• + 17. Other financial assets
                         
    Rm               December 2015   December 2014
                         
    Employee Share Trust Loans to the Executive Directors and other employees of Massmart Holdings Limited:        
    Balance at the beginning of the year    37.6    46.7
    Advanced during the year    0.5    1.2
    Repayments    (19.2)    (10.3)
                     18.9    37.6
    Less: included in other current financial assets      (15.1)
    Balance at the end of the year    18.9    22.5
                         
    Other loans:        
    Housing and staff loans    0.7    0.4
                         
                     19.6    22.9
                         
    For more information on fair value disclosure, refer to note 39.
    For more information on the Group’s credit risk management, refer to note 40.
    All housing and staff loans bear interest at various fixed rates below the prime interest rate. The Employee Share Trust Loans to Executive Directors and other employees of the Company are non-interest bearing and are secured by the underlying ordinary shares in Massmart Holdings Limited. The loans are repayable 10 years after the grant date. Recourse is not limited to these shares and should shares sold to repay these loans be insufficient to recover the balance outstanding, the unrecovered portion remains a debt due and payable. 277,145 (December 2014: 619,443) shares with a market value of R28,601,364 (December 2014: R89,156,431) have been pledged.
    Details of the Employee Share Trust loans to the Executive Directors and members of the Executive Committee of the Company:    
                         
        Pattison,   Hayward,   Other employees        
        GM   GRC     Total    
        Rm   Rm   Rm   Rm    
                         
                         
    December 2015                    
                         
    Balance at the beginning of the year  15.1    13.0    9.5    37.6    
    Advanced during the year    0.3    0.2    0.5    
    Repayments  (15.1)    (0.6)    (3.5)    (19.2)    
    Balance at the end of the year    12.7    6.2    18.9    
                         
    December 2014                    
                         
    Balance at the beginning of the year  23.1    13.4    10.2    46.7    
    Advanced during the year  0.6    0.3    0.3    1.2    
    Repayments  (8.6)    (0.7)    (1.0)    (10.3)    
    Balance at the end of the year  15.1    13.0    9.5    37.6    
                         
  • + 17.1. Other current financial assets
                   
                       
                       
    Rm             December 2015   December 2014
    Employee Share Trust Loans to the Executive Directors and members of the Executive Committee of Massmart Holdings Limited      15.1
    Property loan      214.2
                     229.3
                       
    For more information on fair value disclosure, refer to note 39.
    For more information on the Group’s credit risk management, refer to note 40.
    The Employee Share Trust Loans to Executive Directors and members of the Executive Committee of the Company are non-interest bearing and are secured by the underlying ordinary shares in Massmart Holdings Limited. The current portion in the prior financial year reflected above relates to Grant Pattison’s loan that was transferred to current upon his resignation. The long-term portion of these loans, have been accounted for in note 17.
    The property loan was realised in the current financial year when the Makro store to which it related transfered to the Group in February 2015. The property loan accrued interest at a fixed rate of 9.2% (December 2014: 9.2%) and was secured by a mortgage bond.
  • + 18. Deferred taxation
                               
    Rm                     December 2015   December 2014
                               
    The movements during the year are analysed as follows:            
    Net asset at the beginning of the year    600.9    585.5
    Credit to the Income Statement (including foreign exchange movements)    76.9    26.0
    Credit to Other comprehensive income    (2.1)    0.4
    Acquisition of subsidiaries (note 4)      (7.2)
    Credit to the Statement of Changes in Equity (note 23)      (3.8)
    Net asset at the end of the year    675.7    600.9
                               
    Deferred taxation balances are presented in the Statement of Financial Position as follows:        
    Deferred taxation assets    749.2    662.2
    Deferred taxation liabilities    (73.5)    (61.3)
                           675.7    600.9
                               
      Opening balance   Credit/(charge) to the Income Statement   Credit/ (charge) to Other comprehensive income   Credit to the Statement of Changes in Equity   Acquisition of subsidiaries   Foreign exchange movements   Closing balance
    Rm            
                               
    December 2015                          
    Temporary differences                          
    Trademarks  0.8              0.8
    Assessed loss unutilised  257.1    52.5          (4.2)    305.4
    Export partnerships  (1.8)    0.4            (1.4)
    Debtors provisions  24.0    1.3          (0.1)    25.2
    Prepayments  (24.8)    (1.6)          0.1    (26.3)
    Short-term provisions  225.8    26.7          (1.2)    251.3
    Property, plant and equipment  (240.0)    (67.2)          (5.3)    (312.5)
    Finance leases  (4.3)    4.4            0.1
    Long-term provisions  77.2    (8.7)            68.5
    Income not accrued    (4.3)            (4.3)
    Deferred income  73.8    (6.5)          (1.1)    66.2
    Operating lease adjustment  280.5    38.3          (0.7)    318.1
    Other temporary differences1  (67.4)    45.7    (2.1)        8.4    (15.4)
    Total  600.9    81.0    (2.1)        (4.1)    675.7
                               
                               
      Opening balance   Credit/(charge) to the Income Statement   Credit to Other Comprehensive Income   Credit to the Statement of Changes in Equity   Acquisition of subsidiaries   Foreign exchange movements   Closing balance
    Rm            
                               
    December 2014                          
    Temporary differences                          
    Trademarks  0.8              0.8
    Assessed loss unutilised  273.3    (16.3)          0.1    257.1
    Export partnerships  (2.3)    0.5            (1.8)
    Debtors provisions  21.3    2.8          (0.1)    24.0
    Prepayments  (17.6)    (7.2)            (24.8)
    Short-term provisions  173.0    51.2        1.8    (0.2)    225.8
    Property, plant and equipment  (191.3)    (39.9)        (9.0)    0.2    (240.0)
    Finance leases  (6.1)    1.8            (4.3)
    Long-term provisions  80.4    (3.2)            77.2
    Income not accrued  (1.0)    1.0          
    Deferred income  50.8    23.0            73.8
    Operating lease adjustment  254.4    26.1            280.5
    Other temporary differences1  (50.2)    (14.2)    0.4    (3.8)      0.4    (67.4)
    Total  585.5    25.6    0.4    (3.8)    (7.2)    0.4    600.9
                               
    1‘Other temporary differences’ consists of deferred tax raised on lease premiums, share- based payments, foreign exchange movements, S24C allowance amongst other insignificant items.
    Deferred tax assets have not been recognised for assessed losses to the value of R582.3 million (December 2014: R411.4 million). Had a deferred tax asset been raised, the year end asset value would have increased by R159.7 million (December 2014: R112.7 million).
    The Group offsets tax assets and liabilities if, and only if, it has a legally enforceable right to set off current tax assets and current tax liabilities, and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the same legal entity.
  • + 19. Inventories
       
    Rm   December 2015   December 2014
             
    Food        
    Inventory at cost    3,922.9    3,610.0
    Provisions    (298.7)    (278.4)
         3,624.2    3,331.6
             
    Liquor        
    Inventory at cost    1,136.2    1,037.5
    Provisions    (49.3)    (44.5)
         1,086.9    993.0
             
    General Merchandise        
    Inventory at cost    5,787.6    5,517.1
    Provisions    (445.5)    (425.4)
         5,342.1    5,091.7
             
    Home Improvement        
    Inventory at cost    2,133.0    2,062.2
    Provisions    (251.7)    (249.7)
         1,881.3    1,812.5
             
    Total inventory net of provisions    11,934.5    11,228.8
             
    Carrying amount of inventories carried at net realisable value    185.4    132.9
    Inventory recognised as an expense in the year    67,453.0    66,962.6
    Write-down recognised as an expense in the year    322.9    217.3
             
    Inventory is fully funded by trade payables. Details of trade payables can be found in note 26.
    No inventory is pledged as security.        

