| Thu 25 Feb 2010, 7:05 | | MSM - Massmart - Reviewed Consolidated Results For The 26 Weeks Ended 27 |
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MSM
MSM
MSM - Massmart - Reviewed Consolidated Results For The 26 Weeks Ended 27
December 2009
Massmart Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1940/014066/06)
Share code: MSM
ISIN: ZAE000029534
("Massmart" or "the Company" or "the Group")
Reviewed consolidated results for the 26 weeks ended 27 December 2009
Highlights
Sales
+6,1% to R24 154 million
Operating profit before foreign exchange movements
-5,9% to R1 177 million
Cash generated from operations
+2,2% to R2 585 million
Headline EPS
-19,9% to 347 cents
Dividend per share
252 cents unchanged
Massmart is a managed portfolio of four divisions, each focused on high-
volume, low-margin, low-cost distribution of mainly branded consumer goods
for cash, in 14 countries in sub-Saharan Africa comprising 290 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
National retail sales data confirms that consumers remained under intense
pressure throughout the second-half of 2009. However, whilst not spectacular,
there was evidence of a slight recovery in consumer spending over the Festive
season.
With Group comparable-store sales growth of -0,5%, down in volume terms,
management focused on margin, costs and stock control in an effort to protect
the income statement as much as possible from the recessionary conditions.
In addition to this operating pressure in South Africa, the economic slow-
down in Africa and the relatively stronger Rand resulted in the contribution
from our African businesses declining by 26,7% in trading profit terms and by
36,1% including balance sheet translation losses. In local currencies
however, the African business performance was acceptable.
Total Group sales increased by 6,1%, operating profit decreased by 15,0%,
headline earnings decreased by 19,5% and headline earnings per share
decreased by 19,9%.
With the volatility of the Rand across the reporting periods still affecting
the interpretation of our performance, management continues to focus on
managing operating profit which declined by 5,9% excluding the effects of the
foreign exchange balance sheet translation.
It is encouraging that both in our recent monthly comparable-sales trends and
in some recent national economic data, it appears that South African consumer
spending may be recovering.
Environment
Low internal sales inflation dominated the trading environment.
Food inflation dropped throughout the period, ending close to 1,0% overall
and -10,1% in commodities (wheat, maize, sugar, etc). This deflation is a
result of lower global commodity prices and the stronger Rand. Food
wholesalers were more affected than retailers, as their customers, the
independent retailers, delayed their purchases in anticipation of lower
prices. Wholesale volumes therefore dropped for a few months, although had
recovered by December 2009.
General Merchandise inflation also declined to -0,5% by December 2009 as the
stronger Rand brought down the price of imported items. Again we saw
deflation in many technology-based categories.
In Home Improvement, inflation dropped not only as a result of the stronger
Rand but also as a result of demand weakness as activity in the bonded
residential property market slowed dramatically.
With product inflation substantially below Consumer Price Inflation, the
market participants had to compensate by gaining market share, resulting in
pressure on gross margins. Competitive activity in all categories increased.
Expense growth throughout the industry is under pressure from very high
increases in local taxes for basic services, electricity, and union wage
demands, resulting in the need to look for further productivity gains. The
comparable expense growth for the period was 2,5%.
The Competition Commission`s industry-wide investigation into the
distribution of food is still at an early stage and we will submit the first
round of requested information in March 2010.
