• + 35. Directors’ emoluments
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
                   
    35. Directors’ emoluments
    R000 Services as directors of Massmart Holdings Limited Salary and allowances Bonuses and performance related payments1 Other benefits Retirement and related benefits Subtotal Fringe benefit of interest-free loans used to finance shares2 Gains on exercise of share options and on shares purchased by directors Total
    For the 52 weeks ended December 2014
    Executive directors
    Pattison, GM3 -  5,215 -  692  365  6,272  1,365  15,788  23,425
    Hayward, GRC -  4,443  5,916  667  337  11,363  844 -  12,207
    Zwarenstein, I4 -  2,603  2,827  103  162  5,695 - -  5,695
    -  12,261  8,743  1,462  864  23,330  2,209  15,788  41,327
    Non-executive directors
    Lamberti, MJ5  359 - - - -  359 - -  359
    Seabrooke, CS  1,491 - - - -  1,491 - -  1,491
    Cheesewright, D6 - - - - - - - - -
    Davis, JA6 - - - - - - - - -
    Gwagwa, NN  512 - - - -  512 - -  512
    Langeni, P  758 - - - -  758 - -  758
    Dlamini, KD  892 - - - -  892 - -  892
    Suarez, JP - - - - - - - - -
    Broader, S7 - - - - - - - - -
    Clarke, A7 - - - - - - - - -
     4,012 - - - -  4,012 - -  4,012
    Prescribed Officers
      Prescribed Officer A - - - - -  13,683  293 -  13,976
      Prescribed Officer B - - - - -  8,115 - -  8,115
      Prescribed Officer D - - - - -  4,703 - -  4,703
      Prescribed Officer E - - - - -  6,089 - -  6,089
      Prescribed Officer F - - - - -  13,718 -  2,300  16,018
      Prescribed Officer G - - - - -  4,476  239 -  4,715
      Prescribed Officer I - - - - -  4,913  11  209  5,133
      Prescribed Officer K - - - - -  4,787 - -  4,787
      Prescribed Officer L - - - - -  3,912 - -  3,912
      Prescribed Officer M - - - - -  4,630  76 -  4,706
    - - - - -  69,026  619  2,509  72,154
    Total  4,012  12,261  8,743  1,462  864  96,368  2,828  18,297  117,493
       
    1In order to match incentive awards with the performance to which they relate, bonuses above reflect the amounts accrued in respect of each year and not amounts paid in that year.
    2Held in terms of the rules of the Company’s share scheme.
    3Resigned with effect from 31 December 2014.
    4Resigned from the Board with effect from 12 March 2015.
    5Resigned with effect from 10 April 2014.
    6Resigned with effect from 16 July 2014.
    7Appointed with effect from 16 July 2014
    R000 Services as directors of Massmart Holdings Limited Salary and allowances Bonuses and performance related payments1 Other benefits Retirement and related benefits Subtotal Fringe benefit of interest-free loans used to finance shares2 Gains on exercise of share options and on shares purchased by directors Total
    For the 53 weeks ended December 2013
    Executive directors
    Pattison, GM3 -  5,215  1,304  772  365  7,656  1,413 -  9,069
    Hayward, GRC -  3,560  916  686  249  5,411  814 -  6,225
    Zwarenstein, I4 -  2,447  561  113  153  3,274  1  1,863  5,138
    -  11,222  2,781  1,571  767  16,341  2,228  1,863  20,432
    Non-executive directors
    Lamberti, MJ5  1,213 - - - -  1,213 - -  1,213
    Seabrooke, CS  1,256 - - - -  1,256 - -  1,256
    Cheesewright, D6 - - - - - - - - -
    Davis, JA - - - - - - - - -
    Gwagwa, NN  451 - - - -  451 - -  451
    Langeni, P  689 - - - -  689 - -  689
    Suarez, JP - - - - - - - - -
     3,609 - - - -  3,609 - -  3,609
    Prescribed Officers
      Prescribed Officer A - - - - -  9,712  370  2,702  12,784
      Prescribed Officer B - - - - -  6,161 - -  6,161
      Prescribed Officer D - - - - -  3,694  6  5,904  9,604
      Prescribed Officer E - - - - -  4,327 - -  4,327
      Prescribed Officer F - - - - -  7,756 -  389  8,145
      Prescribed Officer G - - - - -  2,530  229 -  2,759
      Prescribed Officer I - - - - -  2,831  43  719  3,593
      Prescribed Officer K - - - - -  2,979 - -  2,979
      Prescribed Officer L - - - - -  2,930 - -  2,930
      Prescribed Officer M - - - - -  2,582  73 -  2,655
    - - - - -  45,502  721  9,714  55,937
    Total  3,609  11,222  2,781  1,571  767  65,452  2,949  11,577  79,978
       
    1In order to match incentive awards with the performance to which they relate, bonuses above reflect the amounts accrued in respect of each year and not amounts paid in that year.
    2Held in terms of the rules of the Company’s share scheme.
    3Resigned with effect from 31 December 2014.
    4Resigned from the Board with effect from 12 March 2015.
    5Resigned with effect from 10 April 2014.
    6Resigned with effect from 16 July 2014.
  • + 36. Interests of directors in the Company’s share scheme
    36. Interests of directors in the Company’s share scheme
    Details of directors’ shares and share options per director:
    Relevant date Subscription price (R) Market price (R) Number of shares/share options Gain on sale/exercise (R 000’s) Expiry date
    Pattison, GM
    Employee Share Option Scheme (note 29)
    Balance at December 2012  684,021
    Options exercised/ shares sold - - - - -
    Balance at December 2013  684,021 -
    Options exercised 1 April 2005  42  120  (47,000)  1,969
    Shares sold 23 May 2006  54  120  (183,750) -
    Balance at December 2014  453,271
    Comprising: 23 May 2006  54  183,750 22 May 2016
    24 May 2007  94  26,948 23 May 2017
    26 May 2008  73  41,768 25 May 2018
    27 May 2009  78  42,202 26 May 2019
    1 September 2011  154  158,603 31 August 2021
    Employee Share Awards Scheme (note 29)
    Balance at December 2012 -
    Performance share awards 16 September 2013 - -  28,705 - 15 September 2016
    Restricted share grants 16 September 2013 - -  9,569 - 15 September 2018
    Balance at December 2013  38,274
    Share awards/ Share grants - - - - - -
    Balance at December 2014  38,274
    Comprising: Performance share awards 16 September 2013 - -  28,705 - 15 September 2016
                         Restricted share grants 16 September 2013 - -  9,569 - 15 September 2018
    Hayward, GRC
    Employee Share Option Scheme (note 29)
    Balance at December 2012  456,906
    Shares sold - - - - - -
    Balance at December 2013  456,906 -
    Options exercised/ shares sold - - - - -
    Balance at December 2014  456,906 -
    Comprising: 24 May 2007  94 -  24,444 23 May 2017
    1 April 2008  67 -  19,912 31 March 2018
    26 May 2008  73 -  36,573 25 May 2018
    27 May 2009  78 -  105,448 26 May 2019
    1 September 2011  154 -  120,987 31 August 2021
    16 May 2012  160 -  149,542 15 May 2022
    Employee Share Awards Scheme (note 29)
    Balance at December 2012 -
    Performance share awards 16 September 2013 - -  20,848 - 15 September 2016
    Restricted share grants 16 September 2013 - -  6,950 - 15 September 2018
    Balance at December 2013  27,798
    Performance share awards 17 March 2014 - -  32,786 - 16 March 2017
    Restricted share grants 15 September 2014 - -  11,506 - 14 September 2019
    Balance at December 2014  72,090
    Comprising: Performance share awards 16 September 2013 - -  20,848 - 15 September 2016
                           Restricted share grants 16 September 2013 - -  6,950 - 15 September 2018
                           Performance share awards 17 March 2014 - -  32,786 - 16 March 2017
                           Restricted share grants 15 September 2014 - -  11,506 - 14 September 2019
    Zwarenstein, I
    Employee Share Option Scheme (note 29)
    Balance at December 2012  182,659
    Options exercised 1 April 2008  67  196  (2,742)  354
    Options exercised 26 May 2008  73  196  (5,234)  644
    Options exercised 27 May 2009  78  196  (7,352)  871
    Balance at December 2013  167,331  1,869
    Options exercised - - - - - -
    Balance at December 2014  167,331
    Comprising: 26 May 2008  73 -  8,037 25 May 2018
    27 May 2009  78 -  3,677 26 May 2019
    1 September 2011  154 -  63,941 31 August 2021
    16 May 2012  160 -  91,676 15 May 2022
    Employee Share Awards Scheme (note 29)
    Balance at December 2012 -
    Performance share awards 16 September 2013 - -  12,759 - 15 September 2016
    Restricted share grants 16 September 2013 - -  4,253 - 15 September 2018
    Balance at December 2013  17,012
    Performance share awards 17 March 2014 - -  16,686 - 16 March 2017
    Balance at December 2014  33,698
    Comprising: Performance share awards 16 September 2013 - -  12,759 - 15 September 2016
                           Restricted share grants 16 September 2013 - -  4,253 - 15 September 2018
                           Performance awards 17 March 2014 - -  16,686 - 16 March 2017
    The directors interest in the Company’s shares and options held at reporting date can be found in the Director’s Report.

