| Thu 21 Aug 2008, 7:05 | | MSM - Massmart Holdings - Reviewed consolidated results for the 53 weeks |
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MSM
MSM
MSM - Massmart Holdings - Reviewed consolidated results for the 53 weeks
ended 29 June 2008 and dividend declaration
Massmart Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1940/014066/05)
Share code: MSM
ISIN: ZAE000029534
("Massmart" or "the Company" or "the Group")
Dedicated to Value
Reviewed consolidated results for the 53 weeks ended 29 June 2008
Sales increase 14% to R39 784 million
Trading profit increases 23% to R2 157 million
Headline EPS for the 52-week period increases
17% to 634 cents
Headline EPS increases 23% to 663 cents
Headline EPS before the BEE transaction increases
24% to 708 cents
Operating cash before working capital increases
24% to R2 395 million
Massmart is a managed portfolio of nine wholesale and retail chains, each
focused on high-volume, low-margin, low-cost distribution of mainly branded
consumer goods for cash, in 14 countries in sub-Saharan Africa through four
divisions comprising 242 stores.
The Group is the third largest distributor of consumer goods in Africa, the
leading retailer of general merchandise, liquor and home improvement
equipment and supplies, and the leading wholesaler of basic foods.
OVERVIEW
With the downturn in the economic cycle gaining momentum the performance
across our four Divisions remained balanced and produced a strong overall
result for the Group.
Trading patterns were as expected in this economic environment with strong
Food and Liquor sales growth of 17,1%, General Merchandise sales growth
holding steady at 11,2% and Home Improvement sales growth of 14,4% although
slowing through the year.
For the 52-week period, Masswarehouse and Masscash produced strong profit
growth whilst Massdiscounters and Massbuild did well to grow profits at or
near to their rate of sales growth.
Throughout the year investments in stock were made ahead of inflation and
Rand weakness and as a protection against some supplier shortages.
As detailed below, satisfactory progress was made with each of our strategic
initiatives.
ENVIRONMENT
The core economic trends continued their worsening trend with inflation, and
therefore interest rates, driven by rising food and fuel prices. Overall
consumer and business sentiment deteriorated, amplified by the uncertainty
over power supply and the political transition.
The general tightening of consumer spending was evident in lower real Group
sales growth and a greater response to demonstrable value in promotions and
entry-price point brands, as well as the shift in the method of payment with
declining credit card usage.
Although still in low numbers, the emigration of Group executives and senior
management accelerated, each leaving for their own personal reasons, but each
nevertheless a loss to the Group and country. Despite noticeable
environmental stress amongst our employees, healthy relations with the
various unions resulted in wage settlements that balanced the interests of
protecting both the employees and the Company against inflation.
DIVISIONAL OPERATING REVIEW
53 weeks 52 weeks
to to
June 2008 % of June 2007 % of
Rm (Reviewed) sales (Audited) sales
Sales 39 783,6 34 807,6
Massdiscounters 10 406,5 9 424,5
Masswarehouse 10 103,8 8 640,1
Massbuild 5 662,9 4 948,3
Masscash 13 610,4 11 794,7
Trading profit 2 156,9 5,4 1 753,9 5,0
before interest and
tax*
Massdiscounters 724,6 7,0 634,2 6,7
Masswarehouse 640,2 6,3 466,7 5,4
Massbuild 390,1 6,9 363,0 7,3
Masscash 402,0 3,0 290,0 2,5
Trading profit 2 386,4 6,0 1 895,4 5,4
before tax**
Massdiscounters 783,2 7,5 686,3 7,3
Masswarehouse 730,8 7,2 525,4 6,1
Massbuild 433,0 7,6 379,8 7,7
Masscash 439,4 3,2 303,9 2,6
DIVISIONAL OPERATING REVIEW
53-week 52-week
period comparable Estimated
% % sales % sales
Rm growth growth inflation
Sales 14,3 10,8 7,5
Massdiscounters 10,4 7,6 2,7
Masswarehouse 16,9 10,5 7,2
Massbuild 14,4 9,0 7,5
Masscash 15,4 14,3 13,3
Trading profit 23,0
before interest and
tax*
Massdiscounters 14,3
Masswarehouse 37,2
Massbuild 7,5
Masscash 38,6
Trading profit 25,9
before tax**
Massdiscounters 14,1
Masswarehouse 39,1
Massbuild 14,0
Masscash 44,6
*Trading profit before interest and tax is before asset impairments of R4,7
million (2007: R26,3 million) and the BEE transaction IFRS 2 charge of R67,1
million (2007: R54,3 million).
