Directors’ responsibilities

The Directors acknowledge responsibility for the preparation
of the Group Annual Financial Statements, which, in their opinion, fairly present the results and cash flows for the year ended December 2014 and the state of affairs of Massmart Holdings Limited and its subsidiaries at the end of the year.
The external auditors are responsible for reporting on the fair presentation of these financial statements.

The Company and its subsidiaries have maintained satisfactory accounting records and an effective system of internal controls to ensure the integrity of the underlying information. Appropriate accounting policies, supported by sound and prudent managerial judgments and estimates, have been consistently applied.
The Group’s Audit Committee reviews the financial information presented and ensures that there has been adherence to IFRS. Internal and external auditors of Group companies have unrestricted access to the Committee.

Group financial results

The financial results of the Group are set out in the Income Statement, Statement of Comprehensive Income, the Statement of Cash Flows and the Statement of Changes in Equity. The financial position of the Group is set out in the Statement of Financial Position and accompanying notes. A full set of the audited Group Annual Financial Statements for the year-ended December 2014 can be found at:
www.massmart.co.za/iar2014/groupafs

Dividend

Massmart has maintained the dividend at the same level as the prior year. The dividend has been declared out of income reserves and will be subject to the Dividend Tax rate of 15%. With regard to the final distribution to shareholders, the Directors resolved to distribute to shareholders registered in the books of the Company on 20 March 2015, a final cash dividend of 275 cents (December 2013: 275 cents).

Shares in issue

The movement in ordinary and preference shares for the year under review were as follows:

 Ordinary Shares    
Balance at December 2012   216,910,195
Converted preference shares1   198,849
Balance at December 2013   217,109,044
Converted preference shares1   9,028
Ordinary shares in issue at December   217,118,072

 

‘B’ Preference Shares    
Balance at December 2012   12,461,675
Converted to ordinary shares   (198,849)
Residual shares automatically redeemed   (9,395,053)
Balance at December 2013   2,867,773
Converted to ordinary shares   (9,028)
Preference shares in issue at December 2014   2,858,745

 

1The preference shares relate to Massmart’s Black Scarce Skills Trust

 

Directorate and secretary

The current Directorate of the Group is shown here.
The Board comprises nine Directors of whom seven are non-Executive and four are independent. In addition, each Board committee is chaired by an independent Director.
The Company Secretary provides a central source of guidance and advice to the Board, and within the Company, on matters of ethics and good governance. The Company Secretary is Philip Sigsworth, CA(SA), whose business and postal addresses are the same as that of the Company. Philip was appointed on 7 May 2012.
In March 2014, Mark Lamberti was appointed CEO of Imperial Holdings Limited and consequently resigned as Chairman of Massmart. Kuseni Dlamini was appointed the new Chairman of Massmart with effect from 10 April 2014.
Grant Pattison resigned as CEO with effect from 1 June 2014 and Guy Hayward, previously Chief Operating Officer, was appointed to succeed him.
On 10 December 2013 Wal-Mart Stores, Inc. announced the promotion of David Cheesewright to President and CEO of Walmart International. The promotion of Shelley Broader to succeed him as President and CEO of Walmart EMEA was announced on 30 May 2014.

Subsequent to these changes, David resigned from the Board and Shelley was appointed in his place. Shelley has responsibility for Walmart’s Retail operations and business development across Europe, the Middle East, Sub-Saharan Africa and Canada. She was previously CEO of Walmart Canada.
In addition, Jeff Davis resigned following a change in his role in Walmart, and in his place Andy Clarke was appointed to the Board. Andy is the President and CEO of ASDA Stores Ltd, the United Kingdom’s second-largest supermarket retailer.
The appointments of Shelley and Andy and the resignations of David and Jeff were all effective 16 July 2014
Following the August 2014 announcement of the intended resignation of Ilan Zwarenstein from his role as Group FD, the Massmart Board announced the appointment of Johannes van Lierop as CFO of Massmart with effect from 12 March 2015, at which date Ilan accordingly resigned.
At least one-third of the non-Executive Directors are required to retire every year and Massmart Executive Directors have elected to also retire on this basis. As a result, all Directors retire by rotation at least every three years and are then eligible for re-election. In addition, shareholders must ratify the initial appointment of each Director at the first Annual General Meeting following that Director’s appointment. As a result of these requirements, at the 27 May 2015 Annual General Meeting Kuseni Dlamini, Phumzile Langeni and JP Suarez retire by rotation; while Shelley Broader, Andy Clarke and Johannes van Lierop will resign, as required by the Memorandum of Incorporation. Being eligible, they all offer themselves for re-election.