Divisional Operational Review
26 weeks 26 weeks
December December
2009 % of 2008 % of
Rm (Reviewed) sales (Reviewed) sales
Sales 24 153,5 22 758,2
Massdiscounters 6 114,4 6 087,7
Masswarehouse 5 955,7 5 868,1
Massbuild 3 189,9 2 936,2
Masscash 8 893,5 7 866,2
Trading profit before interest
and tax 1 216,1 5,0 1 281,1 5,6
Massdiscounters 417,6 6,8 479,7 7,9
Masswarehouse 371,5 6,2 399,6 6,8
Massbuild 151,9 4,8 139,3 4,7
Masscash 275,1 3,1 262,5 3,3
Trading profit before tax 1 283,9 5,3 1 392,0 6,1
Massdiscounters 434,2 7,1 507,9 8,3
Masswarehouse 393,1 6,6 439,1 7,5
Massbuild 166,1 5,2 161,9 5,5
Masscash 290,5 3,3 283,1 3,6
Period Comparable Estimated 52 weeks
% % sales % sales June 2009 % of
Rm growth growth inflation (Audited) sales
Sales 6,1 (0,5) 1,6 43 128,7
Massdiscounters 0,4 (3,8) 0,5 11 206,0
Masswarehouse 1,5 1,5 5,1 11 102,4
Massbuild 8,6 (0,4) 2,7 5 604,6
Masscash 13,1 0,1 (0,4) 15 215,7
Trading profit before
interest and tax (5,1) 2 097,5 4,9
Massdiscounters (12,9) 680,0 6,1
Masswarehouse (7,0) 713,0 6,4
Massbuild 9,0 222,6 4,0
Masscash 4,8 481,9 3,2
Trading profit before
tax (7,8) 2 348,9 5,4
Massdiscounters (14,5) 746,6 6,7
Masswarehouse (10,5) 802,6 7,2
Massbuild 2,6 270,1 4,8
Masscash 2,6 529,6 3,5
Trading profit excludes foreign exchange movements. A detailed reconciliation
between trading and operating profit can be found below the `Additional
information` table over the page.
Massdiscounters - comprises the 92-store General Merchandise retail
discounter Game, which trades in South Africa, Namibia, Botswana, Zambia,
Uganda, Mozambique, Mauritius, Malawi, Tanzania, Nigeria, and Ghana; and the
10-store Hi-tech retailer Dion Wired.
Divisional comparable store sales decreased by 3,8% with estimated inflation
of 0,5%. Total sales increased by 0,4% and trading profit before tax
decreased by 14,5%. The contribution from our Massdiscounters` African
businesses declined by 30,1% in trading profit terms and by 40% including
balance sheet translation losses.
It was a very busy period in Massdiscounters, with six Game stores and four
Dion Wired stores opening and one Game store closing, increasing space by
5,4%. Construction got underway in earnest on the 70,000m2 Regional
Distribution Centre in Gauteng and work started on a new store in Malawi.
Game`s performance in South Africa continued to improve with total and
comparable sales growing at 6,1% and 2,7% respectively. Game SA grew profits
in this period. Sales from Africa declined 25,2% in Rand terms and 5,5% in
local currency terms, as products became more expensive due to the weakening
of the African currencies and their economies.
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 these Group results).
Divisional total and comparable store sales increased by 1,5% with estimated
inflation of 5,1% and trading profit before tax decreased by 10,5%.
No new stores were opened, although construction began on a new Makro store
in Vanderbijlpark and good progress is being made in securing three other
sites.
Massbuild - comprises 88 outlets, trading in DIY, Home Improvement and
Builders Hardware, under the Builders Warehouse, Builders Express and
Builders Trade Depot brands in South Africa.
Divisional comparable store sales decreased by 0,4% with estimated inflation
of 2,7%. Total sales increased by 8,6% and trading profit before tax
increased by 2,6%.
Trading at Builders Warehouse and Builders Express improved throughout the
period as a result of improved prices and product offering, consumers looking
to maintain their properties, an improved focus on the contractor market, and
market share gains as the industry consolidates. Builders Trade Depot`s
sales, fully exposed to the lacklustre bonded residential property market,
contracted but outperformed its competitors. A Mozambique-based building
materials business, Kangela, was acquired during the period but had little
effect on the results of Builders Trade Depot or the Group.
One Builders Warehouse store, four Builders Express stores and 15 Builders
Trade Depot stores were opened or acquired, and three Builders Trade Depot
stores were closed. Net trading space increased by 8,2%.
Masscash - comprises 87 Wholesale and Retail Cash & Carry stores trading in
South Africa, Lesotho, Namibia, Botswana and Mozambique, and Shield, a
voluntary buying association.
Divisional comparable store sales increased by 0,1% with estimated deflation
of 0,4%. Total sales increased by 13,1% and trading profit before tax
increased by 2,6%.
The Wholesale Cash & Carry business came under pressure as sales inflation in
Food declined below expense inflation and volumes shrank temporarily. Margin
and costs were however, well controlled. A high level of activity enhancing
the Wholesale Cash & Carry business and building the Retail Cash & Carry
business continued, through acquisitions and building a new-store pipeline.
We are on track to exceed our R2 billion annualised sales target for this
2010 financial year.
