notes to the annual financial statements for the year ended 24 June 2012

21. Issued capital

  Share capital   Share premium
  2012
Rm
  2011
Rm
  2012
Rm
  2011
Rm
Authorised              
500,000,000 (2011: 500,000,000) ordinary shares of 1 cent each 5.0   5.0    
20,000,000 (2011: 20,000,000) non-redeemable cumulative non-participating preference shares of 1 cent each 0.2   0.2    
18,000,000 (2011: 18,000,000) 'A' convertible redeemable non-cumulative participating preference shares of 1 cent each 0.2   0.2    
4,000,000 (2011: 4,000,000) 'B' convertible redeemable non-cumulative participating preference shares of 1 cent each      
Issued              
216,124,461 (2011: 213,883,460) ordinary shares of 1 cent each 2.2   2.0   750.6   743.9
10,134,631 (2011: 12,192,748) 'A' convertible redeemable non-cumulative participating preference shares of 1 cent each 0.1   0.2    
3,112,778 (2011: 3,295,662) 'B' convertible redeemable non-cumulative participating preference shares of 1 cent each      

  Number of
shares
  Share capital
Rm
  Share premium
Rm
Ordinary shares          
Balance at June 2010 201,495,504   2.0   142.0
Shares issued in terms of the Massmart Executive Share Scheme 6,331,173     481.6
Shares issued in terms of the Massmart Thuthukani Empowerment Trust 5,480,922    
Shares issued in terms of the Massmart Black Scarce Skills Trust 575,861    
Ordinary shares issued June 2011 213,883,460*   2.0   623.6
Treasury shares (107,644)     120.3
Ordinary shares issued excluding treasury shares June 2011 213,775,816   2.0   743.9
Balance at June 2011 213,883,460*   2.0   743.9
Shares issued in terms of the Massmart Thuthukani Empowerment Trust 2,058,117   0.2  
Shares issued in terms of the Massmart Black Scarce Skills Trust 182,884    
Ordinary shares issued June 2012 216,124,461   2.2   743.9
Treasury shares (43,152)     6.7
Ordinary shares issued excluding treasury shares – June 2012 216,081,309   2.2   750.6
* The number of shares is the ordinary shares issued before deducting treasury shares.
  • Ordinary shares, which have a par value of 1 cent, carry one vote per share and carry the right to dividends.
'A' convertible redeemable non-cumulative participating preference shares          
Balance at June 2010    
Net shares issued in terms of the Massmart BEE transaction 17,673,670   0.2  
Shares converted to ordinary shares (5,480,922)    
Treasury shares (12,192,748)   (0.2)  
Balance at June 2011    
Net shares issued in terms of the Massmart BEE transaction 12,192,748   0.1  
Shares converted to ordinary shares (2,058,117)    
Treasury shares (10,134,631)   (0.1)  
Balance at June 2012    
  • 'A' convertible redeemable non-cumulative participating preference shares, which have a par value of 1 cent, are held in the Massmart Thuthukani Empowerment Trust. These shares carry one vote per share, which are cast by the appointed trustees, and carry the right to dividends. On election of the beneficiary, the shares will convert to ordinary shares on a one-for-one basis and will rank pari passu with all ordinary shares then in issue.
'B' convertible redeemable non-cumulative participating preference shares          
Balance at June 2010    
Net shares issued in terms of the Massmart BEE transaction 3,871,523    
Shares converted to ordinary shares (575,861)    
Treasury shares (3,295,662)    
Balance at June 2011    
Net shares issued in terms of the Massmart BEE transaction 3,295,662    
Shares converted to ordinary shares (182,884)    
Treasury shares (3,112,778)    
Balance at June 2012    

  • 'B' convertible redeemable non-cumulative participating preference shares, which have a par value of 1 cent, are held in the Massmart Black Scarce Skills Trust. These shares carry one vote per share, which are cast by the trustees, and do not carry the right to dividends. On election of the beneficiary, the shares will convert to ordinary shares on a one-for-one basis and will rank pari passu with all ordinary shares then in issue.