     

  • + 37. Principal subsidiaries
    37. Principal subsidiaries
    Details of Massmart’s principal subsidiary companies are as follows:
    Number of shares in issue Place of incorporation and operation Ownership Voting power Interest in Subsidiaries
    Name of company 000s % % Principal activity Rm
    December 2014
    Massbuild (Pty) Ltd - South Africa  100  100 Wholesale and retail of DIY products  1,124.5
    Masscash Holdings (Pty) Ltd - South Africa  100  100 Holding company  890.0
    Massmart International Holdings Ltd - Mauritius  100  100 Holding company  81.4
    Masstores (Pty) Ltd  200 South Africa  100  100 Retailing, warehousing, mass merchandising  (581.9)
    Massmart Management and Finance Company (Pty) Ltd - South Africa  100  100 Management, investment and finance  12.1
    Wild Developments (Pty) Ltd - South Africa  100  100 Property Holding Company  122.5
    Other smaller subsidiaries -  1,561.2
     3,209.8
    December 2013
    Massbuild (Pty) Ltd - South Africa  100  100 Wholesale and retail of DIY products  1,472.4
    Masscash Holdings (Pty) Ltd - South Africa  100  100 Holding company  82.2
    Massmart International Holdings Ltd - Mauritius  100  100 Holding company  81.4
    Masstores (Pty) Ltd  200 South Africa  100  100 Retailing, warehousing, mass merchandising  (417.2)
    Mystic Blue Trading 62 (Pty) Ltd  100 South Africa  100  100 Investment holding  200.0
    Capensis Investments 241 (Pty) Ltd  1 South Africa  100  100 Property Holding Company  1,343.9
    Other smaller subsidiaries  10.1
     2,772.8
    The principal subsidiaries above are determined based on the Group’s cross-surety arrangement, refer to note 11 in the Company Annual Financial Statements. These subsidiaries represent the Group for which the respective Covenants shall be maintained.
    The above details are given in respect of interests in subsidiaries, where material. A full list of subsidiaries is available to shareholders, on request, at the registered office of the Company.
    There were no material non-controlling interests identified within the Group in the current and prior financial years.

     

  • + 38. Notes to the statement of cash flows
    38. Notes to the statement of cash flows
    December 2014 December 2013
    Rm Notes 52 weeks 53 weeks
    38.1 Cash inflow from trading activities
    Profit before taxation  1,620.8  1,897.4
    Adjusted for:
    Depreciation, amortisation and impairment  871.2  772.7
    Net loss on disposal of tangible and intangible assets  1.4  13.7
    Interest paid  386.8  283.8
    Interest received  (41.5)  (28.7)
    Dividends received -  (79.2)
    Share-based payment expense  127.9  126.3
    Unrealised foreign exchange profit  (2.4)  (31.6)
    Other non-cash movements  19.2  29.6
     2,983.4  2,984.0
    38.2 Working capital movements
    Increase in inventories  (1,112.4)  (424.0)
    Increase in trade receivables and prepayments  (697.8)  (30.7)
    Increase in trade payables  1,658.3  1,254.6
    Decrease in provisions  (143.2)  (47.3)
     (295.1)  752.6
    38.3 Taxation paid
    Normal taxation:
    Amounts owing at the beginning of the year  (319.3)  (281.5)
    Amounts owing at the end of the year  152.0  319.3
    Receiver of Revenue balance acquired on current year asset acquisitions  (7.1) -
    Taxation charged to the Income Statement (excluding deferred taxation)  (509.0)  (770.6)
     (683.4)  (732.8)
    38.4 Investment to maintain operations
    Land and buildings/leasehold improvements  (104.8)  (47.8)
    Vehicles  (92.1)  (43.3)
    Fixtures, fittings, plant and equipment  (427.2)  (521.7)
    Computer hardware  (108.1)  (70.9)
    Computer software  (123.6)  (96.5)
    Right of use  (0.9) -
    Other  (0.7) -
     (857.4)  (780.2)
    38.5 Investment to expand operations
    Land and buildings/leasehold improvements  (936.9)  (807.1)
    Vehicles  (11.0)  (34.9)
    Fixtures, fittings, plant and equipment  (341.7)  (427.6)
    Computer hardware  (12.6)  (33.8)
    Computer software  (7.9)  (1.5)
    Right of use -  (1.9)
    Capitalised borrowing cost on buildings  (12.0) -
     (1,322.1)  (1,306.8)
    38.6 Proceeds on disposal of tangible and intangible assets
    Land and buildings/leasehold improvements  9.0  13.1
    Vehicles  12.7  4.8
    Fixtures, fittings, plant and equipment  10.6  4.2
    Computer equipment and software  0.2  0.9
    Other -  2.6
     32.5  25.6
    38.7 Proceeds on disposal of assets classified as held for sale -  2.5
    38.8 Investment in business combinations
    Fair value of assets and liabilities acquired in business combinations:
    Cash and cash equivalents - -
    Inventories  0.9 -
    Tangible assets  1.4 -
    Intangible assets  12.1 -
    Total purchase price  14.4 -
    Less: Cash and cash equivalents of subsidiary - -
    Cash impact of acquisition, net of cash and cash equivalents acquired  14.4 -
    38.9 Other investing activities
    Capital contribution made to the investment in insurance cell-captive on premium contributions 16  (0.1)  (50.0)
    Withdrawal of cash from investment in a trading and logistics structure 16 -  1.6
    Property loan -  (215.0)
    Third party loan -  13.4
    Other  15.0  2.6
     14.9  (247.4)
    38.10 Non-controlling interests acquired
    Non-controlling interest  (11.0)
    Other reserves – premium on acquisition of non-controlling interests  (27.6)  (0.6)
     (38.6)  (0.6)
    38.11 Cash and cash equivalents at the end of the year
    Cash on hand and bank balances  2,067.4  2,196.1
    Bank overdrafts  (584.0)  (607.8)
    Cash and cash equivalents at the end of the year  1,483.4  1,588.3
    38.12 Disposal of subsidiaires
    Net assets at date of disposal
    Trade receivables -  23.1
    Cash and cash equivalents -  96.4
    Loans and investments - -
    Trade payables -  (94.2)
    Taxation -  (1.9)
    Total net assets at date of disposal -  23.4
    Loss on disposal -  (23.4)
    Proceeds received on sale - -
    Less: Cash and cash equivalents of subsidiary disposed - -
    Cash impact of disposal, net of cash and cash equivalents disposed - -
  • + 39. Fair Value
    39. Fair Value
    Fair value hierarchy
    The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments identified below. The table below reflects ‘Financial instruments’ and ‘Non-current assets classified as held for sale’ carried at fair value, and those ‘Financial instruments’ and ‘Non-current assets classified as held for sale’ that have carrying amounts that differ from their fair values, in the Statement of Financial Position:
    Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
    Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly
    Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data
    Financial instruments in the Statement of Financial Position
    Rm Total Carrying Amount Total Fair Value Level 1 Level 2 Level 3
    December 2014
    Financial Assets
    Financial assets at fair value through profit or loss 155.1 155.1 - 155.1 -
    - Investment in insurance cell-captive on extended warranties 56.1 56.1 - 56.1 -
    - Investment in insurance cell-captive on premium contributions 69.0 69.0 - 69.0 -
    - Investment in insurance cell-captive on credit life 0.1 0.1 - 0.1 -
    - FEC asset – De-designated 29.9 29.9 - 29.9 -
    Financial asset designated as a cash flow hedging instrument 13.7 13.7 - 13.7
    - FEC asset – Designated 13.7 13.7 - 13.7
    Loans and receivables 37.6 30.3 - 30.3 -
    - Employee share trust loans 37.6 30.3 - 30.3 -
    Available-for-sale investments 8.4 8.4 8.4 - -
    - Listed investments 8.4 8.4 8.4 - -
    Non-current assets classified as held for sale 18.0 22.0 - - 22.0
    232.8 229.5 8.4 199.1 22.0
    Financial liabilities
    Financial liabilities at amortised cost 2,941.7 2,653.0 - 2,653.0 -
    - Medium-term loan 854.5 591.3 - 591.3 -
    - Medium-term bank loans 2,087.2 2,061.7 - 2,061.7 -
    Financial liabilities at fair value through profit or loss 4.5 4.5 - 4.5 -
    - FEC liability – De-designated 4.5 4.5 - 4.5 -
    Financial liability designated as a cash flow hedging instrument 2.2 2.2 - 2.2 -
    - FEC liability – Designated 2.2 2.2 - 2.2 -
    2,948.4 2,659.7 - 2,659.7 -
    There were no transfers between Level 1 and Level 2 fair value categories during the December 2014 financial year, and no transfers into or out of Level 3.
    The financial assets and financial liabilities have been presented based on an analysis of their respective natures, characteristics and risks.
    Financial instruments in the Statement of Financial Position
    Rm Total Carrying Amount Total Fair Value Level 1 Level 2 Level 3
    December 2013
    Financial Assets
    Financial assets at fair value through profit or loss 235.4 235.4 - 235.4 -
    - Investment in a trading and logistics structure 117.4 117.4 - 117.4 -
    - Investment in insurance cell-captive on extended warranties 44.4 44.4 - 44.4 -
    - Investment in insurance cell-captive on premium contributions 55.9 55.9 - 55.9 -
    - FEC asset – De-designated 17.7 17.7 - 17.7 -
    Financial asset designated as a cash flow hedging instrument 8.8 8.8 - 8.8
    - FEC asset – Designated 8.8 8.8 - 8.8 -
    Loans and receivables 46.7 34.9 - 34.9 -
    - Employee share trust loans 46.7 34.9 - 34.9 -
    Available-for-sale investments 12.1 12.1 12.1 - -
    - Listed investments 12.1 12.1 12.1 - -
    303.0 291.2 12.1 279.1 -
    Financial liabilities
    Financial liabilities at amortised cost 1,710.3 1,724.8 - 1,724.8 -
    - Medium-term loan 757.3 762.2 - 762.2 -
    - Medium-term bank loans 891.7 876.4 - 876.4 -
    - Capitalised finance leases 61.3 86.2 - 86.2 -
    Financial liabilities at fair value through profit or loss 1.9 1.9 - 1.9 -
    - FEC liability – De-designated 1.9 1.9 - 1.9 -
    Financial liability designated as a cash flow hedging instrument 0.8 0.8 - 0.8
    - FEC liability – Designated 0.8 0.8 - 0.8 -
    1,713.0 1,727.5 - 1,727.5 -
    There were no transfers between Level 1 and Level 2 fair value categories during the December 2013 financial year, and no transfers into or out of Level 3.
    The financial assets and financial liabilities have been presented based on an analysis of their respective natures, characteristics and risks.
    Fair value measurement and valuation techniques for level 2 and level 3 financial instruments
    Rm Fair value December 2014 Valuation technique Significant inputs Input
    2014
    Type of financial instrument
    Financial Assets
    Financial assets at fair value through profit or loss 155.1
    Investment in insurance cell-captive on extended warranties 56.1 NAV Cash and cash equivalents
    Investment in unit trusts
    Insurance fund liabilities
    Investment in insurance cell-captive on premium contributions 69.0 NAV Cash and cash equivalents
    Investment in unit trusts
    Insurance fund liabilities
    Investment in insurance cell-captive on credit life 0.1 NAV Cash and cash equivalents
    FEC asset – De-designated 29.9 DCF Yield curves
    Market interest rate
    Market foreign exchange rate
    FEC asset – Designated 13.7 DCF Yield curves
    Market interest rate
    Market foreign exchange rate
    Non-current assets classified as held for sale 22.0 Signed sales agreement Expected selling price in the market 22.0
    Loans and receivables 30.3
    Employee share trust loans 30.3 DCF Market interest rate
    Available-for-sale financial assets 8.4
    Listed investments 8.4
    229.5
    Financial liabilities
    Financial liabilities at amortised cost 2,653.0
    Medium-term loan 591.3 DCF Market interest rate
    Medium-term bank loans 2,061.7 DCF Market interest rate
    Financial liabilities at fair value through profit or loss 4.5
    FEC liability – De-designated 4.5 DCF Yield curves
    Market interest rate
    Market foreign exchange rate
    2.2
    FEC liability – Designated 2.2 DCF Yield curves
    Market interest rate
    Market foreign exchange rate
    2,659.7
    Valuation technique Description of valuation technique
    Net asset value (NAV) Net asset value is used as a valuation technique where the underlying assets and liabilities have been assessed to represent the fair value of the investment. Due to the nature of the investment, specifically the significant composition of liquid assets and liabilities, the net asset value is seen to be the most appropriate representation of fair value.
    Discounted cash flow (DCF) The DCF method involves the projection of a series of cash flows. To this projected cash flow series, an appropriate, market-derived discount rate is applied to establish the present value of the cash flow stream associated with the item. With regards to assets, the fair value is estimated using explicit assumptions regarding the benefits and liabilities of ownership over the asset’s life including an exit or terminal value. With regards to liabilities, in determining fair value management considers non-performance risk and the Group’s own credit risk. To this end, the Group applies Method 2 of the expected present value technique per IFRS 13 Fair Value Measurement.