Four new Wholesale Cash & Carry stores and six new Retail Cash & Carry stores
were opened or acquired. Net trading space increased by 11,6%.
Financial Review
Statement of comprehensive income
Total sales growth for the six months to December 2009 was 6,1% while
comparable sales declined by 0,5%. If one excludes the sales of our African
businesses, which have been severely affected by the significant
strengthening of the Rand, then total Group sales grew by 7,0% and comparable
sales by 1,2%.
During the period inflation declined in all categories and Group sales
inflation for the financial year-to-date was 1,6%.
During the six-month period four stores were closed or sold, 15 opened, and
25 stores acquired, resulting in a total of 290 stores at the end of December
2009. Net trading space increased by 7,3% to a total of 1 164 201m2.
Gross profit of 17,8% was lower than the prior period`s 18,1%. In Masscash
gross margins were lower due mainly to deflation in 21% of this division`s
sales categories by value. Deflation in Food also adversely affected Makro.
In addition, gross margins were lower in Massdiscounters and Makro due to the
increased competitive intensity in General Merchandise categories.
Due to acquisitions, total expenses increased by 8,9%. Comparable expenses
increased by only 2,5%.
Included in operating profit are net realised and unrealised foreign exchange
losses of R68,7 million (2008: R52,7 million gain). The translation of
Massdiscounters` African balance sheets accounted for R7,0 million of this
amount (2008: R21,4 million gain), there was a net loss from other foreign
monetary balances of R24,4 million (2008: R45,0 million gain) and the balance
came from mostly realised losses on landed forward foreign exchange contracts
of R37,3 million (2008: R13,7 million loss). These current period translation
losses arose as a result of the strengthening of the Rand from June 2009.
Net interest paid decreased as commercial interest rates softened, although
the Group`s average net borrowings were approximately R81,0 million higher
than the comparable period.
The non-cash IFRS 2 Share-based Payments charge associated with the Group`s
Staff Empowerment scheme and the Black Scarce Skills Trust was R39,1 million
(2008: R30,6 million). Including the preference dividend paid to participants
however, the total cost of the scheme was R52,6 million (2008: R42,4 million)
and has increased because of the greater proportion of the ordinary dividend
now accruing to scheme participants (see Note 6).
The Group`s effective tax rate is 31,9% (2008: 29,7%). This is higher because
of the effect of STC of 2,8% (2008: 2,1%). The non-deductible IFRS 2 charges
increase the Group effective tax rate by 2,2% (2008: 1,5%).
The minority interests comprise CBW store managers` holdings in certain
Masscash stores and certain acquisitions, including Cambridge Food acquired
with effect from December 2008.
Headline earnings declined by 19,5% while headline EPS declined by 19,9%.
Excluding the net realised and unrealised foreign exchange movements from
both years however, headline earnings declined by 9,8% while headline EPS
declined by 10,3%.
Statement of financial position
In response to the trading environment, Group inventory levels were well
controlled and, despite acquisitions and new stores, at December 2009 are
only 8,4% higher than December 2008. Historical days in stock at December
2009 are 55,2 (2008: 54,2 days).
Acquisitions continue to increase the amount of goodwill. During the period
seven businesses with 25 stores were acquired for a total cash consideration
of R155,4 million. The net cash impact after accounting for take-on bank
balances was R146,0 million.
Average interest-bearing debt for the period was R294,4 million (2008: R213,4
million), representing gearing of 8,3%.
Due to the decline in Group profitability and the recent capital investment
in acquisitions, the annual rolling return on equity of 30,6% at December
2009 is lower than the equivalent 2008 figure of 49,1%.
Statement of cash flows
Cash flow from operations grew 2,2% due to an improvement of net working
capital levels. Total capital expenditure of R291,1 million (2008: R338,8
million) comprises R137,6 million on replacement and R153,5 million on
expansionary expenditure.
Progress with Vision 2012
Good progress is being made on all elements of our 2012 strategic action plan
under the headings: Leadership and Transformation, Growth of the Core
Business through investment in Supply Chain, Private Label and Financial
Services, Organic Growth, Acquisitions, New Formats and Categories, and
Sustainability.
We are particularly proud that we have now progressed over 100 previously
disadvantaged graduates through our Graduate Development programme with 70%
of the graduates completing the programme and securing jobs in the Group. We
are also very proud of increasing our BBBEE rating from 56% to 66% in the
past year. The supply chain progress is now internally measurable in the
business and is gaining implementation momentum. The re-branded Game store
credit card, outsourced to RCS, has performed ahead of expectation, a sign
that there may still be healthy demand for store credit.