**Trading profit before tax is after divisional net interest but before
corporate net interest of R293,6 million (2007: R185,9 million), asset
impairments of R4,7 million (2007: R26,3 million) and the BEE transaction
IFRS 2 charge of R67,1 million (2007: R54,3 million).
MASSDISCOUNTERS - comprises the 83-store General Merchandise retail
discounter Game, which trades in South Africa, Namibia, Botswana, Zambia,
Uganda, Mozambique, Mauritius, Malawi, Tanzania, Nigeria and Ghana; and the
six-store Hi-tech retailer Dion Wired.
The Division`s 52-week comparable-store sales increased by 7,6% with
estimated inflation of 2,7%. Total 53-week sales increased by 10,4% and
trading profit before tax increased 14,1%.
Investments in trading aggression and the shift in customer focus towards
value saw comparable sales in South Africa grow throughout the year, despite
the tightening cycle. African sales, and trading profit, performed at
substantially higher levels than the South African business. We estimate that
the National Credit Act, introduced in June 2007, directly reduced the
Division`s 2008 trading profit by R30 million.
This year saw the investment for future growth in several areas. The African
expansion gained momentum with at least 10 new potential sites identified,
two of which were recently approved. The Dion brand was finally removed
through store closures and conversions, the new Regional Distribution Centre
in Cape Town was commissioned in August 2008, and Dion Wired was established
as a profitable national brand with great potential.
The sale of the Division`s Consumer Credit division and debtors book was
concluded the day after closing this financial year-end.
During the period, four new Game stores were opened, five Game stores were
closed, two Dion stores converted and two closed, and three Dion Wired stores
were opened. As a result of the store closures and conversions, net store
space at year-end decreased by 2,3%.
MASSWAREHOUSE - comprises the 13-store Makro warehouse club trading in Food,
General Merchandise and Liquor in South Africa (and two Zimbabwean stores,
not consolidated in the Group results).
The Division`s 52-week comparable-store sales increased by 10,5% with
estimated inflation of 7,2%. Total 53-week sales increased by 16,9% and
trading profit before tax increased by 39,1%.
Makro demonstrated the resilience of its unique formula in a tightening
economic environment and traded exceptionally well as management responded to
the trading opportunities faster than their competitors. We see potential for
at least four new Makro stores in South Africa.
Immediately after year-end, the Division successfully implemented the latest
version SAP ERP system, which was a credit to all involved.
The new Silver Lakes store, east of Pretoria, had a record opening in October
2007 and is trading above expectations, with its effect on the neighbouring
Makro stores at anticipated levels. Net store space at year-end increased by
9,6%.
MASSBUILD - comprises 68 outlets, trading in DIY, Home Improvement and
Builders Hardware, under the Builders Warehouse, Builders Express and
Builders Trade Depot brands in South Africa.
The Division`s 52-week comparable-store sales increased by 9,0% with
estimated inflation of 7,5%. Total 53-week sales increased by 14,4% and
trading profit before tax increased by 14,0%.
Activities this year were focused on stabilising structure, process and
control following the previous year`s rapid consolidation of brands and
systems. Trading for the period started off strongly but sales growth
declined over the year as the development and renovation housing market
adjusted to the tightening economic conditions. A comprehensive expansion
plan for Builders Warehouse, Express and Trade Depot clarified the role of
each format and confirmed the exciting growth potential for each.
One new Warehouse store and three new Express stores were opened. Net store
space at year-end increased by 5,3%.
MASSCASH - comprises 71 Cash and Carry stores trading in South Africa,
Lesotho, Namibia and Botswana, and Shield, a voluntary buying association.
