11. Dividends paid to shareholders

• No 15 of 123.0 cents declared on 2 October 2007 and paid on 29 October 2007 (R244.4 million).
• No 16 of 223.0 cents declared on 20 March 2008 and paid on 25 March 2008 (R443.0 million).
• No 17 of 163.0 cents declared on 20 August 2008 and paid on 15 September 2008 (R325.0 million).
• No 18 of 252.0 cents declared on 25 February 2009 and paid on 23 March 2009 (R504.3 million).
• No 19 of 134.0 cents declared on 26 August 2009 and paid on 21 September 2009 (R269.7 million).*
• No 2 of 30.75 cents declared on 2 October 2007 and paid on 25 October 2007 to the Massmart Thuthukani Empowerment Trust (R5.0 million).
• No 3 of 111.5 cents declared on 20 March 2008 and paid on 25 March 2008 to the Massmart Thuthukani Empowerment Trust (R17.5 million).
• No 4 of 81.5 cents declared on 20 August 2008 and paid on 15 September 2008 to the Massmart Thuthukani Empowerment Trust (R11.8 million).
• No 5 of 189.0 cents declared on 25 February 2009 and paid on 23 March 2009 to the Massmart Thuthukani Empowerment Trust (R26.3 million).
• No 6 of 100.5 cents declared on 26 August 2009 and paid on 21 September 2009 to the Massmart Thuthukani Empowerment Trust (R13.8 million).*

12. Earnings per share

• Both the Thuthukani 'A' preference shares and the Black Scarce Skills 'B' preference shares are dilutive and have a small effect on diluted basic and diluted headline earnings per share.

13. Property, plant and equipment

2009

2008

• A register of land and buildings as required by the Companies Act of South Africa is available for inspection by members at the registered offices of the companies in the Group.
• Certain capitalised leased property, plant and equipment is encumbered as per note 25.

2009

2008

• The Group has reviewed the residual values and useful lives of the assets. No material adjustment resulted from such review in the current period.
• The following useful lives are used in the calculation of depreciation.

  –	Buildings	50 years
  –	Fixtures, fittings, plant and equipment	4 to 15 years
  –	Motor vehicles	4 to 10 years
  –	Computer hardware	3 to 8 years
  –	Leasehold improvements	Shorter of lease period or useful life

• There is no investment property in the Group and all assets are held at historical cost.

14. Goodwill

• The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
• When testing goodwill for impairment, the recoverable amounts of the CGUs are determined as the lower of value in use and fair value less costs to sell. The key assumptions for the value in use calculations are discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using rates that reflect current market assumptions of the time value of money and the risks specific to the CGUs. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.
• The Group prepares cash flow forecasts based on the CGUs’ results for the next five years. A terminal value is calculated based on a conservative growth rate of 3% (2008: 3%). This rate does not exceed the average long-term growth rate for the relevant markets. The valuation method applied is consistent with the prior period.
• The rate used to discount the forecast cash flows is 14% (2008: 14%).
• No goodwill was impaired in either periods under review.
• Additions through minority buyouts relate to minor business acquisitions in the Masscash division.
• In 2009 the additions through acquisitions relate to the purchase of Cambridge Food and Top Spot in Masscash and Buildrite in Massbuild, more specifically, Builders Trade Depot. Further details relating to these acquisitions can be found in note 3.

15. Other intangibles

2009

2008

2009

2008

• The Group has reviewed the useful lives of the assets for reasonability. There were no material adjustments in the current period.
• The following useful lives are used in the calculation of depreciation.

  –	Computer software	3 to 8 years
  –	Trademarks	10 years

16. Investments

Investment in associate

Unlisted investments

Listed investments

• The ‘bare dominium revaluation’ reflects Massmart’s right to acquire a 49% share in the bare dominium over seven Makro properties.
• The ‘investment in an offshore trading structure’ is in M-class preference shares representing an international treasury, shipping and trading business unit.
• The ‘participation in an insurance cell-captive on extended warranties’ relates to an insurance arrangement with Mutual & Federal pertaining to extended warranties sold within the Group.
• The ‘participation in an insurance cell-captive on premium contributions’ relates to an insurance arrangement with Mutual & Federal pertaining to general insurance within the Group.

• The ‘Trencor export partnership’ represents our participation in export containers.

• The ‘preference share investment’ represented cumulative preference shares. A long-term liability of the Group was secured by a cession of the preference shares and legal offset was permitted. The investment in preference shares was realised in February 2009, and the related loan settled.

• The directors value the unlisted investments at R275.2 million (2008: 309.7 million).
• For IAS 39 Financial Instruments: Recognition and Measurement accounting treatment of these investments, see note 40.

17. Other financial assets

• These loans are classified as ‘Loans and receivables’. For IAS 39 Financial Instruments: Recognition and Measurement accounting treatment of these values, see note 40.
• All housing and staff loans bear interest at various rates below the prime interest rate. The loans to the employee share trust participants, including executive directors, attract interest of zero percent and are secured by the underlying shares.
• The finance lease deposit accrues interest at 13.6%.
• Details of the housing and employee share trust loans to the directors and executive committee members of Massmart Holdings Limited:

2009

2008

18. Deferred taxation

2009

2008

19. Inventories

• Inventories are carried at the lower of cost and net realisable value.
• Provisions include: shrinkage and obsolescence provisions, write-downs to net realisable value and unearned rebates and settlement discounts per SAICA Circular 9/2006 Transactions giving rise to Adjustments to Revenue/Purchases.
• Inventory is fully funded by trade payables. Details of trade payables can be found in note 27.
• No inventory is pledged as security.

Composition of total inventories (%):

20. Trade and other receivables and prepayments

• No interest is charged on the trade receivables for the first 30 days from the date of the invoice. Thereafter, differing structures exist between the Divisions with interest being charged between 12% and 17.5% (2008: 12.5% and 26,0%) per annum on the outstanding balance. Trade receivables between 30 days and 180 days are provided for based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience. It is the Group's policy to provide fully for all receivables that are past due because historical experience is such that these receivables are generally not recoverable. The large movement from 26.0% in the prior year to 17.5% in the current year is due to the sale of the debtors book in Massdiscounters.
• 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. There is no customer who represents more than 5% of the total balance of trade receivables.
• Included in the Group's trade receivables balance are debtors with a carrying amount of R7.5 million (2008: R7.4 million) which are past due at the reporting date for which the Group has not provided. The Group considers the amounts recoverable and currently holds security over these debtors. The average age of these receivables is 120 days.
• 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, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.
• Included in the allowance for doubtful debts are specific trade receivables with a balance of R7.0 million which have been placed under liquidation. This represents the difference between the carrying amount of the specific trade receivable and the present value of the expected liquidation proceeds.
• Trade receivables are classified as ‘Loans and receivables’. For IAS 39 Financial Instruments: Recognition and Measurement accounting treatment of these values, see note 40.