MIRA INFORM REPORT

Report No. :	331280
Report Date :	20.07.2015

IDENTIFICATION DETAILS

Name :	PEPKOR RETAIL (PTY) LTD

Formerly Known As :	TRADEGRO MANAGEMENT SERVICES LTD

Registered Office :	36 Stellenberg Road, Parow Industria, Cape Town, Western Cape

Country :	South Africa

Date of Incorporation :	28.08.1986

Legal Form :	Private Company

Line of Business :	The subject operates through its divisions: JOHN CRAIG SHOE CITY DUNNS PEPCLO PEPKOR FINANCE

No. of Employee :	±28 000 in the group

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory

Payment Behaviour :	No complaints

Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – March 31, 2015

Country Name

Previous Rating

(31.12.2014)

Current Rating

(31.03.2015)

South Africa

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

SOUTH AFRICA - ECONOMIC OVERVIEW

South Africa is a middle-income, emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy, and transport sectors, and a stock exchange that is Africa’s largest and among the top 20 in the world. Even though the country's modern infrastructure supports a relatively efficient distribution of goods to major urban centers throughout the region, unstable electricity supplies retard growth. Economic growth has decelerated in recent years, slowing to just 1.5% in 2014. Unemployment, poverty, and inequality - among the highest in the world - remain a challenge. Official unemployment is roughly 25% of the work force, and runs significantly higher among black youth. Eskom, the state-run power company, is building three new power stations and is installing new power demand management programs to improve power grid reliability. Load shedding and resulting rolling blackouts gripped many parts of South Africa in late 2014 and early 2015 because of electricity supply constraints that resulted from technical problems at some generation units, unavoidable planned maintenance, and an accident at a power station in Mpumalanga province. The rolling black outs were the worst the country faced since 2008. Construction delays at two additional plants, however, mean South Africa will continue to operate on a razor thin margin; economists judge that growth cannot exceed 3% until electrical supply problems are resolved. South Africa's economic policy has focused on controlling inflation, however, the country faces structural constraints that also limit economic growth, such as skills shortages, declining global competitiveness and frequent work stoppages due to strike action. The current government faces growing pressure from urban constituencies to improve the delivery of basic services to low-income areas and to increase job growth.

Source : CIA

COMPANY NAME

PEPKOR RETAIL (PTY) LTD

Formerly: SMART-HOLD LTD, the name having been changed on 10 February 2004.

Formerly: TRADEGRO ADMIN LTD, the name having been changed on 19 December 1986.

Formerly: TRADEGRO MANAGEMENT SERVICES LTD, the name having been changed on 28 August 1986.

The subject converted from a public company to a private company in February 2013.

TRADING DIVISION

ACKERMANS (incorporating the operations of HANG TEN)

PEP STORES

PEPCLO MANUFACTURING

PEPKOR FIN (Corporate services)

SHOE CITY

PHYSICAL ADDRESS

36 Stellenberg Road

PAROW INDUSTRIA

Cape Town

Western Cape

POSTAL ADDRESS

P O Box 6100

PAROW EAST

7501

TELEPHONE NUMBER

+27 21 929 4800

FAX NUMBER

+27 21 933 5075

It was stated by the respondent that the address Production Street, Kuils

River, Cape Town and the telephone number +27219001000 are those of the

ACKERMANS division:

It was stated by a respondent that the address Rednor Street, Parow Industria, Western Cape, South Africa. P O Box 6376, Parow East, 7501 and the telephone number +27 21 937 2300 are those of the PEP division:

PEPCO – is a retailer of clothing and houseware, operating as a chain store in small to medium sized towns across Poland and is also a trading division of PEPKOR.

SHAREHOLDERS

100% PEPKOR LTD (Registration Certificate Number: 1965/007765/06),

which in turn is owned 100% by PEPKOR HOLDINGS LTD

(Registration Certificate Number: 2003/020009/06).

It was stated that PEPKOR, which delisted from the JSE Securities Exchange (now JSE LTD) South Africa in February 2004 in an offer that valued the group at R2 660 000 000, had sold 7.5% of its shares to a black consortium for R208 000 000 in cash. The company has sold the stake to MEDU CAPITAL and J & J PRIVATE EQUITY FUND.

MEDU CAPITAL was founded by Nhlanganiso MkwanazI and Ernest January. Its other investments include Ampaglas, Capital Outsourcing Group, VitalAire and Zest.

J & J PRIVATE EQUITY FUND was founded by former cabinet minister Jay Naidoo and Jayendra Naidoo and hold stakes in information technology, financial services and industrial companies.

ASSOCIATE AND SUBSIDIARY COMPANIES

PEPKOR (AUSTRALIA) (PTY) LTD

PEPKOR CLOTHING INDUSTRIES LTD

(Registration Certificate Number: 1965/005478/06)

PEPKOR MANUFACTURING LTD

(Registration Certificate Number: 1969/009505/06)

ACKERMANS LTD

(Registration Certificate Number: 1992/002170/06)

DUNNS STORES (PTY) LTD

(Registration Certificate Number: 1998/007991/07)

BEST AND LESS LTD in Australia

SHOE CITI HOLDINGS (PTY) LTD. The assets and operations of the company have been incorporated as a division into DUNNS STORES (PTY) LTD with two divisions DUNNS AND SHOE CITI

Plus other companies within the PEPKOR group.

