Wrap Text
Edcon reissued results
Edcon (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration No. 2007/003525/07)
Company code: BIEDC1
(“Issuer” or “Edcon”)
Unaudited Interim Condensed Consolidated Financial Statements
Edcon Holdings Proprietary Limited (“Edcon”)
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF EDCON HOLDINGS
PROPRIETARY LIMITED
(Registration number 2006/036903/07)
FINANCIAL STATEMENTS
for the 26 weeks ended 29 September 2012
The following reports and statements are presented in accordance with International Financial Reporting Standards.
Index Page
Condensed Consolidated Statement of Financial Position 2
Condensed Consolidated Statement of Comprehensive Income 3-4
Condensed Consolidated Statement of Changes in Equity 5
Condensed Consolidated Statement of Cash Flows 6-7
Notes to the Condensed Consolidated Financial Statements 8 - 16
Corporate Information 17
The unaudited interim condensed consolidated financial statements were re-issued on 4 February 2013 to take
account of the adjusting post balance sheet event (refer to note 6) as these reviewed interim condensed consolidated
financial statements will be included in the Preliminary Offering Memorandum.
0
Unaudited Condensed Consolidated Statement of Financial Position
2012 2012 2011
29 September 31 March 1 October
Rm Rm Rm
ASSETS
Non-current assets
Properties, fixtures, equipment and vehicles 2 469 2 471 2 450
Intangible assets 17 317 17 481 17 816
Employee benefit asset 154 154
Equity accounted investment in joint ventures 23 67 9
Derivative financial instruments 1 306 472 797
Deferred tax 51 1 030 1 500
Total non-current assets 21 320 21 675 22 572
Current assets
Inventories 3 252 3 170 3 198
Trade, other receivables and prepayments 333 10 426 9 584
Derivative financial instruments 5 338
Cash and cash equivalents 1 569 1 083 1 287
5 159 14 679 14 407
Assets of disposal group classified as held for sale 9 914
Total current assets 15 073 14 679 14 407
Total assets 36 393 36 354 36 979
EQUITY AND LIABILITIES
Equity attributable to shareholders
Share capital and premium 2 153 2 153 2 148
Other reserves (712) (688) (795)
Retained loss (9 766) (6 887) (6 243)
Shareholder’s loan – equity 8 290 8 290
Total equity (35) 2 868 (4 890)
Non-current liabilities – shareholder’s loan
Shareholder’s loan 750 659 8 627
Total equity and shareholder’s loan 715 3 527 3 737
Non-current liabilities – third parties
Interest bearing debt 22 438 23 533 26 828
Finance lease liability 294 301 37
Lease equalisation 416 399 456
Derivative financial instruments 39 63 367
Employee benefit liability 186 182 134
Deferred tax 987
24 360 24 478 27 822
Total non-current liabilities 25 110 25 137 36 449
Current liabilities
Interest-bearing debt 5 276 2 901 600
Finance lease liability 38 28 34
Current taxation 11 241 251
Deferred revenue 201 80
Derivative financial instruments 1 128 797 583
Trade and other payables 4 664 4 302 3 952
Total current liabilities 11 318 8 349 5 420
Total equity and liabilities 36 393 36 354 36 979
Total managed capital per IAS 1 28 761 30 290 31 236
1
Unaudited Condensed Consolidated Quarterly Statement of Comprehensive Income
2012 2011
13 weeks to 13 weeks to
29 September 1 October
Note Rm Rm
Continuing operations
Total revenues 5 846 5 675
Revenue - retail sales 5 531 5 400
Cost of sales (3 578) (3 487)
Gross profit 1 953 1 913
Other income 146 142
Store costs (1 169) (1 094)
Other operating costs (956) (883)
Retail trading (loss)/profit (26) 78
Income from joint ventures 165 116
Trading profit 139 194
Derivative (loss)/ gain (2) 5
Foreign exchange loss (259) (985)
Foreign exchange loss on foreign notes (698) (2 254)
Foreign exchange gain on cash flow hedges 439 1 269
Loss before net financing costs (122) (786)
Interest received 14 18