The Division`s 52-week comparable-store sales increased by 14,3% with
estimated inflation of 13,3%. Total sales increased 15,4% and trading profit
before tax increased 44,6%.
The Cash and Carry stores experienced higher product inflation, aggressive
competition, and stock shortages from suppliers. Profit growth was supported
by the annualised benefits arising from the merger of Shield, Jumbo, CBW and
CellShack.
The Division`s new point-of-sale and back-office system was trialled
successfully and a store-by-store rollout will now ensue, expected to be
finalised towards the end of the 2009 financial year.
The management team gained momentum in the implementation of the Hybrid
format strategy, resulting in the conclusion of several small acquisitions
now subject only to Competition Tribunal approval. The growth of the exciting
Hybrid format will continue for the next several years, both through
acquisition and organic growth.
During the year no new stores were opened and one store was closed. Net store
space at year end decreased by 1,2%.
FINANCIAL REVIEW
INCOME STATEMENT
Total sales growth for the 53-week period to 29 June 2008 was 14,3%. For the
52-week period, total and comparable sales growths were 12,3% and 10,8%
respectively. Group sales inflation for the year is estimated to be 7,5%.
During the year eight stores were closed and 12 opened, resulting in a total
of 242 stores at the end of June 2008. Net trading space increased by 1,9% to
a total of 1 012 784 square meters.
Gross profit of 18,36% was just higher than the prior year`s 18,31%.
Total expenses increased by 10,8% and improved as a percentage of sales over
the prior year, even after adjusting for the effect of the 53rd week.
Included in operating profit are net realised and unrealised foreign exchange
gains of R62,5 million (2007: R41,4 million loss), most of which arose from
Massdiscounters` African stores.
Net interest paid increased due to higher interest rates, additional
borrowings funding the capital expenditure of R578 million and higher
inventory levels for much of the year. In addition, cash was invested in
share buybacks of R272 million (see note 3).
The non-cash IFRS 2 charge associated with the Group`s Staff Empowerment
scheme, Thuthukani, was R67,1 million (2007: R54,3 million), increasing
because the 2007 figure reflects only nine months of the scheme`s operation.
The total cost of the scheme in 2008 was R89,6 million (2007: R63,2 million)
and has increased because of the greater proportion of the ordinary dividend
now accruing to scheme participants (see note 7).
Adjusting for the non-deductible total IFRS 2 charges, the Group`s effective
tax rate is 31,1% (2007: 32,6%), which includes the effect of STC of 3,4%
(2007: 3,6%).
The minority interests comprise mainly CBW store managers` holdings in
certain Masscash stores.
Headline earnings before the BEE transaction grew by 22,9% (52-weeks: 17,9%)
while headline EPS before the BEE transaction grew by 23,8% (52-weeks:
18,7%).
Headline earnings grew by 21,8% (52-weeks: 16,5%) while headline EPS grew by
22,7% (52-weeks: 17,3%).
BALANCE SHEET
The sale of the Massdiscounters Consumer Credit division and debtors book was
effective immediately after the close of the 2008 financial year. The figure
of R167,6 million shown as an Asset held for Sale is the net book value of
the debtors book and this was received in cash on 30 June 2008.
Group inventory levels at June 2008 are slightly higher than normal due to
the continuing supply constraints requiring higher Food and Liquor inventory
levels in Makro and Masscash.
At year-end, the non-current interest-bearing debt of R267,7 million (2007:
R402,7 million) represents gearing of 9,8% (2007: 18,0%). Average interest-
bearing debt for the year was R535 million, representing gearing of 21,5%.
The annual return on equity of 53,0% at June 2008 is an improvement on the
2007 figure of 52,3%.
PROGRESS WITH VISION 2011
Vision 2011 covers our focus on Leadership and Transformation, Supply Chain,
Private Label, Financial Services, Organic Growth, New Formats and
Sustainability, all of which represent the headlines of our three-year
rolling strategic plans.
This year saw 42 executives and senior managers participate in Massmart
University programmes and the participation of all senior management across
the Group in a Diversity management programme. 22 black graduates completed
our in-house programme and were appointed to roles across the Group. Our
annual BEE Scorecard review saw an improvement by 13 percentage points in our
self-assessed rating.