     

  • + 20. Trade and other receivables
             
    Rm           December 2015   December 2014
                     
    Trade receivables    2,372.4    2,222.3
    Allowance for doubtful debts    (122.7)    (115.2)
                 2,249.7    2,107.1
    Prepayments    102.1    74.8
    Rebates and advertising from buying members    1,547.6    1,414.2
    Other accounts receivable    728.5    648.6
    FEC asset    69.5    43.6
    Total receivables net of provisions    4,697.4    4,288.3
    Trade receivables neither past due nor impaired    1,894.2    1,806.0
                     
    Movement in allowance for doubtful debts        
    Balance at the beginning of the year    115.2    96.1
    Amounts previously in the provision written off during the year    (27.3)    (7.0)
    Additional amounts raised    34.8    26.1
    Balance at the end of the year    122.7    115.2
                     
    Ageing of impaired trade debtors provided for:        
    30 to 60 days            28.0    34.6
    60 to 90 days            3.6    0.9
    90 to 120 days            3.5    2.8
    120+ days            87.6    76.9
    Total            122.7    115.2
                     
                     
    Trade receivables are well controlled throughout the Group, with trade receivable days remaining constant at 9. Allowance for doubtful debts at year end was 5.2% of trade receivables (December 2014: 5.2%).
    No interest is charged on the trade receivables. Trade receivables between 30 days and 180 days are provided for based on estimated irrecoverable amounts, determined by reference to past default experience. It is the Group’s policy to provide fully for all receivables that are past due and not insured as well as those receivables over which the Group does not hold any security, which as a result of historical experience are not considered to be recoverable.
    Before accepting any new customer, the Group uses an external credit scoring system to assess the potential customer’s credit quality and defines credit limits by customer. Limits and scoring attributed to customers are reviewed quarterly to once a year. No customer represents more than 5% of the total balance of trade receivables.
    Included in the Group’s trade receivables balance are receivables with a carrying amount of R355.5 million (December 2014: R301.1 million) which are past due at the reporting date for which the Group has not provided. The average age of these receivables is 64 days (December 2014: 71 days).
    Included in ‘Other accounts receivable’ is Value Added Taxation and other miscellanous receivables.
                     
             
    Rm           Insured and recoverable   Insured and recoverable
                     
    Ageing of past due but not impaired trade debtors                
    30 to 60 days            152.5    149.8
    60 to 90 days            154.9    87.9
    90 to 120 days            6.9    9.5
    120+ days            41.2    53.9
    Total            355.5    301.1
                     
    In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, management believe that there is no further credit provision required in excess of the allowance for doubtful debts. Refer to note 40 for the Group’s management of credit risk exposure.
    There were no specific trade receivables under liquidation in the current and prior financial year.

     

  • + 21. Non-current assets classified as held for sale
    At the end of the current year, non-current assets classified as held for sale represents one property in Masscash in the process of being sold following a store closure. At year end the Group had entered into a sales agreement with the respective purchaser, however transfer of the property had not yet been effected. In the prior year, non-current assets classified as held for sale represent two properties, both of which were sold during the current financial year.
             
    Rm   December 2015   December 2014
             
    Included in the Statement of Financial Position:        
    Non-current assets    11.5    18.0
    – Property, plant and equipment    11.5    18.0
             
    Total assets    11.5    18.0
             
    Fair value of the properties are based on the respective sales agreements. For more information on the fair value of these non-current assets held for sale, refer to note 39.
    Upon re-classification of the properties to non-current assets held for sale, impairment losses have been recognised. Refer to note 6 for more information.

     

  • + 22. Issued capital
               
                     
                     
        Share capital   Share premium
    Rm   December 2015   December 2014   December 2015   December 2014
                     
    Authorised                
    500,000,000 (December 2014: 500,000,000) ordinary shares of 1 cent each    5.0    5.0    
    20,000,000 (December 2014: 20,000,000) non-redeemable cumulative non-participating preference shares of 1 cent each    0.2    0.2    
    18,000,000 (December 2014: 18,000,000) ‘A’ convertible redeemable non-cumulative participating preference shares of 1 cent each    0.2    0.2    
    4,000,000 (December 2014: 4,000,000) ‘B’ convertible redeemable non-cumulative participating preference shares of 1 cent each        
                     
    Issued                
    217,136,334 (December 2014: 217,118,072) ordinary shares of 1 cent each    2.2    2.2    675.1    733.4
    2,840,483 (December 2014: 2,858,745) ‘B’ convertible redeemable non-cumulative participating preference shares of 1 cent each        
            Number of   Share capital   Share premium
    Ordinary shares       shares   Rm   Rm
    Balance at December 2013        217,109,044    2.2    743.3
    Shares issued in terms of the Massmart Black Scarce Skills Trust    9,028    
    Ordinary shares issued – December 2014    217,118,072    2.2    743.3
    Treasury shares        (194,765)      (9.9)
    Ordinary shares issued excluding treasury shares – December 2014    216,923,307    2.2    733.4
                     
    Balance at December 2014        217,118,072    2.2    733.4
    Shares issued in terms of the Massmart Black Scarce Skills Trust    18,262    
    Ordinary shares issued – December 2015        217,136,334    2.2    733.4
    Treasury shares        (575,563)      (58.3)
    Ordinary shares issued excluding treasury shares – December 2015    216,560,771    2.2    675.1
                     
    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        
    There are no ‘A’ convertible redeemable non-cumulative participating preference shares in issue as the residual shares were automatically redeemed on the vesting of the Massmart Thuthukani Empowerment Trust scheme, in terms of the Trust Deed in the 2013 financial year.
                     
    ‘B’ convertible redeemable non-cumulative participating preference shares   Number of   Share capital   Share premium
            shares   Rm   Rm
    Balance at December 2013          
    Net shares issued in terms of the Massmart BEE transaction    2,867,773    
    Shares converted to ordinary shares        (9,028)    
    Treasury shares        (2,858,745)    
    Balance at December 2014          
    Net shares issued in terms of the Massmart BEE transaction    2,858,745    
    Shares converted to ordinary shares        (18,262)    
    Treasury shares        (2,840,483)    
    Balance at December 2015          
                     
    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 December 2015, executives and senior employees have options of 7,673,705 (December 2014: 8,773,054) ordinary shares of which 2,289,364 (December 2014: 4,303,031) are unvested.
    Share options granted under the Employee Share Incentive Schemes carry no rights to dividends and no voting rights. Additional information of the Employee Share Incentive Schemes can be found in note 29.
    During the current financial year, 0.9 million shares (0.4% of average shares in issue) were bought in the market by the Massmart Holdings Limited Executive Share Trust at an average price of R148.88 totalling R135.5 million.
    During the prior financial year, 0.6 million shares (0.3% of average shares in issue) were bought in the market were by the Massmart Holdings Limited Executive Share Trust at an average price of R128.22 totalling R73.7 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.
  • + 23. Other reserves
                 
    Rm         December 2015   December 2014
                   
                   
    Foreign currency translation reserve1    29.3    50.8
    Hedging reserve2    11.0    7.8
    Share-based payment reserve3    1,051.8    833.3
    Capital redemption reserve fund    0.2    0.2
    Fair value adjustment of available-for-sale financial asset    (13.1)    (10.2)
    Change in non-controlling interest    (346.9)    (328.2)
    Treasury shares    1.2  
    Post-retirement medical aid actuarial gain          1.8    (3.2)
               735.3    550.5
                   
    1Reconciliation of the foreign currency translation reserve:   December 2015   December 2014
    Balance at the beginning of the year          50.8    104.5
    Translation on consolidation          (21.5)    (53.7)
               29.3    50.8
                   
    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.
                   
