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MASSMART HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1940/014066/06)
("MASSMART" OR "THE COMPANY")
ABRIDGED PRE-LISTING STATEMENT
PREPARED IN TERMS OF THE LISTINGS REQUIREMENTS OF THE JOHANNESBURG STOCK
EXCHANGE ("THE JSE")
THE ABRIDGED PRE-LISTING STATEMENT IS NOT AN INVITATION TO SUBSCRIBE FOR
SHARES, WHETHER IN SOUTH AFRICA OR ELSEWHERE, BUT IS ISSUED IN COMPLIANCE WITH
THE LISTINGS REQUIREMENTS OF THE JSE FOR THE PURPOSE OF GIVING INFORMATION TO
THE PUBLIC WITH REGARD TO MASSMART. THE JSE HAS GRANTED A LISTING OF 197 077
388 ORDINARY SHARES OF R0,01 EACH IN THE SHARE CAPITAL OF MASSMART UNDER THE
ABBREVIATED NAME "MASMART" IN THE "RETAIL" SECTOR OF THE JSE LISTS, WITH EFFECT
FROM COMMENCEMENT OF BUSINESS ON TUESDAY, 4 JULY 2000. CERTAIN INSTITUTIONS
HAVE UNDERTAKEN TO SUBSCRIBE FOR 40 000 000 SHARES AT A PRICE OF R12,50 PER
SHARE IN PURSUANCE OF THE PRIVATE PLACEMENT.
THIS ANNOUNCEMENT CONTAINS THE SALIENT INFORMATION CONTAINED IN THE PRE-LISTING
STATEMENT OF MASSMART. FOR A FULL APPRECIATION THEREOF, THE PRE-LISTING
STATEMENT SHOULD BE READ IN ITS ENTIRETY.
LISTING ON THE JOHANNESBURG STOCK EXCHANGE
DETAILS OF THE LISTING
THE PRIVATE PLACEMENT OPENED AT 09:00 ON MONDAY, 19 JUNE 2000
THE PRIVATE PLACEMENT CLOSED AT 12:00 ON THURSDAY, 29 JUNE 2000
START OF LISTING 09:00 TUESDAY, 4 JULY 2000
ABBREVIATED NAME MASMART
SECTOR RETAIL
SHARE CAPITAL 500 000 000 AUTHORISED ORDINARY SHARES AND 197 077 388
ISSUED ORDINARY SHARES WITH IDENTICAL RIGHTS AND A PAR VALUE OF R0,01 EACH.
NATURE OF BUSINESS AND STRATEGY
NATURE OF BUSINESS
THE MASSMART GROUP IS A RETAIL GROUP INVESTED IN A PORTFOLIO OF FOCUSED
WHOLESALE AND RETAIL CHAINS WHICH DISTRIBUTE WELL KNOWN BRANDS OF FOOD, LIQUOR
AND GENERAL MERCHANDISE TO A BROAD RANGE OF CONSUMERS IN SEVEN COUNTRIES IN
SOUTHERN AFRICA, THROUGH FIVE SEPARATE CHAINS MANAGED THROUGH FOUR DIVISIONS:
- MASSDISCOUNTERS IS A CHAIN OF 64 DISCOUNT STORES TRADING UNDER THE
ESTABLISHED GAME AND DION RETAIL BRANDS, IN SOUTH AFRICA, NAMIBIA, ZAMBIA AND
BOTSWANA, OFFERING A WIDE RANGE OF GENERAL MERCHANDISE TO VALUE-SEEKING
CUSTOMERS;
- MAKRO IS A CHAIN OF 13 LARGE WAREHOUSE CLUB OUTLETS AND THE MAKROFFICE
FORMAT WHICH OPERATES WITHIN THE MAKRO OUTLETS AND THROUGH ONE FREE-STANDING
OUTLET. THE OUTLETS, SITUATED IN SOUTH AFRICA AND ZIMBABWE, TRADE IN FOOD,
LIQUOR AND GENERAL MERCHANDISE WITH COMMERCIALLY AFFILIATED CUSTOMERS;
- SHIELD IS A VOLUNTARY BUYING ASSOCIATION ASSISTING 266 INDEPENDENT
WHOLESALERS AND 240 INDEPENDENT RETAILERS TO PROCURE FOOD MORE EFFICIENTLY FOR
RESALE TO LOWER INCOME CONSUMERS IN SOUTH AFRICA, NAMIBIA, BOTSWANA, SWAZILAND
AND LESOTHO; AND
- CCW IS A PERI-URBAN AND RURAL CHAIN OF 18 CASH-AND-CARRY WAREHOUSES LOCATED
IN SOUTH AFRICA, NAMIBIA AND LESOTHO DISTRIBUTING BASIC FOOD AND GROCERIES TO
LOWER INCOME CUSTOMERS.
