For the year under review, Masscash continued to outperform its wholesale competitors despite the effect of very low food inflation and the impact of the South African job losses in 2009 which affected our core consumer market’s spending power. We made a number of acquisitions in support of our retail strategy of offering customers high quality and affordable products in the most convenient locations. To this end, we bought the remaining 49% interest in Cambridge Food, a controlling interest in Sunshine supermarkets and a controlling interest in Astor, which comprises a combination of retail and wholesale outlets.

In addition to these acquisitions, we opened three new retail stores during the year, two Astor stores in Soweto, Gauteng, and one Cambridge store in KwaMashu, KwaZulu-Natal. All retail stores will be rebranded under the Cambridge Food brand by the end of the next financial year.

We also bought controlling interests in DF Scott, Finro and Mikeva – all wholesale businesses operating in the Eastern and Western Cape.

Kawena wholesales food in Mozambique and this acquisition is part of our intent to grow a wholesale and retail footprint into sub-Saharan Africa, starting with those countries closest to South Africa.

We sold the cellular contract base of CellShack as we believe it did not fit the Masscash core business model.


Masscash consists of wholesale food and cosmetics business interests as well as retail outlets, all of which target the lower LSM groups. Our Wholesale Division consists of CBW, Jumbo Cash & Carry, and Shield as well as a number of independent wholesalers operating under their own brands. Our recently formed retail division consists of the Thaba Cash & Carry, Sunshine, Cambridge and Astor brands.

CBW wholesales food, liquor, groceries and cosmetics in bulk to independent general dealers, government feeding schemes, franchise members, small traders and hawkers in peri-urban and rural areas within southern Africa. Jumbo sells mainly cosmetics, toiletries and hair-care products to individual customers and independent general dealers. Shield is a voluntary buying association that buys products in bulk on behalf of 456 members who own wholesale or retail food businesses in South Africa, Botswana, Namibia and Swaziland.

We also manage the brands of a number of our wholesale customers. At the lowest end of the market, we provide marketing support such as supplying signage and leaflets to spaza shop and shebeen owners through our Banner Group initiative. Masscash owns the rights to these brands and logos.

We offer wholesale customers with more formal operations the ability to trade under national retail brands such as Saverite, Multisave, Powersave and Liquorland. Our marketing team offers wide-ranging support to these supermarkets and bottle stores, assisting owners with marketing initiatives such as designing of leaflets, signage and implementing national television and radio advertising campaigns.

On the retail side, the three-store Thaba Cash & Carry was acquired in 2007 as part of our strategy of developing a model to serve wholesale and retail customers in the same store. Cambridge Food, with six stores, was acquired in 2008, while Top Spot and two Sunshine stores were acquired in July 2009. Service departments, made up of an on-site bakery, butchery and fresh fruit and vegetable offering, is an important component of this retail offering.

We are in the process of consolidating all 20 of our retail outlets under the Cambridge brand.

  • 14 CCW stores acquired in June 1998
  • 22 Brown and Weirs stores acquired in July 2001
  • Two chains combined under CBW format from July 2001
  • Now 91 stores
  • Operating in SA, Botswana, Lesotho, Mozambique, Namibia, Swaziland
  • Food/liquor/groceries/ethnic cosmetics
  • LSM 2 – 6

  • Six Jumbo stores acquired in April 2001
  • Now six stores
  • Operating in SA
  • Food/groceries/ethnic cosmetics
  • LSM 2 – 6

  • 378 members acquired 1 March 1992
  • Now 456 members and 517 outlets
  • Operating in SA, Botswana, Lesotho, Namibia, Swaziland
  • Food/groceries
  • LSM 2 – 6

Living Standards Measure (LSM)
The South African Advertising Research Foundation (SAARF) Living Standards Measure (LSM) has become the most widely used segmentation tool in South Africa. It is a means of segmenting the South African market that cuts across race, gender, age or any other variable used to categorise people. Instead, it groups people according to their living standards.


