Announcements

GCR withdraws the ratings of JD Group Limited and related bond issuances.

Johannesburg, 30 Oct 2015 — Global Credit Ratings has today withdrawn the national scale ratings assigned to JD Group Limited of A(ZA) and A1(ZA) in the long and short term respectively. Simultaneously, the following ratings on JD Group Limited’s outstanding Senior Unsecured Notes have also been withdrawn:

JDG01, R1,000m, due 30 October 2015 – A(ZA), Outlook: Stable. The JDG01 notes have since been redeemed on maturity.

JDG03, R450m, due 15 April 2016 – A(ZA), Outlook: Stable

JDG04, R300m, due 15 April 2018 – A(ZA), Outlook: Stable

The withdrawal of the ratings of JD Group Limited is at the client’s request, given that JD Group has become a wholly-owned subsidiary of Steinhoff International Holdings Limited (“Steinhoff”), and was delisted from the JSE in July 2015. Furthermore, JD Group has no intention of issuing new notes under its DMTN programme. Prior to withdrawing the above ratings, the ratings were affirmed based on the strength of Steinhoff’s balance sheet, as JD Group no longer releases any separate financial information.

SUMMARY RATING RATIONALE

Global Credit Ratings has accorded the above rating(s) to JD Group Limited (“JD Group”) based on the following key criteria:

The ratings’ affirmation is primarily premised on JDG’s relationship with Steinhoff. Global Credit Ratings has conducted a private credit assessment of Steinhoff, and is satisfied with the ratings linkage between JD Group and its parent.

JD Group recently requested written consent from noteholders to amend the applicable Pricing Supplement related to the issue of its Senior Unsecured Floating Rate Notes; JD03 and JDG04. These amendments will facilitate the early redemption of the aforementioned notes. While the consent is still pending, notifications from noteholders are expected by 05 November 2015.

NATIONAL SCALE RATINGS HISTORY    
     
Issuer ratings    
Initial rating (June 2000)   Last rating (March 2015)
Long term: A(ZA); Short term: A1(ZA)   Long term: A(ZA); Short term: A1(ZA)
Outlook: Stable   Outlook: Stable
     
Bond ratings    
Initial rating (October 2012)*   Last rating (March 2015)
JDG01, R1,000m: A(ZA); Outlook: Stable   JDG01, R1,000m: A(ZA); Outlook: Stable
JDG03, R450m: A(ZA); Outlook: Stable   JDG03, R450m: A(ZA); Outlook: Stable
JDG04, R300m: A(ZA); Outlook: Stable   JDG04, R300m: A(ZA); Outlook: Stable

*Based on the preliminary issue, being JDG01.

ANALYTICAL CONTACTS

Primary Analyst    
Patricia Zvarayi    
Senior Analyst    
(011) 784-1771    
Patricia@globalratings.net    
     
Committee Chairperson    
Eyal Shevel    
Sector Head: Corporate Ratings    
(011) 784-1771    
Shevel@globalratings.net    