    Fair value measurement and valuation techniques for level 2 financial instruments
    Rm Fair value December 2013 Valuation technique Significant inputs Input 2013
    Type of financial instrument
    Financial Assets
    Financial assets at fair value through profit or loss 235.4
    Investment in a trading and logistics structure 117.4 NAV Cash and cash equivalents
    Investment in insurance cell-captive on extended warranties 44.4 NAV Cash and cash equivalents
    Investment in unit trusts
    Insurance fund liabilities
    Investment in insurance cell-captive on premium contributions 55.9 NAV Cash and cash equivalents
    Insurance fund liabilities
    FEC asset – De-designated 17.7 DCF Yield curves
    Market interest rate
    Market foreign exchange rate
    FEC asset – Designated 8.8 DCF Yield curves Market interest rate Market foreign exchange rate
    Loans and receivables 34.9
    Employee share trust loans 34.9 DCF Market interest rate
    Available-for-sale financial assets 12.1
    Listed investments 12.1
    291.2
    Financial liabilities
    Financial liabilities at amortised cost 1,724.8
    Medium-term loan 762.2 DCF Market interest rate
    Medium-term bank loans 876.4 DCF Market interest rate
    Capitalised finance lease 86.2 DCF Market interest rate
    Financial liabilities at fair value through profit or loss 1.9
    FEC liability – De-designated 1.9 DCF Yield curves
    Market interest rate
    Market foreign exchange rate
    FEC liability – Designated 0.8 DCF Yield curves
    Market interest rate
    Market foreign exchange rate
    1,727.5
    Valuation technique Description of valuation technique
    Net asset value (NAV) Net asset value is used as a valuation technique where the underlying assets and liabilities have been assessed to represent the fair value of the investment. Due to the nature of the investment, specifically the significant composition of liquid assets and liabilities, the net asset value is seen to be the most appropriate representation of fair value.
    Discounted cash flow (DCF) The DCF method involves the projection of a series of cash flows. To this projected cash flow series, an appropriate, market-derived discount rate is applied to establish the present value of the cash flow stream associated with the item. With regards to assets, the fair value is estimated using explicit assumptions regarding the benefits and liabilities of ownership over the asset’s life including an exit or terminal value. With regards to liabilities, in determining fair value management considers non-performance risk and the Group’s own credit risk. To this end, the Group applies Method 2 of the expected present value technique per IFRS 13 Fair Value Measurement.
  • + 40. Risk Management
    40. Risk Management
    Capital risk management
    The Group measures its capacity for debt by monitoring net interest bearing debt (including a 5 times multiple of rent) over EBITDAR and EBITDAR divided by net interest and operating lease expense. Provided that these two metrics are within target ranges (agreed with the Group’s Audit Committee and lenders from time to time), the Group is satisfied that it will continue as a going concern while maximising the return to stakeholders through the optimisation of debt and equity balances.
    The capital structure of the Group consists of debt, more specifically medium-term interest-bearing debt and equity attributable to equity holders of the parent, comprising share capital, share premium, other reserves and retained profit (See note 22 and note 23 respectively).
    The targeted level of gearing is determined after consideration of the following key factors :
    - the needs of the Group to fund current and future capital expenditure to achieve its stated production growth target; and
    - the desire of the Group to maintain its gearing within levels considered to be acceptable taking into account potential business opportunities and the position of the Group in the business cycle.
    The targeted level of gearing was adequately managed in the current financial year.
    The Group has medium-term debt facilities that include certain covenants, including:
    - maximum gearing ratio;
    - minimum interest cover; and
    - specified levels of shareholders’ equity.
    The Group’s general banking facility can be analysed as follows:
    Rm December 2014 December 2013
    Available cash reserves  1,483.4  1,588.3
    General banking facility  5,478.3  4,250.0
    Total  6,961.7  5,838.3
    The Group complies with all externally imposed capital requirements relating to loan covenants.
    Classification of financial instruments
    December 2014 Financial instrument Cash flow – hedging instrument Designated at FVTPL Liability at amortised cost Loans and receivables Available-for-sale financial instruments Non-financial instruments
    Rm
    ASSETS
    Non-current assets
    Property, plant and equipment - - - - - -  7,239.2
    Goodwill - - - - - -  2,542.9
    Intangibles assets - - - - - -  415.8
    Investments  135.3 -  125.2 -  1.7  8.4 -
    - Investment in insurance cell-captive on extended warranties  56.1 -  56.1 - - - -
    - Investment in insurance cell-captive on premium contributions  69.0 -  69.0 - - - -
    - Investment in insurance cell-captive on credit life  0.1 -  0.1 - - - -
    - Trencor export partnership  1.7 - - -  1.7 - -
    - Other listed investments  8.4 - - - -  8.4 -
    Other financial assets  22.9 - - -  22.9 -
    - Housing and staff loans  0.4 - - -  0.4 - -
    - Employee share trust loans  22.5 - - -  22.5 - -
    Deferred taxation - - - - - -  662.2
    Current assets
    Other current financial assets  229.3 - - -  229.3 - -
    - Employee share trust loans  15.1 - - -  15.1 - -
    - Property loan  214.2 - - -  214.2 - -
    Inventories - - - - - -  11,228.8
    Trade and other receivables  4,024.5  13.7  29.9 -  3,980.9 -  263.8
    - Trade receivables  2,107.1 - - -  2,107.1 - -
    - Other accounts receivable and prepayments  1,873.8 - - -  1,873.8 -  263.8
    - FEC asset  43.6  13.7  29.9 - - - -
    Taxation - - - - - -  56.3
    Cash on hand and bank balances  2,067.4 - - -  2,067.4 - -
    Non-current assets classified as held for sale - - - - - -  18.0
    Total assets  6,479.4  13.7  155.1 -  6,302.2  8.4  22,427.0
    Non-current liabilities
    Non-current liabilities – interest-bearing  2,133.9 - -  2,133.9 - - -
    - Medium-term loans  600.0 - -  600.0 - - -
    - Medium-term bank loans  1,521.7 - -  1,521.7 - - -
    - Capitalised finance lease  12.2 - -  12.2 - - -
    Non-current liabilities – interest-free  2.1 - -  2.1 - -  924.5
    - Loans to non-controlling interests  2.1 - -  2.1 - - -
    - Other - - - - - -  13.3
    - Operating lease liability - - - - - -  911.2
    Non-current provisions - - - - - -  115.0
    Deferred taxation - - - - - -  61.3
    Current liabilities
    Trade and other payables  17,148.9  2.2  4.5  17,142.2 - -  1,174.6
    - Trade payables  14,841.5 - -  14,841.5 - - -
    - FEC liability  6.7  2.2  4.5 - - - -
    - Rebates and advertising to buying members  129.0 - -  129.0 - - -
    - Shareholders for dividends  10.5 - -  10.5 - - -
    - Interest accrual  32.1 - -  32.1 - - -
    - Amounts due to Walmart  218.3 - -  218.3 - - -
    - Sundry payables and other accruals  1,910.8 - -  1,910.8 - -  1,174.6
    Current provisions and other - - - - - -  195.4
    Other current liabilities  831.2 - -  831.2 - - -
    - Medium-term loans  254.5 - -  254.5 - - -
    - Medium-term bank loans  565.5 - -  565.5 - - -
    - Capitalised finance lease  11.2 - -  11.2 - - -
    Taxation - - - - - -  208.3
    Bank overdrafts  584.0 - -  584.0 - - -
    Total liabilities  20,700.1  2.2  4.5  20,693.4 - -  2,679.1