STRATEGY
SINCE ITS FORMATION, MASSMART HAS CONSISTENTLY PURSUED THREE STRATEGIC
INITIATIVES IN PURSUIT OF SHAREHOLDER VALUE:
- AGGLOMERATE AND GROW FOR SCALE AND SCOPE (THROUGH FOCUSED CHAINS) - FOUNDED
ON THE BELIEF THAT RELATIVE MARKET SHARE IS A KEY DETERMINANT OF SUSTAINABLE
PROFITABILITY, MASSMART HAS GROWN RAPIDLY TO ESTABLISH A MAJOR PRESENCE, IF NOT
LEADERSHIP, IN THE RETAIL AND WHOLESALE DISTRIBUTION OF SEVEN MAJOR PRODUCT
CATEGORIES IN SOUTH AFRICA. THIS WAS ACHIEVED THROUGH A MULTI-FORMAT APPROACH
WHICH FACILITATED DEEPER AND BROADER PENETRATION OF MARKETS BY FOCUSED RETAIL
OR WHOLESALE CHAINS.
- SYNERGISE FOR EFFICIENCY (THROUGH COLLABORATIVE CHANNELS) - COLLABORATION
IS REQUIRED TO HARNESS THE BENEFITS OF THE GROUP'S SIZE AND DIVERSITY. BY
SHARING OR AGGLOMERATING CAPABILITIES, KNOWLEDGE, RESOURCES, INFLUENCE AND
INFORMATION, MASSMART'S DIVISIONS AIM TO PERFORM BETTER THAN THEY COULD AS
STAND-ALONE ENTITIES. THIS IS TERMED CHANNEL ACTIVITY. THREE AREAS OF
OPPORTUNITY HAVE BEEN PURSUED: COST REDUCTION THROUGH BENCHMARKING AND SHARED
SERVICES, MARGIN ENHANCEMENT THROUGH COLLECTIVE PROCUREMENT, AND MORE EFFECTIVE
MARKET PENETRATION THROUGH CO-ORDINATION OF THE RETAIL MARKETING MIX.
- EMPOWER TO LEAD - THE INCREASING RATE OF ENVIRONMENTAL AND BUSINESS CHANGE
NECESSITATES A RAPID RESPONSE, CLOSE TO THE CUSTOMER. TO THIS END MASSMART HAS
INVESTED HEAVILY IN THE RECRUITMENT, DEVELOPMENT AND RETENTION OF SKILLED
MANAGEMENT WHO ARE CAPABLE OF EXERCISING INITIATIVE IN THE INTERESTS OF
SHAREHOLDERS. REMUNERATION, INCENTIVE AND OWNERSHIP SCHEMES SEEK TO ATTRACT,
RECOGNISE AND RETAIN INDIVIDUALS WHO EXHIBIT EXCEPTIONAL LEADERSHIP AND
ENTREPRENEURIAL QUALITIES.
THE FIRST TWO INITIATIVES ARE REFERRED TO AS THE GROUP'S "CHAIN AND CHANNEL"
STRATEGY.
OPERATIONS
THE OPERATING PRACTICES OF MASSMART HAVE ENSURED THAT IMPLEMENTATION IS
THOROUGH AND DAY-TO-DAY RETAIL CHALLENGES ARE DEALT WITH EFFECTIVELY.
- GROUP STRATEGIES, STRUCTURES AND OPERATING POLICIES ARE REVIEWED ANNUALLY
AND COMMUNICATED.
- GROUP STRATEGIES ARE DEVOLVED INTO THREE-YEAR PLANS BY EACH OF THE GROUP'S
FOCUSED DIVISIONAL BOARDS ANNUALLY.
- GROUP AND DIVISIONAL STRUCTURES AND POLICIES ARE CREATED TO MITIGATE RISK.
- RIGOROUS ANNUAL BUDGETING REFLECTS THE STRATEGIES AND PLANS AND ENSURES
APPROPRIATE FINANCIAL PERFORMANCE.