Share options granted under the Massmart Holdings Limited Employee Share Trust

  • At June 2012, executives and senior employees have options over 9,702,840 (2011: 6,079,937) ordinary shares of which 7,188,065 (2011: 3,846,383) are unvested.
  • Share options granted under the Employee Share Incentive Scheme carry no rights to dividends and no voting rights. Further details of the Employee Share Incentive Scheme are contained in note 29.
  • During the current year, the only shares bought in the market were by the Share Trust where 1.2 million shares (0.6% of average shares in issue) were bought at an average price of R166.28 totalling R206.7 million.
  • During the prior year, the only shares bought in the market were by the Share Trust where 2.1 million shares (1.0% of average shares in issue) were bought at an average price of R131.60 totalling R273.9 million.
  • The directors have the authority, until the next annual general meeting, to issue the ordinary shares of the Company up to a maximum of 5% of the shares already issued.

22. Other reserves

  2012
Rm
  2011
Rm
Foreign currency translation reserve 32.2   (35.4)
Hedging reserve 5.9   (2.2)
Share-based payment reserve 803.3   689.5
Capital redemption reserve fund 0.2   0.2
Amortisation of trademarks 76.5   76.5
Fair value adjustment of available-for-sale financial asset (13.2)   (13.2)
Fair value adjustment on listed shares 0.6   0.4
Change in minority interests 1.9   1.9
Cost of acquiring minority interests (292.5)   (272.0)
Treasury shares (0.2)   (1.3)
  614.7   444.4
Reconciliation of the foreign currency translation reserve:      
Balance at the beginning of the year (35.4)   (38.0)
Translation on consolidation 67.6   2.6
Balance at the end of the year 32.2   (35.4)
  • Exchange differences relating to the translation from functional currencies of the Group's foreign subsidiaries into Rands are accounted for in the foreign currency translation reserve.
     
Reconciliation of the hedging reserve:      
Balance at the beginning of the year (2.2)   (0.6)
Movement on cash flow hedges 8.1   (1.6)
Balance at the end of the year 5.9   (2.2)
  • The hedging reserve represents hedging gains and losses recognised on the effective portion of cash flow hedges. The hedge is released from equity at the same time the forecast transaction is recognised in profit or loss. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to profit or loss for the period.
     
Reconciliation of the share-based payment reserve:      
Balance at the beginning of the year 689.5   508.7
Share-based payment expense related to the Massmart Holdings Limited Employee Share Trust 44.4   68.8
Share-based payment expense related to the Massmart Thuthukani Empowerment Trust 12.8   33.5
Share-based payment expense related to the Massmart Black Scarce Skills Trust 8.9   8.4
Share-based payment expense related to Walmart 47.7   70.1
Balance at the end of the year 803.3   689.5

  • The share-based payment reserve arises on grant of share options to employees under the Employee Share Incentive Schemes. Details of the Employee Share Incentive Schemes can be found in note 29. The share-based payment valuation was performed by Alexander Forbes for all periods and all schemes are equity-settled share schemes.

Massmart Share Schemes
Massmart Holdings Limited Employee Share Trust
Details of the share options outstanding during the year are as follows:

  2012
Number of
share options
  2012
Weighted average

exercise price
Rand
  2011
Number of
share options
  2011
Weighted average

exercise price
Rand
Outstanding at the beginning of the year 6,079,937   76.07   14,156,168   71.46
Granted during the year 5,176,251   156.65   584,117   120.42
Forfeited during the year (245,753)   115.03   (411,375)   77.71
Exercised during the year (1,307,595)   65.87   (8,248,973)   71.21
Outstanding at the end of the year 9,702,840   119.45   6,079,937   76.07
Exercisable at the end of the year 2,514,775       2,233,554    

  2012   2011
In 2012, the weighted average share price at the date of exercise for share options exercised during the year was R161.17. The options outstanding at the end of the year had a weighted average remaining contractual life of 7.8 years. Options were granted on 1 September 2011, 1 November 2011, 1 March 2012, 1 April 2012 and 16 May 2012. The estimated fair values of the options granted on these dates were R46.77, R43.88, R50.52, R47.11 and R48.37.

In 2011, the weighted average share price at the date of exercise for share options exercised during the year was R144.12. The options outstanding at the end of the year had a weighted average remaining contractual life of 6.9 years. Options were granted on 1 September 2010. The estimated fair values of the options granted on this date was R52.17.