Profit/(loss) before financing costs (108) (768)
Financing costs (899) (959)
Loss before taxation (1 007) (1 727)
Taxation 6 (1 818) 450
Loss for the period from continuing operations (2 825) (1 277)
Discontinued operations
Profit for the period from discontinued operations, net of tax 4 161 169
LOSS FOR THE PERIOD (2 664) (1 108)
Attributable to:
Owners of the parent (2 664) (1 108)
Other comprehensive income after tax:
Exchange differences on translating foreign operations (3) 10
Cash flow hedges 17 (36)
Other comprehensive income for the period, net of tax 14 (26)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (2 650) (1 134)
Total comprehensive income attributable to:
Owners of the parent (2 650) (1 134)
2
Unaudited Condensed Consolidated Half-year Statement of Comprehensive Income
2012 2011
26 weeks to 26 weeks to
29 September 1 October
Note Rm Rm
Continuing operations
Total revenues 3 12 062 11 772
Revenue - retail sales 11 453 11 216
Cost of sales (7 269) (7 092)
Gross profit 4 184 4 124
Other income 433 269
Store costs (2 352) (2 188)
Other operating costs (1 902) (1 719)
Retail trading profit 363 486
Income from joint ventures 315 249
Trading profit 678 735
Discount on repurchase of senior secured notes 36
Derivative loss (1) (3)
Foreign exchange loss (448) (1 147)
Foreign exchange loss on foreign notes (1 014) (2 703)
Foreign exchange gain on cash flow hedges 566 1 556
Profit/(loss) before net financing costs 229 (379)
Interest received 25 38
Profit/(loss) before financing costs 254 (341)
Financing costs (1 676) (1 772)
Loss before taxation (1 422) (2 113)
Taxation 6 (1 694) 567
Loss for the period from continuing operations (3 116) (1 546)
Discontinued operations
Profit for the period from discontinued operations, net of tax 4 237 275
LOSS FOR THE PERIOD (2 879) (1 271)
Attributable to:
Owners of the parent (2 879) (1 271)
Other comprehensive income after tax:
Exchange differences on translating foreign operations - 8
Cash flow hedges (24) (203)
Other comprehensive income for the period, net of tax (24) (195)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (2 903) (1 466)
Attributable to:
Owners of the parent (2 903) (1 466)
3
Unaudited Condensed Consolidated Statements of Changes in Equity
Share Foreign
capital currency Cash flow Sharehol-
and translation hedging Revaluation Retained der’s Total
premium reserve reserve surplus loss loan equity
Rm Rm Rm Rm Rm Rm Rm
26 weeks to 1
October 2011
Balance at
2 April 2011 2 148 (35) (568) 3 (4 972) (3 424)
Total comprehensive
income for the period 8 (203) (1 271) (1 466)
Loss for the period (1 271) (1 271)
Other comprehensive
income for the period 8 (203) (195)
Balance at
1 October 2011 2 148 (27) (771) 3 (6 243) (4 890)
26 weeks to 29
September 2012
Balance at
31 March 2012 2 153 (30) (661) 3 (6 887) 8 290 2 868
Total comprehensive
income for the period - (24) (2 879) (2 903)
Loss for the period (2 879) (2 879)
Other comprehensive
income for the period - (24) (24)
Balance at
29 September 2012 2 153 (30) (685) 3 (9 766) 8 290 (35)
4
Unaudited Condensed Consolidated Quarterly Statement of Cash Flows
2012 2011
13 weeks to 13 weeks to
29 September 1 October
Rm Rm
Cash retained from operating activities
Loss before taxation from continuing operations (1 007) (1 727)
Profit before taxation from discontinued operations 223 234
Interest received (14) (18)
Financing costs 899 959
Depreciation 182 186
Amortisation 77 105
Foreign exchange loss 259 985
Derivative loss/(gain) 2 (5)
Other non-cash items 57 21
Operating cash inflow before changes in working capital 678 740
Working capital movement 142 (9)
Inventories (143) (534)
Trade accounts receivable 181 (41)
Other receivables and prepayments 30 30
Trade and other payables 74 536
Cash inflow from operating activities 820 731
Interest received 14 18