The completion of the Regional Distribution Centre in Cape Town marks a new
era of logistics for Massmart - but we still have much to learn and gain.
Across the Group, the proportion of items automatically replenished increased
as this process became entrenched. The first space planning trial was
piloted.
The complete rework of a number of the Group`s major private-label brands was
concluded and the foundation set to improve the quantity and quality of our
participation in the creation and ownership of some of the biggest consumer
brands in Africa.
The latest review of our store opening opportunities indicates potential for
new unweighted space growth of 5,1%, 6,0% and 3,5% in 2009, 2010 and 2011
respectively. These figures exclude any potential minor acquisitions. A
combination of bureaucracy and unrealistic price expectations for land has
increased the challenge of finding sites, probably resulting in a slower
store-opening programme than the market potential suggests.
Since the formation of the New Formats Division we have made good and
exciting progress with our preparations to enter new categories with new
formats.
In addition to continuing to build on our gains from previous periods, our
focus on supplier BEE scorecards, environmental awareness in procurement, and
anticipating regulatory changes has positioned us well for the future.
ACKNOWLEDGING OUR PEOPLE
In Massmart we are clear that financial performance is a lagging indicator of
human performance. Our approach at all times is therefore to urge the leaders
throughout Massmart to look behind the obvious to determine the nature and
quality of each individual`s contribution to our corporate endeavour.
In a year which saw retail conditions tighten, we are delighted to have found
widespread evidence of exceptional human performance and are deeply grateful
to each of our 24 308 employees for their contribution to these results.
Thank you.
PROSPECTS
For the 7 weeks to 17 August 2008, total sales increased by 12,1% and
comparable sales increased by 10,9%.
The resilience of Massmart through previous tightening economic cycles gives
us confidence that we will continue to perform well relative to our
competitors trading in similar categories. This short-term cycle presents
both opportunities and threats as consumers adjust their purchasing behaviour
to accommodate higher food, energy and interest costs.
We are monitoring closely the effects of the interest rate cycle on our
relatively new Home Improvement business.
We remain confident that in the medium- to long-term the South African
consumer economy will benefit from a growing middle class, a general shortage
of housing, the Social Spending programme and the secondary economic benefits
of the country`s infrastructure investments.
Africa continues to provide opportunities as it benefits from improving
political and economic stability and from increased investment from within
and beyond the continent.
We will continue to invest in organic and non-organic growth opportunities,
which provide superior returns in the medium- to long-term.
We are pleased with the performance of the Group across all areas, although
we still see much room for improvement in the core business in pursuit of
world-class standards.
Given the current economic environment, we are cautious about the year ahead,
but are confident in our business model and are excited about the
opportunities that are available to ensure medium- to long-term growth.
DISTRIBUTION AND DIVIDEND POLICY
Massmart`s dividend policy is to declare and pay an interim and final cash
dividend representing a 1,7 times dividend cover unless circumstances dictate
otherwise.
Notice is herby given that a final cash dividend of 163 cents per share in
respect of the period ended 29 June 2008 has been declared payable to the
holders of ordinary shares recorded in the books of the Company on Friday, 12
September 2008. The last day to trade cum-dividend will therefore be Friday,
5 September 2008 and Massmart shares will trade ex-dividend from Monday, 8
September 2008. Payment of the cash dividend will be made on Monday, 15
September 2008. Share certificates may not be dematerialised or
rematerialised between Monday, 8 September 2008 and Friday, 12 September
2008, both days inclusive.
A Thuthukani dividend equivalent to 50% of the Massmart ordinary dividend per
share (81,5 cents) will be paid to the Massmart Thuthukani Empowerment Trust
on Monday, 15 September 2008.