All our stores apply the philosophy of supplying the right range of products at competitive prices to low- to middle-income wholesale customers. We keep costs down by employing a no-frills cash and carry warehouse format, coupled with basic distribution centres that supply our private label and important general merchandise ranges. Our private label food brands, Econo and Heritage, offer our customers exceptional value and the assurance of stringent quality and safety controls. Our retail stores are well located, close to high traffic commuter nodes, and offer the best quality at affordable prices.



  • Retail offering expanded
    • Focused on three key regions
    • Developing a single national brand
  • Wholesale division-wide full suite IT system rolled out
  • Kawena in Mozambique acquired

An estimated one million jobs were lost in South Africa in 2009 as a result of the global recession, affecting not only our customer base which is made up mainly of traders, but in turn their customers. This, coupled with sales deflation of 0.6% which included deflation in commodities such as oil, rice and maize, resulted in a decline in profitability as expense inflation was closer to 7%.

The underlying causes of commodity deflation include volatility of agriculture supplies driven by global warming, bio-fuels, extreme climatic conditions and the stronger Rand. A strengthening Rand typically reduces the price of imported categories such as rice and oil. In addition, the record South African maize crop has seen the price of this staple food fall from R1,700/ton to R1,100 by June 2010.

The tightening of the credit market did not impact our business as much as the formal retailers as our customers are generally less credit-sensitive. Many of our customers rely on social grants to fund their purchases and government’s increased expenditure on grants from 3.2% of South Africa’s Gross Domestic Product to 3.5% was therefore welcomed.

Over the long term we face increased competition in our chosen markets, with the major retail chains targeting the lower LSM sector more aggressively. However, we believe that to date they have been less successful in developing the appropriate smaller-store format for this market and so it continues to be dominated by independent retailers and informal traders who typically have a lower cost base and an owner-manager mindset. Masscash continues to service these independent retailers efficiently through our cash and carry and voluntary buying group formats.

Our retail offering made good progress, assisted by the decision to bring all retail stores under the Cambridge brand. A more contemporary design to appeal to our customers was introduced and the new ‘look and feel’ will be rolled out first to all new stores and then to older acquired ones in a refurbishment programme.

‘Fresh’ departments, offering meat as well as fruit and vegetables, have proven very successful in enticing customers and optimising trading margin. Our customers depend on public transport and therefore shop for dry groceries and perishable products several times a week, and so we have dedicated more trading space in our Cambridge stores to perishable goods.

In addition, our private labels programme reported 25% sales growth, with the new lines (fish and chicken) performing particularly well.


    2010 2009 2008 2008
    52 week 52 week 52 week 53 week


Rm 17,418.0 15,215.7 13,353.5 13,610.4
Trading profit before interest3 Rm 483.6 481.9 390.5 402.1
Trading profit before interest as % sales % 2.8 3.2 2.9 3.0
Operating profit before interest Rm 471.9 485.7 386.6 398.2
Operating profit before interest as % sales % 2.7 3.2 2.9 2.9
Net finance costs Rm 26.5 47.7 36.8 37.4
Trading profit before taxation3 Rm 510.1 529.6 427.3 439.5
Trading profit before taxation as % sales % 2.9 3.5 3.2 3.2
Operating profit before taxation Rm 498.4 533.4 423.4 435.6
Operating profit before taxation as % sales % 2.9 3.5 3.2 3.2
Inventories Rm 1,354.4 1,077.6   1,094.5
Inventory days days 31 29   32
Net capital expenditure1 Rm 95.6 117.7   91.1
Cash flow from operating activities Rm 154.1 308.0   163.4
Number of stores   97 79 71  
Trading area m2 321,210 270,324 247,007  
Average trading area per store m2 3,311 3,422 3,479  
Number of employees   8,395 5,931 4,893  
Sales per store R000 148,927 163,047 158,023  
Sales per m2 R000 45 48 45  
Sales per employee R000 2,075 2,565 2,729  
1 Net capital expenditure is defined as capital expenditure less disposal proceeds.
2 The ratios have been calculated using year-end balance sheet figures.
3 Trading profit is earnings before asset impairments, BEE transaction IFRS 2 charges and foreign exchange movements.
4 Shield is shown as average sales to each independently owned outlet (ie this represents only a portion of the outlet’s sales).
5 Definitions/explanations to the ratios and terms above can be found here.