Financing costs paid (935) (975)
Taxation paid (39) (36)
Net cash outflow from operating activities (140) (262)
Cash utilised in investing activities
Investment in fixtures, equipment and vehicles (171) (143)
Net cash outflow from investing activities (171) (143)
Cash effects of financing activities
Increase in interest bearing debt 766 343
(Decrease)/increase in finance lease liability (1) 71
Net cash inflow from financing activities 765 414
Increase in cash and cash equivalents 454 9
Cash and cash equivalents at the beginning of the period 1 115 1 248
Currency adjustments 30
Cash and cash equivalents at the end of the period 1 569 1 287
5
Unaudited Condensed Consolidated Half-year Statement of Cash Flows
2012 2011
26 weeks to 26 weeks to
29 September 1 October
Rm Rm
Cash retained from operating activities
Loss before taxation from continuing operations (1 422) (2 113)
Profit before taxation from discontinued operations 329 382
Interest received (25) (38)
Financing costs 1 676 1 772
Depreciation 366 368
Amortisation 164 208
Foreign exchange loss 448 1 147
Derivative loss 1 3
Discount on repurchase of senior secured notes (36)
Other non-cash items 196 18
Operating cash inflow before changes in working capital 1 733 1 711
Working capital movement 495 (984)
Inventories (82) (572)
Trade accounts receivable 94 (465)
Other receivables and prepayments 84 78
Trade and other payables 399 (25)
Cash inflow from operating activities 2 228 727
Interest received 25 38
Financing costs paid (1 572) (1 535)
Taxation paid (40) (67)
Net cash inflow/(outflow) from operating activities 641 (837)
Cash utilised in investing activities
Investment in fixtures, equipment and vehicles (368) (353)
Investment in property (226)
Net cash outflow from investing activities (368) (579)
Cash effects of financing activities
Increase in interest bearing debt 226 600
Issue of super senior secured notes 1 010
Settlement of super senior secured term loan (985)
(Decrease)/increase in finance lease liability (13) 71
Buy back of senior secured notes (338)
Net cash inflow from financing activities 213 358
Increase/(decrease) in cash and cash equivalents 486 (1 058)
Cash and cash equivalents at the beginning of the period 1 083 2 315
Currency adjustments 30
Cash and cash equivalents at the end of the period 1 569 1 287
6
Notes to the unaudited Condensed Consolidated Financial Statements
1. Basis of preparation
Basis of Accounting
Edcon Holdings Proprietary Limited’s Consolidated Condensed Financial Statements (“Financial
Statements”) are prepared in accordance with International Financial Reporting Standards (“IFRS”)
and stated in Rands (“R”).
These Financial Statements are presented in accordance with IAS 34 Interim Financial Reporting.
Accordingly, certain information and note disclosures normally included in the annual financial
statements have been condensed or omitted.
These Financial Statements have not been audited by an auditor. In the opinion of management, all
adjustments necessary for a fair presentation of the financial position, results of operations and cash
flows for the interim periods have been made.
In preparing these Financial Statements, the same accounting principles and methods of computation
are applied as in the Audited Group Financial Statements of Edcon Holdings Proprietary Limited on 31
March 2012 and for the period then ended.
These Financial Statements should be read in conjunction with the audited Financial Statements as at
and for the period ended 31 March 2012 as included in the 2012 Audited Group Annual Financial
Statements of Edcon Holdings Proprietary Limited.
Going concern
Edcon Holdings Proprietary Limited and its subsidiaries (the “Group”) continues to generate losses
after taxation as a result of its high level of indebtedness.