              December 2015   December 2014
    2Reconciliation of the hedging reserve:    
    Balance at the beginning of the year          7.8    6.8
    Foreign exchange loss in cost of sales          (20.5)    (11.7)
    FEC asset          25.9    17.1
    FEC liability          (1.0)    (4.0)
    Deferred taxation          (1.2)    (0.4)
               11.0    7.8
                   
              December 2015   December 2014
    3Reconciliation of the share-based payment reserve:    
    Balance at the beginning of the year          833.3    708.2
    Share-based payment expense relating to the Massmart Holdings Limited Employee Share Trust  194.7    106.7
    Deferred tax recognised in equity relating to the Massmart Holdings Limited Employee Share Trust    (2.8)
    Share-based payment expense relating to the Massmart Black Scarce Skills Trust  23.8    21.2
               1,051.8    833.3
                   
    Massmart introduced a new Employee Share Incentive Scheme called the Share Incentive Plan in the 2013 financial year. The share-based payment reserve arises on the granting of share options and share awards to employees under the Employee Share Incentive Schemes. For additional information, refer to note 29.

     

  • + 24. Non-current liabilities
                 
            December 2015   December 2014
    Rm        
                 
    Interest-bearing borrowings            
    Secured            
    Medium-term loan        600.0    600.0
    Medium-term bank loans        1,938.3    2,087.2
    Less: Payable within one year included in other current liabilities (note 28)    (728.3)    (565.5)
             1,810.0    2,121.7
                 
    Capitalised finance leases        18.4    23.4
    Less: Payable within one year included in other current liabilities (note 28)    (8.8)    (11.2)
             9.6    12.2
                 
    Total non-current interest-bearing liabilities    1,819.6    2,133.9
                 
    Interest-free borrowings            
    Unsecured            
    Loans from non-controlling interests        2.1    2.1
    Operating lease liability – lease smoothing adjustment        1,128.2    1,014.6
    Other        11.5    13.3
    Less: Payable within one year included in trade and other payables (note 26)    (106.3)    (103.4)
    Total non-current interest-bearing liabilities    1,035.5    926.6
                 
                 
    Medium-term loan            
    The medium-term loan is a fixed term loan of R600.0 million owed to Walmart. The interest is repayable quarterly over five years and was effective from 18 April 2013 at a fixed interest rate of 7.46%. The loan is repayable in one final instalment in April 2018. The loan is secured by intragroup cross-suretyships.
                 
    Medium-term bank loans
    Included in medium-term bank loans above is a fixed term loan of R750.0 million which was secured during the second half of the June 2012 financial year repayable quarterly over five years. The drawdown of the loan occurred on 25 May 2012 at a fixed interest rate of 7.88%. The long-term portion of the loan at the end of the current financial year is R75.0 million (December 2014: R225.0 million) and the short-term portion is R150.0 million (December 2014: R150.0 million). The loan is secured by intragroup cross-suretyships. The short-term portion has been accounted for in note 28.
    Included in medium-term bank loans above is a fixed term loan of R275.0 million which was secured during the second half of the December 2013 financial year repayable quarterly over three years. The drawdown of the loan occurred on 28 November 2013 at a fixed interest rate of 7.23%. The long-term portion of the loan at the end of the current financial year is NIL (December 2014: R91.6 million) and the short-term portion is R91.6 million (December 2014: R91.6 million). The loan is secured by intragroup cross-suretyships. The short-term portion has been accounted for in note 28.
    Included in medium-term bank loans above is a fixed term loan of R500.0 million which was secured during the first half of the December 2014 financial year repayable quarterly over five years. The drawdown of the loan occurred on 2 June 2014 at a fixed interest rate of 8.40%. The long-term portion of the loan at the end of the current financial year is R250.0 million (December 2014: R350.0 million ) and the short-term portion is R100.0 million (December 2014: R100.0 million). The loan is secured by intragroup cross-suretyships. The short-term portion has been accounted for in note 28.
    Included in medium-term bank loans above is a fixed term loan of R600.0 million which was secured during the second half of the December 2014 financial year repayable quarterly over five years. The drawdown of the loan occurred on 28 November 2014 at a fixed interest rate of 8.17%. The long-term portion of the loan at the end of the current financial year is R360.0 million (December 2014: R480.0 million ) and the short-term portion is R120.0 million (December 2014: R120.0 million). The loan is secured by intragroup cross-suretyships. The short-term portion has been accounted for in note 28.
    Included in medium-term bank loans above is a fixed term loan of R500.0 million which was secured during the second half of the December 2014 financial year repayable quarterly over five years. The drawdown of the loan occurred on 7 July 2014 at a fixed interest rate of 8.61%. The long-term portion of the loan at the end of the current financial year is R275.0 million (December 2014 :R375.0 million) and the short-term portion is R100.0 million (December 2014: R100.0 million). The loan is secured by intragroup cross-suretyships. The short-term portion has been accounted for in note 28.
    Included in medium-term bank loans above is a fixed term loan of R500.0 million which was secured during the first half of the December 2015 financial year repayable quarterly over four years. The drawdown of the loan occurred on 25 March 2015 at a fixed interest rate of 8.02%. The long-term portion of the loan at the end of the current financial year is R250.0 million and the short-term portion is R166.7 million. The loan is secured by intragroup cross-suretyships. The short-term portion has been accounted for in note 28.
                 
    Capitalised finance leases    
    Capitalised finance leases include leases over motor vehicles; fixtures, fittings and computer hardware, repayable in monthly instalments varying from one to five years at various interest rates of between 7.0% and 12.0% (December 2014: between 7.0% and 12.0%). 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 R17.8 million (December 2014: R22.2 million). No renewal terms nor contingencies exist, escalation ranges between 7-8% on certain leases. These assets are accounted for in note 13.
                 
    Operating lease liability
    The increase in the operating lease liability primarily relates to the increased number of stores opened during the current financial year.
                 
    For more information on the Group’s liquidity risk and interest rate risk management, refer to note 40.
    Additional information on the fair value of ‘non-current liabilities’ can be found in note 39.

