MASSMART HOLDINGS LIMITED - CEO's AGM Statement and Trading statement.

CEO's AGM Statement and Trading statement.

Massmart Holdings Limited
(Incorporated in the Republic of South Africa)
Company registration No. 1940/014066/06
JSE Code: MSM
ISIN: ZAE 000152617
("Massmart", “Company” or the “Group”)

CEO’S AGM STATEMENT AND TRADING STATEMENT

Herewith a brief sales and business update and general trading statement for the Group

For the first 20 weeks of the 2019 financial year, Massmart’s sales of R33.5bn represented total growth of
6.1% and comparable sales growth 4.1%, with year-to-date product inflation of 2.5%. Total sales growth
from our South African (SA) stores was 5.4%, while the same figure from our ex-SA stores was 13.9% in
Rands. For the same period, Group total sales growth in Food was 7.3%, Liquor 13.3%, Durable Goods
2.2% and Home Improvement 4.3%.

The sales per division are as follows:

•   Massdiscounters’ total sales growth was 4.9% and comparable sales growth 2.7%.
•   Masswarehouse’s total and comparable sales growths were 4.2% and 2.6% respectively.
•   Massbuild’s total sales growth was 4.3% and comparable sales growth 1.0%. Sales growths have
    slowed in our South African stores resulting in total and comparable sales growths of 2.6% and 0.2%
    respectively.
•   In Masscash, total sales growth was 9.8% and comparable sales growth 8.2%. Total sales growth in
    our Wholesale stores was 13.2% and in our Retail stores 3.9%.

With trading margin pressure from the lower sales participation in our higher-margin Durables and Home
Improvement categories and formats, and pressure from expense growth, the April 2019 year-to-date EBIT
for all four divisions is below the equivalent prior year figures.

With two months trading remaining until the end of the six-month reporting period to June 2019, and the
weak and variable sales trends noted in the past few months, it is not possible currently to estimate with
reasonable certainty (as required by the JSE) the likely earnings range for that six-month period.
Nonetheless, in the interests of transparency, and based on the anticipated sales environment, we provide
the following outlook for the six-month period to June (all figures are before restating for IFRS 16):

    •   Operating profit before interest, depreciation, restructure, non-trading items and taxation (EBITDA)
        may be at a level similar to the prior period (June 2018: R1 211m);
    •   This EBITDA less depreciation may be 20% lower than the prior period (June 2018: R664m).
        Depreciation in the current period has accelerated from the new stores opened and our IT and
        online investments since June 2018;
    •   Operating profit after restructure costs, non-trading items, foreign exchange movements and
        interest paid may be 60% below the prior period (June 2018: R271m). African currency weakness
        in the current period is causing foreign exchange translation losses (June 2018: a gain of R21m);
        and
    •   Consequently headline earnings and headline earnings per share may be at least 50% lower than
        the prior period (June 2018: R204m).

Current economic data and sentiment cause us to believe however, that most risks associated with the
above estimates are likely to the downside.

Shareholders are reminded that the figures and estimates shown above are before adjusting for IFRS 16
which the Group will be reporting for the first time in the June 2019 interim financial results (and which were
the subject of a separate investor presentation held on 14 May 2019).
The above information has not been reviewed and reported on by the Company’s external auditors. A
further trading statement will be released when there is a reasonable degree of certainty on the range.


Johannesburg
23 May 2019

Sponsor: JP Morgan Equities South Africa (Pty) Ltd

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