Wrap Text
Massmart Holdings Limited
("the Company" or "the Group")
JSE code MSM
ISIN ZAE000152617
Company registration number
1940/014066/06
HIGHLIGHTS
UP BY 15.6%
UP R61,209m
SALES
2011: R52,950m
UP BY 3.7%
UP R2,135m
OPERATING PROFIT BEFORE
TRANSACTION COSTS
2011: R2,059m
UP BY 62.8%
UP R2,669m
CASH GENERATED
FROM OPERATIONS
2011: R1,639m
UP BY 8.9%
UP R1,364m
HEADLINE EARNINGS
BEFORE TRANSACTION
COSTS
2011: R1,253m
UP BY 2.8%
UP 633 cents
HEADLINE EPS BEFORE
TRANSACTION COSTS
2011: 616 cents
UP BY 3.1%
UP 398 cents
DIVIDEND
PER SHARE
2011: 386 cents
REVIEWED CONSOLIDATED RESULTS FOR THE 52 WEEKS ENDED 24 JUNE 2012
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
12 countries in sub-Saharan
Africa comprising 348 stores.
The Group is the second
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
For the 52 weeks to June 2012, Massmart's total sales
increased by 15.6%, operating profit by 21.0% and
headline earnings by 38.0%. Excluding costs relating
to the Walmart integration and transaction however,
operating profit increased by 3.7% and headline
earnings by 8.9%.
The underlying trading was resilient with comparable
sales increasing by 9.6% and product inflation
remained low at 1.8%. The derived 7.8% increase
in comparable sales volumes was material and put
pressure on operating costs, the impact of which was
somewhat mitigated by supply chain efficiencies.
Although the Rand weakened against the Dollar
during the financial year, the Group incurred a foreign
exchange translation loss on its African businesses of
R72.5 million due to the unrealised translation loss
caused by the significant currency devaluation in
Malawi in May 2012.
Underlying cost pressures remain a challenge. The
Group's significant investment in new stores, the
Food Retail conversions, and the new Regional
Distribution Centers (RDCs) caused both occupancy
costs and depreciation to increase ahead of sales
growth. A secondary effect is the above-inflation
increases in Local Government taxes and services.
Buoyed by a good working capital performance,
cash generated by operations increased by 62.8% to
R2.7 billion, financing a record R1.7 billion in capital
spending on maintaining and growing operations and
acquisitions.
Environment
Whilst South African GDP growth estimates declined
throughout the year, Massmart's high comparable sales
growth suggests a healthy overall consumer environment.
Within the South African consumer-base however,
middle-income consumers, particularly those that rely
on unsecured credit to fund their purchases, came under
increasing pressure and in Massdiscounters we saw a
decline in credit spending on a comparable account basis.
The large growth in new consumer credit accounts also
points towards a trend of increasing use of unsecured
credit.
Competition in most product categories increased as the
battle for market share intensified, indicative of a healthy
competitive environment. Most major retailers are being
innovative in the search for growth by focusing on new
categories, whilst the independent retailers remain nimble,
exploiting opportunities in the market.
Wage settlements remain above inflation, requiring
management to seek productivity gains. This puts
downward pressure on employment in the comparable
business whilst total employment will increase through
organic store growth. The proposed amendments to
Labour regulations will require us to manage flexi-time
workers differently, although the regulations will not
affect the balance between full-time and flexi-time
employment. They will however, increase the costs of
managing flexi-time employees, which will again require
management to look for productivity gains.
Massmart's labour relations remain sound and our
wage-agreements have, almost without exception, been
concluded earlier than the case a year ago and, in some
instances, with two-year agreements.
Our participation in the affairs of Government and Industry
are of growing importance and we will increase our
contribution to the policy debates on matters affecting
business, trade and the economy at large.
