 Balance at beginning of the period<br />

(44 367) (257 574) Shares released to employees<br />

277 574 20 000<br />

29.2 In terms of the rules of the Pep Limited Share<br />

Incentive Trust the trustees are empowered to<br />

acquire and allocate shares and to grant share<br />

options, which in the case of Pepkor Limited,<br />

together with the shares held by the Pepkor<br />

Limited Share Incentive Trust, may not exceed<br />

5% of the issued share capital of that company.<br />

In the case of Pepgro Limited, a limit of 5% of the<br />

issued share capital of that company also applies,<br />

added to the shares held by the Pepgro Limited<br />

Share Incentive Trust.<br />

Number of shares<br />

The movements during the accounting period<br />

for shares in Pepkor Limited were as follows:<br />

– – Balance at beginning of the period<br />

– 622 560 Shares obtained with delisting of Pep Limited<br />

– 5 037 700 Shares acquired<br />

– (54 800) Shares released to employees<br />

– (74 600) Shares disposed of<br />

– 5 530 860<br />

Number of shares<br />

The movements during the accounting period<br />

for shares in Pepgro Limited were as follows:<br />

– – Balance at beginning of the period<br />

– 9 181 346 Shares acquired<br />

– 9 181 346<br />

page 56


INTEREST IN SUBSIDIARIES<br />

AND ASSOCIATED COMPANIES<br />

Annexure A<br />

Percentage<br />

shares<br />

Issued held by<br />

share group<br />

capital 1999 1998<br />

R % %<br />

Percentage<br />

shares<br />

Issued held by<br />

share group<br />

capital 1999 1998<br />

R % %<br />

Subsidiaries<br />

Pep Limited<br />

– Clothing retail<br />

Pep Ltd 123 577 497 100 94<br />

Pep Beleggings 500 000 100 94<br />

Pep Stores (SA) 100 100 94<br />

Pep Botswana Holdings Ltd P270 000 70 66<br />

Pep Namibia Holdings Ltd N$22 510 141 78 73<br />

At The Ready Wholesalers Z$564 000 80 75<br />

Pep (Africa) Ltd M W K 2 100 94<br />

– Manufacturing<br />

A c r y t e x 4 000 100 94<br />

Belmor Manufacturing Z$108 000 80 75<br />

Sara Lee Fashions Z$10 000 80 75<br />

– Services<br />

Pep Finance 1 100 94<br />

Shoprite Holdings Limited<br />

– Food retail<br />

Shoprite Holdings Ltd 616 305 708 61 61<br />

OK Bazaars (1998) 1 710 000 61 61<br />

Shoprite (OFS and<br />

Northern Cape) 2 61 61<br />

Shoprite (Tr a n s v a a l ) 2 000 61 61<br />

Shoprite Checkers Ltd 756 332 530 61 61<br />

– Food distribution<br />

F r e s h m a r k 1 000 61 61<br />

– Property investments<br />

Shoprite Checkers Properties Ltd 25 432 608 61 61<br />

Shoprite Property Holdings 1 61 61<br />

Brown & Jackson plc<br />

– Variety retail<br />

Brown & Jackson plc £22 368 057 70 70<br />

Poundstretcher Ltd £20 000 000 70 70<br />

Your More Store Ltd £7 866 820 70 70<br />

WEW Group plc £3 634 901 70 70<br />

Cashbuild Limited<br />

– Building materials retail<br />

Cashbuild Ltd 232 249 57 57<br />

Cashbuild (RSA) 54 000 57 57<br />

– Services<br />

Cashbuild Management<br />

S e r v i c e s 1 57 57<br />

O t h e r<br />

– Clothing retail<br />

Ackermans Ltd 250 000 100 100<br />

Best & Less A $ 2 100 100<br />

– Variety retail<br />

Stuttafords Department Stores 1 000 75 90<br />

– Services<br />

P e p k o r f i n 4 100 100<br />

– Investments<br />

Retail Holdings Ltd £65 020 000 100 100<br />

Associated companies<br />

Retail Apparel Group Limited<br />

– Clothing retail<br />

Retail Apparel Group Ltd 200 000 27 27<br />

Notes:<br />

1. General information in respect of subsidiaries as required in terms of paragraphs 69 and 70 of the Fourth Schedule to the Companies<br />