On behalf of the Board
Grant Pattison Guy Hayward
Chief Executive Officer Chief Financial Officer
20 August 2008
INCOME STATEMENT
53 weeks 52 weeks
June 2008 June 2007
Rm (Reviewed) (Audited) % change
Revenue 39 944,8 34 964,7 14,2
Sales 39 783,6 34 807,6 14,3
Cost of sales (32 481,4) (28 435,7) 14,2
Gross profit 7 302,2 6 371,9 14,6
Other income 161,2 157,1 2,6
Depreciation and (297,8) (240,9) 23,6
amortisation
Impairment of assets (4,7) (26,3) (82,0)
(note 5)
Employment costs (2 736,2) (2 449,8) 11,7
Occupancy costs (962,7) (846,0) 13,8
Other operating costs (1 376,9) (1 292,7) 6,5
Operating profit 2 085,1 1 673,3 24,6
Finance costs (110,6) (100,4) 10,2
Finance income 46,5 56,0 (17,0)
Net finance costs (64,1) (44,4) 44,4
Profit before taxation 2 021,0 1 628,9 24,1
Taxation (662,9) (554,8) 19,5
Profit for the period 1 358,1 1 074,1 26,4
Attributable to:
Equity holders of the 1 314,1 1 049,9 25,2
parent
Preference shareholders 22,5 8,9
(note 7)
Minority interest 21,5 15,3
1 358,1 1 074,1
Basic EPS (cents) 660,3 523,7 26,1
Diluted basic EPS 644,6 514,6 25,3
(cents)
Dividend (cents):
- Interim 223,0 197,0 13,2
- Final 163,0 123,0 32,5
- Total 386,0 320,0 20,6
Reconciliation of net
profit for the period to
headline earnings
Net profit attributable 1 314,1 1 049,9
to equity holders of the
parent
Impairment of assets 4,7 26,3
(note 5)
Loss on disposal of 3,8 0,8
fixed assets
Loss on disposal of - 6,2
Furnex
Total tax effects of (3,2) 0,1
adjustments
Headline earnings 1 319,4 1 083,3 21,8
BEE transaction (note 6 89,6 63,2
and 7)
Headline earnings before 1 409,0 1 146,5 22,9
the BEE transaction
Headline EPS (cents) 663,0 540,4 22,7
Headline EPS (cents) - 634,1 540,4 17,3
52 Week
Headline EPS before the
BEE transaction (cents)
(note 6 and 7) 708,0 571,9 23,8
Headline EPS before BEE
transaction (cents) -
52 Week 679,1 571,9 18,7
Diluted headline EPS 647,2 530,9 21,9
(cents)
BALANCE SHEET
June 2008 June 2007
Rm (Reviewed) (Audited) % change
ASSETS
Non-current assets 3 840,6 3 448,2
Property, plant and 1 393,0 1 123,8 24,0
equipment
Goodwill and other 1 494,4 1 477,0
intangible assets
Investments and loans 538,0 414,6
Deferred taxation 415,2 432,8
Current assets 7 892,7 7 401,4
Inventories 4 758,6 4 027,3 18,2
Accounts receivable and 1 764,1 1 876,5 (6,0)
prepayments
Taxation 310,4 251,9
Cash and bank balances 1 059,6 1 245,7
Assets classified as held 167,6 -
for sale (note 8)
Total 11 900,9 10 849,6
EQUITY AND LIABILITIES
Total equity 2 766,5 2 264,8
Equity attributable to 2 735,8 2 239,0 22,2
equity holders of the
parent
Minority interest 30,7 25,8
Non-current liabilities 1 015,9 1 122,2
Non-current liabilities - 267,7 402,7
interest-bearing
Other non-current 606,3 604,0
liabilities and
provisions
Deferred taxation 141,9 115,5
Current liabilities 8 118,5 7 462,6
Accounts payable and 7 391,5 6 759,6 9,3
accruals
Taxation 543,1 534,4
Bank overdrafts and short- 183,9 168,6
term borrowings
Total 11 900,9 10 849,6
ADDITIONAL INFORMATION
Year ended Year ended
June 2008 June 2007
(Reviewed) (Audited)
Net asset value per share (cents) 1 359,8 1 113,2
Ordinary shares (000`s):
- In issue 201 195 201 073
- Weighted average 198 996 200 461
- Diluted weighted-average 203 867 204 037
Preference shares (000`s):
- Thuthukani "A" shares (note 6) 17 868 17 968
- Black Scarce Skills Trust "B" 1 979 2 000
shares (note 6)
Capital expenditure (Rm)
- Authorised and committed 278,0 101,0
- Authorised not committed 287,2 327,7
Operating lease commitments (2008 - 6 270,7 6 082,5
2022) (Rm)
US dollar exchange rates - period 7,96 7,20
end
- average 7,31 7,22
CASH FLOW STATEMENT
53 weeks 52 weeks
June 2008 June 2007
Rm (Reviewed) (Audited)
Operating cash before working 2 394,9 1 926,4
capital movements
Working capital movements (73,2) (28,3)