     

  • + 25. Provisions
                         
    Rm               December 2015   December 2014
                         
    Onerous lease provision                33.8    22.6
    Less: Payable within one year included in current provisions (note 27)                (10.4)    (6.6)
    Provision for post-retirement medical aid contributions                104.2    101.7
    Less: Payable within one year included in current provisions (note 27)                (2.8)    (2.7)
                         
                     124.8    115.0
                         
    Reconciliation of provisions                    
                         
    Rm   Opening balance   Additional amounts provided1   Amounts utilised   Unused amounts reversed   Closing balance
                         
    December 2015                    
    Onerous lease provision    16.0    11.9      (4.5)    23.4
    Provision for post-retirement medical aid contributions    99.0    2.4        101.4
         115.0    14.3      (4.5)    124.8
                         
    December 2014                    
    Onerous lease provision    18.0    3.8    (1.0)    (4.8)    16.0
    Provision for post-retirement medical aid contributions    84.2    14.8        99.0
         102.2    18.6    (1.0)    (4.8)    115.0
                         
                         
    Rm       Repayable within 1 year2   Repayable in 2 – 5 years   Repayable after 5 years   Total
                         
    December 2015        13.2    20.4    104.4    138.0
    December 2014        9.3    13.7    101.3    124.3
                         
                         
    The onerous lease provision relates to the closure of stores in the Masscash Division. The respective escalation rates range between 6.0% and 8.0%. The final onerous operating lease expires in March 2025.
    1Includes financing costs.
    2Included in current provisions in note 27.                    
                         
    Post-retirement medical aid                    
                         
    Employees of Massmart participate on Massmart Health Plan and Resolution Health Medical Scheme administered by Universal Healthcare Proprietary Limited and Agility Global Health Solutions Health Proprietary Limited respectively. The post-retirement subsidy policy is summarised below:
    Members who joined Makro and Dion Stores prior to 1 July 1999 are eligible for a subsidy of medical scheme contributions upon retirement. Members who joined Massmart prior to 1 January 2000 are also eligible for a subsidy upon retirement;
    Members and their spouses are entitled to a 50% subsidy of medical scheme contributions upon retirement; and
    Dependants of eligible continuation members receive a subsidy before and after the death of the principal member.
    If a member eligible for a subsidy of medical scheme contributions upon retirement dies in service, their dependants are eligible for a subsidy of medical scheme contributions as described above for a period of three months.
                         
    The significant risks faced by Massmart as a result of the post-retirement healthcare obligation can be summarised as follows:
    The risk that future CPI inflation and healthcare cost inflation are higher than expected and uncontrolled; and
    The risk that pensioners live longer than expected and thus their healthcare benefit is payable for longer than expected.
                         
    The liability is unfunded. The significant assumptions are listed below.
    Of particular importance is the ‘interest rate – medical inflation rate’ gap of 0.3% (December 2014: 0.2%) used in calculating the provision.
                         
                    December 2015   December 2014
                         
    Significant assumptions:                    
    Discount rate               9.8% p.a.   8.9% p.a.
    Healthcare cost inflation               9.5% p.a.   8.7% p.a.
    Consumer Price Index inflation1               7.5% p.a.   6.7% p.a.
    Expected retirement age               65 years   65 years
    Membership discontinued at retirement or death-in-service               0%   0%
                         
    Movements in the post-retirement medical aid liability (Rm):                    
    Opening defined benefit obligation                101.7    84.2
    Current service cost                3.2    2.5
    Interest cost                8.9    8.4
    Employer benefits paid                (2.7)    (2.3)
    Net actuarial (gain)/loss recognised in the year                (6.9)    8.9
    Closing defined-benefit obligation                104.2    101.7
                         
    1CPI inflation by itself is not a significant assumption used in the valuation. This assumption has been based on the relationship between current conventional bond yields and current index-linked bond yields. The healthcare cost inflation exceeds CPI inflation by an average of 2.0% per annum over the long term, which is seen to be appropriate.
     
    The last valuation of the liability for the post-retirement medical aid contributions was performed as at December 2015 by Alexander Forbes, Fellow of the Institute of Actuaries (December 2014: Alexander Forbes, Fellow of the Institute of Actuaries). The current financial year costs have been assessed in accordance with the advice of independent actuaries.
     
    The net actuarial gain in the current year arose as a result of a combination of the following factors:
    Unexpected changes in the membership and membership profile resulted in a net gain of R2.9 million (December 2014: R0.1 million);
    Lower than expected healthcare cost inflation resulted in a gain of R2.2 million (December 2014: R1.1 million); and
    An unexpected gain of R1.8 million arose as a result of an increase in the real discount rate, i.e. an increase in the difference between the discount rate and the healthcare cost inflation assumption from 0.2% per annum to 0.3% per annum.
                         
    Projection of defined-benefit obligation                    
                         
    Provided that all actuarial assumptions are borne out in practice, the accrued liability is expected to increase each year in line with:
    The rate of discount;
    Plus the cost of an additional year’s accrual for in-service members (service cost); and
    Less the benefit payments made by the employer in respect of continuation members.
                         
    A projection of results:                    
                         
    Rm                   December 2015
                         
    Defined-benefit obligation at December 2015                    104.2
    Current service cost                    2.7
    Interest cost                    10.0
    Expected employer benefits paid                    (2.9)
    Defined-benefit obligation at December 2016                    114.0
                         
                         
    Maturity profile of defined-benefit obligation                    
                         
    The expected contributions to the defined benefit plan obligation in the following financial year is R2.9 million.
    The average duration of the defined benefit plan obligation at the end of the reporting period is 19.8 years (December 2014: 20.5 years).
                         
                         
    Sensitivity analysis                    
                         
    The valuation results are based on a number of assumptions. The value of the defined benefit obligation could be overstated or understated, depending on the extent to which actual experience differs from the assumptions adopted.
                         
    2015           Central assumption   Decrease   Increase
                         
    Sensitivity analysis on the defined benefit obligation:                    
    1% decrease or increase in the rate of healthcare cost inflation           9.5%   -1.0%   1.0%
    Defined-benefit obligation in (Rm)            103.8    87.6    124.3
    % change               -15.6%   19.8%
    0.5% decrease or increase in the rate of healthcare cost inflation for the next 5 years, thereafter returning to a healthcare cost inflation of 9.5%           9.5%   -0.5%   0.5%
    Defined-benefit obligation in (Rm)            103.8    101.6    106.0
    % change               -2.1%   2.1%
    5% or 10% increase in the rate of healthcare cost inflation for the next 5 years, thereafter returning to a healthcare cost inflation of 9.5%           9.5%       5.0% – 10.0%
    Defined-benefit obligation in (Rm)            103.8       127.9 – 156.5
    % change                   23.3%- 50.9%
    1% decrease or increase in the discount rate           9.8%   -1.0%   1.0%
    Defined-benefit obligation in (Rm)           103.8    124.4    87.8
    % change               19.9%   -15.4%
    1 year decrease or increase in the expected retirement age           65 years   – 1 year   1 year
    Defined-benefit obligation in (Rm)            103.8    108.8    99.1
    % change               4.9%   -4.5%
    Sensitivity analysis on the aggregate of the current service and interest cost:                    
    1% decrease or increase in the rate of healthcare cost inflation from previous valuation           8.7%   -1.0%   1.0%
    Current service cost and interest cost from the previous valuation (Rm)            11.7    9.7    14.4
    % change               -17.5%   22.6%
                         
    2014           Central assumption   Decrease   Increase
                         
    Sensitivity analysis on the defined benefit obligation:                    
    1% increase or decrease in the rate of healthcare cost inflation           8.7%   -1.0%   1.0%
    Defined-benefit obligation in (Rm)            101.7    85.3    122.7
    % change               -16.1%   20.7%
    0.5% increase or decrease in the rate of healthcare cost inflation for the next 5 years, thereafter returning to a healthcare cost inflation of 9.3%           8.7%   -0.5%   0.5%
    Defined-benefit obligation in (Rm)            101.7    82.4    85.6
    % change               -2.1%   2.1%
    5% or 10% increase in the rate of healthcare cost inflation for the next 5 years, thereafter returning to a healthcare cost inflation of 9.3%           8.7%       5.0% – 10.0%
    Defined-benefit obligation in (Rm)            101.7       125.6 – 154.0
    % change                   23.5% – 51.5%
    1% increase or decrease in the discount rate           8.9%   – 1%   1.0%
    Defined-benefit obligation in (Rm)            101.7    122.9    85.5
    % change               20.8%   -16.0%
    1 year increase or decrease in the expected retirement age           65 years   – 1 year   + 1 year
    Defined-benefit obligation in (Rm)            101.7    105.8    97.0
    % change               4.1%   -4.6%
    Sensitivity analysis on the aggregate of the current service and interest cost:                    
    1% increase or decrease in the rate of healthcare cost inflation from previous valuation           9.3%   -1.0%   1.0%
    Current service cost and interest cost from the previous valuation (Rm)            10.9    9.0    13.4
    % change               -17.3%   22.3%
  • + 26. Trade and other payables
                 