- THE VARIOUS FORMATS WITHIN MASSMART ARE USED TO EXPLOIT OPPORTUNITIES FOR
SUCCESSION AND DEVELOPMENT THROUGHOUT THE GROUP'S INCREASINGLY EXPERIENCED
CADRE OF OPERATING, FUNCTIONAL AND LINE MANAGERS.
- INDIVIDUAL PERFORMANCE IS MANAGED AND SHORT-TERM IMPERATIVES ARE
INCENTIVISED.
SYSTEMS AND CONTROL
CONTROL IS ASSURED BY GOOD CORPORATE GOVERNANCE, STRONG FINANCIAL DISCIPLINES,
CODIFIED OPERATING POLICIES, PROCESSES AND PRACTICES, AND THE APPROPRIATE USE
OF INFORMATION TECHNOLOGY.
OPERATING STRUCTURE
GRAPHIC: SEE PRESS FOR DETAIL
PROSPECTS
MASSMART ANTICIPATES REAL GROWTH IN SALES THROUGH THE OPENING OF NEW STORES AND
THROUGH PRODUCT INNOVATION, FOUNDED ON VALUE MERCHANDISING OFF A LOW COST BASE
IN EACH OF THE GROUP'S NICHED FORMATS. THIS WILL BE TARGETED INCREASINGLY AT
MIDDLE TO UPPER INCOME CASH CUSTOMERS THROUGHOUT AFRICA AND, IN TIME, OTHER
EMERGING MARKETS. ACQUISITIONS COMPATIBLE WITH THIS APPROACH WILL BE PURSUED
AGGRESSIVELY. PROFIT MARGINS ARE EXPECTED TO BE ENHANCED BY IMPROVED EFFICIENCY
AND GROUP SYNERGY.
MASSDISCOUNTERS HAS CREATED SUBSTANTIAL SYNERGISTIC BENEFITS FROM JOINT PRODUCT
PROCUREMENT, CONSOLIDATED LOGISTICS SYSTEMS, REDUCED ADVERTISING COSTS AND
CO-ORDINATED STORE DEVELOPMENT. THE FULL IMPACT OF THESE INITIATIVES ON
OPERATING MARGINS ARE EXPECTED TO TAKE PLACE IN 2001 AND 2002. STORE EXPANSION
IS SCHEDULED THROUGHOUT SUB-SAHARAN AFRICA.
MAKRO ENVISAGES STORE EXPANSION OPPORTUNITIES THROUGHOUT AFRICA AND ULTIMATELY
IN OTHER EMERGING MARKETS. EXISTING STORES SHOULD ENHANCE PERFORMANCE BY SALES
GROWTH RESULTING FROM IMPROVED MERCHANDISE AND CATEGORY MANAGEMENT, MARGIN
ENHANCEMENT FROM HEAD OFFICE COST REDUCTION, PROCUREMENT SYNERGIES AND MORE
SOPHISTICATED CUSTOMER RELATIONSHIP MANAGEMENT.
SHIELD WILL ENHANCE ITS EXISTING INTERNET-BASED ECOMMERCE CAPABILITY WHICH
FACILITATES TRANSACTIONS BETWEEN MEMBERS AND SUPPLIERS. THE ENHANCEMENT SHOULD
INCREASE MEMBER LOYALTY BY FACILITATING INTERACTION BETWEEN MEMBERS AND
SUPPLIERS, REDUCING COSTS AND RENDERING SHIELD LESS SUSCEPTIBLE TO
DISINTERMEDIATION EFFORTS BY SUPPLIERS.
CCW INTENDS TO EXPAND AGGRESSIVELY VIA NEW STORES, AS WELL AS ROLLING OUT
LIQUOR OUTLETS INTO ALL EXISTING STORES.