DIRECTORS

L S BRAND ID No. 6009155054088

S N N CARDINAAL ID No. 6712225176001

C A CRONJE ID No. 6001185065002

R R SCHOLTZ ID No. 7010035097083

L LAMBRECHTS ID No. 7506155092082

J H DU TOIT ID No. 6102055097008

P J ERASMUS ID No. 6510025150089

J L HAMMAN ID No. 7011295010083

R G HANEKOM ID No. 6911055023081

C J KLEM ID No. 7209265146084

(MS) M S LAURENCE ID No. 7007140243088

L M LOURENS ID No. 6603155037083

MS E A MORKEL ID No. 6807110158088

J F PIENAAR ID No. 5608175119002

W J JACOBS ID No: 6611015013087

W J MOLLER ID No: 7006295006084

J E COETZEE ID No: 7610105020084

R S C CRAEYE ID No: 6212055205087

S K VOGES ID No: 7311055095081

MS S SPREETH ID No: 7409040049088

J S VAN ROOYEN ID No. 6512135225082

J D WASSERFALL ID No. 6709285006086

N TOM ID No. 7212010777088

MS M L HAMMAN ID No. 7108110056086

R S VAN ROOYEN ID No. 6512135225082

T L JAGER ID No. 6908220592081

BANKERS

It was stated that the PEP and PEPKOR FIN divisions bank with FIRST NATIONAL BANK, Corporate Branch, Cape Town. The PEPCLO division banks with ABSA BANK, Corporate Cape Town Branch. The ACKERMANS division banks with FIRST NATIONAL BANK, ABSA and NEDBANK.

It was stated that the divisions are managed by a cash management scheme controlled by the PEPKOR FIN division of the subject.

DATE REGISTERED

28 August 1986

Registration Certificate Number: 1986/003435/07

PEPKOR RETAIL (PTY) LTD in 1986, however the subject underwent numerous entity and name changes, the last one being from SMART HOLD LTD to the current name, having taken effect in February 2004.

In October 2000 PEPKOR restructured its operations extensively. It unbundled its holdings in the South African food retailer SHOPRITE and in the UK retail group BROWN & JACKSON PLC to its shareholders. In the case with BROWN & JACKSON, the shares were housed in a new company TRADEHOLD, now listed on the JSE Securities Exchange South Africa and the shares of TRADEHOLD unbundled to PEPKOR shareholders on a pro rata basis.

At the same time that the PEPKOR pyramid structure was collapsed and its ultimate holding company, PEPGRO, delisted from the JSE Securities Exchange South Africa this left PEPKOR with the discount clothing retailers PEP, ACKERMANS and BEST & LESS, having previously disposed of STUTTAFORDS and CASHBUILD.

VAT NUMBER

Each division has its own VAT number

4390210419 (PEP CLOTHING)

TAX NUMBER

9370415029

MAJOR OPERATION

The subject operates through its divisions;

PEP and ACKERMANS are a cash chain selling family fashions and basics in clothing, footwear and textiles to middle to lower-income consumers. ACKERMANS owns the largest babywear brand marketed in Southern Africa, under the brand name ABC Baby Company. The former brand store HANGTEN operation has been incorporated into ACKERMANS.

JOHN CRAIG: Retailer of world leading brands for – Pringle; Polo; Carducci; Crockett and Jones

SHOE CITY: Retailer of adult and children’s footwear and accessories.

DUNNS: Speciality retailer of adult clothing; footwear and accessories.

PEPCLO is a manufacturer of clothing. PEPKOR FINANCE deals with administration and finance for the company.

MAJOR SUPPLIERS

Each division has its own major suppliers. However, supplier information was declined.

MAJOR CUSTOMERS OR BUSINESS SECTORS

Pep and Ackermans deal with the general public. Pepclo deals with Ackermans and Pep

AREA OF DISTRIBUTION AND SELLING

South Africa

EXPORTS

It was stated that the Pep division exports to neighbouring countries e.g. Malawi, Zambia and Mozambique.

TOTAL EMPLOYEES

±28 000 in the group

OTHER PREMISES

The Pep and Ackermans divisions have a total of ±2 800 stores throughout South Africa. There are group companies situated in Botswana, Lesotho, Swaziland, Namibia, Zambia, Mozambique and Malawi. Pepclo has a factory at the heading address.

OWNED OR LEASED

The heading premises are owned by a group property company and most of the branches are retail outlets that are leased

FINANCIALS

Full financial information was not forthcoming from respondents at the subject and outside authorities were unable to assist in this respect.

PEPKOR is stated to be a dominant player in the South African cash clothing discount market with an annual turnover well in excess of R10 000 000 000

AUDITORS

PRICEWATERHOUSECOOPERS +27 21 529 2000

YEAR END

JUNE

INSURANCE BROKERS

AON INSURANCE BROKERS

TRADE REFERENCES

DECLINED

COMMENTS

This is a well-established and well-connected company. The subject is considered equal to its normal business engagements and to a maximum figure of €2 000 000 over 30 days. The lack of supplier information and full financial information should be borne in mind.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.63.49
UK Pound	1	Rs.99.43
Euro	1	Rs.69.14

INFORMATION DETAILS

Analysis Done by :	DIV

Report Prepared by :	ASH

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.