These fair values were calculated using the binomial model. The inputs into the model were as follows:
 
     
Weighted average share price (Rand) at granting dates 163.65   135.92
Expected volatility 30.4% – 31.7%   32.8% 34.2%
Expected life 3 – 10 years   3 10 years
Risk-free rate 6.4% – 7.5%   6.5% 7.2%
Expected dividend yield 2.5% – 5.0%   4.3% 4.5%


Expected volatility was determined by calculating the historical volatility of the Company's share price over the number of previous years corresponding with the option lifetime. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

       
Massmart Thuthukani Empowerment Trust      
In 2012, the weighted average share price at the date of exercise for share options was R150.18. The options outstanding at the end of the year had a weighted average remaining contractual life of three months.

In 2011, the weighted average share price at the date of exercise for share options was R145.70. The options outstanding at the end of the year had a weighted average remaining contractual life of 15 months.

These fair values were calculated using the binomial model. The inputs into the model were as follows:
 
     
Weighted average share price (Rand) at granting dates (no issues in 2008, 2009, 2010, 2011 or 2012) 56.91   56.91
Expected volatility 30.1% – 32.3%   30.1% 32.3%
Expected life 5 years   5 years
Risk-free rate 8.3% – 8.4%   8.3% 8.4%
Expected dividend yield 3.7%   3.7%

Expected volatility was determined by calculating the historical volatility of the Company's share price over the number of previous years corresponding with the option lifetime. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
 
     
Massmart Black Scarce Skills Trust      
In 2012, the weighted average share price at the date of exercise for share options exercised during the year was R153.83. The options outstanding at the end of the year had a weighted average remaining contractual life of 3.5 years. Options were granted on 1 October 2011 and 1 April 2012. The estimated fair values of the options granted on these dates were R32.19 and R37.10.

In 2011, the weighted average share price at the date of exercise for share options exercised during the year was R145.87. The options outstanding at the end of the year had a weighted average remaining contractual life of 3.0 years. No options were granted in the 2011 financial year.

These fair values were calculated using the binomial model. The inputs into the model were as follows:
 
     
Weighted average share price (Rand) at granting dates 34.01   107.55
Expected volatility 22.6% – 31.5%   32.6% 37.1%
Expected life 3 – 5 years   3 â 5 years
Risk-free rate 6.3% – 7.9%   7.1% 8.4%
Expected dividend yield 2.5% – 5.0%   4.6% 4.9%
Expected volatility was determined by calculating the historical volatility of the Company's share price over the number of previous years corresponding with the option lifetime. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

23. Minority interest

  2012
Rm
  2011
Rm
At the beginning of the year 215.8   122.1
Net changes in minority interests (5.3)   (1.0)
Income attributable to minorities 36.3   41.7
Minorities relating to acquisitions   80.5
Distribution to minorities (38.9)   (27.5)
At the end of the year 207.9   215.8

  • The minority interests comprise mainly CBW store managers' holdings in certain Masscash stores.
  • The minorities relating to acquisitions is the take on minority balance on all acquisitions in the period.

24. Non-current liabilities

  2012
Rm
  2011
Rm
Interest-bearing      
Unsecured      
Medium-term payable 4.3   4.2
Less: Included in current liabilities (4.3)   (4.2)
   
Secured      
Medium-term bank loans 1,281.0   827.0
Less: Included in current liabilities (503.8)   (286.8)
  777.2   540.2
Capitalised finance leases 110.4   80.8
Less: Included in current liabilities (34.9)   (22.3)
  75.5   58.5
Total interest-bearing liabilities 852.7   598.7
Interest-free      
Unsecured      
Minority shareholders' loans 3.0   3.0
Income received in advance   21.5
Less: Included in trade and other payables   (21.5)
   
Operating lease liability 404.9   392.5
Less: Included in trade and other payables (62.1)   21.8
  342.8   414.3
Total non-interest bearing liabilities 345.8   417.3
Total non-current liabilities 1,198.5   1,016.0

