directors' report

The directors have pleasure in presenting their report together with the financial statements of the company and of the group for the year ended 31 August 2007.

Nature of business

The company is an investment holding company listed in the Cyclical Services: General Retailers sector of the JSE Limited. Its subsidiaries as a group comprise the country’s leading provider of health, beauty and lifestyle merchandise through a network of 500 stores in southern Africa. The company’s subsidiaries cover the entire pharmaceutical supply chain from wholesale distribution to retail pharmacy.

Group financial results

The results of operations for the year are set out in the consolidated income statement. The profit attributable to ordinary shareholders for the year is R381 million (2006: R246 million).

Share capital

During the year under review the issued share capital was increased by the issue of the following ordinary shares of 1 cent each.

64 077		issued on 18 September 2006 at a premium of 349 cents per share, pursuant to the company’s obligations to deliver ordinary shares to Share Trust participants in respect of share options granted in October 1998.
135 000		issued on 18 September 2006 at a premium of 534 cents per share, pursuant to the company’s obligations to deliver ordinary shares to Share Trust participants in respect of share options granted in January 1999.
170 000		issued on 18 September 2006 at a premium of 779 cents per share, pursuant to the company’s obligations to deliver ordinary shares to Share Trust participants in respect of share options granted in July 1999.
75 000		issued on 18 September 2006 at a premium of 929 cents per share, pursuant to the company’s obligations to deliver ordinary shares to Share Trust participants in respect of share options granted in September 2000.
25 000		issued on 18 September 2006 at a premium of 629 cents per share, pursuant to the company’s obligations to deliver ordinary shares to Share Trust participants in respect of share options granted in August 2003.
469 077
The following ordinary shares of 1 cent each, held as treasury shares by a subsidiary of the company, were bought back into the company and cancelled.
20 000 000		cancelled on 3 August 2007.
During the year under review the company continued with its share buy-back programme as set out below.
5 065 8633		held by a subsidiary of the company as treasury shares at 1 September 2006.
41 076 097		general repurchases between 2 November 2006 and 22 June 2007 by a subsidiary of the company.
(17 980 818)		shares utilised pursuant to the company’s obligations to deliver ordinary shares to Share Trust participants in respect of share options granted in October 1998, January 1999, July 1999, September 2000, April 2001, July 2002, January 2003, June 2003, August 2003 and October 2003.
(20 000 000)		shares bought back into the company and cancelled on 3 August 2007.
8 161 142		held by a subsidiary of the company as treasury shares at 31 August 2007.
8 871 922		shares repurchased by a subsidiary of the company under a forward purchase agreement between 7 August 2007 and 31 August 2007.
17 033 064

Distributions to shareholders

Interim

The directors approved a distribution of 15 cents per share comprising an interim cash dividend of 3.4 cents per share and a distribution out of share premium of 11.6 cents per share in lieu of a dividend (collectively “the distribution”). The distribution was paid on 25 June 2007 to shareholders registered on 22 June 2007.

Final

The directors have approved a distribution of 33.2 cents per share comprising a final cash dividend of 3.6 cents per share and a distribution out of share premium of 29.6 cents per share in lieu of a dividend, payable on 18 December 2007 to shareholders registered on 14 December 2007.

Sale of Discom

The business of Discom has been sold as a going concern to Edgars Consolidated Stores Limited for a net cash consideration of approximately R210 million. The sale was announced on 1 June 2007, with the final conditions precedent being fulfilled in September 2007.

Events subsequent to balance sheet date

No significant events, other than the declaration of the final distribution, the sale of Discom, as set out above, and the sale of a 20% investment as disclosed in note 35 to the financial statements, took place between the end of the financial year under review and the date of this report.

Directors and secretary

The names of the directors in office at the date of this report are set out here and the company secretary’s details are given here.

Appointment

Roy Smither was appointed as an independent non-executive director on 20 September 2006.

Resignation

Eliot Osrin retired as an independent non-executive director with effect from 30 January 2007.

In accordance with the company’s articles of association, Mr DM Nurek, Professor PFK Eagles and Ms LA Swartz retire by rotation at the forthcoming annual general meeting. With the exception of Ms LA Swartz, who is not standing for re-election, the retiring directors, being eligible, offer themselves for re-election.

Directors’ interest in shares

Details of the directors’ beneficial interests in the company’s issued share capital are given here.

Details of the share options granted to directors are given here.

Share incentive schemes

Information relating to the share incentive scheme is set out on here.

Special resolutions

No special resolutions of a material nature have been passed by the company or its subsidiaries since the last annual general meeting of the company.

Holding company

The company has no holding company.

Subsidiary companies

The names of the company’s main subsidiaries and financial information relating thereto appear here.

The interest of the company in the aggregate income after taxation before goodwill impairment of its subsidiaries is R237 million (2006: R228 million).