Integrated annual report
for 52 weeks ended 27 December 2015
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Financial Capital

For the year ended December 2015 Massmart’s total sales of R84.7 million grew by 8.4% over the prior year, while comparable stores’ sales grew by 6.7%. Group operating profit, excluding foreign exchange movements and interest, grew by 14.1% to R2.3 billion. Headline earnings before foreign exchange movements (taxed) increased by 7.7%.
In 2015…
What we did well:
We maintained or grew market share in each major category in which we trade.

We increased our Africa sales component from 8.1% to 8.4% of total Group sales and grew our African sales in ZAR by 12.6% and in constant local currencies by 13.8%.

Despite an increased asset base as a result of our key property acquisitions in recent years and new store roll-outs, comparable expenses were well controlled at 6.0%, below comparable sales of 6.7%.
Our stringent application of our philosophy “we operate for less” resulted in operating profit before interest and foreign exchange movements (taxed) increasing by 14.1%, up from R2,015.9 million in 2014.

We continued our measured approach to store roll-outs as we expanded our store footprint, opening 21 stores during the year, five of which were in Africa.

In line with our strategic priority of growth in ecommerce, we maintained our focused investment in IT infrastructure.
The improvements we made:
We improved our funding gap by increasing our creditor days, reducing our inventory days and maintaining our debtor days.

As a result of our recent key property acquisitions, we were able to control the growth in our occupancy costs at 7.0% with a comparable growth of 4.4%.
The challenges we’re facing:
As our African footprint has expanded, so too has our exposure to foreign currency fluctuations and in response, we are actively managing the value and currency of our foreign-denominated loan balances, where practicable, and we take out foreign exchange contracts on selected exposures.

Our increased level of gearing, coupled with recent interest rates hikes, has increased our net finance costs by 37.6%.