APPLICABLE METHODOLOGIES AND RELATED RESEARCH

Criteria for rating corporate entities, updated February 2015

JD Group Limited rating reports, 2000-March 2015

GLOSSARY OF TERMS/ACRONYMS USED IN THIS DOCUMENT AS PER GCR’S CORPORATE GLOSSARY

Credit Rating An opinion regarding the creditworthiness of an entity, a security or financial instrument, or an issuer of securities or financial instruments, using an established and defined ranking system of rating categories.
Credit Rating Agency An entity that provides credit rating services.
Credit Risk The possibility that a bond issuer or any other borrowers (including debtors/creditors) will default and fail to pay the principal and interest when due.
Debt An obligation to repay a sum of money. More specifically, it is funds passed from a creditor to a debtor in exchange for interest and a commitment to repay the principal in full on a specified date or over a specified period.
Default Failure to meet the payment obligation of either interest or principal on a debt or bond. Technically, a borrower does not default, the initiative comes from the lender who declares that the borrower is in default.
Early Redemption The repurchase of a bond by the issuer before it matures.
Equity Equity is the holding or stake that shareholders have in a company. Equity capital is raised by the issue of new shares or by retaining profit.
Floating Rate Note A floating rate note/bond is a medium-term debt instrument that pays a variable interest rate. The coupon is usually set at a premium to LIBOR or its local equivalent such as JIBAR.
Gearing With regard to corporate analysis, gearing (or leverage) refers to the extent to which a company is funded by debt and can be calculated by dividing its debt by shareholders’ funds or by EBITDA.
Interest Scheduled payments made to a creditor in return for the use of borrowed money. The size of the payments will be determined by the interest rate, the amount borrowed or principal and the duration of the loan.
Interest Rate The charge or the return on an asset or debt expressed as a percentage of the price or size of the asset or debt. It is usually expressed on an annual basis.
JIBAR The Johannesburg Interbank Agreed Rate, or JIBAR, is the annualised interest rate at which banks obtain unsecured loans from each other. It is often used as the basis for pricing floating interest rate instruments, and is the main reference rate used in South Africa.
JSE Johannesburg Stock Exchange.
Liabilities All financial claims, debts or potential losses incurred by an individual or an organisation.
Margin A term whose meaning depends on the context. In the widest sense, it means the difference between two values.
Market Capitalisation The total value of a company’s shares as quoted on a stock exchange. It is calculated by multiplying the total number of shares in issue by the market price.
Maturity The length of time between the issue of a bond or other security and the date on which it becomes payable in full.
National Scale Rating The national scale provides a relative measure of creditworthiness for rated entities only within the country concerned. Under this rating scale, a ‘AAA’ long term national scale rating will typically be assigned to the lowest relative risk within that country, which in most cases will be the sovereign state.
Net Profit Trading/operating profits after deducting the expenses detailed in the profit and loss account such as interest, tax, depreciation, auditors’ fees and directors’ fees.
Operating Margin Operating margin is operating profit expressed as a percentage of a company’s sales over a given period.
Operating Profit Profits from a company’s ordinary revenue-producing activities, calculated before taxes and interest costs.
Principal The total amount borrowed or lent, e.g. the face value of a bond, excluding interest.
Redemption The repurchase of a bond at maturity by the issuer.
Rights Issue One of the ways that a company can raise additional funds is to issue new shares. These must be first offered to current shareholders and a rights issue allows a shareholder to buy shares in proportion to the number already held. 
Risk The possibility that an investment or venture will make a loss or not make the returns expected. There are many different types of risk including basis risk, country risk, credit risk, currency risk, economic risk, inflation risk, liquidity risk, market or systemic risk, political risk, settlement risk and translation risk.
Shareholder An individual, entity or financial institution that holds shares or stock in an organisation or company.

RATING LIMITATIONS AND DISCLAIMERS

ALL GCR’S CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.NET/UNDERSTANDING-RATINGS. IN ADDITION, GCR’S RATING SCALES AND DEFINITIONS ARE ALSO AVAILABLE FOR DOWNLOAD AT THE FOLLOWING LINK: HTTP://GLOBALRATINGS.NET/RATINGS-INFO. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, PUBLICATION TERMS AND CONDITIONS AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT HTTP://GLOBALRATINGS.NET.


SALIENT FEATURES OF ACCORDED RATINGS

GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating Was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for a maximum of 12 months, or earlier as indicated by the applicable credit rating document.

JD Group Limited participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.

The credit rating/s has been disclosed to JD Group Limited with no contestation of the rating.

The information received from JD Group Limited and other reliable third parties to accord the credit rating(s) included;

  • Steinhoff International Holdings Limited’s 2015 audited financial results and presentation;
  • four years of comparative numbers;
  • publically available information pertaining to Steinhoff International Holdings Limited’s listed subsidiaries;
  • JD Group Limited’s unaudited interim results for 2015
  • JD Group Limited’s Integrated Report and four years’ comparative numbers; and
  • JD Group Limited’s medium term budgeted financial statements

The ratings above were solicited by, or on behalf of, the rated client, and therefore, GCR has been compensated for the provision of the ratings.

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ALL GCR CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS, TERMS OF USE OF SUCH RATINGS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK:HTTP://GCRRATINGS.COM. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT WWW.GCRRATINGS.COM/RATING_INFORMATION. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. GCR's CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THIS SITE.

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