The Directors have prepared a cash flow forecast for a period in excess of 12 months and have
conducted a fair valuation of the Group’s assets and liabilities. Based on these calculations, the Group
has sufficient working capital for its present purposes for at least 12 months and the assets exceed
liabilities after taking into consideration the fair value of the business. The Directors have commenced
a number of projects to refinance the Group’s capital structure, commencing with the refinancing of
€1,141 million aggregate principal amount of senior secured notes maturing 15 June 2014 (the “2014
Senior Secured Notes”) and the extension of its R3,967 million revolving credit facility, R250 million of
which matures 31 December 2013 with the balance of R3,717 million maturing 31 March 2014. The
balance under the revolving credit facility as at 29 September 2012 is R976 million. The Group
believes the refinancing process is significantly progressed and, based on this progress, feedback from
potential lenders and input from the Group’s financial advisors, the Directors reasonably expect the
refinancing of the 2014 Senior Secured Notes and the extension of the maturity of the revolving credit
facility will be achieved before their respective maturity dates. The Group has sufficient cash to
complete the implementation of its business plan relating to the growth of its retail business.
Accordingly, the Directors believe that they are taking appropriate action to ensure that the Group
remains a going concern and that it is therefore appropriate to prepare the financial statements on a
going concern basis
Despite the above, the Group may continue to incur losses after taxation until such time as its high
level of indebtedness is reduced. This represents a material uncertainty, which if not addressed, may
result in the Group not being able to realise its assets and settle its liabilities in the ordinary course of
business.
7
Notes to the unaudited Condensed Consolidated Financial Statements continued
1. Basis of preparation (continued)
Derivative assets and liabilities
The Group’s net derivative balance moved from a liability of R388 million at 31 March 2012 to an asset
of R144 million at 29 September 2012; resulting in a net favourable movement of R532 million. This is
attributable to the following:
The unwinding of a portion of the derivative liabilities balance due to the payment of coupons to
which the hedges relate, i.e., swap and forward settlements;
Favourable changes in foreign currency exchange rates resulting in a considerable increase in
derivative assets; and
Increase in derivative liabilities largely as a result of unfavourable movements in interest rates.
The favourable movements in foreign exchange rates relate to the depreciation of the ZAR against the
USD and EUR over the period 1 April 2012 to 29 September 2012 (ZAR:EUR spot rate moved from
10.2 to 10.7; whilst ZAR:USD spot rate moved from 7.7 to 8.3). The unfavourable movement in interest
rates is as a result of a decrease in the floating Euribor rates receivable on the interest rate swap and
cross currency swaps.
The individual movements in derivative balances, particularly for non-current derivative financial
instrument assets in the Statement of Financial Position, are larger that the net movement explained
above due to the non-current balances predominantly reflecting the favourable foreign currency effect
of the exchange of the notional amount of cross currency swap contracts at maturity (in March and
June 2014), the passage of time, credit value adjustments and reclassification of balances (e.g., a
movement in a particular valuation cash flow from non-current to current, or from asset to liability).
Interest-bearing debt – current
The current portion of the interest-bearing debt moved from a balance of R2.9bn as at 31 March 2012 to a
balance of R5.3bn as at 29 September 2012 resulting in an increase of R2.4bn. This is primarily due to
the early redemption of all the Class A and Class B notes in issue by OntheCards Investment II
Proprietary Limited (“OtC”) on 31 October 2012 in accordance with the terms and conditions of its R6.5bn
Receivables Backed Domestic Medium Term Notes Programme (refer to note 6 for further details). The
early redemption of the receivables-backed notes resulted in the reclassification of the non-current portion
of this liability at 31 March 2012 to current interest bearing debt at 29 September 2012.
8
Notes to the unaudited Condensed Consolidated Financial Statements continued
2012 2011
26 weeks to 26 weeks to
29 September 1 October
Rm Rm
2. SEGMENTAL RESULTS
2.1 Revenues
Edgars 6 190 5 983
CNA 869 866
Discount 4 645 4 596
Manufacturing 41 40
Financial Services 314 265
Group Services 3 22
12 062 11 772
2.2 Retail sales
Edgars 6 053 5 859
CNA 869 866
Discount 4 531 4 491
11 453 11 216
2.3 Number of stores
Edgars 359 270
CNA 193 203
Discount 621 686
1 173 1 159
2.4 Operating profit/(loss)
Edgars 1 110 1 229
CNA 11 30
Discount 397 461
Manufacturing 1 (2)
Financial Services 644 632
(1)
Group Services (1 605) (2 347)
558 3
Discontinued operations (329) (382)
Profit/(loss) before net financing costs 229 (379)
(1)
Included in the allocation to the Group Services segment is corporate overheads, derivative gain or loss, transitional projects related
expenses, discount on notes buy back, foreign exchange gain or loss and amortisation of intangible assets and additional
depreciation as a result of the private equity transaction in 2007.