  • Included in current liabilities is a medium-term payable of R4.3 million (2011: R4.2 million), which is an amount owing to the Massmart Education Foundation relating to cash reserves invested with Group Treasury. The short-term portion has been accounted for in note 28.
  • A fixed term loan of R500.0 million was secured during the second half of the 2010 financial year repayable quarterly over three years. The loan bears interest at 9.8%. The loan is secured by intra-group cross-suretyships. The short-term portion has been accounted for in note 28.
  • A fixed term loan of R500.0 million was secured during the second half of the 2011 financial year repayable quarterly over three years. The loan bears interest at 8.1%. The loan is secured by intra-group cross-suretyships. The short-term portion has been accounted for in note 28.
  • A fixed term loan of R750.0 million was secured during the second half of the financial year repayable quarterly over five years. The loan bears interest at 7.88%. The loan is secured by intra-group cross-suretyships. The short-term portion has been accounted for in note 28.
  • Capitalised finance leases include vehicles, fixtures, fittings, plant and computer equipment and property leases, repayable in monthly instalments varying from one to five years at varying interest rates between 4.0% and 17.5% (2011: between 4.0% and 17.5%). The short-term portion has been accounted for in note 28.
  • The capitalised finance leases are secured by moveable assets with a book value of R68.5 million (2011: R24.2 million) and the property lease by the value of the underlying land amounting to R34.4 million (2011: R36.4 million). These assets are accounted for in note 13.
  • The operating lease liability relates to the lease smoothing adjustment required by IAS 17 Leases. The short-term portion has been accounted for in note 26.
  • For IAS 39 Financial Instruments: Recognition and Measurement accounting treatment of these values, see note 39.

25. Non-current provisions

  2012
Rm
  2011
Rm
Onerous lease provision 33.9   15.4
Less: Payable within one year included in current provisions (6.2)   (14.4)
Provision for Supplier Development Fund 94.9   100.0
Liabilities raised on business acquisitions 182.3  
Less: Payable within one year included in current provisions (124.1)  
Provision for post-retirement medical aid contributions and other medical aid provisions 78.2   66.0
  259.0   167.0

  Repayable
within 1 year*
Rm
  Repayable
in 2 – 5 years
Rm
  Repayable
after 5 years
Rm
  Total
Rm
2012 130.3   173.5   85.5   389.3
2011 14.4   101.0   66.0   181.4
* Included in current provisions in note 27.

  • Certain Group companies provide post-retirement healthcare benefits to their retirees. This fund is accounted for as a defined benefit plan and measured using the projected unit credit method. The liability is unfunded. The main assumption used in calculating the costs and the provision is an 'interest rate medical inflation rate' gap of 0.5% (2011: 1.0%).
  2012
Rm
  2011
Rm
The net expense recognised in the income statement is:      
Current service cost 2.5   2.4
Interest cost 5.7   5.2
Benefits paid against balance sheet held liability (1.7)   (1.5)
Net actuarial loss recognised in the year 5.7   1.6
Net expense recognised as part of employment costs 12.2   7.7
Movements in the post-retirement medical aid liability:      
Opening defined benefit obligation 66.0   58.3
Expense as above 12.2   7.7
Closing defined-benefit obligation 78.2   66.0

  • The last valuation of the liability for the post-retirement medical aid contributions was performed as at 30 June 2012 by Alexander Forbes, Fellow of the Institute of Actuaries (2011: Alexander Forbes, Fellow of the Institute of Actuaries). The current year costs have been assessed in accordance with the advice of independent actuaries.
  • The net actuarial loss in the current year arose as a result of a combination of the following factors:
    • An unexpected loss of R7.0 million (2011: R5.6 million) arose as a result of a decrease in the real discount rate, ie a decrease in the difference between the discount rate and the healthcare cost inflation assumption from 1.0% per annum to 0.5% per annum (2011: 1.5% per annum to 1.0% per annum).
    • Lower than expected inflation resulted in a net gain of R1.2 million (2011: R1.7 million).
    • Unexpected changes in the membership and membership profile resulted in a net gain of R0.1 million (2011: R2.3 million).
  • Other than the changes listed above, the remaining assumptions are consistent with the assumptions applied in the prior year.

26. Trade and other payables

  2012
Rm
  2011
Rm
Trade payables 8,908.8   7,553.9
Income received in advance – short-term portion   21.5
Operating lease liability – short-term portion 62.1   (21.8)
Leave pay accrual 175.3   149.5
FEC liability 4.0   3.7
Sundry payables and other accruals 2,151.8   1,675.0
  11,302.0   9,381.8

  • The operating lease liability relates to the lease smoothing adjustment required by IAS 17 Leases. The long-term portion has been accounted for in note 24.
  • The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe. Settlement discounts received range from 1.0% to 3.0% (2011: 1.0% to 3.0%).
  • For IAS 39 Financial Instruments: Recognition and Measurement accounting treatment of these values, see note 39.