 

 

 

 

 

    December 2014   December 2013
Non-executive Directors   Shares   Options/
Shares Awards
  Shares   Options/
Shares Awards
MJ Lamberti1    -    -    -    -
K Dlamini2   9,800    -    -    -
CS Seabrooke    -    -    -    -
S Broader3    -    -    -    -
D Cheesewright4    -    -    -    -
A Clarke3    -    -    -    -
JA Davis4    -    -    -    -
NN Gwagwa   9,800    -   9,800    -
P Langeni    -    -   9,800    -
JP Suarez    -    -    -    -
Executive Directors                
GM Pattison   643,473   196,877   596,473   243,877
GRC Hayward   222,894   342,619   222,894   298,327
J van Lierop5    -    -    -    -
I Zwarenstein6    -   201,029    -   184,343

 

1    Resigned with effect from 10 April 2014
2    Appointed with effect from 10 April 2014
3    Appointed with effect from 16 July 2014
4    Resigned with effect from 16 July 2014
5    Appointed with effect from 12 March 2015

6    Resigned as Group FD with effect from 12 March 2015

 

At the date of this Report, the Directors’ beneficial holdings were as follows:

    April 2015   April 2014
Non-executive Directors   Shares   Options/
Shares Awards
  Shares   Options/
Shares Awards
MJ Lamberti1    -    -    -    -
K Dlamini2   9,800    -    -    -
CS Seabrooke    -    -    -    -
S Broader3    -    -    -    -
D Cheesewright4    -    -    -    -
A Clarke3    -    -    -    -
JA Davis4    -    -    -    -
NN Gwagwa   9,800    -   9,800    -
P Langeni    -    -   8,800    -
JP Suarez    -    -    -    -
Executive Directors                
GM Pattison   -   -   596,473   243,877
GRC Hayward   222,894   342,619   222,894   298,327
J van Lierop5    -    -    -    -
I Zwarenstein6    -   -    -   184,343

 

There were no non-beneficial interests in either of these periods.

1    Resigned with effect from 10 April 2014
2    Appointed with effect from 10 April 2014
3    Appointed with effect from 16 July 2014
4    Resigned with effect from 16 July 2014    
5    Resigned with effect from 28 December 2014, and as such his number of shares are not shown in the above table
6    Appointed with effect from 12 March 2015
7    Resigned as Group FD with effect from 12 March 2015, and as such his number of shares are not shown in the above table

 

 

Subsidiaries

As at the date hereof, the following companies are principal subsidiaries of the Company:

Massbuild Proprietary Limited
2004/035206/07
Masscash Holdings Proprietary Limited
1997/014716/07
Massmart International Holdings Limited
(incorporated in Mauritius)
47902 C1/GBL
Massmart Management and Finance Company
Proprietary Limited
1992/004084/07
Masstores Proprietary Limited
1991/006805/07
Wild Developments Proprietary Limited
1973/000178/07

The principal subsidiaries above are determined based on the Group’s cross-surety arrangement. These subsidiaries represent the group for which the respective covenants shall be maintained. Details of the Company’s interests in principal subsidiaries are set out in note 37 in the Group Annual Financial Statements.

Going concern

The Directors are of the opinion that the business will be a going concern in the year ahead. In reaching this opinion, the Directors considered the following factors:

  • strong positive cash flows from trading;
  • no recurring operating losses at Divisional and Group level;
  • well-controlled working capital and good quality inventory;
  • approved short- and long-term financing, with sufficient additional short-term borrowing capacity if required;
  • key executive management in place;
  • there have been no material changes that may affect the Group in any of its customer, product or geographic markets; and
  • budgets to December 2015 reflect a continuation of the above positive issues.

Borrowing powers

In terms of the Memorandum of Incorporation, the Group has unlimited borrowing powers. At December 2014, borrowings were R3.6 billion (December 2013: R2.3 billion).

Direct and ultimate holding companies

The Company’s direct holding company is Main Street 830 Proprietary Limited, incorporated in South Africa and the Company’s ultimate holding company is Wal-Mart Stores, Inc, incorporated in the United States.

Subsequent events

There were no significant subsequent events after the year-end, apart from the movement in Directors already spoken to.

On behalf of the Board

Philip-Sigsworth

Philip Sigsworth
Company Secretary
2 April 2015

 

 

Massmart address

The Company’s registered office and postal address are as follows:

Registered office: Postal address:

Massmart House
16 Peltier Drive
Sunninghill Ext 6
Sandton, 2146
South Africa

Private Bag X
4 Sunninghill
2157
South Africa

Company Secretary certificate

In terms of section 88(e) of the Companies Act No. 71 of 2008, as amended (“Companies Act”), I, Philip Sigsworth, in my capacity as Company Secretary of Massmart Holdings Limited, confirm that, to the best of my knowledge and belief, in respect of the year under review, Massmart Holdings Limited has filed with the Companies and Intellectual Property Commission all such returns and notices as are required of a public company in terms of the Companies Act and that all such returns and notices appear to be true, correct and up to date.