Prospects
For the 34 weeks to 21 February 2010, total sales increased by 6,7% and
comparable sales increased by 0,4%, showing an encouraging turnaround that
seems to have commenced in mid-December 2009.
These recent sales trends suggest that the worst is behind us, and should the
current trends and currency values continue, Massmart could comfortably grow
operating profits, before foreign exchange, in the second half and perhaps
even for the 2010 financial year.
The financial information on which this outlook statement is based has not
been reviewed or reported on by the Company`s external auditors.
Conclusion
The past 12 months have been the most difficult since listing in 2000, and
there is no question that Massmart`s earnings were affected by Rand
volatility over the past 18 months. Given the Group`s cyclical product mix
however, the business has performed reasonably through the recession and is
now positioned to perform well in the economic upturn ahead.
Given the robustness and agility of the Group`s human performance and
operational performance over this period, we are confident that financial
performance will follow.
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. Despite the slightly lower headline earnings and this policy, the
Board has decided to maintain this year`s dividend at the same level as last
year.
Notice is hereby given that an interim cash dividend of 252 cents per share
in respect of the period ended 27 December 2009 has been declared payable to
the holders of ordinary shares recorded in the books of the company on
Friday, 19 March 2010. The last day to trade cum-dividend will therefore be
Friday, 12 March 2010 and Massmart shares will trade ex-dividend from Monday,
15 March 2010. Payment of the dividend will be made on Tuesday, 23 March
2010. Share certificates may not be dematerialised or rematerialised between
Monday, 15 March 2010 and Friday, 19 March 2010, both days inclusive.
A Thuthukani dividend equivalent to 100% of the Massmart ordinary dividend
per share of 252 cents will be paid to the Thuthukani participants on
Tuesday, 23 March 2010.
On behalf of the Board
Grant Pattison Guy Hayward
Chief Executive Officer Chief Financial Officer
24 February 2010
Income statement
26 weeks 26 weeks 52 weeks
December December
2009 2008 % June 2009
Rm (Reviewed) (Reviewed) change (Audited)
Revenue 24 214,2 22 812,7 6,1 43 231,8
Sales 24 153,5 22 758,2 6,1 43 128,7
Cost of sales (19 843,6) (18 630,4) (6,5) (35 351,0)
Gross profit 4 309,9 4 127,8 4,4 7 777,7
Other income 60,7 54,5 11,4 103,1
Depreciation and
amortisation (187,0) (171,2) (9,2) (343,1)
Impairment of assets
(note 3) - - (1,6)
Employment costs (1 621,0) (1 492,6) (8,6) (2 965,8)
Occupancy costs (note 4) (646,3) (553,9) (16,7) (1 170,4)
Foreign exchange
(loss)/gain (68,7) 52,7 (78,4)
Other operating costs
(note 4) (739,3) (714,1) (3,5) (1 370,9)
Operating profit 1 108,3 1 303,2 (15,0) 1 950,6
Finance costs (48,6) (60,9) 20,2 (112,8)
Finance income 22,1 31,8 (30,5) 64,2
Net finance costs (26,5) (29,1) 8,9 (48,6)
Profit before taxation 1 081,8 1 274,1 (15,1) 1 902,0
Taxation (345,0) (378,2) 8,8 (620,4)
Profit for the period 736,8 895,9 (17,8) 1 281,6
Profit attributable to:
Owners of the parent 693,7 868,3 1 210,9
Preference 13,5 11,8 38,0
shareholders (note 6)
Non-controlling 29,6 15,8 32,7
interests
Profit for the period 736,8 895,9 (17,8) 1 281,6
Basic EPS (cents) 346,2 435,5 (20,5) 606,9
Diluted basic EPS
(cents) 335,9 422,8 (20,6) 593,4
Dividend (cents):
- Interim 252,0 252,0 - 252,0
- Final 134,0
- Total 386,0
Headline earnings
Reconciliation of net
profit for the period to
headline earnings
Net profit attributable
to equity holders of the
parent 693,7 868,3 1 210,9
Impairment of assets
(note 3) - - 1,6
Loss on disposal of