                 
                 
    Rm       December 2015   December 2014
                 
    Trade payables        16,320.4    14,841.5
    Operating lease liability – lease smoothing adjustment    106.3    103.4
    Payroll accruals        791.2    735.6
    FEC liability        7.7    6.7
    Income received in advance        53.6    70.4
    Rebates and advertising owing to buying members    141.1    129.0
    Interest accrual        38.3    32.1
    Amounts due to Walmart        299.4    218.3
    Sundry payables and other accruals    2,169.7    2,186.5
             19,927.7    18,323.5
                 
    For more information on amounts due to Walmart refer to
    note 5 and note 34.
       
    Trade payables do not attract interest.
    For more information on the operating lease liability refer to note 24.
    The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe, normally around 60 days. Control over trade payables has resulted in the average term increasing to 76 days (December 2014: 75 days). Settlement discounts received range from 0.3% to 5.0% (December 2014: 1.0% to 2.2%).
     ‘Sundry payables and other accruals’ comprises other sundry creditor accruals and VAT payable.
  • + 27. Provisions and other
    Rm December 2015 December 2014
    Onerous lease provision  10.4  6.6
    Provisions raised on asset acquisitions  12.6  12.6
    Provision for Supplier Development Fund  111.6  157.2
    Provision for post-retirement medical aid contributions  2.8  2.7
    Other  12.6  16.3
     150.0  195.4
    Provisions raised against specific assets, for example inventories and trade receivables, are accounted for with those assets and are detailed in the relevant notes.
    The Group established the Supplier Development Fund in line with the judgement of the Competition Appeal Court at the time of the Walmart transaction. The purpose of the fund is to assist the Group’s suppliers, particularly Black Economic Empowerment suppliers, in order to promote and benefit from the growth of their businesses. The fund has no fixed utilisation requirements per year.
           
    Reconciliation of provisions
    Rm Opening balance Amounts provided Amounts utilised Unused amounts reversed Closing balance
         
    December 2015
    Onerous lease provision  6.6  7.5  (1.3)  (2.4)  10.4
    Provisions raised on asset acquisitions  12.6  12.6
    Provision for Supplier Development Fund  157.2  (45.6)  111.6
    Provision for post-retirement medical aid contributions  2.7  2.8  (2.7)  2.8
    Other  16.3  8.6  (8.9)  (3.4)  12.6
     195.4  18.9  (58.5)  (5.8)  150.0
    December 2014
    Onerous lease provision  8.6  5.7  (3.1)  (4.6)  6.6
    Contingent consideration payable on business acquisitions  92.9  (90.0)  (2.9)
    Provisions raised on asset acquisitions  8.5  11.6  (7.5)  12.6
    Provision for Supplier Development Fund  202.5  (45.3)  157.2
    Provision for post-retirement medical aid contributions  5.0  (2.3)  2.7
    Other  14.5  7.8  (2.9)  (3.1)  16.3
     327.0  30.1  (143.6)  (18.1)  195.4
  • + 28. Other current liabilities
                 
                 
                 
    Rm       December 2015   December 2014
                 
    Medium-term bank loans    728.3    565.5
    Capitalised finance leases    8.8    11.2
    Massmart Education Foundation loan    5.1    4.8
    Medium-term loans        463.9    249.7
    – Foreign bank loans    459.5    237.8
    – Short-term foreign bank loan      7.6
    – Lamberti Education Foundation Trust loan    4.4    4.3
             1,206.1    831.2
                 
    Medium-term bank loans and capitalised finance leases        
    For more information on the medium-term bank loans, medium term loans and capitalised finance leases, refer to note 24.
    The Massmart Education Foundation loan represents cash reserves invested with Group Treasury. Interest was incurred at a variable rate based on the daily prime rate plus 25 basis points at year end, and has no fixed terms of repayment.
                 
    Medium-term loans        
    In the current year and prior year ‘foreign bank loans’ comprise an offshore USD facility, granted by Standard Chartered Bank, available for working capital and general corporate requirements. The Group is using this loan to fund its African expansion. During the current year, the final drawdown of USD 9.5 million was utilised in order to settle the Group’s utilised portion of the HSBC overdraft. The facility is capped at USD 30.0 million, of which the Group has utilised all USD 30 million (December 2014: USD 20.5 million) at the year end. Interest is incurred daily at the average 6 monthly USD LIBOR rate plus 155 basis points, in arrears.
    In the prior year, the ‘short-term foreign bank loan’ was an offshore USD overdraft facility, granted by HSBC, to fund the Group’s working capital expenditure requirements in Africa. The Group repaid its outstanding balance under this facility during the current year (December 2014: USD 0.7 million). The facility is capped at USD 15.0 million and is available for utilisation should the Group wish to draw from it. Interest is incurred based on the overnight USD LIBOR plus 0.75% per annum. The facility imposes financial covenants on the Group, none of which have been breached during the current financial year. All amounts drawn down in terms of this facility are repayable on demand.
    The Lamberti Education Foundation Trust loan represents cash reserves invested with Group Treasury. Interest was earned at a variable rate based on the daily prime rate plus 25 basis points which amounted to 5.7% (December 2014: 5.4%) at year end, and has no fixed terms of repayment.
                 
    For more information on fair value disclosure, refer to note 39.
    For more information on the Group’s liquidity risk and interest rate risk management, refer to note 40.
  • + 29. Employee Share Incentive Schemes
                               
    Massmart Holdings Limited Employee Share Trust
                                 
    Massmart introduced a new Share Incentive Scheme in the 2013 financial year referred to as the Employee Share Incentive Plan. Massmart Holdings Limited’s shareholders approved the scheme at the Annual General Meeting held on 22 May 2013. The new scheme entails participation through a retention share grant and a performance share award, further explained below. The first grant of retention grants and performance awards under the new scheme was made on 16 September 2013. The purpose of the new scheme is to replace the existing Employee Share Option Scheme which had its last grant date on 1 May 2013. The Employee Share Option Scheme will continue to give rise to an equity-settled share-based payment expense until the end of the December 2018 financial year. The final options of this scheme will expire in the 2023 financial year. Both Employee Share Incentive Schemes are administered through the Massmart Holdings Limited Employee Share Trust.
                                 
    Shares to satisfy awards and options
     
    It is Massmart’s practice to satisfy grants, awards and options granted under the Employee Share Incentive Schemes through shares purchased in the market and held by the Massmart Holdings Limited Employee Share Trust, which was established for the purpose of satisfying grants, awards and options under the Employee Share Incentive Schemes, and is funded by the Company.
                                 
    Employee Share Option Scheme        
                                 
    Massmart granted share options entitling certain employees within the Group to its shares under the Employee Share Option Scheme. The options were granted by Massmart in its own shares resulting in them being accounted for as equity-settled share-based payments. Employees are required to be employed up to the date of vesting in order to receive the share options earned by them. The share-based payment valuation was performed by Alexander Forbes for all periods with respect to the share options.
                                 