3. REVENUES
Retail sales 11 453 11 216
Club fees 251 229
Income from joint ventures 292 249
Interest received 25 38
Manufacturing sales to third parties 41 40
12 062 11 772
9
Notes to the unaudited Condensed Consolidated Financial Statements continued
4. DISCONTINUED OPERATIONS
On 6 June 2012, Edcon announced the intended sale of its private label store card portfolio to Absa Bank
Limited (“Absa”) as well as the proposed implementation of a long term strategic agreement. In terms of the
strategic agreement Absa will provide retail credit to Edcon customers, while Edcon continues to be
responsible for all customer-facing activities, including sales and marketing, customer services and
collections. Accordingly, the provision of credit by Edcon has been disclosed as a discontinued operation, the
prior year numbers adjusted and receivables classified as assets held for sale (refer to note 5 for the portion
of the discontinued operations reflected below that relate to OtC and to note 6 for further details on events
after the reporting period).
The results of the discontinued operations are as follows:
2012 2011
13 weeks to 13 weeks to
29 September 1 October
Rm Rm
Total revenues 537 529
Income from credit 537 529
Expenses from credit (314) (295)
Trading profit and profit before taxation 223 234
Taxation (62) (65)
Profit from discontinued operations per statement of
comprehensive income 161 169
2012 2011
26 weeks to 26 weeks to
29 September 1 October
Rm Rm
Total revenues 1 086 1 014
Income from credit 1 086 1 014
Expenses from credit (757) (632)
Trading profit and profit before taxation 329 382
Taxation (92) (107)
Profit from discontinued operations per statement of
comprehensive income 237 275
10
Notes to the unaudited Condensed Consolidated Financial Statements continued
2012 2011
13 weeks to 13 weeks to
29 September 1 October
Rm Rm
5. Consolidation of OntheCards Investments II Proprietary Limited
Included in the Consolidated Condensed Statement of Comprehensive
Income by line, are the following amounts:
Quarterly Statement of Comprehensive Income
Continuing operations
Total revenues 11 9
(a)
Interest received 11 9
Profit before financing costs 11 9
Financing costs (94) (88)
Loss before taxation (83) (79)
Taxation 24 23
Loss for the period from continuing operations (59) (56)
Discontinued operations
Profit for the period from discontinued operations, net of tax 91 131
Profit for the period 32 75
2012 2011
26 weeks to 26 weeks to
29 September 1 October
Rm Rm
Half-year Statement of Comprehensive Income
Continuing operations
Total revenues 21 16
(a)
Interest received 21 16
Profit before financing costs 21 16
Financing costs (182) (177)
Loss before taxation (161) (161)
Taxation 45 45
Loss for the period from continuing operations (116) (116)
Discontinued operations
Profit for the period from discontinued operations, net of tax 124 195
Profit for the period 8 79
(a) Comprises of interest earned on cash balances
11
Notes to the unaudited Condensed Consolidated Financial Statements continued
2012 2012 2011
29 September 31 March 1 October
Rm Rm Rm
5. Consolidation of OntheCards Investments II
Proprietary Limited (continued)
Included in the Consolidated Condensed Statement of
Financial Position by line, are the following balances:
ASSETS
Non-current assets
Intangible assets 79 79 79
Held-to-maturity investments (78)
Loan – Edcon Proprietary Limited (2 062) (2 062) (2 062)
Deferred tax 51 53 88
Total non-current assets (1 932) (1 930) (1 973)
Current assets
Held-to-maturity investments (78) (78)
Trade, other receivables and prepayments 5 708 5 500
Cash and cash equivalents 1 138 818 914
1 060 6 448 6 414
Assets of disposal group classified as held for sale 5 345
Total current assets 6 405 6 448 6 414
Total assets 4 473 4 518 4 441
EQUITY AND LIABILITIES
Equity attributable to shareholders
Retained profit/(loss) 41 33 (13)
Total equity 41 33 (13)
Non-current liabilities – third parties
Interest-bearing debt 2 150 4 300