    December 2013 Financial instrument Held- for-trading Cash flow – hedging instrument Designated at FVTPL Liability at amortised cost Loans and receivables Available-for-sale financial instruments Non-financial instruments
    Rm
    ASSETS
    Non-current assets
    Property, plant and equipment - - - - - - -  5,988.1
    Goodwill - - - - - - -  2,532.0
    Intangibles assets - - - - - - -  396.8
    Investments  231.9  117.4 -  100.3 -  2.1  12.1 -
    - Investment in a trading and logistics structure  117.4  117.4 - - - - - -
    - Investment in insurance cell-captive on extended warranties  44.4 - -  44.4 - - - -
    - Investment in insurance cell-captive on premium contributions  55.9 - -  55.9 - - - -
    - Trencor export partnership  2.1 - - - -  2.1 - -
    - Other listed investments  12.1 - - - - -  12.1 -
    Other financial assets  290.9 - - - -  290.9 - -
    - Housing and staff loans  0.3 - - - -  0.3 - -
    - Employee share trust loans  46.7 - - - -  46.7 - -
    - Finance lease deposit  21.9 - - - -  21.9 - -
    - Property loan  215.0 - - - -  215.0 - -
    - Third party loan  6.8 - - - -  6.8 - -
    - Other loans  0.2 - - - -  0.2 - -
    Deferred taxation - - - - - - -  672.1
    Current assets
    Inventories - - - -  10,115.5
    Trade and other receivables  3,518.4 -  8.8  17.7 -  3,500.7 -  194.1
    - Trade receivables  1,822.8 - - - -  1,822.8 - -
    - Other accounts receivable and prepayments  1,677.9 - - - -  1,677.9 -  194.1
    - FEC asset  17.7 -  8.8  17.7 - - - -
    Taxation - - - - - - -  12.0
    Cash on hand and bank balances  2,196.1 - - - -  2,196.1 - -
    Total assets  6,237.3  117.4  8.8  118.0 -  5,989.8  12.1  19,910.6
    Non-current liabilities
    Non-current liabilities – interest-bearing  1,178.7 - - -  1,178.7 - - -
    - Medium-term loans  600.0 - - -  600.0 - - -
    - Medium-term bank loans  562.1 - - -  562.1 - - -
    - Capitalised finance lease  16.6 - - -  16.6 - - -
    Non-current liabilities – interest-free  3.0 - - -  3.0 - -  835.9
    - Loans to non-controlling interests  3.0 - - -  3.0 - - -
    - Operating lease liability - - - - - - -  835.7
    - Other - - - - - - -  0.2
    Non-current provisions - - - - - - -  102.2
    Deferred taxation - - - - - - -  86.6
    Current liabilities
    Trade and other payables  15,773.4 -  0.8  1.9  15,770.7 - -  1,000.9
    - Trade payables  13,702.5 - - -  13,702.5 - - -
    - FEC liability  2.7 -  0.8  1.9 - - - -
    - Rebates and advertising to buying members  92.4 - - -  92.4 - - -
    - Shareholders for dividends  12.0 - - -  12.0 - - -
    - Interest accrual  15.3 - - -  15.3 - - -
    - Amounts due to Walmart  136.3 - - -  136.3 - - -
    - Promissory notes  104.5 - - -  104.5 - - -
    - Sundry payables and other accruals  1,707.7 - - -  1,707.7 - -  1,000.9
    Current provisions and other  92.9 - - -  92.9 - -  234.1
    Other current liabilities  531.6 - - -  531.6 - - -
    - Medium-term loans  157.3 - - -  157.3 - - -
    - Medium-term bank loans  329.6 - - -  329.6 - - -
    - Capitalised finance lease  44.7 - - -  44.7 - - -
    Taxation - - - - - - -  331.3
    Bank overdrafts  607.8 - - -  607.8 - - -
    Total liabilities  18,187.4 -  0.8  1.9  18,184.7 - -  2,591.0
    Financial risk management
    The Group does not trade in financial instruments, but in the ordinary course of business operations, the Group is exposed to a variety of financial risks arising from the use of financial instruments. These risks include:
    - market risk (comprising interest rate risk and currency risk);
    - liquidity risk; and
    - credit risk.
    The Group has developed a comprehensive risk management process to facilitate, control and monitor these risks. This process includes formal documentation of policies, including limits, controls and reporting structures. The Executive Committee is responsible for risk management activities within the Group.
    Market risk management
    Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The market risks that the Group is primarily exposed to include interest rate risk and currency risk. Market risk is managed by identifying and quantifying risks on the basis of current and future expectations and ensuring that all trading occurs within defined parameters. This involves the review and implementation of methodologies to reduce risk exposure. The reporting on the state of the risk and risk practices to the Executive Committee of the Group is part of this process. There has been no change to the Group’s exposure to market risk or the manner in which it manages and measures the risk since the prior financial year.
    Interest rate risk management
    During the year, the surplus cash position of the Group remained fairly constant with that of the prior year. The size of the Group’s position, be it either surplus cash or borrowings, exposes it to interest rate risk. The interest-bearing loan funding requirements and the investment of surplus cash funds are managed by the Group through its own commercial bank facilities.
    The carrying amount of the Group’s financial assets and liabilities at reporting date that are subject to interest rate risk are as follows :
    December 2014 Subject to interest rate movement Non-interest bearing Total
    Rm Fixed Floating
    ASSETS
    Financial assets
    Investments -  1.7  133.6  135.3
    - Investment in insurance cell-captive on extended warranties - -  56.1  56.1
    - Investment in insurance cell-captive on premium contributions - -  69.0  69.0
    - Investment in insurance cell-captive on credit life - -  0.1  0.1
    - Trencor export partnership -  1.7 -  1.7
    - Other listed investments - -  8.4  8.4
    Other financial assets  0.4 -  22.5  22.9
    - Housing and staff loans  0.4 - -  0.4
    - Employee share trust loans - -  22.5  22.5
    Other current financial assets  214.2 -  15.1  229.3
    - Employee share trust loans - -  15.1  15.1
    - Property loan  214.2 - -  214.2
    Trade and other receivables -  14.2  4,010.3  4,024.5
    - Trade receivables - -  2,107.1  2,107.1
    - Other accounts receivable and prepayments -  14.2  1,859.6  1,873.8
    - FEC asset - -  43.6  43.6
    Cash on hand and bank balances  7.6  1,968.0  91.8  2,067.4
    Total financial assets  222.2  1,983.9  4,273.3  6,479.4
    Financial liabilities
    Non-current liabilities – interest-bearing  2,121.7  12.2 -  2,133.9
    - Medium-term loans  600.0 - -  600.0
    - Medium-term bank loans  1,521.7 - -  1,521.7
    - Capitalised finance lease -  12.2 -  12.2
    Non-current liabilities – interest-free - -  2.1  2.1
    - Loans to non-controlling interests - -  2.1  2.1
    Trade and other payables - -  17,148.9  17,148.9
    - Trade payables - -  14,841.5  14,841.5
    - FEC liability - -  6.7  6.7
    - Rebates and advertising to buying members - -  129.0  129.0
    - Shareholders for dividends - -  10.5  10.5
    - Interest accrual - -  32.1  32.1
    - Amounts due to Walmart - -  218.3  218.3
    - Sundry payables and other accruals - -  1,910.8  1,910.8
    Other current liabilities  565.5  265.7 -  831.2
    - Medium-term loans -  254.5 -  254.5
    - Medium-term bank loans  565.5 - -  565.5
    - Capitalised finance lease -  11.2 -  11.2
    Bank overdrafts -  584.0 -  584.0
    Total financial liabilities  2,687.2  861.9  17,151.0  20,700.1
    December 2013 Subject to interest rate movement Non-interest bearing Total
    Rm Fixed Floating
    ASSETS
    Financial assets
    Investments -  2.1  112.4  114.5
    - Investment in a trading and logistics structure - - - -
    - Investment in insurance cell-captive on extended warranties - -  44.4  44.4
    - Investment in insurance cell-captive on premium contributions - -  55.9  55.9