    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.        
                                 
                                 
    The following options granted to employees and Executive Directors in terms of the Employee Share Option Scheme have not yet been exercised:
                                 
    2015                            
    Offer date   Expiry date   Exercise price (R)   No of options at December 2014   No of options forfeited and expired   No of options exercised   No of options closing balance    
                                 
    27 May 2005   26 May 2015   42.97    12,664      12,664      
    30 November 2005   29 November 2015   51.19    3,618      3,618      
    1 April 2006   31 March 2016   58.74    2,773      2,773      
    23 May 2006   22 May 2016   54.13    19,607      1,728    17,879    
    25 August 2006   24 August 2016   51.93    4,724        4,724    
    15 November 2006   14 November 2016   62.04    14,700        14,700    
    23 February 2007   22 February 2016   67.79    28,033      5,218    22,815    
    2 April 2007   1 April 2017   82.67    5,573        5,573    
    24 May 2007   23 May 2017   94.25    192,395      32,774    159,621    
    24 August 2007   23 August 2017   80.75    41,216        41,216    
    30 November 2007   29 November 2017   71.58    12,854        12,854    
    1 April 2008   31 March 2018   66.91    191,167      24,225    166,942    
    26 May 2008   25 May 2018   72.86    506,234      57,469    448,765    
    1 September 2008   31 August 2018   79.86    88,464        88,464    
    27 October 2008   26 October 2018   72.42    106,017      84,488    21,529    
    15 November 2008   14 November 2018   79.91    32,549        32,549    
    1 March 2009   28 February 2019   70.71    97,196      24,170    73,026    
    27 May 2009   26 May 2019   77.55    508,286      65,658    442,628    
    1 September 2009   31 August 2019   79.15    33,208        33,208    
    1 October 2009   30 September 2019   87.60    9,605        9,605    
    16 November 2009   15 November 2019   88.71    10,272        10,272    
    1 March 2010   28 February 2020   90.49    89,129      39,158    49,971    
    1 April 2010   31 March 2020   108.95    14,722      7,857    6,865    
    1 May 2010   30 April 2020   110.00    30,142    2,607    2,948    24,587    
    1 September 2010   31 August 2020   120.42    190,145    2,813    9,715    177,617    
    1 September 2011   31 August 2021   153.84    3,108,887    282,099    146,156    2,680,632    
    1 November 2011   31 October 2021   157.27    380,491    30,522      349,969    
    1 March 2012   28 February 2022   174.88    421,478    48,078      373,400    
    1 April 2012   31 March 2022   164.09    122,954        122,954    
    16 May 2012   15 May 2022   159.62    333,314        333,314    
    1 September 2012   31 August 2022   168.03    1,105,909    151,175      954,734    
    15 October 2012   14 October 2022   167.06    321,729        321,729    
    1 March 2013   28 February 2023   186.05    699,092    61,436      637,656    
    1 May 2013   30 April 2023   187.53    33,907        33,907    
                 8,773,054    578,730    520,619    7,673,705    
                                 
                                 
                                 
    2014                            
    Offer date   Expiry date   Exercise price (R)   No of options at December 2013   No of options forfeited and expired   No of options exercised   No of options closing balance    
                                 
    1 April 2005   31 March 2015   41.91    47,000      47,000      
    27 May 2005   26 May 2015   42.97    13,303      639    12,664    
    1 November 2005   31 October 2015   51.91    996      996      
    30 November 2005   29 November 2015   51.19    3,618        3,618    
    1 April 2006   31 March 2016   58.74    7,665      4,892    2,773    
    23 May 2006   22 May 2016   54.13    22,863      3,256    19,607    
    25 August 2006   24 August 2016   51.93    4,724        4,724    
    15 November 2006   14 November 2016   62.04    14,700        14,700    
    23 February 2007   22 February 2016   67.79    32,152      4,119    28,033    
    2 April 2007   1 April 2017   82.67    5,573        5,573    
    24 May 2007   23 May 2017   94.25    239,073      46,678    192,395    
    24 August 2007   23 August 2017   80.75    41,216        41,216    
    30 November 2007   29 November 2017   71.58    12,854        12,854    
    1 April 2008   31 March 2018   66.91    228,602      37,435    191,167    
    26 May 2008   25 May 2018   72.86    590,590      84,356    506,234    
    1 September 2008   31 August 2018   79.86    120,164      31,700    88,464    
    27 October 2008   26 October 2018   72.42    129,126      23,109    106,017    
    15 November 2008   14 November 2018   79.91    32,549        32,549    
    1 March 2009   28 February 2019   70.71    107,694      10,498    97,196    
    27 May 2009   26 May 2019   77.55    624,089    4,419    111,384    508,286    
    1 September 2009   31 August 2019   79.15    39,661      6,453    33,208    
    1 October 2009   30 September 2019   87.60    17,923      8,318    9,605    
    16 November 2009   15 November 2019   88.71    18,820      8,548    10,272    
    1 March 2010   28 February 2020   90.49    113,775    4,017    20,629    89,129    
    1 April 2010   31 March 2020   108.95    19,092      4,370    14,722    
    1 May 2010   30 April 2020   110.00    32,748      2,606    30,142    
    1 September 2010   31 August 2020   120.42    199,615      9,470    190,145    
    1 September 2011   31 August 2021   153.84    3,318,101    209,214      3,108,887    
    1 November 2011   31 October 2021   157.27    432,365    51,874      380,491    
    1 March 2012   28 February 2022   174.88    421,478        421,478    
    1 April 2012   31 March 2022   164.09    122,954        122,954    
    16 May 2012   15 May 2022   159.62    377,779    44,465      333,314    
    1 September 2012   31 August 2022   168.03    1,235,157    129,248      1,105,909    
    15 October 2012   14 October 2022   167.06    321,729        321,729    
    1 March 2013   28 February 2023   186.05    739,384    40,292      699,092    
    1 May 2013   30 April 2023   187.53    33,907        33,907    
                 9,723,039    483,529    466,456    8,773,054    
                                 
                                 
                                 
                            December 2015   December 2014
    Reconciliation of the number of shares options issued   000s   000s
                                 
                                 
    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 issued    9,392    10,554
    Shares and options sold by employees and Executive Directors    (863)    (678)
    Shares repurchased from/ forfeited by employees and options lapsed/ forfeited    (579)    (484)
    Closing balance of shares and options issued    7,950    9,392
                                 
    The closing balance includes 277,145 (December 2014: 619,443) shares and 7,673,705 (December 2014: 8,773,054) options. Shares and options previously issued to employees who then subsequently left the Group are excluded from the figures above.
                                 
    Once the options have vested they may be exercised at any time, up to ten years, from the offer date. Once exercised, the relevant shares can be sold at the discretion of the participants. In terms of the scheme rules, share trust loans have been raised on offers made to Executive Directors and other employees. Refer to note 17 on Employee Share Trust loans to Executive Directors and other employees.
                                 
    Movement in the year                    
    The following options granted to employees and Executive Directors in terms of the Employee Share Option Scheme have not yet been exercised:    
       
                    December 2015   December 2014
                    Number of share options   Weighted average exercise price   Number of share options   Weighted average exercise price
                      Rand     Rand
                                 
    Outstanding at the beginning of the year    8,773,054    141.6    9,723,039    139.4
    Exercised during the year        (520,619)    99.0    (466,456)    75.5
    Forfeited or expired during the year        (578,730)    162.5    (483,529)    160.0
    Outstanding at the end of the year        7,673,705    143.0    8,773,054    141.6
                         
    Exercisable at the end of the year  5,384,341        4,470,023    
                                 
    In December 2015, the weighted average share price at the date of exercise for share options exercised during the year was R153.95. The options outstanding at the end of the year had a weighted average remaining contractual life of 5.4 years. No options were granted in the current financial year.
                                 