fixed assets 0,9 0,6 1,7
Profit on sale of assets
classified as held for
sale (note 7) - (7,0) (7,0)
Total tax effects of (0,3) 0,7 (0,1)
adjustments
Headline earnings 694,3 862,6 (19,5) 1 207,1
Headline earnings before
foreign exchange 743,8 824,7 (9,8) 1 263,5
Headline EPS (cents) 346,5 432,6 (19,9) 605,0
Headline EPS before
foreign exchange (cents) 371,2 413,6 (10,3) 633,3
Diluted headline EPS
(cents) 336,1 420,1 (20,0) 591,6
Statement of comprehensive income
26 weeks 26 weeks 52 weeks
December December June
2009 2008 % 2009
Rm (Reviewed) (Reviewed) change (Audited)
Profit for the period 736,8 895,9 1 281,6
Other comprehensive
income:
Foreign currency
translation reserve (31,9) 30,2 (27,3)
Cash flow hedges 7,8 8,5 (11,7)
Income tax relating to
components of other
comprehensive income - - -
Other comprehensive
income for the period,
net of tax (24,1) 38,7 (39,0)
Total comprehensive
income for the period 712,7 934,6 (23,7) 1 242,6
Total comprehensive
income attributable to:
Owners of the parent 669,6 907,0 1 171,9
Preference
shareholders (note 6) 13,5 11,8 38,0
Non-controlling
interests 29,6 15,8 32,7
Total comprehensive
income for the period 712,7 934,6 (23,7) 1 242,6
Statement of financial position
December December June 2009
2009 2008 %
Rm (Reviewed) (Reviewed) change (Audited)
ASSETS
Non-current assets 4 739,3 4 221,7 4 397,5
Property, plant and
equipment 1 794,4 1 571,6 14,2 1 696,6
Goodwill and other
intangible assets 1 973,5 1 699,1 1 747,4
Investments and loans 559,6 538,8 534,3
Deferred taxation 411,8 412,2 419,2
Current assets 11 192,5 10 524,3 8 129,4
Inventories 5 997,3 5 533,5 8,4 4 893,2
Trade, other receivables
and prepayments 2 585,3 2 309,0 12,0 1 851,1
Taxation 31,3 62,0 329,3
Cash and bank balances 2 578,6 2 619,8 1 055,8
Total 15 931,8 14 746,0 12 526,9
EQUITY AND LIABILITIES
Total equity 3 677,7 3 259,7 3 096,7
Equity attributable to
equity holders of the
parent 3 547,9 3 232,7 9,8 3 054,7
Minority interest 129,8 27,0 42,0
Non-current liabilities 821,2 937,6 858,3
Non-current liabilities
- interest-bearing 78,8 213,4 149,7
Other non-current
liabilities and
provisions 567,9 568,3 560,1
Deferred taxation 174,5 155,9 148,5
Current liabilities 11 432,9 10 548,7 8 571,9
Trade, other payables
and provisions 10 779,6 9 750,4 10,6 7 692,5
Taxation 228,3 395,0 490,4
Bank overdrafts and
short-term borrowings 425,0 403,3 389,0
Total 15 931,8 14 746,0 12 526,9
Statement of cash flows
26 weeks 26 weeks 52 weeks
December December June
2009 2008 2009
Rm (Reviewed) (Reviewed) (Audited)
Operating cash before working
capital movements 1 331,8 1 503,9 2 398,2
Working capital movements 1 253,2 1 024,6 63,8
Cash generated from operations 2 585,0 2 528,5 2 462,0
Taxation paid (267,4) (279,5) (700,3)
Net interest paid (26,5) (29,1) (48,6)
Investment income 20,4 18,1 29,5
Dividends received 6,3 2,5 13,4
Dividends paid (281,9) (335,9) (867,4)
Cash inflow from operating
activities 2 035,9 1 904,6 888,6
Investment to maintain
operations (137,6) (123,7) (345,5)
Investment to expand operations (153,5) (215,1) (340,1)
Disposal of assets classified as
held for sale - 174,3 174,3
Disposal of subsidiary - - 4,3
Businesses acquired (146,0) (147,2) (198,5)
Other investing activities 14,5 4,8 8,1
Cash outflow from investing
activities (422,6) (306,9) (697,4)
Cash outflow from financing
activities (89,6) (104,9) (160,7)
Net increase in cash and cash
equivalents 1 523,7 1 492,8 30,5
Foreign exchange (loss)/gain
taken to other comprehensive
income (31,9) 30,2 (27,3)
Opening cash and cash
equivalents 1 025,1 1 021,9 1 021,9
Closing cash and cash
equivalents 2 516,9 2 544,9 1 025,1
Statement of changes in equity
6 months ended December 2009 Ordinary
(Reviewed) share Share General Retained
Rm capital premium reserves profit
Opening balance 2,0 149,4 298,7 2 604,6