    - Trencor export partnership -  2.1 -  2.1
    - Other listed investments - -  12.1  12.1
    Other financial assets  237.2  6.8  46.9  290.9
    - Housing and staff loans  0.3 - -  0.3
    - Employee share trust loans - -  46.7  46.7
    - Finance lease deposit  21.9 - -  21.9
    - Property loan  215.0 - -  215.0
    - Third party loan -  6.8 -  6.8
    - Other loans - -  0.2  0.2
    Trade and other receivables - -  3,518.4  3,518.4
    - Trade receivables - -  1,822.8  1,822.8
    - Other accounts receivable and prepayments - -  1,677.9  1,677.9
    - FEC asset - -  17.7  17.7
    Cash on hand and bank balances -  2,196.1 -  2,196.1
    Total financial assets  237.2  2,205.0  3,677.7  6,119.9
    Financial liabilities
    Non-current liabilities – interest-bearing  1,178.7 - -  1,178.7
    - Medium-term loans  600.0 - -  600.0
    - Medium-term bank loans  562.1 - -  562.1
    - Capitalised finance lease  16.6 - -  16.6
    Non-current liabilities – interest-free - -  3.0  3.0
    - Loans to non-controlling interests - -  3.0  3.0
    Trade and other payables - -  15,773.4  15,773.4
    - Trade payables - -  13,702.5  13,702.5
    - FEC liability - -  2.7  2.7
    - Rebates and advertising to buying members - -  92.4  92.4
    - Shareholders for dividends - -  12.0  12.0
    - Interest accrual - -  15.3  15.3
    - Amounts due to Walmart - -  136.3  136.3
    - Promissory note - -  104.5  104.5
    - Sundry payables and other accruals - -  1,707.7  1,707.7
    Other current liabilities  374.3  157.3 -  531.6
    - Medium-term loans -  157.3 -  157.3
    - Medium-term bank loans  329.6 - -  329.6
    - Capitalised finance lease  44.7 - -  44.7
    Bank overdrafts -  607.8 -  607.8
    Total financial liabilities  1,553.0  765.1  15,776.4  18,094.5
    Interest rate sensitivity
    The Group is sensitive to the movements in the SA Prime interest rate. The rates of sensitivity represents management’s assessment of the possible change in interest rates. The average interest rate for the Group for the year was 7.20% (December 2013: 6.00%), and the variable interest paid was R201.6 million (December 2013: R188.1 million). If the SA Prime interest rate increased and decreased by 100 average basis points (December 2013: increased and decreased by 150 average basis points) at year-end, the net finance costs for the year would have decreased and increased by R13.3 million respectively (December 2013: decreased and increased by R47.7 million respectively). Although the Group is exposed to the US Libor rate, this exposure is not considered to be significant.
    Currency risk management
    All foreign-denominated trading liabilities are covered by forward exchange contracts. Foreign-denominated assets and other foreign-denominated liabilities are not covered by forward exchange contracts.
    The carrying amount of the Group’s foreign currency denominated monetary assets at reporting date is as follows :
    December 2014 South African Rand USD Euro Other1 Total
    Rm
    Investments  127.8 - -  7.5  135.3
    Trade and other receivables and other financial assets  4,006.4  43.4  0.2  203.8  4,253.8
    Cash on hand and bank balances  1,378.2  95.6  18.6  575.1  2,067.5
    Total  5,512.4  139.0  18.8  786.4  6,456.6
    December 2013 South African Rand USD Euro Other1 Total
    Rm
    Investments  103.2  117.4 -  11.3  231.9
    Trade receivables  3,339.6 - -  178.8  3,518.4
    Cash on hand and bank balances  1,109.9  (79.7)  14.4  543.7  1,588.3
    Total  4,552.7  37.7  14.4  733.8  5,338.6
    1‘Other’ comprise the currencies per table below.
    Foreign currency sensitivity
    The USD is the primary currency to which the Group is exposed.
    For further information regarding the forex movements for the year, refer to note 7.
    The table below indicates the Group’s sensitivity at year-end to movements in the relevant foreign currencies on monetary items, excluding forward exchange contracts. The rates of sensitivity are the rates used when reporting the currency risk to the Executive Committee of the Group and represents management’s assessment of the possible change in reporting foreign currency exchange rates. The rate sensitivity remained constant in the current financial year at 10% in light of the significant devaluation of the Rand in the current year. For each 10% increase, profit or loss is increased and the financial asset is increased, for each 10% decrease, profit or loss is decreased and the financial asset is decreased.
    December 2014 Spot rate 10% increase 10% decrease
    Currency Rm Rm
    USD  11.5995  1.8  (1.8)
    Pound Sterling  18.0449  0.0  (0.0)
    Euro  14.1944  0.2  (0.2)
    Botswana Pula  1.2157  1.1  (1.1)
    Ghanaian New Cedi  3.6107  1.6  (1.6)
    Kenyan Shilling  0.1281  0.0  (0.0)
    Malawian Kwacha  0.0249  1.9  (1.9)
    Mozambican New Metical  0.3458  2.0  (2.0)
    Nigerian Naira  0.0634  0.5  (0.5)
    Tanzanian Shilling  0.0068  0.1  (0.1)
    Uganda Shilling  0.0042  0.1  (0.1)
    Zambian Kwacha  0.1281  0.2  (0.2)
    December 2013  Spot rate 10% increase 10% decrease
    Currency Rm Rm
    USD  10.5372  2.6  (2.6)
    Pound Sterling  17.3686  0.2  (0.2)
    Euro  14.4703  0.1  (0.1)
    Botswana Pula  1.2012  0.7  (0.7)
    Ghanaian New Cedi  4.4177  0.6  (0.6)
    Malawian Kwacha  0.0255  1.7  (1.7)
    Mozambican New Metical  0.3508  1.8  (1.8)
    Nigerian Naira  0.0653  2.6  (2.6)
    Tanzanian Shilling  0.0066  2.1  (2.1)
    Uganda Shilling  0.0042  3.1  (3.1)
    Zambian Kwacha  1.8966  0.2  (0.2)
    Forward foreign exchange contracts
    Forward exchange contracts are entered into to manage exposure to fluctuations in foreign currency exchange rates on specific trading transactions. The Group’s policy is to enter into forward contracts for all committed foreign currency purchases to hedge the Group’s exposure to variability in cash flows. For more information refer to note 7. There are no other hedges in the Group.
    December 2014 Foreign currency Fair value adjustment Average exchange rate
    At year-end, the open forward exchange contracts were as follows: (millions) Rm
    USD  68.9  36.7  11.3
    Sterling  0.2 -  18.1
    Euro  0.6  0.2  14.2
    Total  36.9
    December 2013 Foreign currency Fair value adjustment Average exchange rate
    At year-end, the open forward exchange contracts were as follows: (millions) Rm
    USD  70.3  23.1  10.6
    Sterling  0.4  0.2  14.6
    Euro  0.4  0.6  20.4
    Total  23.9
    The fair value adjustment represents the balance at the end of the current financial year and is included in Trade and other receivables (FEC asset balance) and included in Trade and other payables (FEC liability balance). As the average duration is three months, these FEC balances would be derecognised and the resulting impact would be accounted for in cost of sales the Income Statement within the next financial year for both periods under review.
    During the December 2014 financial year an amount of R1.0 million (December 2013: R5.1 million) relating to the FEC hedges was recognised in Other Comprehensive Income. For more information on the movement in the hedging reserve refer to note 23.
    Forward foreign exchange contracts sensitivity
    The following table indicates the Group’s sensitivity of the outstanding forward exchange contracts at the reporting date to movements in the USDs. The USD is the primary currency in which the Group has entered into forward foreign exchange contracts. The rates of sensitivity are the rates used when reporting the currency risk to the Executive Committee of the Group and represents management’s assessment of the possible change in foreign currency exchange rates. The Rand/USD year-end rate was R11.60 (December 2013: R10.54 ).