27. Provisions

  2012
Rm
  2011
Rm
Onerous lease provision 6.2   14.4
Liabilities raised on business acquisitions 124.1  
Other 9.4   12.4
  139.7   26.8

  • Provisions raised against specific assets, for example inventories and trade receivables, are offset against those assets.
Reconciliation of provisions: Opening
balance

Rm
  Amounts
provided

Rm
  Amounts
utilised

Rm
  Unused
amounts


reversed

Rm
  Closing
balance

Rm
2012                  
Onerous lease provision 14.4   3.4   (9.7)   (1.9)   6.2
Liabilities raised on business acquisitions   124.1       124.1
Other 12.4   4.5   (5.7)   (1.8)   9.4
  26.8   132.0   (15.4)   (3.7)   139.7
2011                  
Onerous lease provision 2.1   15.0   (2.7)     14.4
Leasehold improvements 1.5     (1.5)    
Other 22.2     (9.6)   (0.2)   12.4
  25.8   15.0   (13.8)   (0.2)   26.8

28. Other current liabilities

  2012
Rm
  2011
Rm
Medium-term bank loans      
Capital short-term portion 503.8   286.8
Interest accrual   8.1
  503.8   294.9
Capitalised finance leases 34.9   22.3
Massmart Education Foundation loan 4.3   4.2
Trade finance facility 92.4   75.6
Lamberti Education Foundation Trust loan 13.5   12.9
  648.9   409.9

  • A fixed term loan of R500.0 million was secured during the second half of the 2010 financial year repayable quarterly over three years. The loan bears interest at 9.8%. The loan is secured by intra-group cross-suretyships. The medium-term portion has been accounted for in note 24.
  • A fixed term loan of R500.0 million was secured during the second half of the 2011 financial year repayable quarterly over three years. The loan bears interest at 8.1%. The loan is secured by intra-group cross-suretyships. The medium-term portion has been accounted for in note 24.
  • A fixed term loan of R750.0 million was secured during the second half of the financial year repayable quarterly over five years. The loan bears interest at 7.88%. The loan is secured by intra-group cross-suretyships. The medium-term portion has been accounted for in note 24.
  • Capitalised finance leases include vehicles, fixtures, fittings, plant and computer equipment and property leases, repayable in monthly instalments varying from one to five years at varying interest rates between 4.0% and 17.5% (2011: between 4.0% and 17.5%). The medium-term portion has been accounted for in note 24.
  • The capitalised finance leases are secured by moveable assets with a book value of R68.5 million (2011: R24.2 million) and the property lease by the value of the underlying land amounting to R34.4 million (2011: R36.4 million). These assets are accounted for in note 13.
  • The Massmart Education Foundation loan represents cash reserves invested with Group Treasury. The long-term portion has been accounted for in note 24.
  • The trade finance facility is an offshore US Dollar facility available for working capital requirements. The Group has used this facility to fund four African working capital loans namely Botswana, Ghana, Malawi and Mozambique (2011: Botswana, Ghana, Malawi and Mozambique). The facility is capped at USD 20.0 million, of which we have utilised USD11.0 million (2011: USD10.9 million) at the reporting date.
  • The Lamberti Education Foundation Trust loan represents cash reserves invested with Group Treasury.
  • For IAS 39 Financial Instruments: Recognition and Measurement accounting treatment of these values, see note 39.

29. Employee share incentive schemes

  2012
000s
  2011
000s
Massmart Holdings Limited Employee Share Trust      
Total shares and options available to the scheme 39,500   39,500
Total shares and options available to the scheme 39,500   39,500
Shares and treasury shares issued to the scheme (16,493)   (16,493)
Remaining capacity for issue in terms of the JSE practice 23,007   23,007
Opening balance of shares and options 7,554   17,515
New shares and options offered to employees and executive directors 5,176   584
Shares and options sold by employees and directors (1,399)   (10,134)
Shares repurchased from/forfeited by employees and options lapsed/forfeited (246)   (411)
Closing balance of shares and options 11,085   7,554

The closing balance includes 1,382,228 (2011: 1,474,255) shares and 9,702,840 (2011: 6,079,937) options. Shares and options previously issued to employees who then subsequently left the Group are excluded from the figures above. The amendments needed to bring the Share Trust rules in line with the new JSE Schedule 14 requirements were approved by the shareholders at the AGM on 24 November 2010.