    In December 2014, the weighted average share price at the date of exercise for share options exercised during the year was R123.96. The options outstanding at the end of the year had a weighted average remaining contractual life of 6.3 years. No options were granted in the current financial year.
                                 
    Fair value of share options granted during the year
                                 
    There were no grants issued during the current financial year.        
                                 
                                 
    Employee Share Incentive Plan        
                                 
    Massmart granted retention share grants and performance share awards entitling certain employees within the Group to fully-paid shares under the Employee Share Incentive Plan. The grants and awards were granted by Massmart in its own shares resulting in the grants and awards being treated as equity-settled share-based payments. The Employee Share Incentive Plan is split into two incentive structures, mainly, retention share grants and performance share awards. Retention share grants require the employee to remain employed at the date of vesting in order to receive the shares earned by them. In determining the spot price at grant date its fair market value is the volume weighted average price of a share on the Johannesburg Stock Exchange (JSE) over the ten trading days immediately prior to the day in question. Performance share awards are subject to non-market conditions in years one, two and three based 50% on Group Return of Investment (ROI) and 50% on Group nominal sales against the budgeted equivalent for that year. The share-based payment valuation was performed using a valuation system acquired by the Group with the necessary model inputs having been determined by management. Management derived these inputs through consultation with various financial institutions, and they are representative of the market data available for Massmart Holdings Limited’s share at the reporting date. Vesting occurs over a five-year period for retention share grants and over a three-year period for performance share awards as follows:
                                 
            Retention share grants   Performance share awards                
    – Three years after the offer date   33%   100%                
    – Four years after the offer date   33%   N/A                
    – Five years after the offer date   33%   N/A                
                                 
                                 
    The following grants and awards granted to employees and Executive Directors in terms of the Employee Share Incentive Plan have not yet been exercised:
                    December 2015   December 2014
    Retention share awards   Number of share grants and awards   Vesting Period   Number of share grants and awards   Vesting Period
    16 September 2013    323,236   2016 to 2018    344,624   2016 to 2018
    15 September 2014    733,914   2017 to 2019    779,689   2017 to 2019
    16 March 2015                61,178   2018 to 2020    
    15 September 2015                820,437   2018 to 2020    
    Performance share awards                
    16 September 2013    708,988   2016    761,903    2016
    17 March 2014                1,055,509   2017    1,110,418    2017
    16 March 2015                1,025,501   2018    
    Total awards    4,728,763        2,996,634    
    Exercisable at the end of the year            
                                 
    Movement in the Year                
                    December 2015   December 2014
                    Number of share grants and awards   Weighted average exercise price   Number of share grants and awards   Weighted average exercise price
                      Rand     Rand
                                 
    Outstanding at the beginning of the year    2,996,634      1,221,814  
    Granted during the year    1,959,803      1,890,107  
    Forfeited or expired during the year    (227,674)      (115,287)  
    Outstanding at the end of the year    4,728,763      2,996,634  
    Exercisable at the end of the year            
                                 
    The estimated fair values of the retention share grants at grant date was R110.43 (December 2014: R121.66) and the performance share awards was R134.15 (December 2014: R132.71).
                                 
    Fair value of retention share grants and performance share awards granted during the year
           
    These fair values were calculated using the Lattice Model. The inputs into the model at grant date were as follows:        
    Retention share grants (15 September 2015)   December 2015   December 2014
    10 day volume weighted average share price (Rand)    107.9    126.3
    Expected volatility   29.17% – 29.38%   27.74% – 28.43%
    Expected life   2.25 – 4.75 years   2.75 – 4.75 years
    Risk-free rate   7.18% -7.58%   7.19% – 7.62%
    Expected dividend yield   3.37%   3.55%
    Performance share awards and retention share grants (16 March 2015)        
    10 day volume weighted average share price (Rand)    149.1    129.4
    Expected volatility   30.05%   22.70%
    Expected life   2.25 years   2.25 years
    Risk-free rate   7.06%   7.46%
    Expected dividend yield   2.82%   3.08%
    Exercise price                        
                                 
    Expected volatility was determined by calculating the historical volatility of the Company’s share price over the number of previous years corresponding with the share awards vesting period. 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. The risk-free rate used was the swap rate over the vesting period of the share grants and awards.
                                 
    Massmart Black Scarce Skills Trust
                                 
    The Black Scarce Skills Trust is a share-scheme used to attract and retain African, Coloured and Indian employees. The Executive Committee of each of the Divisions and the Massmart Remuneration Committee submit their nominations to the Black Scarce Skills Trust trustees for approval, upon which allocations are made bi-annually in April and October of each year. A beneficiary can only receive one allocation.
                                 
    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)   No of options opening balance   No of options forfeited and expired   No of options exercised   New options granted   No of options closing balance
                                 
    December 2015                            
    1 April 2010   31 March 2015   108.95    59,764    14,464    45,300    
    1 October 2011   30 September 2016   143.74    534,821    66,204    53,366      415,251
    1 April 2012   31 March 2017   164.09    344,809    26,404        318,405
    1 October 2012   30 September 2017   166.91    218,814    29,686        189,128
    1 April 2013   30 March 2018   189.13    169,066    27,815        141,251
    1 October 2013   30 September 2018   170.31    889,423    51,947        837,476
    1 April 2014   30 March 2019   136.69    296,456    14,781        281,675
    1 October 2014   30 September 2019   120.29    496,717    8,230        488,487
                 3,009,870    239,531    98,666      2,671,673
                                 
    December 2014                      
    1 April 2009   31 March 2014   71.96    10,873    918    9,955    
    27 May 2009   26 May 2014   77.56    4,290      4,290    
    1 April 2010   31 March 2015   108.95    76,582    2,043    14,775      59,764
    1 October 2011   30 September 2016   143.74    571,491    36,670        534,821
    1 April 2012   31 March 2017   164.09    369,388    24,579        344,809
    1 October 2012   30 September 2017   166.91    223,878    5,064        218,814
    1 April 2013   30 March 2018   189.13    182,133    13,067        169,066
    1 October 2013   30 September 2018   170.31    909,444    20,021        889,423
    1 April 2014   30 March 2019   136.69      9,201      305,657    296,456
    1 October 2014   30 September 2019   120.29      10,690      507,407    496,717
                 2,348,079    122,253    29,020    813,064    3,009,870
                                 
                            December 2015   December 2014
                            000s   000s
    Reconciliation of the number of options issued        
    Opening balance of share options    3,010    2,348
    New share options offered to employees      814
    Share options sold by employees    (99)    (29)
    Share options repurchased from/forfeited by employees and options lapsed/forfeited    (240)    (123)
    Closing balance of share options    2,671    3,010
    Number of options exercisable    793    428
                                 
    In December 2015, the weighted average share price at the date of exercise for share options exercised during the year was R150.91. The options outstanding at the end of the year had a weighted average remaining contractual life of 2.40 years.
                                 
    In December 2014, the weighted average share price at the date of exercise for share options exercised during the year was R132.68 The options outstanding at the end of the year had a weighted average remaining contractual life of 3.27 years. Options were granted on 1 April 2014 and 1 October 2014. The estimated fair values of the options granted on these dates were R23.45 and R19.48.
                                 