Dividends declared - - - (281,8)
Total comprehensive income - - (24,1) 707,2
Changes in minority interests
and distribution to minorities - - - -
Cost of acquiring minority
interests - - (30,8) -
Minorities relating to
acquisitions - - - -
Share trust transactions and
IFRS 2 charge - - 78,7 (21,2)
Treasury shares
(acquired)/realised - (50,7) 115,9 -
Total 2,0 98,7 438,4 3 008,8
6 months ended December 2008
(Reviewed)
Opening balance 2,0 151,7 269,0 2 313,1
Dividends declared - - - (336,8)
Total comprehensive income - - 38,7 880,1
Changes in minority interests
and distribution to minorities - - - -
Financial liability raised on a
business acquisition - - (120,0) -
Share trust transactions and
IFRS 2 charge - - 68,0 (46,6)
Treasury shares
(acquired)/realised - (20,2) 33,7 -
Total 2,0 131,5 289,4 2 809,8
Year ended June 2009
(Audited)
Opening balance 2,0 151,7 269,0 2 313,1
Dividends declared - - - (867,4)
Total comprehensive income - - (39,6) 1 249,5
Changes in minority interests
and distribution to minorities - - - -
Financial liability raised on a
business acquisition - - (120,0) -
Share trust transactions and
IFRS 2 charge - - 133,5 (90,6)
Treasury shares
(acquired)/realised - (2,3) 55,8 -
Total 2,0 149,4 298,7 2 604,6
Equity
attributable
6 months ended December 2009 to equity
(Reviewed) holders of Minority
Rm the parent interest Total
Opening balance 3 054,7 42,0 3 096,7
Dividends declared (281,8) - (281,8)
Total comprehensive income 683,1 29,6 712,7
Changes in minority interests and
distribution to minorities - (20,3) (20,3)
Cost of acquiring minority
interests (30,8) - (30,8)
Minorities relating to - 78,5 78,5
acquisitions
Share trust transactions and IFRS
2 charge 57,5 - 57,5
Treasury shares 65,2 - 65,2
(acquired)/realised
Total 3 547,9 129,8 3 677,7
6 months ended December 2008
(Reviewed)
Opening balance 2 735,8 30,7 2 766,5
Dividends declared (336,8) - (336,8)
Total comprehensive income 918,8 15,8 934,6
Changes in minority interests and
distribution to minorities - (19,5) (19,5)
Financial liability raised on a
business acquisition (120,0) - (120,0)
Share trust transactions and IFRS
2 charge 21,4 - 21,4
Treasury shares 13,5 - 13,5
(acquired)/realised
Total 3 232,7 27,0 3 259,7
Year ended June 2009
(Audited)
Opening balance 2 735,8 30,7 2 766,5
Dividends declared (867,4) - (867,4)
Total comprehensive income 1 209,9 32,7 1 242,6
Changes in minority interests and
distribution to minorities - (21,4) (21,4)
Financial liability raised on a
business acquisition (120,0) - (120,0)
Share trust transactions and IFRS
2 charge 42,9 - 42,9
Treasury shares 53,5 - 53,5
(acquired)/realised
Total 3 054,7 42,0 3 096,7
Additional information
26 weeks 26 weeks 52 weeks
December December June
2009 2008 2009
(Reviewed) (Reviewed) (Audited)
Net asset value per share (cents) 1 761,9 1 606,1 1 517,5
Ordinary shares (000`s):
- In issue 201 370 201 277 201 303
- Weighted average 200 367 199 390 199 533
- Diluted weighted average 206 545 205 348 204 054
Preference shares (000`s):
- Thuthukani `A` shares held by
the participants (note 6) 13 513 15 311 13 694
- Black Scarce Skills Trust `B`
shares held by the participants
(note 6) 2 314 1 613 2 345
Capital expenditure (Rm)
- Authorised and committed 231,9 220,4 286,9
- Authorised not committed 76,8 223,7 320,0
Operating lease commitments (2010
- 2025) (Rm) (note 10) 8 849,2 8 209,4 8 515,4
US dollar exchange rates - year
end (R/$) 7,55 9,77 7,94
- average (R/$) 7,68 8,85 9,05
Reconciliation between Trading and Operating profit
26 weeks 26 weeks 52 weeks
December December June
2009 2008 2009
Rm (Reviewed) (Reviewed) (Audited)
Profit before interest and
taxation
Trading profit before interest and
taxation 1 216,1 1 281,1 2 097,5
Asset impairments - - (1,6)
BEE transactions IFRS 2 charge
