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- These provisional reviewed condensed consolidated 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 provisional reviewed condensed consolidated 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, besides impacting disclosure within the annual financial statements.
- During the current year, 0.9 million (0.4% of average shares in issue) Massmart shares were acquired in the market by the Massmart Employee Share Trust at an average price of R148.88 totalling R135.5 million. During the prior year, the Massmart Employee Share Trust acquired 0.6 million shares (0.3% of average shares in issue) at an average price of R128.22 totalling R73.7 million.
- The impairment of assets in the current and prior periods relate to the impairment of tangible assets in Masscash as a result of
- During the current year the Group reassessed the designation of a number of its intercompany loans to its foreign operations in Africa, as per IAS 21 The Effects of Changes in Foreign Exchange Rates. As a result, certain loans were designated as part of the Group’s net investment in these foreign operations and the associated foreign exchange gains and losses have been recognised in the foreign currency translation reserve on a prospective basis. Massmart’s foreign exchange loss of R149.8 million (December 2014: R49.8 million) arose as a result of its foreign- and Rand-denominated intercompany loans to its African subsidiaries, as well as its US-Dollar-denominated liabilities. In the current year, a combination of Massmart’s increased investment into the rest of Africa; the weakening of the average basket of other African currencies against the Rand; the weakening of the average basket of African currencies against the US Dollar; and the weakening of the Rand against the US Dollar, resulted in a significant increase in Massmart’s foreign exchange loss.
- There were no significant business combinations during the current or prior years.
- Massmart entered into an agreement in 2013 to acquire a Makro store. A current loan of R214.2 million was provided to the seller in 2014 in anticipation of the transfer of the property. Transfer of the property was approved in February 2015 and as a result the current loan was reversed and the property was recognised.
- The Massmart Employee Share Awards Scheme, which came into operation in September 2013, gave rise to an IFRS 2 Share-based Payment charge of R149.9 million (December 2014: R54.2 million).
- Other non-current liabilities and provisions include the lease smoothing liability of R1,023.2 million (December 2014: R912.5 million).
- The Group concluded a Term Loan Facility Agreement with Standard Bank as lender in February 2016. In terms of the agreement Standard Bank will advance R2 billion to the Group on 26 February 2016. The agreement includes a R600m facility that will mature in three years and a R1.4 billion facility that will mature in five. With the exception of this, there were no significant subsequent events after the year end.
- Massmart and its divisions enter into certain transactions with related parties in the normal course of business. Details of these are, and will be, disclosed in Massmart’s Integrated Annual Report. At December 2015, the Supplier Development Fund had a closing balance of R111.6 million (December 2014: R157.2 million). A net amount of R292.7 million remains unpaid to Walmart (December 2014: R206.2 million), which has been accounted for in ‘trade, other receivables and prepayments’ and ‘trade, other payables and provisions’. The Group has a medium-term loan with Walmart repayable after five years, on which interest of 7.46% is paid quarterly. The loan of R600.0 million is accounted for under interest-bearing non-current liabilities. As a 52.4% shareholder, Wal-Mart Stores, Inc. will also be receiving a dividend based on their number of shares held.
- Due to Christmas trading, Massmart’s earnings are weighted towards the six months to December.
- These provisional reviewed 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 provisional reviewed condensed consolidated financial statements was supervised by the Chief Financial Officer, Johannes van Lierop, Bachelor of Business Economics, RA (Amsterdam).