Massmart Annual Report 2008

Massmart’s investment proposition

Massmart is a South African retail and wholesale distributor, with 220 stores in South Africa and 22 stores elsewhere in sub-Saharan Africa.

Massmart’s investment proposition can be summarised as:

Strategic and structural clarity

  • Through four focused divisions, each a leader in its target market and business model
  • Where additional value is created through inter-divisional collaboration
  • And behaviour is aligned through short- and long-term incentives
  • While adhering strictly to organic and acquisitive growth criteria

Management depth, quality and diversity

  • The 49 Group and Divisional Executives hold 87 degrees, have an average of 15 years of retail experience, an average age of 43 years, and 14% of whom are African, Coloured or Indian

Diversification

  • Merchandise
Massmart is the third largest distributor of consumer goods in Africa, and is the leading retailer of general merchandise, liquor, home improvement and building supplies, and the leading food wholesaler
  • Formats
trading through a variety of formats
  • Customers
serving all mass-market consumers
  • Geography
operating in 14 sub-Saharan African countries

Low risk

  • Earnings underpinned by high cash generation
  • Limited balance sheet financial leverage
  • Conservative through-the-cycle store opening plans

Good governance

  • Board composition – two executive and 12 non-executive directors, 11 of whom are independent
  • Long record of good disclosure
  • Compliant with King II Report and the JSE SRI criteria
  • Member of the Ethics Institute of Southern Africa

Growth

  • Continuously improving the productivity of capital, space and labour
  • Strengthening supply chain activities
  • Upweighting Group private label efforts
  • Inter-divisional collaboration
  • Complementing store growth through targeted acquisitions and greenfields opportunities
  • Consistent merchandise innovation