Store progress

Opening balance 73
Stores opened 2
Durban (KwaZulu-Natal)
Isipingo (KwaZulu-Natal)
Stores acquired 16
Port Elizabeth (Eastern Cape)
Willowvale (Eastern Cape)
Roodepoort (Gauteng)
Roodepoort (Gauteng)
Newtown (Gauteng)
Soweto (Gauteng)
Soweto (Gauteng)
Johannesburg CBD (Gauteng)
Johannesburg CBD (Gauteng)
Pretoria (Gauteng)
Mokopane (Limpopo)
Tzaneen (Limpopo)
Piet Retief (Mpumalanga)
George (Western Cape)
Mossel Bay (Western Cape)
Manzini (Swaziland)
Total stores in 2010 91
Opening balance 6
No store movement during the current year  
Total stores in 2010 6

The Division reported total sales of R17.4 billion, representing growth of 14.5%. Comparable sales growth was 1.1% and our annual sales deflation was 0.6%. Acquisitions during the year caused the significantly higher total, compared to comparable, sales growth.

Trading profit before interest and taxation of R483.6 million was 0.4% higher than the prior year. This growth was achieved by a steady sales performance, boosted by maintaining our low-cost operating structure, the positive effect of the higher net margin retail food stores and the loss in the prior year of the very low margin cigarette sales.

Net interest received declined, despite better working capital management, due to lower commercial interest rates. Debtors remain well controlled and stock levels increased by 25.7% to R1.4 billion representing 30.9 days.

Total capital expenditure of R98.3 million for the year was 18.6% lower than the prior year’s R120.8 million. In addition, the total amount invested in acquisitions totalled R154.0 million.


Actual 2010 Medium-term target International benchmark Makro South America




Trading profit before tax return on sales has been calculated using profit before tax adjusted for asset impairments, the BEE IFRS 2 charge and net foreign exchange movements.

As wholesale food volumes tend to be constant, the Division’s sales performance is materially affected by the level of sales inflation. As inflations slows or moves into deflation, the Division’s ability to hold its trading profit margin comes under pressure and, with deflation, will even reduce. As the higher net margin Retail Cash and Carry stores gain momentum however, the target profit margin may be increased above 3.0%.


Masscash serves its customers through low-cost stores located in areas which are easily accessible. Our low-cost base is essential for maintaining our competitive pricing.

To support this, our management structure is decentralised, but with centralised support in terms of accounting systems, supplier relations and business management. This facilitates a marketing strategy where ranges, pricing and promotional support, as well as trade credit, are specifically tailored for the individual requirements of local customers and markets. A flexible purchasing strategy coupled with the leveraging of Group volumes facilitates the procurement of products at the lowest price.

The store-by-store rollout of our point-of-sale IT system, Arch Retail, continued during the financial year and will significantly enhance the use of management information and fundamentally improve the way we do business. We began rolling out the Arch Retail Management System in 2009 and 70 stores now have access to it. The system allows for a common masterfile of stock data across the Division and seamlessly integrates with the Division’s accounting and finance functions. Through the stock masterfile, the new system provides our buyers with powerful reporting functionality, thereby improving the quality of their information when assessing sales trends and negotiating with suppliers.


Read more

More information on the Group’s investment in Human Capital

Corporate Accountability

We continued to invest significantly in up-skilling and training our staff. Employees attended courses ranging from soft-skills development to diversity awareness and health and safety. Adult Basic Education and Training remains an ongoing offering for our employees and we granted 126 learnerships to black staff.

We have adopted a multi-faceted approach to transforming our business, including aligning our training interventions with succession planning and our talent management strategy.

We have an ownership mentality across our national, regional and store leadership teams, all of whom are empowered to trade and who are incentivised through profit sharing at various levels. Minority partners that previously sold a majority share in their businesses to Masscash are accommodated and, for the most part, continue to operate successfully within the Division, thus retaining important entrepreneurial talent in the business.