(note 5) (39,1) (30,6) (66,9)
Foreign exchange (loss)/gain (68,7) 52,7 (78,4)
Operating profit before interest
and taxation 1 108,3 1 303,2 1 950,6
Profit before taxation
Trading profit before taxation 1 283,9 1 392,0 2 348,9
Corporate net interest (94,3) (140,0) (300,0)
Asset impairments - - (1,6)
BEE transactions IFRS 2 charge
(note 5) (39,1) (30,6) (66,9)
Foreign exchange (loss)/gain (68,7) 52,7 (78,4)
Operating profit before taxation 1 081,8 1 274,1 1 902,0
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, except for IFRS 3
Business Combinations, IFRS 8 Operating Segments, IAS 1 Presentation of
Financial Statements, IAS 23 Borrowing Costs and IAS 27 Consolidated and
Separate Financial Statements which were implemented during the period in
accordance with the transitional provisions.
2. During the period under review, no Massmart shares were bought in the
market. In the prior period the total share buyback (including shares bought
in the market by the Share Trust) was 0,7 million at an average price of
R80,49 totalling R56,3 million.
3. The impairment of assets in the prior period relates to impairment of
computer software in Shield.
4. Security costs relating to properties in Masscash have been reallocated
from `Other operating costs` to `Occupancy costs` in December 2008 (R15,8
million) and June 2009 (R34,9 million), in line with the Group`s accounting
policy.
5. The Massmart BEE transaction, which came into operation in October 2006,
gave rise to an IFRS 2 Share-based Payment charge of R39,1 million (2008:
R30,6 million). The `A` and `B` preference shares have been issued to the
Thuthukani Trust and the Black Scarce Skills Trust respectively.
6. The `A` preference shareholders dividend amount of R13,5 million (2008:
R11,8 million) represents the final cash dividend of 100,5 cents paid to all
Thuthukani participants. In the prior period, the Thuthukani dividend was
equivalent to 75% of the ordinary dividend, and for the current period it is
equivalent to 100%.
7. The profit on assets classified as held for sale in the prior period
relates to the cash sale of the Massdiscounters` retail debtors` book
effective from 30 June 2008, immediately after closing the 2008 financial
year.
8. Other non-current liabilities and provisions include the lease smoothing
liability of R471,6 million (2008: R464,6 million).
9. The net asset value of the businesses acquired during the period was R36,2
million (2008: R12,9 million) on the date of acquisition.
10. In the prior year the June 2009 figure was incorrectly disclosed as R9
959,6 million.
11. Related party transactions include private aircraft, used from time to
time, in the normal course of business by Massmart and its divisions and
hired from competitively selected charter companies, two of which operate
aircraft indirectly beneficially owned by Mr MJ Lamberti.
12. Due to Christmas trading, Massmart`s earnings are weighted towards the
six months to December.
13. These results have been reviewed by independent external auditors,
Deloitte & Touche, and their unmodified review opinion is available for
inspection at the registered office. The review was performed in accordance
with ISRE 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity.
Directorate MJ Lamberti (Chairman),CS Seabrooke (Deputy Chairman), GM
Pattison* (Chief Executive Officer), MD Brand, ZL Combi, KD Dlamini, NN
Gwagwa, GRC Hayward* (Chief Financial Officer), 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 (Proprietary) Limited
Registered auditors Deloitte & Touche
For more information www.massmart.co.za
25 February 2010
Johannesburg
Sponsor:
Deutsche Securities (SA) (Proprietary) Limited
Date: 25/02/2010 07:05:25 Produced by the JSE SENS Department.
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