Divisional operational review
June June Comparable Estimated
2012 % of 2011 % of Year % sales % sales
Rm (Reviewed) sales (Audited) sales % growth growth inflation
Sales 61,209.1 52,950.1 15.6 9.6 1.8
Massdiscounters 14,805.7 13,332.5 11.0 4.4 (3.3)
Masswarehouse 15,370.6 12,722.9 20.8 11.6 1.9
Massbuild 8,138.0 7,271.0 11.9 9.3 1.4
Masscash 22,894.8 19,623.7 16.7 11.6 6.1
Trading profit before
interest and tax 2,265.3 3.7 2,182.9 4.1 3.8
Massdiscounters 749.8 5.1 744.0 5.6 0.8
Masswarehouse 844.5 5.5 749.0 5.9 12.8
Massbuild 389.8 4.8 315.1 4.3 23.7
Masscash 281.2 1.2 374.8 1.9 (25.0)
Trading profit
before tax 2,456.8 4.0 2,331.6 4.4 5.4
Massdiscounters 813.0 5.5 782.0 5.9 4.0
Masswarehouse 906.3 5.9 803.2 6.3 12.8
Massbuild 435.3 5.3 354.7 4.9 22.7
Masscash 302.2 1.3 391.7 2.0 (22.8)
Trading profit excludes several items. A detailed reconciliation between trading and operating profit can be found below the 'Additional
information' table over the page.
Massdiscounters comprises the 107-store General
Merchandise retail discounter Game, which trades in
South Africa, Botswana, Ghana, Malawi, Mozambique,
Namibia, Nigeria, Tanzania, Uganda and Zambia; and the
18-store Hi-tech retailer DionWired.
Comparable store sales increased by 4.4% with estimated
product deflation of 3.3%. Total sales increased by 11.0%
and trading profit before tax increased by 4.0%. Game
South Africa's comparable sales growth was low as a
result of the middle-income consumer, product deflation
and some cannibalisation from the new Makro stores.
Africa performed superbly and increased sales and profits
significantly as the African currencies (with the exception
of Malawi), strengthened. DionWired had another year of
great sales and profit growth.
Foodco continues to expand and comprises 20 stores
(including three in Africa), and is performing at or
above expectations. Significantly, the third and final
Massdiscounters RDC was commissioned which now
completes the South African network. Whilst these facilities
are expensive in the short term, they provide a significant
opportunity for leverage in the medium to long term.
Eight Game stores and five DionWired stores opened, and
one Game store closed, increasing space by 27,592 m2
(7.1%).
Masswarehouse comprises the 16-store Makro
warehouse-club trading in Food, General Merchandise and
Liquor in South Africa and now includes Fruitspot.
Comparable store sales increased by 11.6%, with
estimated product inflation of 1.9%. Total sales grew by
20.8% and trading profit before tax increased by 12.8%.
This was a busy year with three new stores, an expanded
DC and the January 2012 acquisition of Fruitspot. Despite
the cost pressures of the three new stores and associated
opening costs, the business remained tightly controlled and
well managed. If adjusted for the once-off store opening
costs, trading profit increased by 14.5%.
Three stores were opened and one closed, increasing
space by 17,609 m2 (13.7%). A further two stores will
be opened during the period to December 2012.
Massbuild comprises 84 outlets, trading in DIY, Home
Improvement and Builders Hardware, under the Builders
Warehouse, Builders Express and Builders Trade Depot
brands in South Africa and Botswana.
Comparable store sales increased by 9.3% with estimated
product inflation of 1.4%. Total sales increased by 11.9%
and trading profit before tax increased by 22.7%.
The Builders Warehouse and Builders Express brands
continued to transform the South African home improvement
market. Builders Trade Depot's performance improved
despite the depressed level of housing construction activity.
The first non-South African Builders Warehouse was
opened in Gaborone, Botswana, and has traded
better than expected. At least two other non-South
African stores have been approved and should be opened
in calendar 2013.
One Builders Warehouse store and two Builders Express
stores were opened resulting in net trading space increasing
by 8,602 m2 (2.2%). One Builders Trade Depot store was
converted to a Builders Express store.
Masscash comprises 80 Wholesale Cash and Carry
stores and 43 Retail Cash and Carry trading in South
Africa, Botswana, Lesotho, Namibia and Swaziland; and
Shield, a voluntary buying association.
Comparable store sales increased by 11.6% with estimated
product inflation of 6.1%. Total sales increased by 16.7%
but disappointingly trading profit before tax decreased
by 22.8%.