                                 
    Fair value of share options granted during the year
                                 
    These fair values were calculated using the binomial model. The inputs into the model at grant date were as follows:   December 2015   December 2014
    Weighted average share price (Rand)      127.8
    Expected volatility     22.57% – 23.13%
    Expected life     3 – 5 years
    Risk-free rate     7.1% – 7.8%
    Expected dividend yield     2.5% – 2.7%
                                 
    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.
                                 
    Expense charged to Profit or Loss      
    The expense recognised for employee services received during the year on equity-settled share-based payment transactions is shown in the following table:
                                 
    Rm                       December 2015   December 2014
                                 
    Expense arising from Employee Share Option Scheme    44.7    52.5
    Expense arising from Employee Share Incentive Plan    150.0    54.2
    Expense arising from Black Scarce Skills Trust    23.8    21.2
    Total expense arising from equity-settled share-based payment transactions    218.5    127.9
                                 
                                 
  • + 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, some 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.
    The Massmart Pension Fund and Massmart Provident Fund have been classified as valuation exempt. The Board of Trustees successfully submitted applications for exemption from valuation in 2015 and the funds were, therefore, exempt from the provisions of sections 9A and 16 of the Pension Funds Act, with effect from 28 February 2015. The exemption expires on 28 February 2018. This exemption may be extended upon submission of an application in terms of the Notice, which must be submitted to the registrar on or before 28 February 2019; failing which the fund must undergo a statutory actuarial valuation as at 28 February 2018, which must be submitted to the registrar by 28 February 2019. The fund will reapply if required.
    Contributions received by the funds for the year ended December 2015 amounted to R518.8 million (December 2014: R487.0 million). The Group’s contribution of R310.0 million (December 2014: R299.8 million) was included in the Income Statement for the year in ‘Employee costs’.
  • + 31. Commitments
    Rm December 2015 December 2014
    Commitments in respect of capital expenditure approved by Directors:
    Contracted for
    Stores to be opened  116.1  277.2
    Distribution centre to be opened  18.7  16.0
    Stores to be refurbished  18.6  114.1
    Purchase of plant and equipment  94.7  23.5
    Purchase of new system software  217.2  162.3
    Purchase of new computer hardware  24.9  41.5
    Purchase of motor vehicles  1.8  3.4
    Store relocations  4.5  17.8
    Store conversions  2.3
    Minor revamps  20.3  34.9
    Store Expansion and Reduction  436.6  166.0
    Rebranding  5.1
     953.4  864.1
    Not contracted for
    Stores to be opened  383.7  388.3
    Stores to be refurbished  133.5  358.4
    Purchase of plant and equipment  130.8  114.3
    Purchase of new system software  132.2  81.8
    Purchase of new computer hardware  24.8  31.5
    Purchase of motor vehicles  46.1  68.9
    Minor revamps  44.5  42.3
    Distribution centre to be opened  0.9
    Logistical expansion  30.0  40.2
    Store relocations  108.3  28.5
     1,033.9  1,155.1
     1,987.3  2,019.2
    Massmart has the right of first refusal on the sale of any shares by the non-controlling interest holders in various Masscash stores. Historically Massmart has exercised this right.
    Capital commitments will be funded using current facilities.
  • + 32. Operating lease commitments
    Net operating lease expense
    Rm December 2015 December 2014
    Land and buildings
    Year 1  1,978.1  1,788.3
    Years 2 to 5  7,124.1  6,684.7
    Subsequent to year 5  6,441.3  6,979.0
     15,543.5  15,452.0
    Plant and equipment
    Year 1  6.4  5.1
    Years 2 to 5  17.6  7.5
     24.0  12.6
    Other
    Year 1  5.0  10.3
    Years 2 to 5  3.2  7.2
     8.2  17.5
     15,575.7  15,482.1
    Leases on properties are contracted for periods of between 3 and 20 years with renewal options averaging a further 3 to 25 years. Rental comprises minimum monthly payments and in some cases, contingent payments based on turnover levels. Turnover rentals, where applicable, average 1.5% (December 2014: 1.5%) of turnover. Rental escalations vary, but are between 5 and 11.5% p.a (December 2014: 5 and 11.5% p.a).
  • + 33. Contingent liabilities
    Rm December 2015 December 2014
    Contingent liabilities  7.2  4.2
    In the ordinary course of business, the Group and its subsidiaries are involved in a number of legal proceedings. In the Board of Directors’ judgment, however, there are no current, pending or threatened legal or arbitration proceedings that may have, or have had in the previous 12 months, a material effect on the Group’s financial position.

    33.1 Lease exclusivity
    We have previously disclosed various litigation and regulatory referrals related to restrictive lease clauses involving Massdiscounters/Game, three of the major food retailers in South Africa and certain South African landlords. Most of these proceedings are on-going. During 2015 we received an adverse judgment in one of the interdict applications involving Pick ‘n Pay in the Supreme Court of Appeal. We have appealed this ruling to the Constitutional Court and our leave to appeal has been granted. The Competition Commission market enquiry into the potential anti-competitive effect of excluding new market entrants by means of lease usage and exclusivity clauses is underway. We have subsequently also proceeded to self-refer the matter to the Competition Tribunal and have named Pick ‘n Pay, Shoprite and Spar as respondents. If the conclusion of these proceedings is not in our favour, in whole or in part, then a key Group strategy in certain localities in South Africa could be delayed or curtailed. In addition to this matter, the Group and our subsidiaries are party to a variety of legal, administrative, regulatory and government proceedings, claims and inquiries arising in the normal course of business. While the results of these proceedings, claims and inquiries cannot be predicted with certainty, management believes that the final outcome of the foregoing will not have a material adverse effect on the Group’s financial position.
  • + 34. Related-party transactions
           
    Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.
             
        December 2015   December 2014
    Rm   52 weeks   52 weeks
             
             
    Compensation of key management personnel:        
             
    The remuneration of Executive Directors and other key management were as follows:        
    Short-term benefits (salaries, benefits and short-term incentives)    24.0    22.4
    Retirement benefits    1.0    0.9
    Other long-term benefits    0.8    2.2
    Gains on exercise of share options      15.8
         25.8    41.3
             
    Key management is defined as the two Executive Directors (December 2014: three Executive Directors).
             
    Other related-party transactions:        
             
    Of the Walmart integration and related costs, an amount due to Walmart of R299.4 million (December 2014: R218.3 million) remains unpaid at the end of the current financial year and has been included in ‘Amount due to Walmart’ in note 26. An amount due from Walmart of R6.7 million (December 2014: R12.0 million) remains receivable at the end of the current financial year and has been included in ‘other accounts receivable’ in note 20. These are non- interest bearing and have no fixed terms of repayment.
    Main Street 830 Proprietary Limited, a subsidiary of Wal-Mart Stores, Inc. and the direct holding company of Massmart Holdings Ltd receives dividends from the Company. Dividends of R479.3 million (December 2014: R479.3 million) were paid during the year.
    In April 2013 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 non-current interest-bearing liabilities. Additional information can be found in note 24.
    Loans to Executive Directors and Executive Committee members have been disclosed in note 17.
    The Massmart Health Plan and Resolution Health Medical Scheme, Massmart Pension Fund and Massmart Provident Fund are managed for the benefit of past and current employees of the Group. Additional information can be found in note 25 and note 30.
    Refer to note 35 and 36 for more information regarding Directors remuneration and interests in the Company’s Share Incentive Schemes.