Cash generated from operations 2 321,7 1 898,1
Taxation paid (668,1) (531,6)
Net interest paid (64,1) (44,4)
Investment income 47,7 53,6
Dividends received 2,2 2,5
Dividends paid (709,9) (565,1)
Cash inflow from operating 929,5 813,1
activities
Investment to maintain operations (263,1) (142,3)
Investment to expand operations (309,6) (317,9)
Businesses acquired - (160,0)
Other investing activities (325,5) (70,6)
Cash outflow from investing (898,2) (690,8)
activities
Cash outflow from financing (222,7) (288,4)
activities
Net decrease in cash and cash (191,4) (166,1)
equivalents
Foreign exchange losses taken to 4,6 (1,5)
statement of changes in equity
Opening cash and cash equivalents 1 208,7 1 376,3
Closing cash and cash equivalents 1 021,9 1 208,7
STATEMENT OF CHANGES IN EQUITY
Year ended June General
2008 non-
(Reviewed) Ordinary Share distribu- Retained
share table
Rm capital premium reserve profit
Opening balance 2,0 254,7 205,4 1 776,9
Exchange - - 4,6 -
differences
Dividends - - - (709,9)
declared
Cash flow hedges - - (1,9) -
taken directly
to equity
Profit for the - - - 1 336,6
period
Changes in
minority
interests
and distribution - - - -
to minorities
Gains and losses - - 3,3 -
not recognised
in the income
statement
Release of
deferred
taxation
on trademarks - - (5,8) 5,8
Net movement of
treasury
shares - (103,0) (45,7) -
Share trust - - 109,1 (96,3)
transactions and
IFRS 2 charge
Total 2,0 151,7 269,0 2 313,1
Year ended June General
2007 non-
(Audited) Ordinary Share distribu- Retained
share table
Rm capital premium reserve profit
Opening balance 2,0 262,6 143,4 1 493,8
Exchange - - 0,6 -
differences
Deconsolidation - - 5,9 -
of Makro
Zimbabwe (note
2)
FV adjustment of - - (13,2) -
investment in
Makro Zimbabwe
(note 2)
Dividends - - - (565,0)
declared
Cash flow hedges
taken directly
to equity - - 1,2 -
Profit for the - - - 1 058,8
year
Changes in
minority
interests
and distribution - - - -
to minorities
Release of - - (5,8) 5,8
deferred
taxation on
trademarks
Net movement of - (3,4) - -
treasury shares
BEE transaction - (4,5) - -
costs
Share trust - - 73,3 (216,5)
transactions and
IFRS 2 charge
Total 2,0 254,7 205,4 1 776,9
STATEMENT OF CHANGES IN EQUITY
Equity
Year ended June attributable
2008 to equity
(Reviewed) holders of Minority
Rm the parent interest Total
Opening balance 2 239,0 25,8 2 264,8
Exchange 4,6 - 4,6
differences
Dividends declared (709,9) - (709,9)
Cash flow hedges (1,9) - (1,9)
taken directly to
equity
Profit for the 1 336,6 21,5 1 358,1
period
Changes in
minority interests
and distribution - (16,6) (16,6)
to minorities
Gains and losses 3,3 - 3,3
not recognised in
the income
statement
Release of
deferred taxation
on trademarks - - -
Net movement of
treasury
shares (148,7) - (148,7)
Share trust 12,8 - 12,8
transactions and
IFRS 2 charge
Total 2 735,8 30,7 2 766,5
Equity
Year ended June attributable
2007 to equity
(Audited) holders of Minority
Rm the parent interest Total
Opening balance 1 901,8 50,6 1 952,4
Exchange 0,6 - 0,6
differences
Deconsolidation of 5,9 - 5,9
Makro Zimbabwe
(note 2)
FV adjustment of (13,2) - (13,2)
investment in
Makro Zimbabwe
(note 2)
Dividends declared (565,0) - (565,0)
Cash flow hedges
taken directly
to equity 1,2 - 1,2
Profit for the 1 058,8 15,3 1 074,1
year
Changes in
minority interests
and distribution - (40,1) (40,1)
to minorities
Release of - - -
deferred taxation
on trademarks
Net movement of (3,4) - (3,4)
treasury shares
BEE transaction (4,5) - (4,5)
costs
Share trust (143,2) - (143,2)
transactions and
IFRS 2 charge
Total 2 239,0 25,8 2 264,8
NOTES
1. These condensed financial statements have been prepared in accordance
with IAS 34 Interim Financial Reporting, using accounting policies that are
in line with IFRS and consistently applied to prior periods.