    December 2014 USD USD
    Rm 5% increase 5% decrease
    Profit/(loss)  12.3  (12.3)
    Derivative financial assets/(liabilities)  13.8  (13.8)
    Equity  1.5  (1.5)
    December 2013 USD USD
    Rm 5% increase 5% decrease
    Profit/(loss)  19.7  (19.7)
    Derivative financial assets/(liabilities)  27.1  (27.1)
    Equity  7.4  (7.4)
    Liquidity risk management
    Liquidity risk is the risk that the Group will be unable to meet a financial commitment in any location or currency. This risk is minimised through the holding of cash balances and sufficient available borrowing facilities (refer to note 24). In addition, detailed cash flow forecasts are regularly prepared and reviewed so that the cash needs of the Group are managed according to its requirements.
    The following table details the Group’s contractual maturity for its financial liabilities. The table has been compiled based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to repay the liability. The cash flows include both the principal and estimated interest payments.
    December 2014 Repayable Repayable Total
    Rm within 1 year 1 – 5 years
    Financial liabilities
    Non-current and current liabilities – interest-bearing  1,025.4  2,445.5  3,470.9
    - Medium-term loans  299.3  703.2  1,002.5
    - Medium-term bank loans  714.1  1,729.5  2,443.6
    - Capitalised finance lease  12.0  12.8  24.8
    Non-current liabilities – interest-free -  2.1  2.1
    - Loans to non-controlling interests -  2.1  2.1
    Trade and other payables  17,148.9 -  17,148.9
    - Trade payables  14,841.5 -  14,841.5
    - FEC liability  6.7 -  6.7
    - Sundry payables and other accruals  2,300.7 -  2,300.7
    Bank overdrafts  584.0 -  584.0
    Total undiscounted cash flows of the Group’s financial liabilities  18,758.3  2,447.6  21,205.9
    Less: Future finance charges  (505.8) *
    Total financial liabilities  20,700.1
    Included in future finance charges is R1.4 million that relates to finance leases. Finance charges of R0.9 million are repayable in year 1 and R0.5 million in years 1 – 5, respectively.
    December 2013 Repayable Repayable Repayable Total
    Rm within 1 year 1 – 5 years after 5 years
    Financial liabilities
    Non-current and current liabilities – interest-bearing  647.2  1,379.9  2,027.1
    - Medium-term loans  214.0  748.0 -  962.0
    - Medium-term bank loans  384.2  614.0 -  998.2
    - Capitalised finance lease  49.0  17.9 -  66.9
    Non-current liabilities – interest-free  1.9 -  1.1  3.0
    - Loans to non-controlling interests  1.9 -  1.1  3.0
    Trade and other payables  15,773.4 - -  15,773.4
    - Trade payables  13,702.5 - -  13,702.5
    - FEC liability  2.7 - -  2.7
    - Sundry payables and other accruals  2,068.2 - -  2,068.2
    Bank overdrafts  607.8 - -  607.8
    Total undiscounted cash flows of the Group’s financial liabilities  17,030.3  1,379.9  1.1  18,411.3
    Less: Future finance charges  (316.9)
    Total financial liabilities  18,094.4
    Included in future finance charges is R5.6 million that relates to finance leases. Finance charges of R4.3 million are repayable in year 1 and R1.3 million in years 1 – 5, respectively.
    The effect of discounting on the current medium-term loan amounts are deemed immaterial.
    The average duration of the FEC’s are three months, so they would fall in the repayable within one year for both periods under review. The FEC’s are settled on a net basis.
    Credit risk management
    The carrying amount of the financial assets represents the Group’s maximum exposure to credit risk without taking into consideration any collateral provided. Other than R1.7 million (December 2013:R2.1 million) relating to the Trencor Partnership that is considered to be of medium credit risk, all other loans and receivables are considered to be of low credit risk for the current and prior financial year.
    Potential areas of credit risk include trade receivables and short-term loans and cash investments. Credit risk arises from the risk that a counterparty may default or not meet its obligations timeously. Trade accounts receivable consist primarily of a large, widespread customer base. Group companies regularly monitor the financial position of their customers. Where considered appropriate, credit guarantee insurance is used. The granting of credit is controlled by application and account limits. Provision is made for both specific and general portfolio impairments, and at the year-end management did not consider there to be any material credit risk exposure that was not already covered by credit guarantee insurance or portfolio impairment provisions. The carrying amounts of the financial assets above represent the Group’s maximum credit risk exposure. Additional information relating to trade and other receivables can be found in note 20.
    At year end no loans and receivables were pledged as security. At year end, security with a fair value of R30.5 million is held by the Group. During the current year the Group did not take possession of security it held over its loans and receivables.

     

  • + 41. Segmental reporting
    41. Segmental reporting
    Operating segments
    The Group is organised into four divisions for operational and management purposes, being Massdiscounters, Masswarehouse, Massbuild and Masscash. Massmart reports its operating segment information on this basis. The principal offering for each division is as follows:
    Massdiscounters – general merchandise discounter and food retailer
    Masswarehouse – warehouse club trading in food, general merchandise and liquor
    Massbuild – home improvement retailer and building materials supplier
    Masscash – food wholesaler, retailer and buying association
    No single customer represented more than 10% of any of one of the divisions’ revenue in the current and prior financial year.
    Rm Total Other Massdiscounters Masswarehouse Massbuild Masscash
    For the 52 week year ended December 2014
    Sales  78,173.2 -  17,955.2  21,554.8  10,822.8  27,840.4
    Operating profit before foreign exchange movements and interest  2,015.9  (30.6)  180.7  1,044.3  537.6  283.9
    Trading profit before interest and taxation  2,061.7 -  180.7  1,044.3  537.6  299.1
    Net foreign exchange (loss)/ gain  (49.8)  (48.4)  (5.8) -  2.5  1.9
    Net finance (costs)/income  (345.3)  (211.0)  (29.4)  44.4  (63.2)  (86.1)
    Operating profit before taxation  1,620.8  (290.0)  145.5  1,088.7  476.9  199.7
    Trading profit before taxation  1,716.4  (211.0)  151.3  1,088.7  474.4  213.0
    Inventory  11,228.8  30.5  3,984.9  2,845.7  1,785.6  2,582.1
    Total assets  28,906.4  (325.6)  7,985.5  7,689.0  5,027.7  8,529.8
    Non-current asset held for sale  18.0  15.0 - -  3.0 -
    Total liabilities  23,379.2  (4,366.5)  7,820.9  7,312.1  4,730.6  7,882.0
    Net capital expenditure  2,147.0  967.8  542.2  70.3  296.8  269.9
    Depreciation and amortisation  846.6  43.2  293.1  171.6  154.0  184.7
    Impairment losses  24.6  9.4 - - -  15.2
    Non-cash items other than depreciation and impairment  146.1  (16.2)  112.0  46.9  12.6  (9.2)
    Cash flow from operating activities  745.6  (446.2)  473.4  (103.8)  707.4  114.8
    Cash flow from investing activities  (2,146.5)  (980.8)  (545.0)  (70.1)  (296.8)  (253.8)