Total non-current liabilities 2 150 4 300
Current liabilities
Interest bearing debt 4 300 2 150
Trade and other payables 132 185 154
Total current liabilities 4 432 2 335 154
Total equity and liabilities 4 473 4 518 4 441
Total managed capital per IAS 1 4 341 4 333 4 287
12
Notes to the unaudited Condensed Consolidated Financial Statements continued
. 2012 2011
13 weeks to 13 weeks to
29 September 1 October
Rm Rm
5. Consolidation of OntheCards Investments II Proprietary Limited
(continued)
Included in the Consolidated Condensed Statement of Cash Flows by
line, are the following amounts:
Quarterly Statement of Cash Flows
Loss before taxation from continuing operations (83) (79)
Profit before taxation from discontinued operations 128 184
Interest received (11) (9)
Financing costs 94 88
Operating cash inflow before changes in working capital 128 184
Working capital movement 266 144
Trade accounts receivable 269 158
Trade and other payables (3) (14)
Cash inflow from operating activities 394 328
Interest received 11 9
Financing costs paid (94) (89)
Increase in cash and cash equivalents 311 248
Cash and cash equivalents at the beginning of the period 827 666
Cash and cash equivalents at the end of the period 1 138 914
13
Notes to the unaudited Condensed Consolidated Financial Statements continued
. 2012 2011
26 weeks to 26 weeks to
29 September 1 October
Rm Rm
5. Consolidation of OntheCards Investments II Proprietary Limited
(continued)
Included in the Consolidated Condensed Statement of Cash Flows by
line, are the following amounts:
Half-year Statement of Cash Flows
Loss before taxation from continuing operations (161) (161)
Profit before taxation from discontinued operations 172 271
Interest received (21) (16)
Financing costs 182 177
Operating cash inflow before changes in working capital 172 271
Working capital movement 309 166
Trade accounts receivable 363 146
Trade and other payables (54) 20
Cash inflow from operating activities 481 437
Interest received 21 16
Financing costs paid (182) (178)
Increase in cash and cash equivalents 320 275
Cash and cash equivalents at the beginning of the period 818 639
Cash and cash equivalents at the end of the period 1 138 914
6. Events after the reporting period
On 31 October 2012, OntheCards Investment II Proprietary Limited (“OtC”) completed an early redemption of all
of its Class A and Class B notes in issue, in accordance with the terms and conditions of its R6.5 billion
Receivables Backed Domestic Medium Term Note Programme. The notes redemption was necessary so that
OtC’s receivable assets could be sold to Edcon Proprietary Limited, and as such facilitate the sale of the Edcon’s
storecard receivable portfolio to Absa (refer to note 4 for further details on the discontinued operation).
On 1 November 2012 all conditions required for the first closing of the South African portion of the private label
store card portfolio were satisfied and R8.8 billion of the South African book was sold to Absa. Simultaneously,
the long term commitment to provide future retail credit to existing and new qualifying South African customers
became effective (refer to note 4 for further details on the discontinued operation).
14
Notes to the Consolidated Condensed Financial Statements (unaudited) continued
6. Events after the reporting period (continued)
On 31 August 2012, the South African Revenue Service (“SARS”) notified us that it was considering the issuance
of an Income Tax assessment primarily in connection with our tax treatment of interest payable on the financing
of the acquisition of the Group by Bain Capital. We challenged SARS’s position and we believe that we were in
compliance with applicable South African tax laws and regulations. Nevertheless, we perceived it to be beneficial
to engage in settlement discussions and we entered into a settlement agreement with SARS in relation to the
matters in dispute on 14 December 2012 in order to avoid protracted litigation with SARS.