This Division traded hard in a competitive environment and
invested heavily in Food Retail stores, skills, distribution,
IT systems and brand-building. This investment came at
a cost, compounded by some operational errors and a
failed small acquisition. Trading trends in the final quarter
to June 2012 were encouraging and both the Wholesale
and Retail parts of this Division are poised for growth. We
look forward to improving profitability from the Wholesale
Division, bolstered by food inflation, whilst investing for
growth in the Retail Division.
Rhino, comprising 15 stores, was acquired with effect from
March 2012 and is trading well.
One Wholesale store and five new Retail stores were
opened, whilst one Wholesale store and two Retail stores
were closed, bringing the total number of Wholesale stores
to 80 and Retail stores to 43. Net trading space increased
by 38,512 m' (11.2%).
Directorate
In line with the Walmart International regional reporting
structure that was implemented post the Massmart-Walmart
merger, Doug McMillon, who is the Chief Executive Officer
and President of Walmart International Operations, resigned
from the Massmart board of directors with effect from
20 August 2012. Doug was appointed to the Massmart
board upon completion of the Massmart-Walmart transaction
on 20 June 2011.
David Cheesewright, who is the Chief Executive Officer and
President of Walmart's Europe Middle East Africa (EMEA)
region into which Massmart reports, has been appointed in
Doug's stead with effect from 20 August 2012. David was
previously appointed as an alternate director on the Massmart
board on 23 November 2011.
Financial review
Statement of comprehensive income
Total Group sales growth for the year to June 2012 was 15.6%
with comparable sales growth of 9.6%. Sales in our African
businesses represented 7.8% of total sales and grew by 21.7% in
Rands and 14.4% in local currencies.
The Group's product inflation was 1.8% for the year. This is the
first year of product inflation since 2009. General Merchandise
remained in deflation of 4.9%, while Food & Liquor's inflation
increased to 6.5% and Home Improvement inflation increased
to 1.4%.
During the year, five stores were closed, 25 stores opened and
15 acquired, resulting in a total of 348 stores at June 2012. Net
trading space increased by 7.3% to a total of 1,350,300 m2.
The Group's gross margin of 18.38% is higher than that of the
prior year (18.26%). This is from improved gross margins in
Massbuild and a higher contribution from Game Africa.
Due to the new stores, specifically the three Makro stores, the
investment in Cambridge's supply chain and infrastructure, and IT
upgrades across most Divisions, total expenses (excluding foreign
exchange losses) increased by 19.8%. The impact of the Group's
continued investment in growth can be seen in the 24.8% higher
depreciation and amortisation charge and 23.7% increase in
occupancy costs. Comparable expenses increased by 7.0%.
Included in operating profit are net realised and unrealised
foreign exchange losses of R72.5 million (2011: R72.3 million
loss). These are the net result of foreign exchange gains due to
the weaker Rand being offset by the 50% devaluation of the
Malawian Kwacha in May 2012.
Earnings before interest, tax, depreciation and amortisation
(EBITDA) increased by 7.9% to R2.7 billion.
Direct costs incurred in connection with the Walmart integration
were R185.4 million. This figure will reduce over the next
12 months to a permanent level of approximately R50.0 million
annually.
Net interest paid of R115.1 million increased as a result of the
Group's capital expenditure programme. At R1.62 billion, the
Group's average net borrowings are 9.5% higher than the prior
period's figure of R1,48 billion.
The Group's effective tax rate of 33.7% (2011: 38.9%) includes
the effect of STC of 4.3% (2011: 5.2%). This STC charge now
falls away with South Africa's introduction of withholding tax on
dividends.
The minority interests comprise store managers' holdings in
Masscash stores and minorities in acquired Masscash businesses.
This year's minority figure has reduced due to the acquisition of
several store managers' minority interests in Masscash Wholesale.
Headline earnings increased by 38.0% and headline EPS
increased by 30.3%. Adjusting for the effect of the Walmart
costs in both years however, reduces these to 8.9% and 2.8%,
respectively. The lower earnings per share growth is caused by
the higher weighted-average number of shares in issue as a
consequence of the implementation of the Walmart transaction
in June 2011.
