1. These reviewed interim condensed consolidated financial results have been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), its interpretations issued by the IFRS Interpretations Committee, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, presentation and disclosure as required by International Accounting Standard (IAS) 34 Interim Financial Reporting, the JSE Limited Listings Requirements and the requirements of the Companies Act 71 of 2008 of South Africa. The accounting policies and methods of computation used in the preparation of the reviewed interim condensed consolidated financial results are in terms of IFRS and are consistent in all material respects with those applied in the most recent Annual Financial Statements, as none of the amendments coming into effect in the current financial year have had an impact on the financial reporting of the Group.

  1. The detailed assessments for IFRS 15: Revenue from Contracts with Customers, IFRS 9: Financial Instruments and IFRS 16: Leases have identified the following which will impact the financial results:

    1. IFRS 9: There will be reclassification of financial assets and the measurement of provisions against receivables will be revised on the expected credit loss method. Effective from 1 January 2018
    2. IFRS 15: Certain revenue streams will be recognised on a net basis; as a result of performance obligations, certain revenue streams will be estimated upfront and certain revenue streams will be deferred based on the allocation of the transaction price; gift card breakage will be estimated upfront to the extent that the reversal is remote and there will be reclassification between revenue, other income and cost of sales. Effective from 1 January 2018.
    3. IFRS 16: Massmart has numerous leases that will be brought onto the Statement of Financial Position. The quantitative impact of the above standards is under review. Effective from 1 January 2019.

    The Group will adopt the modified retrospective model for IFRS 19 and IFRS 15.

  1. The majority of Massmart’s foreign exchange loss of R16.6 million (June 2016: R125.2 million) arose as a result of the settlement of its Rand-denominated foreign creditors as well as intercompany trade balances. Despite Massmart’s increased investment into the rest of Africa, the volatility of the average basket of other African currencies against the Rand and the volatility of the Rand against the US Dollar, Massmart managed to reduce its foreign exchange exposure.

  1. Massmart and its divisions enter into certain transactions with related parties in the normal course of business. At June 2017, the Supplier Development Fund had a closing balance of R60.9 million (June 2016: R105.3 million). A net amount of R2.3 million remains unpaid to Walmart (June 2016: R26.6 million), which has been accounted for in ‘trade, other payables and provisions’ and ‘trade, other receivables and prepayments’. The Group has a medium-term loan with Walmart that is repayable in April 2018, on which interest of 7.46% is paid quarterly. The loan of R600.0 million was reclassified from non-current to current interest-bearing. As a 52.4% shareholder, Main Street 830 Proprietary Limited, a subsidiary of Walmart, will also be receiving a dividend based on their number of shares held.

  1. Massmart, offers a diverse range of retail offerings to the market consisting of Food & Liquor, General Merchandise and Home Improvement. Due to the cyclical nature of this industry, higher revenues and operating profits are usually expected in the second half of the year rather than in the first six months. Higher sales during the period October to December are mainly attributed to the increased demand for our non-Food categories, where we see an increase in discretionary spend leading up to the Christmas holiday period. This information is provided to allow for a better understanding of the results.

  2. These reviewed interim condensed consolidated results have been reviewed by independent external auditors, Ernst & Young Inc. and their unmodified review report is available for inspection at the Company’s registered office. The review was performed in accordance with ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. Any reference to future financial performance included in this announcement has not been reviewed or reported on by the Group’s external auditors. The auditor’s report does not necessarily report on all of the information contained in this announcement/ financial results. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s engagement they should obtain a copy of the auditor’s report together with the accompanying financial information from the Group’s registered office. The preparation of the Group’s reviewed interim condensed consolidated financial statements was supervised by the Chief Financial Officer, Johannes van Lierop, Bachelor of Business Economics, RA (Amsterdam).