2. In the prior year, a decision was taken to deconsolidate Makro Zimbabwe
prospectively. This decision was made on the basis that the Group no longer
had day-to-day control of the entity and is still not consolidated in the
current year.
3. The total share buyback (including shares bought in the market by the
Share Trust) for the year was 3,3 million shares (2007: 4,4 million) at an
average price of R83,10 (2007: R71,85) totalling R271,8 million (2007: R313,2
million).
4. The net realised and unrealised foreign exchange translation profit
included in trading profit amounted to R62,5 million (2007: loss deducted of
R41,4 million). These amounts are included in the other operating costs.
5. The impairment of assets in the current year relates to the impairment of
computer software and trademarks. The impairments of assets in the prior year
related to the write-off of Dion inventory, consumables and plant and
equipment and the impairment of certain goodwill in an old Jumbo acquisition.
6. The Massmart BEE transaction, which came into operation in October 2006,
gave rise to an IFRS 2 Share-based Payment charge of R67,1 million (2007:
R54,3 million). The "A" and "B" preference shares have been issued to the
Thuthukani Trust and the Black Scarce Skills Trust respectively.
7. The preference shareholders` dividend amount of R22,5 million represents
the final dividend of 30,75 cents and an interim dividend of 111,50 cents
paid to all Thuthukani participants. In year one (to June 2007), the
Thuthukani dividend was equivalent to 25% of the ordinary dividend, in year
two (2008) it was equivalent to 50%, in year three (2009) it will be
equivalent to 75%, in year four (2010) it will be equivalent to 100%.
8. The assets classified as held for sale in the current year relate to the
cash sale of the Massdiscounters` retail debtors` book effective from 30 June
2008, immediately after closing the 2008 financial year.
9. Related-party transactions include certain properties used by Masscash
that are leased from CCW Property Holdings (Pty) Ltd in which Robin Wright
has a shareholding. Robin Wright is a director and former owner of CBW. From
time to time, in the normal course of business, Massmart and its divisions
make use of private aircraft hired from competitively selected charter
companies, two of which operate aircraft indirectly beneficially owned by Mr
MJ Lamberti.
10. Due to Christmas trading, Massmart`s earnings are weighted towards the
six months to December.
11. These results have been reviewed by independent external auditors,
Deloitte & Touche, and their unmodified review opinion is available for
inspection at the registered office.
DIRECTORATE
MJ Lamberti (Chairman)
CS Seabrooke (Deputy Chairman)
GM Pattison* (Chief Executive Officer)
MD Brand, ZL Combi, KD Dlamini, NN Gwagwa
GRC Hayward*, JC Hodkinson**, P Langeni
IN Matthews, P Maw, DNM Mokhobo, MJ Rubin
*Executive **United Kingdom
REGISTERED OFFICE
Massmart House, 16 Peltier Drive
Sunninghill Ext 6, 2191
COMPANY SECRETARY
I Zwarenstein
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
REGISTERED AUDITORS
Deloitte & Touche
For more information
www.massmart.co.za
Johannesburg
21 August 2008
Sponsor:
Deutsche Securities (SA) (Proprietary) Ltd
Date: 21/08/2008 07:05:01 Produced by the JSE SENS Department.
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