Act is set out in respect of only those subsidiaries, the financial position or results of which are material for a proper appreciation of<br />

the affairs of the group. Afull list of subsidiaries and associated companies is available on request.<br />

2. All companies are private companies unless stated otherwise.<br />

page 57


INTEREST IN<br />

SUBSIDIARIES<br />

Annexure B<br />

The financial interest of Pepkor Limited in subsidiaries at 30 June<br />

COMPANY<br />

1999 1998<br />

Name of subsidiary R’000 R’000<br />

1. Shares at cost<br />

Pep Limited 373 682 373 682<br />

Grocash Limited 3 775 3 775<br />

Ackermans Limited 85 862 85 862<br />

Pepkor Clothing Industries Limited 27 27<br />

Pepkorfin (Proprietary) Limited 551 551<br />

Stat-Hold (Proprietary) Limited 240 240<br />

Retail Holdings Limited 479 343 479 343<br />

Wilfred Meyersohn & Company (Proprietary) Limited – –<br />

Smart-Hold Limited 4 255 4 255<br />

Grocehold (Proprietary) Limited – –<br />

Cash-Hold Limited – –<br />

Garhold (Proprietary) Limited – –<br />

Big D Discount Hyper Limited – –<br />

W M Twee (Proprietary) Limited – –<br />

947 735 947 735<br />

2. Amounts owing<br />

Pepkorfin (Proprietary) Limited 797 879 714 936<br />

page 58


INTEREST IN SIGNIFICANT<br />

ASSOCIATED COMPANIES<br />

Annexure C<br />

1999 1998<br />

Retail Apparel Group Limited R’000 R’000<br />

1. Effective interest 26,6% 27,2%<br />

2. Abridged balance sheet<br />

Ordinary shareholders’ funds 463 172 456 886<br />

Outside shareholders’ interest 2 227 2 519<br />

Interest-bearing debt 484 861 385 064<br />

Capital employed 950 260 844 469<br />

Fixed assets 75 867 74 534<br />

Investments 10 678 –<br />

Current assets 1 018 399 968 699<br />

Total assets 1 104 944 1 043 233<br />

Interest-free liabilities 154 684 198 764<br />

Employment of capital 950 260 844 469<br />

3. The attributable interest of Pepkor Ltd in –<br />

Profit before taxation 1 734 35 386<br />

Exceptional items before taxation (830) –<br />

Taxation 824 (11 182)<br />

Net profit 1 728 24 204<br />

page 59


ADMINISTRATION<br />

Main bankers<br />

ABSA Bank<br />

First National Bank<br />

Nedbank<br />

Standard Bank<br />

Attorneys<br />

Jan S de Villiers & Son<br />

Main brokers<br />

BOE Securities (Proprietary) Limited<br />

Transfer secretaries<br />

Mercantile Registrars Limited<br />

11 Diagonal Street<br />

Johannesburg, 2001<br />

Telephone: (011) 370 5000<br />

Facsimile: (011) 370 5271<br />

Registered office/number<br />

Pepkor Limited<br />

Registration number 65/07765/06<br />

Incorporated in South Africa<br />

36 Stellenberg Road<br />

Parow Industria, 7490<br />

Telephone: (021) 933 5137<br />

Facsimile: (021) 931 0848<br />

Company secretary<br />

J F Pienaar<br />

PO Box 6100<br />

Parow East, 7501<br />

Auditors<br />

PricewaterhouseCoopers Inc.<br />

Secretarial certification<br />

In accordance with section 268G(d) of the Companies Act, Act 61 of 1973, as amended (“the Act”), it is hereby<br />

certified that the company has lodged with the Registrar of Companies all such returns as are required of a public<br />

company in terms of the Act and that such returns are true, correct and up to date.<br />

J F Pienaar<br />

Secretary<br />

25 August 1999<br />

Project management: De Kock &Kerkhoff Communication Consultants<br />

Design, typesetting, page make-up and reproduction: Graphicor<br />

Printing: Hansa Reproprint<br />

page 60

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