SUMMARY OF FINANCIAL INFORMATION
THE RESULTS OF THE MASSMART GROUP FOR THE YEAR ENDED 30 JUNE 1999, EACH OF THE
PRECEDING FOUR YEARS AND FOR THE SIX-MONTH PERIOD TO 31 DECEMBER 1999 HAVE BEEN
EXTRACTED FROM THE INDEPENDENT REPORTING ACCOUNTANTS' REPORT:
6 MONTHS 12 MONTHS 12 MONTHS
ENDED ENDED ENDED
31 DECEMBER 30 JUNE 30 JUNE
1999 1999 1998
R'000 R'000 R'000
TURNOVER 5 650 791 8 916 044 5 830 145
OPERATING INCOME/(LOSS) 158 986 144 090 74 115
NET INTEREST PAID 40 533 69 029 784
NET INCOME/(LOSS) BEFORE
EXCEPTIONAL ITEMS 118 453 75 061 73 331
EXCEPTIONAL ITEMS (430) 116 398 -
INCOME/(LOSS) BEFORE TAXATION 118 023 191 459 73 331
TAXATION 31 904 (37 849) 29 895
NET INCOME/(LOSS) AFTER TAXATION 86 119 229 308 43 436
INCOME FROM ASSOCIATES 1 235 959 -
ATTRIBUTABLE TO OUTSIDE
SHAREHOLDERS IN SUBSIDIARIES 3 099 3 131 3 356
NET INCOME/(LOSS) ATTRIBUTABLE
TO SHAREHOLDERS 84 255 227 136 40 080
DIVIDENDS - - -
RETAINED INCOME/(LOSS) FOR
THE PERIOD 84 255 227 136 40 080
NUMBER OF ISSUED SHARES ('000) 156 127 121 528 90 547
EARNINGS/(LOSS) PER SHARE (CENTS) 69,2 200,1 45,2
FULLY DILUTED EARNINGS/(LOSS)
PER SHARE (CENTS) 67,8 184,2 45,2
HEADLINE EARNINGS/(LOSS)
PER SHARE (CENTS) 67,2 41,4 43,3
FULLY DILUTED HEADLINE EARNINGS/
(LOSS) PER SHARE (CENTS) 66,3 61,4 43,2
DIVIDEND PER SHARE (CENTS) - - -
SUMMARY OF FINANCIAL INFORMATION CONTINUED
12 MONTHS 12 MONTHS 12 MONTHS
ENDED ENDED ENDED
30 JUNE 30 JUNE 30 JUNE
1997 1996 1995
R'000 R'000 R'000
TURNOVER 4 831 433 4 146 870 3 512 308
OPERATING INCOME/(LOSS) 41 791 (8 251) 25 757
NET INTEREST PAID 16 174 15 931 11 430
NET INCOME/(LOSS) BEFORE
EXCEPTIONAL ITEMS 25 617 (24 182) 14 327
EXCEPTIONAL ITEMS - - 291
INCOME/(LOSS) BEFORE TAXATION 25 617 (24 182) 14 618
TAXATION 6 923 755 798
NET INCOME/(LOSS) AFTER TAXATION 18 694 (24 937) 13 820
INCOME FROM ASSOCIATES - - -
ATTRIBUTABLE TO OUTSIDE
SHAREHOLDERS IN SUBSIDIARIES 920 1 266 1 503
NET INCOME/(LOSS) ATTRIBUTABLE
TO SHAREHOLDERS 17 774 (26 203) 12 317
DIVIDENDS - 1 041 -
RETAINED INCOME/(LOSS) FOR
THE PERIOD 17 774 (27 244) 12 317
NUMBER OF ISSUED SHARES ('000) 83 514 83 514 70 056
EARNINGS/(LOSS) PER SHARE (CENTS) 21,3 (37,3) 17,8
FULLY DILUTED EARNINGS/(LOSS)
PER SHARE (CENTS) 21,1 (35,6) 17,7
HEADLINE EARNINGS/(LOSS)
PER SHARE (CENTS) 14,2 (31,0) 27,5
FULLY DILUTED HEADLINE EARNINGS/
(LOSS) PER SHARE (CENTS) 14,1 (31,0) 27,3
DIVIDEND PER SHARE (CENTS) - 1,2 -
EXECUTIVE AND NON-EXECUTIVE DIRECTORS
THE NAMES AND OCCUPATIONS OF THE DIRECTORS OF MASSMART ARE SHOWN BELOW.
