NOTES

1.  

These reviewed condensed interim consolidated financial statements have been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), its interpretations issued by the IFRS Interpretations Committee, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, presentation and disclosure as required by IAS 34 Interim Financial Reporting, the JSE Listings Requirements and the requirements of the Companies Act of South Africa. The accounting policies are consistent in all material respects with that of the previous financial period, except for:

IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities – Amendments to IFRS 7

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements

IFRS 11 Joint Arrangements, IAS 28 Investments in Associates and Joint Ventures

IFRS 12 Disclosure of Interests in Other Entities

IFRS 13 Fair Value Measurement

IAS 19 Employee Benefits (Revised)

2.  

During the current period, the only Massmart shares acquired in the market were by the Massmart Employee Share Trusts where 0.9 million shares (0.4% of average shares in issue) were bought at an average price of R193.57 totalling R175.3 million. During the comparative six-month period, the Massmart Employee Share Trusts acquired 0.7 million shares (0.3% of average shares in issue) at an average price of R174.84 totalling R120.0 million.

3.  

There was no impairment of assets in the current period. The impairment of assets in the prior period relates to the impairment of certain acquired goodwill in Masscash.

4.  

Walmart transaction, integration and related costs in the prior periods comprise professional fees, integration costs, expatriate employment costs, share-based payments, travel, consulting costs and other direct expenses relating to the Walmart transaction, of which certain amounts remain unpaid at the reporting date, as well as the additional R140.0 million being the increase in the Supplier Development Fund required by the judgement of the Competition Appeal Court. At June 2013 an amount of R125.5 million remains unpaid (June 2012: R76.7 million) and has been accounted for in trade and other payables. The Walmart transaction costs are behind us and integration costs are now included as part of our normal operating costs.

5.  

The preference shareholders’ dividend amount of R3.6 million in the prior period represents the December 2011 interim cash dividend of 2 cents paid to all Thuthukani beneficiaries. The Thuthukani dividend was equivalent to 100% of the ordinary dividend for the prior period. On 1 October 2012, the final conversion of ‘A’ preference shares to ordinary shares through the Thuthukani Trust occurred and as such there was no preference dividend paid in the current period.

6.  

The Massmart BEE transaction, which came into operation in October 2006, gave rise to an IFRS 2 Share-based Payment charge of R7.9 million (June 2012: R11.9 million). The ‘A’ and ‘B’ preference shares were issued to the Thuthukani Trust and the Black Scarce Skills Trust respectively. On 1 October 2012, the final conversion of ‘A’ preference shares to ordinary shares through the Thuthukani Trust occurred. The employees had the option of converting their remaining share allocation into Massmart ordinary shares and continue to receive 100% of the dividend on their ordinary shares or they could sell their remaining share allocation and receive net proceeds after tax and selling expenses.

7.  

Other non-current liabilities and provisions include the net lease smoothing liability of R755.0 million (June 2012: R342.8 million).

8.  

There were no businesses acquired in the current period. The net asset value of the businesses acquired during the prior comparative period was R44.9 million on the date of acquisition.

9.  

Massmart finalised the acquisition of Capensis Investments 241 (Pty) Ltd on 25 January 2013, and now controls seven Makro properties previously lease held. The impact is: an increase in PPE of R1.353.6 million; a release of both the lease smoothing position of R437.0 million and the bare dominium option of R122.0 million; and a final cash outflow during this period of R575.0 million.

10.  

There were no significant subsequent events in the period.

11.  

Massmart and its divisions enter into certain transactions with related parties in the normal course of business. Details of these are, and will be, disclosed in Massmart’s Integrated Annual Report. Transactions between the Company and Walmart (its Holding Company), were accounted for in Walmart transaction, integration and related costs in the prior periods, in the condensed consolidated income statement. Further detail relating to these costs is disclosed in note 4 above. The Walmart transaction costs are behind us and integration costs are now included as part of our normal operating costs. During the period the Group secured a medium-term loan with Walmart repayable after five years. Interest of 7.46% is repaid quarterly. The loan of R600.0 million is accounted for under interest-bearing non-current liabilities. As a 51% shareholder, Walmart will also be receiving a dividend based on their number of shares held.

12.  

The results of the 26 weeks ended June 2013 have been reviewed by independent external auditors, Ernst & Young Inc., and their unmodified review report is available for inspection at the Company’s registered office. The review was performed in accordance with ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. The results of the 26 weeks ended June 2012 were reviewed by independent external auditors, Deloitte & Touche, and their unmodified review report is available for inspection at the Company’s registered office. The review was performed in accordance with ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. Any reference to future financial performance included in this announcement has not been reviewed or reported on by the Group’s external auditors.

The preparation of the Group’s reviewed condensed interim consolidated financial statements was supervised by the Group Financial Director, Ilan Zwarenstein, BCom, BAcc, CA(SA).