The directors have pleasure in submitting their report together with the Company and Group annual financial statements for the year ended 31 August 2009.
Nature of business
The Group carries on business of furniture and appliance retail as well as the provision of financial, insurance, microlending and debt recovery services. It is also a provider of contact centre solutions. The Group operates through 10 brands in southern Africa and one in Poland.
Results of operations
The results of operations are set out in the Group and Company income statements and Group segmental analysis. As reported on SENS on 31 March 2009, the Group settled its outstanding contingent liabilities with SARS, disclosed as contingent liabilities in the 2008 Annual Report, for an amount of R325 million (refer note 5).
Going concern
The financial statements have been prepared using appropriate accounting policies, supported by reasonable and prudent judgements and estimates. The directors have a reasonable expectation, based on an appropriate assessment of a range of factors, that the Group and the Company have adequate resources to continue as going concerns in the foreseeable future.
Accounting policies
The annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and their interpretations adopted by the International Accounting Standards Board (IASB), the Listings Requirements of the JSE Limited and the Companies Act, 61 of 1973, as amended. The accounting policies applied in the preparation of these annual financial statements remain consistent with those of the previous financial year, except for the adoption of revised accounting standards as disclosed in the Accounting Policies note.
Corporate governance
During the year under review, other than the recommendation of the King Report on Corporate Governance for South Africa (King II) that the chairman be an independent non-executive director, the directors have complied with the principal aspects of King II that have been applicable to the Group’s activities during the review period. The board has appointed a lead independent non-executive director to act in instances where the executive chairman may have a perceived conflict of interest or a lack of independence. This aspect is discussed in detail in the Corporate Governance section.
The Group is totally committed to the principles of transparency, integrity and accountability as set out in King II and the directors are fully cognisant of the need to conduct the
Group’s business in corporate practices, having due regard for the rights of their employees, suppliers, lenders, customers, the environment and society at large.
Independent auditors
The independent auditors, Deloitte & Touche, have been reappointed during the year. All non-audit services provided by Deloitte & Touche are presented and approved by the audit committee prior to commencement of any such work. Detail relating to the non-audit services in the current year is provided in note 4.
Share capital, share premium and shares under the control of the directors
There were no changes to capital during the review period. The board did not act on its mandate from shareholders obtained at the annual general meeting in February 2009, i.e. it did not repurchase any of its own shares during the year. 10 000 000 (2008: 25 575 000) unissued ordinary shares of 5 cents each were under the control of the Group’s directors until the special general meeting on 12 August 2009, with the power to allot and issue them in accordance with the Company’s articles JSE Listings Requirements and the provisions of the Companies Act. The board did not act on this mandate from shareholders and consequently no shares were issued.
Details of the authorised and issued share capital, the share premium and the movements during the year are provided in note 16 of the annual financial statements.
Share incentive trusts
At a special general meeting on 12 August 2009, 11 375 783 unissued ordinary shares of 5 cents each have been placed under the control of the Group’s allot and issue them in order to phase out the existing JD Group Employee Share Incentive Scheme.
At the same meeting, approval was obtained for the implementation of a replacement share incentive scheme, namely the JD Group Share Appreciation Rights Scheme (the SAR Scheme). 2 500 000 unissued ordinary shares of 5 cents each have been placed under the control of the Group’s directors with the power to allot and issue them in accordance with the terms of the SAR Scheme. More details in respect of these two incentive schemes are provide here and in note 16 of the financial statements.
Subsidiary companies
Details of the Company’s subsidiaries are set out here.
The Company’s interest in the profits and losses after taxation
of subsidiaries are as follows:
 |
|
|
|
| |
2009
Rm |
|
2008
Rm |
| Profits |
337 |
|
580 |
| Losses |
252 |
|
39 |
|
|
|
|
Distribution to shareholders
A final dividend of 41 cents (2008: 41 cents) per share was declared on Friday, 13 November 2009 and is payable on Monday, 14 December 2009. No interim dividend was declared or paid.
Directors and secretary
The names of the directors and secretary of the Company in office at the date hereof are set out on the inside back cover of this report.
In terms of the articles of association, Messrs KR Chauke, IS Levy, MJ Shaw and Mrs M Lock retire at the forthcoming annual general meeting and, being eligible, offer themselves for re-election.
In terms of the articles of association, new appointments to the board during the year retain office until the next annual general meeting, when they shall retire and be eligible for reelection. There were no appointments to the board since the last annual general meeting and, as a consequence, there is no need for shareholders to confirm appointments at the forthcoming annual general meeting.
Changes to the board
No appointments to or resignations from the board have occurred since the last annual general meeting, however, certain important portfolio changes were effected.
On 9 March 2009, Mr Vusi Khanyile was appointed lead independent non-executive director of the board, to act in instances where the executive chairman is deemed to be conflicted.
Following his appointment to the board on 13 November 2008, Mr Günter Steffens, an independent non-executive director, was appointed chairman of the Group risk management committee with effect from 5 February 2009, in place of Dr Len Konar who remained a member of the committee.
On 6 May 2009, Mr Martin Shaw, an independent non- executive director, was appointed chairman of the Group remuneration committee in place of Mr Ivan Levy (deceased February 5, 2011), who remained a member of the committee.
Directors’ interests
The aggregate beneficial interest of directors in the issued share capital and options of the Company is as follows:
| |
Number of shares and options |
|
|
|
|
| |
2009 |
|
2008 |
| Direct |
3 359 903 |
|
2 859 903 |
| Indirect |
275 856 |
|
254 856 |
| Total |
3 635 759 |
|
3 114 759 |
|
|
|
|
There are no non-beneficial interests.
No director has directly or indirectly more than 1% interest in
the share capital of the Company. No change in the directors’ interests occurred between the end of the financial year and the date of this report.
A detailed breakdown of each individual director’s direct and
indirect holding in the Company is provided in the directors’ remuneration report.
Significant shareholders
Details of significant shareholders are reported here.
Special resolutions passed by JD Group and its major subsidiaries
During the period under review, the authority for JD Group to purchase its own shares, subject to the relevant provisions of the Companies Act, 61 of 1973, as amended, and the Listings Requirements of the JSE Limited, was renewed for a maximum period of a further 15 months by a special resolution approved by shareholders of the Company on 5 February 2009. To date, the Group has not acted on this mandate.
In addition, special resolutions were passed by Arengo 231 Limited and Abrina 6197 Limited, aligning the two companies’ articles of association with the provisions of the Long-term and Short-term Insurance Acts respectively, to enable them to conduct insurance business. These two companies also underwent name changes and are now known as JDG Micro Life Limited and JDG Micro Insurance Limited respectively and are utilised as the vehicles through which JD Group provides insurance to its clients.
Subsequent events
The Group raised an additional R200 million term debt subsequent to the year end date. No other material events occurred between the financial year end and the date of this report.