Masscash achieved a Level 5 B-BBEE score at 59.1% from Level 6 at 50.3%, audited by Empowerdex, driven higher mainly by improvements in skills development. Finding appropriate equity candidates for senior management positions remains a challenge, but with some progress being made this year.

For several years we have implemented a staff HIV/Aids programme, with the objective of encouraging our employees to test their HIV status and thereafter offering free counselling and antiretroviral therapy. Approximately 233 of our employees now access ARV treatment through the Company’s treatment programme. In 2009, 859 staff underwent voluntary counselling and testing.

Masscash trading hours do not require that we employ a large number of non-permanent staff and as a result concerns around labour broking do not affect our business.


Read more

More information on the Group’s investment in Corporate Social Investment

Corporate Accountability

Masscash supports projects that focus on building food security and improving educational outcomes for disadvantaged students.

Thousands of children continue to receive a balanced meal at container kitchens sponsored by Masscash. During the reporting period we donated 16 more kitchens to schools throughout the country, adding to the 17 already in place. Each container costs about R67,000 and a Masscash store then ‘adopts’ a container and provides food on an ongoing basis for volunteers to prepare and distribute to school children.

At Kromhoek, we sponsored 11 grandmothers who support their orphaned grandchildren as well as donating R12,000 to grandmothers in the Valley of 1,000 Hills who also take care of Aids orphans.

Masscash provided ongoing support to the Dinelei Crèche, the Joshuas and other projects in the inner city of Johannesburg.

During the reporting period we trained 30 home-based crèche principals through the African Self Help Group Soweto. We also donated more than R500,000 to the Wildlands Trust in support of their Treepreneur project which provides food in exchange for indigenous tress to reforest areas and create carbon credits.

Staff members volunteer their time on several projects including an Easter drive to collect children’s books from staff to donate to the Baragwanath children’s ward. Our employees partnered Mpumelelo School, one of the poorest schools in Gauteng, launching a feeding scheme and supplying computers for disadvantaged learners. Masscash staff members are now working towards setting up a school library on the premises.


For several years we have had a presence in Namibia and Botswana and, as a first step into Portuguese-speaking Africa, we acquired the Kawena group of stores in Mozambique. We intend to use this as a base to develop a wholesale and retail footprint in the rest of that country. Our operations in Botswana experienced a difficult year as the political and economic situation in Zimbabwe normalised and so cross-border demand decreased.

Masscash intends to expand into the rest of Africa once we have bedded down our existing operations.


Continued high unemployment, deflation particularly in commodities, and the risk of a ‘double-dip’ recession could affect the discretionary spend of our customers through further job losses. We also face increasing competition from retailers penetrating the lower LSM groups. We are confident that the Masscash model which is underpinned by a low-cost philosophy will continue to play a significant role in the food supply chain.

Service departments and perishable categories account for an increasingly large part of our customers’ grocery baskets. This presents an opportunity for us to grow in these areas and to build a business that differentiates itself from existing national players. A single, powerful national retail brand will also provide significant benefits.

Uncertainty around South African provincial liquor legislation continues to present a challenge, with several stores battling to get licences processed. Periodic xenophobia also remains a concern as many of our customers are foreign nationals.


The LSM 2 – 6 market remains highly fragmented but Masscash is well positioned to offer new retail formats and to expand our current footprint to better supply food, cosmetics, liquor, cigarettes and cellular to lower-end consumers. Future growth will focus on building our Retail Division, expanding the wholesale range to include meat and fruit and vegetables and growing the franchise and Banner Group formats.

Masscash directorate

Grant Pattison

Robin Wright
Chief Executive

Jane Bruyns
Human Resources Director

Jay Currie
Retail Director

Neville Dunn
Operations Director

Guy Hayward
Non-executive Director

Dino Holmes
Financial Director

Pearl Maphoshe
Non-executive Director

Michael Marshall
Business Systems & Process Director

Llewellyn Steeneveldt
Non-executive Director

Ilan Zwarenstein
Non-executive Director

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