    Cash flow from financing activities  1,349.7  1,163.0  112.9  161.8  (369.3)  281.3
    Inventory days  64.4 -  107.6  57.1  84.6  37.1
    Number of stores  392 -  153  19  100  120
    Trading area (m2)  1,539,295 -  506,188  195,794  436,538  400,775
    Trading area (m2) increase on December 2013 3.9% 0.0% 6.5% 0.0% 6.3% 0.3%
    Average trading area per store (m2)  3,927 -  3,308  10,305  4,365  3,340
    Distribution centre space (m2)  328,175 -  178,488  51,300  61,733  36,654
    Distribution centre space (m2) increase on December 2013 1.3% - - - - 13.5%
    For the 53 week year ended December 2013
    Sales  72,263.4 -  16,740.6  19,675.1  9,583.6  26,264.1
    Operating profit before interest and taxation  2,152.5  (37.9)  449.0  988.1  505.3  248.0
    Trading profit before interest and taxation  2,145.4 -  366.6  990.2  507.6  281.0
    Net finance (costs)/income  (255.1)  (349.6)  34.0  38.5  29.2  (7.2)
    Operating profit before taxation  1,897.4  (387.5)  483.0  1,026.6  534.5  240.8
    Trading profit before taxation  2,239.9 -  400.6  1,028.7  536.8  273.8
    Inventory  10,115.5  12.6  3,647.3  2,618.2  1,597.0  2,240.4
    Total assets  26,147.9  (2,614.7)  7,718.3  7,166.8  5,212.0  8,665.5
    Total liabilities  20,778.3  (6,027.7)  7,522.2  6,587.8  4,857.4  7,838.6
    Net capital expenditure  2,061.4  759.0  489.7  344.8  275.1  192.8
    Depreciation and amortisation  731.1  33.9  256.4  145.4  121.2  174.2
    Impairment losses  41.6 - -  2.1 -  39.5
    Non-cash items other than depreciation and impairment  138.0  458.0  23.3  (352.2)  13.6  (4.7)
    Cash flow from operating activities  1,914.5  399.4  990.1  273.9  356.9  (105.8)
    Cash flow from investing activities  (2,306.3)  (1,424.0)  (490.6)  (385.2)  (275.2)  268.7
    Cash flow from financing activities  293.0  819.4  (621.6)  209.3  1.4  (115.5)
    Inventory days  64 -  109  59  92  35
    Number of stores  376 -  143  19  92  122
    Trading area (m2)  1,481,308 -  475,331  195,794  410,546  399,637
    Trading area (m2) increase on December 2012 (excluding re-measurements) 4.8% 0.0% 7.7% 9.3% 3.7% 0.6%
    Average trading area per store (m2)  3,940 -  3,324  10,305  4,462  3,276
    Distribution centre space (m2)  323,813 -  178,488  51,300  61,733  32,292
    Distribution centre space (m2) increase on December 2012 11.4% - - - 108.4% 3.2%
    The other column includes consolidation entries.
    All intercompany transactions have been eliminated in the above results.
    Additional information can be found in ‘Our Customers’ and the ‘Chief Financial Officer’s Review’.
    Trading profit before taxation is earnings before corporate net interest, asset impairments, BEE transaction IFRS 2 charges, foreign exchange movements, loss on disposal of business, and assets classified as held for sale.
    Net capital expenditure is defined as capital expenditure less disposal proceeds.
    Geographic segments
    The Group’s four divisions operate in two principal geographical areas – South Africa and the rest of Africa.
    December 2014 December 2013
    52 weeks 53 weeks
    Total South Africa Rest of Africa Total South Africa Rest of Africa
    Sales  78,173.2  71,822.4  6,350.8  72,263.4  66,676.1  5,587.3
    Segment assets (Total)  21,764.8  20,226.3  1,538.5  19,238.5  18,320.0  918.5
    Segment assets (Non-current)  10,197.9  9,576.5  621.4  8,916.9  8,418.7  498.2
    Net capital expenditure  2,147.0  1,936.6  210.4  2,061.4  1,891.9  169.5
    All intercompany transactions have been eliminated in the above results.
    Segment assets excludes financial instruments and deferred taxation and reflects the geographic location of the Group’s assets.
    Net capital expenditure is defined as capital expenditure less disposal proceeds.

     

  • + 42. Value added statement
    42. Value added statement
         
    December 2014 December 2013
    52 weeks 53 weeks
    Rm % Rm %
    Sales, royalties, franchise fees, rentals and management and administration fees (inclusive of VAT)  86,779.9  82,650.9
    Cost of sales  (63,610.8)  (58,926.4)
    Interest and investment income  66.3  40.7
    Net costs of services and other operating expenses  (5,771.1)  (5,279.3)
    Value added  17,464.3  18,485.9
    Applied as follows :
    To employees as salaries, wages and other benefits  6,109.0  35.1  5,423.5  29.4
    To Government as taxation  8,969.0  51.4  10,705.3  57.9
    To shareholders as dividends  914.0  5.2  913.4  4.9
    To lenders as interest  386.8  2.2  283.8  1.5
    Depreciation and amortisation  846.6  4.8  731.1  4.0
    Non-controlling interests  57.6  0.3  59.1  0.3
    CSI  15.4  0.1  18.0  0.3
    Net earnings retained  165.9  0.9  351.7  1.7
     17,464.3  100.0  18,485.9  100.0
  • + 43. Events after the reporting date
    43. Events after the reporting date
           
    The Group’s Financial Director, Ilan Zwarenstein, effectively resigned as the Group Financial Director, from 12 March 2015. Johannes van Lierop has been appointed the new Chief Financial Officer of Massmart, with effect from 12 March 2015. Additional information can be found in ‘Our Business’.

    During February 2015 the Makro Amanzimtoti property was transferred and the property loan was realised.
  • + 44. Shareholder analysis
    44. Shareholder analysis
    The following analysis of shareholders was extracted from the shareholders register:
    Number of holders % Number of shares %
    Shareholder spread
    1 – 1,000 shares  4,232  85.0  841,823  0.4
    1,001 – 10,000 shares  521  10.5  1,581,549  0.7
    10,001 – 100,000 shares  146  2.9  4,709,637  2.2
    100,001 – 1,000,000 shares  53  1.1  17,420,328  8.0
    1,000,001 shares and over  24  0.5  192,564,735  88.7
     4,976  100.0  217,118,072  100.0
    Public/non-public shareholders
    Non-public shareholders:
    Walmart subsidiary: Main Street 830 (Pty) Ltd  1 -  113,859,293  52.4
    Directors and Group Executives of the Company  4  0.1  838,967  0.4
    Share trusts  1 -  194,765  0.1
    Public shareholders  4,970  99.9  102,225,047  47.1
     4,976  100.0  217,118,072  100.0
    Number of holder % Number of shares %
    Distribution of shareholders
    Walmart subsidiary: Main Street 830 (Pty) Ltd  1 -  113,859,293  52.4
    Unit Trusts/Mutual Funds  77  1.5  48,739,296  22.4
    Pension Funds  75  1.5  29,180,660  13.4
    Other Managed Funds  49  1.0  8,446,937  3.9
    Sovereign Wealth  13  0.3  6,023,147  2.8
    Custodians  15  0.3  4,193,454  1.9
    Private Investors  16  0.3  2,026,985  0.9
    Hedge Fund  1 -  1,431,489  0.7
    Charities  9  0.2  1,378,003  0.6
    Insurance Companies  5  0.1  866,537  0.4
    Exchange-Traded Fund Total  3  0.1  473,338  0.2
    BEE  1 -  100,271 -
    Investment Trusts  2 -  86,936 -
    Local Authorities  2 -  87,889 -
    American Depositary Receipt  2 -  95,239 -
    University  1 -  70,220 -
    Remainder  4,704  94.7  58,378  0.4
     4,976  100.0  217,118,072  100.0
    Custodians and managers holding 3% or more
    The following custodians and managers held beneficially, directly or indirectly, equal to or in excess of 3% of the Company’s shares:
    Aberdeen Asset Management Group  9,381,191  4.3
    Public Investment Corporation  15,724,370  7.2
    Walmart subsidiary: Main Street 830 (Pty) Ltd  113,859,293  52.4