Overview

Whilst the Massmart Groupís sales growth for most of the six months to December 2010 was strong, the softer sales growth over Christmas, and in the eight weeks since then, suggest that the South African economy may not yet be in a sustainable recovery. For the six months to December 2010, sales increased by 13.3% and Operating Profit excluding Foreign Exchange adjustments by 12.7% and Headline Earnings by 6.5%.

The Rand strength against the US Dollar again depressed Rand earnings from our African businesses and resulted in a foreign exchange translation loss of R79.5 million (2009: R13.9 million).

The Groupís product deflation has reached record levels, and so the comparable sales growth of 7.3% represents 10.2% of volume growth after taking product deflation of 2.9% into account. Deflation in Food meant that trading in this category in Makro and Masscash was difficult.

The Group continues investing for growth and so trading space increased by 5.9%, being 4.1% in new stores and 1.8% through acquisitions.

Three of the four Divisions performed strongly, growing trading profit at or ahead of sales growth.

Since the first announcement on 27 September 2010, a significant amount of Massmart time and resources have been committed to the Walmart transaction. The approval by Massmart shareholders on 17 January 2011 and the recent positive referral by the Competition Commission give us confidence that the transaction is seen as positive for all stakeholders. The transaction remains subject to approval by the Competition Tribunal which is hearing the matter on 22-24 March 2011. Separate announcements have been, and will be, made by Massmart regarding this process.