The South African economy has technically been out of recession for almost four quarters but real retail sales growth lagged by six months and job creation is still in decline.

The effect of the strengthening Rand dominated trading conditions and kept inflation low in all our product categories with Food and Liquor inflation at 1.4%, General Merchandise deflation at 5.3% and Home Improvement inflation at 1.8%. Historically, Food and Liquor volumes do not respond significantly to lower prices and did not do so over the past year. General Merchandise and Home Improvement volumes however, usually do respond and this was particularly evident in the latter part of the financial year.

The 2010 FIFA World Cup was an exciting, once in a lifetime experience for the country and we could certainly see the increased spend in our stores over that four-week period. We estimate this to have been R200 million – R300 million of additional turnover, not significant in the year but welcome nevertheless.

Labour relations were strained in Massdiscounters as management sought more labour flexibility from SACCAWU in order to extract productivity improvement from our investment in supply chain. Unfortunately, we were unable to reach resolution and had to resort to retrenchment, which was devastating for those employees. We have provided and continue to provide those retrenched employees with as much support as possible. As a result of these labour disputes, there were some isolated labour-related disruptions to trading. More significantly however, the Game Lakeside Mall in Benoni was deliberately destroyed by fire. We continue to co-operate with the police as they progress their investigations and the store will re-open in November 2010.