Options may be exercised at any time, but shares arising out of options may only be sold when they have vested with the participant.

Vesting occurs over a five-year period, as follows:

  • 25% two years after the offer date;
  • 50% three years after the offer date;
  • 75% four years after the offer date;
  • 100% five years after the offer date; and
  • expires ten years after the offer date.

In terms of the scheme rules, all share loans on offers must be repaid or options exercised no later than 10 years from the offer date.

The following options granted to employees and directors in terms of the Massmart Employee Share Incentive Scheme have not yet been exercised:

Offer date   Expiry date   Exercise
price
(R)
  Number of
options at
June 2011
  Number of
options
forfeited
and expired
  Number of
options
exercised
  New
options
granted
  Number of
options at
June 2012
27 August 2001   26 August 2011   10.95   110,091     110,091    
16 January 2002   15 January 2012   12.03   24,500     24,500    
1 April 2005   31 March 2015   41.91   196,000     100,000     96,000
1 May 2005   30 April 2015   43.42   1,242     1,242    
27 May 2005   26 May 2015   42.97   45,316     9,551     35,765
31 May 2005   30 May 2015   42.88   23,554     225     23,329
1 October 2005   30 September 2015   52.48   1,059     1,059    
1 November 2005   31 October 2015   51.91   14,461     760     13,701
30 November 2005   29 November 2015   51.19   22,069     11,638     10,431
1 April 2006   31 March 2016   58.74   45,965     28,360     17,605
23 May 2006   22 May 2016   54.13   78,836     26,215     52,621
25 August 2006   24 August 2016   51.93   20,128     11,619     8,509
1 October 2006   30 September 2016   56.42   13,311     7,626     5,685
15 November 2006   14 November 2016   62.04   39,455     22,550     16,905
23 February 2007   22 February 2016   67.79   147,856     31,265     116,591
2 April 2007   1 April 2017   82.67   7,290     858     6,432
24 May 2007   23 May 2017   94.25   575,943   1,446   168,215     406,282
24 August 2007   23 August 2017   80.75   73,116     7,757     65,359
30 November 2007   29 November 2017   71.58   113,960     54,250     59,710
1 April 2008   31 March 2018   66.91   534,443   12,342   83,445     438,656
26 May 2008   25 May 2018   72.86   1,334,508   21,330   278,751     1,034,427
1 September 2008   31 August 2018   79.86   206,460     16,638     189,822
27 October 2008   26 October 2018   72.42   286,801   10,957   100,539     175,305
15 November 2008   14 November 2018   79.91   48,455     10,604     37,851
1 March 2009   28 February 2019   70.71   147,428     8,571     138,857
27 May 2009   26 May 2019   77.55   1,174,634   26,646   158,217     989,771
1 September 2009   31 August 2019   79.15   121,617   40,989   14,299     66,329
1 October 2009   30 September 2019   87.60   33,268     5,115     28,153
16 November 2009   15 November 2019   88.71   36,087     4,661     31,426
1 March 2010   28 February 2020   90.49   145,519         145,519
1 April 2010   31 March 2020   108.95   94,402     4,584     89,818
1 May 2010   30 April 2020   110.00   75,997     4,390     71,607
1 September 2010   31 August 2020   120.42   286,166   21,751       264,415
1 September 2011   31 August 2021   153.84     92,425     3,739,981   3,647,556
1 November 2011   31 October 2021   157.27     17,867     486,730   468,863
1 March 2012   28 February 2022   174.88         448,807   448,807
1 April 2012   31 March 2022   164.09         122,954   122,954
16 May 2012   15 May 2022   159.62         377,779   377,779
            6,079,937   245,753   1,307,595   5,176,251   9,702,840

  2012
000s
  2011
000s
Massmart Thuthukani Empowerment Trust      
Total shares and options available to the scheme 18,000   18,000
Opening balance of share units 4,176   12,826
Shares sold (3,123)   (8,550)
Shares repurchased from/forfeited by employees and options lapsed/forfeited   (100)
Closing balance of share units 1,053   4,176

Vesting occurs over a six-year period, as follows:

  • 33.3% in October 2010;
  • 33.3% in October 2011;
  • 33.4% in October 2012; and
  • expires six years after the offer date.