Statement of financial position
Working capital continues to be effectively managed across
the Group. Days in inventory at June 2012 were 50.5
(2011: 49.8 days) for the Group and supplier funding was at
57.1 days (2011: 55.9 days).
The net book value of property, plant and equipment increased
by 29.5% compared to June 2011. During the year we acquired
Fruitspot and Rhino for a combined net cash consideration of
R326.7 million.
Despite the higher average interest-bearing debt, the Group's
gearing ratio (debt: equity) was steady at 38.9% (2011: 39.9%).
The annual rolling return on equity was 29.2% at June 2012
(2011: 23.7%). Excluding the Walmart costs this figure was
32.8% (2011: 33.7%).
Statement of cash flows
Operating cash of R2.67 billion was 62.8% higher than the
prior year, reflecting the strong cash-underpin to the Group's
earnings as well as the stable working capital position. Total
capital expenditure of R1.33 billion is 15.9% higher than
the prior year, and comprises R620.4 million on replacement
and R710.4 million on expansionary expenditure. This
expansionary expenditure was incurred in three main areas
being: new stores, Foodco-refurbishments and the Durban RDC
in Massdiscounters (combined R358.0 million); three new
Makro stores (R165.4 million); and new stores and supply chain
capability in Masscash Retail (R94.7 million).
Strategic agenda
We have made good progress in our four priorities of: completing
the Walmart transaction; Walmart integration; maintaining trading
momentum; and being a good Corporate Citizen.
Legally, the Walmart transaction is complete, save for the
anticipated final ruling from the Competition Appeal Court on the
amount, purpose and governance of the Supplier Development
Fund. The three other conditions from the Competition Tribunal
have been implemented. 222 of the 503 previously retrenched
Massdiscounters employees have been re-employed across the
Group. We began implementing the Supplier Development Fund
in terms of our commitments but, pending the Appeal Court
ruling, have put any new commitments on hold.
The formal Integration project is complete. Governance and
reporting have been aligned and the basic processes to continually
extract value from the transaction are in place. The formal
Integration process will wind down over the next 12 months
whilst processes are handed over to line-management. About
368 Massmart employees attended the annual Walmart
shareholders' conference, completing the process of welcoming
Massmart into Walmart.
On Maintaining Trading Momentum, all strategic agenda projects
have progressed well. We completed the Massdiscounters RDC
network, opened the first Food RDC, improved our competence
in Fresh, increased Private Label and Financial Services
penetration, and continued with Food Retail.
On Corporate Citizenry, we maintained our Level 4 BBBEE status;
have driven advocacy on environmental sustainability with our
suppliers; reduced our Group's environmental footprint through
investment in waste management and energy efficiency; and
maintained our private-public partnership with Departments
of Basic Education, South African Police Services, Agriculture,
Forestry and Fisheries, Treasury, SABS and SANDF.
Prospects
For the eight weeks to 19 August 2012, total sales increased by
17.7% and comparable sales increased by 9.8%, continuing the
trends experienced towards the close of the financial year.
With the coming change in Massmart's financial year-end, the
next reporting period will be the 26-week "financial year" to
December 2012. Sales and gross margins are expected to grow
satisfactorily, although cost pressures will remain. Currently we
expect no improvement in net trading margin for either the 26 weeks
to December 2012 or for the year to December 2013.
Where value is extracted from Integration we will invest much of
it in price.
Conclusion
The Group has invested, and continues to invest, for growth
across all Divisions, but specifically in Food Retail, which will
drive sales and market-share growth but which will suppress any
expected margin growth in the short term.
The capital investments, our broad and growing relationship with
Walmart, and our renewed focus on operating the business and
delivering the strategy, positions the Group well for both growth in
sales and trading margin in the medium-to-long term.
