Shares in issue
| Ordinary shares | |
| Closing balance June 2007 | 201,072,831 |
| Converted preference shares* | 120,681 |
| Closing balance June 2008 | 201,193,512 |
| Converted preference shares* | 109,127 |
| Closing balance June 2009 | 201,302,639 |
| Preference shares* | |
| Closing balance June 2007 | 19,967,866 |
| Converted to ordinary shares | 120,681 |
| Closing balance June 2008 | 19,847,185 |
| Converted to ordinary shares | 109,127 |
| Closing balance June 2009 | 19,738,058 |
| * | The preference shares relate to Massmart’s Thuthukani Empowerment Trust and Black Scarce Skills Trust. |
Massmart address
| The Company’s registered office and postal address are as follows: |
| Registered office Massmart House, 16 Peltier Drive, Sunninghill Ext 6, Sandton, 2191 South Africa |
| Postal address Private Bag X4, Sunninghill, 2157 South Africa |
Directors’ report
The Directors acknowledge responsibility for the preparation of the annual financial statements, which, in their opinion, fairly present the results and cash flows for the financial year and the state of affairs of Massmart Holdings Limited and its subsidiaries at the end of the financial year. The external auditors are responsible for reporting on the fair presentation of these financial statements.
The Company and its subsidiaries have maintained adequate accounting records and an effective system of internal controls to ensure the integrity of the underlying information. Appropriate accounting policies, supported by sound and prudent managerial judgements and estimates, have been consistently applied.
The Audit Committee of the Board reviews the financial information presented and ensures that there has been adherence to International Financial Reporting Standards. Internal and external auditors of Group companies have unrestricted access to the Committee.
Group financial results
The financial results of the Group are set out in the income statement, the cash flow statement and the statement of changes in equity. The financial position of the Group is set out in the balance sheet.
Dividend
Massmart’s dividend policy is to declare and pay an interim and final cash dividend representing a 1,7 times dividend cover (2008: 1,7 times), unless circumstances dictate otherwise. Despite the slightly lower headline earnings and this policy, the Board has decided to maintain this year’s dividend at the same level as last year.
With regard to the final distribution to shareholders, the Directors resolved to distribute to shareholders registered in the books of the Company on 18 September 2009, a final cash dividend of 134 cents (2008: 163 cents) per share, bringing the total dividend for the year to 386 cents (2008: 386 cents) per share.
A Thuthukani dividend equivalent to 75% of the Massmart ordinary dividend per share (100,5 cents) was paid to the Massmart Thuthukani Empowerment Trust on 21 September 2009.
Alongside please find the movement in ordinary and preference shares for the period under review.
Directorate and Secretary
The current directorate of the Company is shown here.
The Company Secretary provides a central source of guidance and advice to the Board, and within the Company, on matters of ethics and good governance.
The Company Secretary is Mr Ilan Zwarenstein, CA(SA), whose business and postal addresses are the same as that of the Company.
In accordance with the provisions of the Company’s Articles of Association, MD Brand, ZL Combi, GRC Hayward, JC Hodkinson and P Maw will retire at the annual general meeting. Being eligible, MD Brand, ZL Combi, GRC Hayward, JC Hodkinson and P Maw offer themselves for re-election.
Interests of Directors in the Company’s shares
At 28 June 2009, Directors owned ordinary shares in the Company, or options over ordinary shares in the Company, directly or indirectly, aggregated as to beneficial and non-beneficial ownership, as follows:
At the date of this report, the Directors’ holdings were as follows:
| Shares | Options | |||
| Beneficial | non-Beneficial | Beneficial | non-Beneficial | |
| Non-executive directors | ||||
| MJ Lamberti | – | 500,000 | – | – |
| CS Seabrooke | – | 30,000 | – | – |
| MD Brand | – | – | – | – |
| ZL Combi | 20,000 | – | – | – |
| KD Dlamini | 20,000 | – | – | – |
| NN Gwagwa | 20,000 | – | – | – |
| JC Hodkinson | 8,000 | – | – | – |
| P Langeni | 20,000 | – | – | – |
| IN Matthews | – | – | – | – |
| P Maw | – | – | – | – |
| DNM Mokhobo | 20,000 | – | – | – |
| MJ Rubin | – | 29,500 | – | – |
| Executive directors | ||||
| GM Pattison | 1,457,308 | – | 550,000 | – |
| GRC Hayward | 804,898 | – | 250,000 | – |
Details of shares issued and options granted by the Company in terms of the rules of the Massmart Share Incentive Scheme are dealt with
here.
Subsidiaries
The following companies are principal subsidiaries of the Company:
| Builders Trade Depot (Proprietary) Limited | 2004/035206/07 |
| Masscash Holdings (Proprietary) Limited | 1997/014716/07 |
| Massmart International Holdings Limited (Incorporated in Mauritius) | 47902 C1/GBL |
| Massmart Management & Finance Company (Proprietary) Limited | 1992/004084/07 |
| Masstores (Proprietary) Limited | 1991/006805/07 |
| Servistar (Proprietary) Limited | 1948/031897/07 |
Details of the Company’s interests in material subsidiaries are set out in
note 38 . Total net profit for all subsidiaries for the 2009 financial year amounted to R1,282.0 million (2008: R1,317.2 million).
Borrowing powers
In terms of the Articles of Association, the Group has unlimited borrowing powers. At 30 June 2009, borrowings were R388.0 million (2008: R413.9 million).
Going concern
The Directors are of the opinion that the business will be a going concern in the year ahead. In reaching this opinion, the Directors considered the following factors:
- strong positive cash flows from trading
- no recurring operating losses
- well-controlled working capital and good quality inventory
- approved short- and long-term financing, with sufficient additional short-term borrowing capacity if required
- key executive management in place
- there have been no material changes that may affect the Group in any of our customer, product or geographic markets
- budgets to June 2010 reflect a continuation of the above positive issues.
Litigation
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.
Audit Committee report
The Audit Committee met three times during the year and the internal and external auditors presented formal reports to the Committee and attended meetings by invitation. In accordance with section 270A(1)(f) of the Companies Act, No. 61 of 1973, as amended, the Committee reports as follows:
- The scope, independence and objectivity of the external auditors was reviewed.
- The audit firm Deloitte & Touche, and audit partner André Dennis, are, in the Committee’s opinion, independent of the Company, and have been proposed to the shareholders for approval to be the Group’s auditor for the 2010 financial year.
- On an ongoing basis, the Committee reviews and approves the fees proposed by the external auditors.
- The appointment of the external auditor complies with the Companies Act, as amended, and with all other legislation relating to the appointment of external auditors.
- The nature and extent of non-audit services provided by the external auditors has been reviewed to ensure that the fees for such services do not become so significant as to call into question their independence.
- The nature and extent of future non-audit services have been defined and preapproved.
- As at the date of this report, no complaints have been received relating to accounting practices and internal audit of the Company or to the content or auditing of the Company’s financial statements, or to any related matter.
Subsequent events
There were no significant subsequent events.
On behalf of the Board
Ilan Zwarenstein
Company Secretary
5 October 2009