EXECUTIVE DIRECTORS
NAME OCCUPATION
MARK LAMBERTI EXECUTIVE CHAIRMAN
DAN BARRETT CHIEF OPERATING OFFICER
STEPHEN LEGGATT CHIEF FINANCIAL OFFICER
NON-EXECUTIVE DIRECTORS
NAME OCCUPATION
COLIN HALL EXECUTIVE CHAIRMAN OF WOOLTRU AND WOOLWORTHS
WILLIAM KIRSH CHIEF EXECUTIVE OFFICER OF PRIMEDIA
JOHN NEWTON FINANCE DIRECTOR OF WOOLTRU
MICHAEL RUBIN BUSINESSMAN
FOLKERT SCHUKKEN CHAIRMAN OF MAKRO ASIA
CHRISTOPHER SEABROOKE EXECUTIVE CHAIRMAN OF SABVEST
PURPOSES OF THE PRIVATE PLACEMENT AND THE LISTING
THE PURPOSES OF THE PRIVATE PLACEMENT AND THE LISTING ARE TO:
- AFFORD INSTITUTIONAL INVESTORS, BUSINESS ASSOCIATES OF THE GROUP AND
MEMBERS OF THE PUBLIC THE OPPORTUNITY TO PARTICIPATE DIRECTLY IN THE EQUITY OF
MASSMART;
- ATTRACT AND RETAIN HIGH QUALITY STAFF BY AFFORDING EMPLOYEES OF THE GROUP
THE OPPORTUNITY TO PARTICIPATE FURTHER IN THE EQUITY AND FUTURE GROWTH OF
MASSMART;
- ENHANCE INVESTOR AND GENERAL PUBLIC AWARENESS OF THE GROUP; AND
- PROVIDE ADDITIONAL CAPITAL TO THE GROUP'S OPERATING SUBSIDIARIES.
THE ENTIRE PROCEEDS OF THE PRIVATE PLACEMENT, BEING R500 MILLION, WILL ACCRUE
TO THE COMPANY AND WILL BE UTILISED TO FUND FUTURE EXPANSION OPPORTUNITIES AND
TO DEFRAY THE EXPENSES OF THE LISTING.
COPIES OF THE PRE-LISTING STATEMENT
ENGLISH COPIES OF THE PRE-LISTING STATEMENT MAY BE OBTAINED DURING BUSINESS
HOURS FROM MONDAY, 3 JULY 2000 UNTIL MONDAY, 24 JULY 2000 FROM:
MASSMART, 1ST FLOOR, MASSMART HOUSE, 16 PELTIER DRIVE, SUNNINGHILL EXT 6,
SANDTON, 2157;
ING BARINGS, 2 MERCHANT PLACE, FREDMAN DRIVE, SANDTON, 2196;
SG SECURITIES, 3RD FLOOR, SOCIETE GENERALE HOUSE, 30 WELLINGTON ROAD, PARKTOWN,
2193;
UBS WARBURG, 64 WIERDA ROAD EAST, WIERDA VALLEY, SANDTON, 2196; AND
MERCANTILE REGISTRARS, 11 DIAGONAL STREET, JOHANNESBURG, 2001.
JOHANNESBURG
4 JULY 2000
GLOBAL CO-ORDINATOR
UBS WARBURG SECURITIES (SOUTH AFRICA) (PTY) LTD
A FINANCIAL SERVICES GROUP OF UBS AG
JOINT FINANCIAL ADVISERS, LEAD MANAGERS AND BOOKRUNNERS
ING BARINGS
UBS WARBURG SECURITIES (SOUTH AFRICA) (PTY) LTD
A FINANCIAL SERVICES GROUP OF UBS AG
JOINT SPONSORING BROKERS
ING BARINGS SOUTHERN AFRICA LIMITED
(MEMBER OF THE JOHANNESBURG STOCK EXCHANGE)
(REGISTRATION NUMBER 1994/004352/06)
SG SECURITIES (JOHANNESBURG) (PROPRIETARY) LIMITED
REG. NO. 96/05841/07
MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
UBS WARBURG SECURITIES (SOUTH AFRICA) (PTY) LTD
A FINANCIAL SERVICES GROUP OF UBS AG
(MEMBER OF THE JOHANNESBURG STOCK EXCHANGE)
(REGISTRATION NUMBER 1995/011140/07)
CORPORATE LAW ADVISERS AND CONSULTANTS
EDWARD NATHAN & FRIEDLAND (PTY) LTD
(REGISTRATION NUMBER 1999/026464/07)
AUDITORS AND INDEPENDENT REPORTING ACCOUNTANTS
DELOITTE & TOUCHE
ATTORNEYS
KNOWLES HUSAIN INC ATTORNEYS
(REGISTRATION NUMBER 2000/000 004/21)
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