Distribution and dividend policy
Massmart's previous dividend policy was to declare and pay an
interim and final cash dividend representing a 1.70 times dividend
cover. In light of the new South African Dividend Tax introduced
with effect from 1 April 2012 ("Dividend Tax"), the Group's
dividend cover has been adjusted to reflect the benefit to the
Company of no longer paying the Secondary Tax on Companies
("STC") on the net dividend. Consequently, Massmart's new
dividend policy is to declare and pay an interim and final cash
dividend representing a 1.55 times dividend cover unless
circumstances dictate otherwise. There were no STC credits
available for use as part of this declaration. The number of shares
in issue at the date of this declaration is 216,146,751.
Notice is hereby given that a gross final cash dividend of
146.00 cents per share in respect of the period ended
24 June 2012 has been declared. The dividend will be
subject to the Dividend Tax. The dividend has been declared
out of income reserves. The dividend will be subject to the local
dividend tax rate of 15% which will result in a net dividend to
those shareholders who are not exempt from paying dividend tax
of 124.10 cents per share. Massmart's tax reference number is
9900/196/71/9.
The salient dates relating to the payment of the dividend are as
follows:
Last day to trade cum dividend
on the JSE: Friday, 7 September 2012
First trading day ex dividend
on the JSE: Monday, 10 September 2012
Record date: Friday, 14 September 2012
Payment date: Monday, 17 September 2012
Share certificates may not be dematerialised or rematerialised
between Monday, 10 September 2012 and Friday, 14 September
2012, both days inclusive.
Massmart shareholders who hold Massmart ordinary shares in
certificated form ("certificated shareholders") should note that
dividends will be paid by cheque and by means of an electronic
funds transfer ("EFT") method. Where the dividend payable
to a particular certificated shareholder is less than R100, the
dividend will be paid by EFT only to such certificated shareholder.
Certificated shareholders who do not have access to any EFT
facilities are advised to contact the Company's transfer secretaries,
Computershare Investor Services at Ground Floor, 70 Marshall
Street, Johannesburg 2001, PO Box 61051, Marshalltown
2107, (011) 370 5000, 086 110 09818, in order to make
the necessary arrangements to take delivery of the proceeds
of their dividend. Massmart shareholders who hold Massmart
ordinary shares in dematerialised form will have their accounts
held at their CSDP or broker credited electronically with the
proceeds of their dividend.
A Thuthukani gross final cash dividend equivalent to 100% of
the Massmart ordinary dividend per share (146.00 cents) will be
paid to the Massmart Thuthukani Empowerment Trust on Monday,
17 September 2012.
On behalf of the Board
Grant Pattison Ilan Zwarenstein
Chief Executive Officer Financial Director
21 August 2012
Condensed income statement
June 2012 June 2011
Rm (Reviewed) (Audited) % change
Revenue 61,362.9 53,089.5 15.6
Sales 61,209.1 52,950.1 15.6
Cost of sales (49,957.1) (43,281.8) (15.4)
Gross profit 11,252.0 9,668.3 16.4
Other income 153.8 139.4 10.3
Depreciation and amortisation (594.2) (476.3) (24.8)
Impairment of assets (note 3) (16.5) (10.0) (65.0)
Employment costs (4,336.1) (3,766.3) (15.1)
Occupancy costs (2,059.9) (1,664.7) (23.7)
Foreign exchange loss (72.5) (72.3) (0.3)
Other operating costs (2,192.0) (1,759.4) (24.6)
Operating profit before Walmart costs 2,134.6 2,058.7 3.7
Walmart transaction, integration and related costs (note 5) (185.4) (408.8) 54.6
Loss on disposal of Makro Zimbabwe (38.6) 100.0
Operating profit 1,949.2 1,611.3 21.0
Finance costs (183.9) (140.4) (31.0)
Finance income 68.8 33.2 107.2
Net finance costs (115.1) (107.2) (7.4)
Profit before taxation 1,834.1 1,504.1 21.9