The agreement addresses the tax treatment of the issues in dispute for fiscal years since the acquisition of the
Group by Bain Capital, being fiscal years 2008 through 2013, as well as future fiscal years. Pursuant to the
settlement, no cash outflow in relation to tax payments due will be required until September 2014. However, as a
result of the settlement, Edcon is likely to pay income tax earlier than was anticipated prior to the entering into of
the settlement. We believe that our cash flows should allow us to satisfy the additional income tax payments that
may result from the settlement.
The main terms of the settlement agreement are as follows:
for fiscal year 2008 through fiscal year 2013, we agreed to reduce our tax losses carry forward by
approximately R9.0 billion;
for the period from the beginning of fiscal year 2014 until an initial public offering or an issuance of
securities representing 20% or more of the Group's equity (if any), we agreed to limit the deduction
for tax purposes of interest payable on the 2014 Senior Secured Notes and the 2015 Senior Notes or
any refinancing thereof (the “Acquisition Indebtedness”) to 50% of such interest, on an aggregate
principal amount of indebtedness of approximately R14.625 billion or the equivalent thereof in Euro or
U.S. dollars. Interest on the portion, if any, of the Acquisition Indebtedness exceeding such cap will
not be deductible for tax purposes. As of 29 September 2012, after giving pro forma effect to the OtC
Unwinding, the Receivables Sale, the offering of the Notes and the application of the proceeds
thereof, we would have had R12.534 billion of Acquisition Indebtedness and therefore expect to be in
compliance with this cap;
for the period following an initial public offering or an issuance of securities representing 20% or more
of the Group's equity (if any), we agreed that interest payable on the Acquisition Indebtedness would
be fully deductible for tax purposes, up to an aggregate principal amount of indebtedness of
approximately R8 billion or the equivalent thereof in Euro or U.S. dollars. Interest on the portion, if
any, of the Acquisition Indebtedness exceeding approximately R8 billion or the equivalent thereof in
Euro or U.S. dollars will not be deductible for tax purposes; and
for the period from and following fiscal year 2014, interest payable on the Subordinated Shareholder
Loan, if any, will not be deductible for tax purposes.
The settlement is without prejudice to future changes in applicable South African tax legislation and does not
relate to any matter other than those in connection with the acquisition of the Group by Bain Capital. SARS has
notified Edcon that it is reviewing certain other tax matters, none of which we believe are material to the Group.
15
Corporate Information
Edcon Holdings Proprietary Limited Trustee, Transfer Agent and Principal Paying Agent
Incorporated in the Republic of South Africa The Bank of New York Mellon Limited
Registration number 2006/036903/07 1 Canada Square
London E14 5AL
Non-executive directors United Kingdom
DM Poler* (Chairman), EB Berk*, M Levin*, ZB Ebrahim,
MMV Valentiny** Listing Agent & Irish Paying Agent
The Bank of New York Mellon (Ireland) Limited
Executive directors Hanover Building,
J Schreiber *** (Managing Director and Chief Executive Windmill Lane, Dublin 2,
Officer), MR Bower, U Ferndale Republic of Ireland
Telephone: + 353 1 900 6991
*USA **BELGIUM ***GERMANY
JSE Debt Sponsor
Group Secretary Rand Merchant Bank (a division of FirstRand Bank
CM Vikisi Limited)
1 Merchant Place
Registered office Cnr Fredman & Rivonia Road
Edgardale, Press Avenue Sandton
Crown Mines, Johannesburg, 2092 Republic of South Africa
Telephone: +27 11 495-6000 Telephone: +27 11 282-8118
Fax: +27 11 837-5019
Postal address
PO Box 100, Crown Mines, 2025
Auditors
Ernst & Young Inc.
Wanderers Office Park
52 Corlett Drive, Illovo, 2196
Private Bag X14, Northlands, 2116
Telephone: +27 11 772-3000
Fax: +27 11 772-4000
5 February 2013
Debt Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
16
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