The following options granted to eligible employees in terms of the Massmart Thuthukani Empowerment Trust have not yet been exercised:

Offer date   Expiry date   Exercise
price
(R)
  Number of
options


opening
balance
  Number of
options


forfeited
and expired
  No of
options
exercised
  Number of
options
closing
balance
2012                        
1 October 2006   30 September 2012   49.98   4,175,647     3,122,787   1,052,860
2011                        
1 October 2006   30 September 2012   49.98   12,826,310   100,635   8,550,028   4,175,647

  2012
000s
  2011
000s
Massmart Black Scarce Skills Trust      
Total preference shares available to the scheme 3,979   3,979
Reconciliation of units:      
Opening balance of share units 890   2,203
New share units offered to employees 1,209  
Shares sold by employees (318)   (1,148)
Share units repurchased from/forfeited by employees and options lapsed/forfeited (41)   (165)
Closing balance of share units 1,740   890
Conversion of share units into preference shares 426   380

Vesting occurs over a five-year period, as follows:

  • 25% two years after the offer date;
  • 50% three years after the offer date;
  • 75% four years after the offer date;
  • 100% five years after the offer date; and
  • expires five years after the offer date.

The following options granted to eligible employees in terms of the Massmart Black Scarce Skills Trust have not yet been exercised:

Offer date   Expiry date   Exercise
price
(R)
  Number of
options
opening
balance
  Number of
options
forfeited
and expired
  Number of
options
exercised
  New
options
granted
  Number of
options
closing
balance
2012                            
1 October 2006   30 September 2011   56.42   127,325   1,945   125,380    
2 April 2007   1 April 2012   82.67   7,672     7,672    
30 November 2007   29 November 2012   71.58   3,221     1,899     1,322
1 April 2008   31 March 2013   66.97   327,790   6,704   103,666     217,420
1 October 2008   30 September 2013   75.52   250,998     57,440     193,558
1 April 2009   31 March 2014   71.96   24,775     5,756     19,019
27 May 2009   26 May 2014   77.56   7,784     1,946     5,838
1 April 2010   31 March 2015   108.95   140,045     14,620     125,425
1 October 2011   30 September 2016   143.74     32,503     773,909   741,406
1 April 2012   31 March 2017   164.09         436,083   436,083
            889,610   41,152   318,379   1,209,992   1,740,071
2011                            
1 October 2006   30 September 2012   56.42   318,485   9,842   181,318     127,325
2 April 2007   1 April 2013   82.67   17,309     9,637     7,672
30 November 2007   29 November 2013   71.58   9,277     6,056     3,221
1 April 2008   31 March 2014   66.97   796,507   25,827   442,890     327,790
1 October 2008   30 September 2014   75.52   681,787   95,514   335,275     250,998
1 April 2009   31 March 2015   71.96   59,759   7,742   27,242     24,775
27 May 2009   26 May 2015   77.56   15,889     8,105     7,784
1 April 2010   31 March 2016   108.95   303,862   25,657   138,160     140,045
            2,202,875   164,582   1,148,683     889,610

30. Retirement benefit information

All full-time permanent Massmart staff are members of either the Massmart Pension Fund, the Massmart Provident Fund or the SACCAWU National Provident Fund. These funds are defined contribution funds and are subject to the Pension Funds Act, 1956. Following the recent acquisitions, many of their staff are still members of the retirement funds of the previous business owners. Projects are underway to transfer these employees to one of the above funds in future.

With effect from 1 March 2007, the Massmart Pension Fund and Massmart Provident Fund have been classified as valuation exempt. This exemption was renewed on 1 March 2010 with the current exemption set to expire on 1 March 2013.
The statutory process has changed and the next application for renewal should result in the funds' remaining valuation exempt indefinitely whilst they meet the required criteria. The financial position of the funds is monitored on a quarterly basis, with a full external audit conducted annually.

Contributions received by the funds for the year ended 30 June 2012 amounted to R342 million (2011: R294 million). The Group's contribution of R205 million (2011: R176 million) was included in the income statement for the year as part of the employee costs.