Taxation (618.2) (585.3) (5.6)
Profit for the year 1,215.9 918.8 32.3
Profit attributable to:
Owners of the parent 1,173.5 838.7
Preference shareholders (note 6) 6.1 38.4
Non-controlling interests 36.3 41.7
Profit for the year 1,215.9 918.8 32.3
Basic EPS (cents) 544.4 412.1 32.1
Diluted basic EPS (cents) 532.7 390.7 36.3
Dividend (cents):
Interim 252.0 252.0
Final 146.0 134.0 9.0
Total 398.0 386.0 3.1
Headline earnings
Reconciliation of net profit for the year to
headline earnings:
Net profit attributable to equity holders of the parent 1,173.5 838.7
Impairment of assets (note 3) 16.5 10.0
Loss/(Profit) on disposal of fixed assets 12.6 (2.9)
Loss on disposal of business 12.1 34.9
Fair value adjustment on assets classified as held for sale 7.9
Total tax effects of adjustments (5.9) 1.2
Headline earnings 1,216.7 881.9 38.0
Headline earnings before Walmart costs (taxed) 1,363.6 1,252.7 8.9
Headline EPS (cents) 564.5 433.3 30.3
Headline EPS before Walmart costs (taxed) (cents) 632.6 615.5 2.8
Diluted headline EPS (cents) 552.3 410.8 34.4
Diluted headline EPS before Walmart costs (taxed) (cents) 619.0 583.5 6.1
Statement of comprehensive income
June 2012 June 2011
Rm (Reviewed) (Audited) % change
Profit for the year 1,215.9 918.8
Foreign currency translation reserve 67.6 2.6
Cash flow hedges 11.3 (2.2)
Revaluation of listed shares 0.2 0.1
Income tax relating to components of other
comprehensive income (3.2) 0.6
Other comprehensive income for the year, net of tax 75.9 1.1
Total comprehensive income for the year 1,291.8 919.9 40.4
Total comprehensive income attributable to:
Owners of the parent 1,249.4 839.8
Preference shareholders (note 6) 6.1 38.4
Non-controlling interests 36.3 41.7
Total comprehensive income for the year 1,291.8 919.9 40.4
Condensed statement of financial position
June 2012 June 2011
Rm (Reviewed) (Audited) % change
ASSETS
Non-current assets 7,175.8 5,846.7
Property, plant and equipment 3,520.6 2,717.8 29.5
Goodwill and other intangible assets 2,868.5 2,358.4
Investments and loans 456.5 505.5
Deferred taxation 330.2 265.0
Current assets 11,895.9 11,427.6
Inventories 7,615.6 6,199.7 22.8
Trade, other receivables and prepayments 2,953.9 2,562.7 15.3
Taxation 21.0 22.5
Cash and bank balances 1,305.4 1,549.1
Restricted cash held on behalf of Massmart Employee Share Trusts'
beneficiaries (note 9) 1,093.6
Non-current assets classified as held for sale 103.2
Total 19,174.9 17,274.3
EQUITY AND LIABILITIES
Total equity 4,564.8 4,181.7
Equity attributable to equity holders of the parent 4,356.9 3,965.9 9.9
Minority interest 207.9 215.8
Non-current liabilities 1,486.0 1,205.2
Non-current liabilities: interest-bearing 852.7 598.7
Other non-current liabilities and provisions (note 7) 604.8 584.3
Deferred taxation 28.5 22.2
Current liabilities 12,982.2 11,887.4
Trade, other payables and provisions 11,441.7 9,416.7 21.5
Massmart Employee Share Trusts' beneficiaries
liability (note 9) 1,093.6
Taxation 259.0 170.6
Bank overdrafts and short-term borrowings 1,281.5 1,206.5
Non-current liabilities classified as
held for sale 141.9
Total 19,174.9 17,274.3
Condensed statement of cash flows
June 2012 June 2011
Rm (Reviewed) (Audited)
Operating cash before working capital movements 2,614.6 2,264.8
Working capital movements 53.9 (625.4)
Cash generated from operations 2,668.5 1,639.4
Taxation paid (595.6) (645.1)
Net interest paid (115.1) (107.2)
Investment income 3.9 48.9
Dividends paid (838.8) (822.5)
Cash inflow from operating activities 1,122.9 113.5
Investment to maintain operations (620.4) (305.2)
Investment to expand operations (710.4) (843.0)
Businesses acquired (327.9) (171.0)
Other investing activities including minority interests acquired 50.7 21.3
Cash outflow from investing activities (1,608.0) (1,297.9)
Cash inflow from financing activities 345.9 615.3
Net decrease in cash and cash equivalents (139.2) (569.1)
Foreign exchange profit taken to other comprehensive income 67.6 2.6
Opening cash and cash equivalents 744.4 1,310.9
Closing cash and cash equivalents 672.8 744.4
Condensed statement of changes in equity
Equity
Year ended June 2012 attributable
Ordinary to equity
(Reviewed) share Share General Retained holders of Minority
Rm capital premium reserves profit the parent interest Total
Opening balance 2.0 743.9 444.4 2,775.6 3,965.9 215.8 4,181.7
Issue of share capital
(net of costs) 0.2 0.2 0.2
Dividends declared (838.8) (838.8) (38.9) (877.7)
Total comprehensive
income 75.9 1,179.6 1,255.5 36.3 1,291.8
Changes in minority
interests and
distribution
to minorities (5.3) (5.3)
Minorities relating to
acquisitions (20.5) (20.5) (20.5)
Share trust transactions
and IFRS 2 charge 113.8 (127.0) (13.2) (13.2)
Treasury shares realised/
(acquired) 6.7 1.1 7.8 7.8
Total 2.2 750.6 614.7 2,989.4 4,356.9 207.9 4,564.8
Equity
Year ended June 2011 attributable
Ordinary to equity
(Audited) share Share General Retained holders of Minority
Rm capital premium reserves profit the parent interest Total
Opening balance 2.0 142.0 464.6 2,861.1 3,469.7 122.1 3,591.8
Issue of share capital
(net of costs) 481.6 481.6 481.6
Dividends declared (822.4) (822.4) (27.5) (849.9)
Total comprehensive
income 1.1 877.1 878.2 41.7 919.9
Changes in minority
interests and
distribution to
minorities (40.5) (40.5) (1.0) (41.5)
Minorities relating to
acquisitions (16.8) (16.8) 80.5 63.7
Share trust transactions
and IFRS 2 charge 180.8 (140.2) 40.6 40.6
Treasury shares realised/
(acquired) 120.3 (144.8) (24.5) (24.5)
Total 2.0 743.9 444.4 2,775.6 3,965.9 215.8 4,181.7
Additional information
June 2012 June 2011
(Reviewed) (Audited)
Net asset value per share (cents) 2,015.9 1,854.2
Ordinary shares (000's):
In issue 216,124 213,883
Weighted average 215,539 203,516
Diluted weighted average 220,284 214,683
Preference shares (000's):
Thuthukani Trust 'A' shares held by the participants (note 6) 1,053 4,176
Black Scarce Skills Trust 'B' shares held by the participants (note 6) 1,740 890
Capital expenditure (Rm):
Authorised and committed 472.1 738.2
Authorised not committed 598.3 593.1
Gross operating lease commitments (2013 2027) (Rm) 12,271.0 10,334.0
US dollar exchange rates: year-end (R/$) 8.40 6.95
average (R/$) 7.75 7.04
Reconciliation between trading and operating profit
June 2012 June 2011
Rm (Reviewed) (Audited)
Profit before interest and taxation
Trading profit before interest and taxation 2,265.3 2,182.9
Asset impairments (note 3) (16.5) (10.0)
Walmart transaction, integration and related costs (note 5) (185.4) (408.8)
Loss on disposal of business (12.1) (38.6)
Fair value adjustment on assets classified as held for sale (7.9)
BEE transaction IFRS 2 charge (note 4) (21.7) (41.9)
Foreign exchange loss (72.5) (72.3)
Operating profit before interest and taxation 1,949.2 1,611.3
Profit before taxation
Trading profit before taxation 2,456.8 2,331.6
Corporate net interest (306.6) (255.9)
Asset impairments (note 3) (16.5) (10.0)
Walmart transaction, integration and related costs (note 5) (185.4) (408.8)
Loss on disposal of business (12.1) (38.6)
Fair value adjustment on assets classified as held for sale (7.9)
BEE transaction IFRS 2 charge (note 4) (21.7) (41.9)
Foreign exchange loss (72.5) (72.3)
Operating profit before taxation 1,834.1 1,504.1
NOTES
1. These condensed financial statements have been prepared
in accordance with the framework concepts and the
measurement and recognition requirements of International
Financial Reporting Standards (IFRS), the AC 500
standards as issued by the Accounting Practices Board or
its successor, the information as required by IAS 34 Interim
Financial Reporting, the JSE Listing Requirements and the
requirements, of the South African Companies Act 71 of
2008, using accounting policies that have been consistently
applied to prior years.
2. During the current year, the only Massmart shares acquired
in the market were by the Massmart Employee Share
Trusts where 1.2 million shares (0.6% of average shares in
issue) were bought at an average price of R166.28
totalling R206.7 million. During the prior year, the Massmart
Employee Share Trusts acquired 2.1 million shares (1.0% of
average shares in issue) at an average price of R131.60
totalling R273.9 million.
3. The impairment of assets in the current and prior year
relates to the impairment of certain acquired goodwill in
Masscash.
4. The Massmart BEE transaction, which came into operation
in October 2006, gave rise to an IFRS 2 Share-based
Payment charge of R21.7 million (2011: R64.7 million,
R22.8 million of which arose from the accelerated IFRS 2
Share-based Payment charge as a result of the Walmart
Transaction and is included in the R70.1 million in
note 5 below). The 'A' and 'B' preference shares were
issued to the Thuthukani Trust and the Black Scarce Skills
Trust respectively.
5. Walmart transaction, integration and related costs
comprise professional fees, expatriate costs, share-based
payments and other direct expenses relating to the Walmart
transaction.
6. The preference shareholders' dividend amount of R6.1 million
(2011: R38.4 million) represents the 2011 final cash
dividend of 134 cents (2010: 134 cents) and the 2012
interim cash dividend of 252 cents (2011: 252 cents) paid
to all Thuthukani beneficiaries. The Thuthukani dividend
was equivalent to 100% of the ordinary dividend for the
current and prior year.
7. Other non-current liabilities and provisions include the lease
smoothing liability of R342.8 million (2011: R414.3 million).
8. The net asset value of the businesses acquired during the
year was R44.9 million (2011: R46.0 million) on the date
of acquisition.
9. Included in the 2011 year-end current assets and current
liabilities in the Statement of Financial Position were
two amounts of R1,093.6 million each. These amounts
represent the net cash proceeds held in the three Massmart
Employee Share Trusts, and the corresponding liability
to the beneficiaries, as a result of the Walmart Transaction.
The cash was distributed to beneficiaries shortly after
26 June 2011. The Massmart Employee Share Trusts are
consolidated with the Group results.
10. Massmart and its Divisions enter into certain transactions
with related parties in the normal course of business.
Details of these are, and will be, disclosed in Massmart's
Integrated Annual Reports.
11. These results have been reviewed by independent
external auditors, Deloitte & Touche, and their unmodified
review report 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. Any
reference to future financial performance included in this
announcement has not been reviewed or reported on by the
Group's external auditors. The preparation of the Group's
condensed consolidated reviewed results was supervised
by the Financial Director, Ilan Zwarenstein, BCom, BAcc,
CA(SA).
Directorate
MJ Lamberti (Chairman),
CS Seabrooke (Deputy Chairman),
GM Pattison* (Chief Executive Officer),
D Cheesewright***,
JA Davis**,
NN Gwagwa,
GRC Hayward* (Chief Operating Officer),
P Langeni,
JP Suarez**,
I Zwarenstein* (Financial Director)
*Executive **USA ***UK
Massmart Holdings Limited
("the Company" or "the Group")
JSE code
MSM
ISIN
ZAE000152617
Company registration number
1940/014066/06
Registered office
Massmart House, 16 Peltier Drive
Sunninghill Ext 6, 2191
Company secretary
P Sigsworth
Sponsor
Deutsche Securities (SA) (Proprietary) Limited
Transfer secretaries
Computershare Investor Services
(Proprietary) Limited
Registered auditors
Deloitte & Touche
For more information
www.massmart.co.za
Date: 22/08/2012 07:05:00 Supplied by www.sharenet.co.za
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