Report Profile

3.1 – 3.22

What is Massmart’s reporting period and date of the most recent previous report?

This is Massmart’s 8^th report covering sustainability performance for the financial year ending 30 June 2011. The content of our sustainability report is supplemented by ongoing communication via stakeholder workshops, press releases, results presentations, Massmart’s website and our internal news magazine, Personal Best.

3.3 – 3.4

What is the reporting cycle and contact point for questions regarding the report and its contents?

Report Scope and Boundary

3.5

What process is followed to define the report’s content, including the determination of materiality, prioritization of topics and identifying those stakeholders most likely to use the report?

We attempt to select information that is perceived to be socially material to our key stakeholder groups, placing particular emphasis on government, employees, customers, suppliers, the communities within which we operate and civil society. The information reported is based on input provided during stakeholder meetings, outcome of Massmart’s internal risk management process, advice of independent subject matter experts, local and global industry trends, content of public discourse and standards defined by initiatives such as the JSE Ltd. Socially Responsible Investment (SRI) Index and Global Reporting Initiative (GRI).

In order to obtain maximum value from our interactions with stakeholders, we have relaunched and implemented a more structured and rigorous stakeholder engagement process.  The information we report is based on feedback from our stakeholders and covers material social and environmental performance indicators.

3.6

Boundary of reporting.

Information reported on encompasses all divisions and operations over which Massmart has a direct control.

3.7

What are the limitations on the scope or boundary of the report?

Electricity consumption figures from the Group’s Africa operations are excluded due to data inaccuracy and difficulties associated with determining what percentage of the electricity supply comes from renewable sources. Due to the exclusion of all non- SA energy consumption data, intensity figures are based on total GLA for South African operations only. Africa Operations information is limited to data from the Group’s Massdiscounters division.

3.8

Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations and other entities that can significantly affect comparability from period to period and/or between organisations.

Not applicable to Massmart.

3.9

Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the indicators and other information in the report.

Human Capital Data Measurements and Assumptions

Human capital data is based on Group and divisional payroll data. HIV prevalence data is based on Right to Care VCT testing figures. The minimum wage figure is not averaged and represents the actual minimum wage paid to staff members at Massmart. Data is internally audited prior to publication. Estimated figures (including the percentage of staff with medical benefits, HIV prevalence, staff turnover and per capita training investment) are considered to have a 10%-15% margin for error.

B-BBEE Data Measurements and Assumptions

Massmart’s B-BBEE figures are calculated externally by Empowerdex Economic Empowerment Rating Agency. These figures are based on actual staff numbers (not estimates) and are believed to be 100% accurate at the time  they are published. B-BBEE scores are calculated retrospectively; therefore the data reported is based on the scorecard compiled in February 2011 for the period ended June 2011.

Africa Operations Data Measurements and Assumptions

Africa Operations information is limited to data from the Group’s Massdiscounters division. Local management as a percentage of total management is based on all employees whose job titles contain the word “manager”. The calculation of local executive store managers as a percentage of total executive store managers was based on store manager and store manager designated job titles. Energy consumption figures are based on total spend on energy and have a 10%-15% margin of error.

Climate Change Data Measurements and Assumptions

Scope 1 and 2 emissions figures are calculated externally by Global Carbon Exchange consultants. Scope 1 emissions relate to direct emissions resulting from co-owned vehicle and generator use and business related refrigerant gas emissions. Massmart trend data is not available for Scope 1 2008/2009 emissions since this information has historically been reported by calendar rather than financial year.

Scope 2 figures are based on divisional electricity consumption figures. Energy consumption data is annualised and normalised (outlying data is excluded). Consequently, the margin for error on reported data is considered to be between 10%-15%. Gross Lettable Area (GLA) is used to calculate per m2 intensity figures. GLA covers the total functional uses area for commercial purposes such as retail shop, office etc. inside the building - excluding all common areas, car parking and service areas. Electricity consumption and Scope 2 emissions figures relate to South African operations only.

Electricity consumption figures from the Group’s Africa operations are excluded due to data inaccuracy and difficulties associated with determining what percentage of the electricity supply comes from renewable sources. Due to the exclusion of all non- SA energy consumption data, intensity figures are based on total GLA for South African operations only. Energy consumption for Massmart Services has been excluded due to data inaccuracy. The total group sales are used to calculate Scope 1 and 2 emissions’ intensity per Rand million (Rm). Water usage has been derived with reference to the cost of water consumed. Water consumption is based on Rand Water Tariff 2010/2011 of 858.89 c/kl. 

3.10

Explain the effect of any re-statements of information provided in earlier reports and the reasons for such re-statement.

Due to more accurate energy data and the analysis of Group energy consumption, Scope 2 emissions data has been restated. Furthermore, energy intensity has been calculated using Gross Lettable Area (GLA). On the basis of these more accurate calculations, the Group’s energy intensity was 178 KWh/m2 for the 2010/2011 reporting period. We are encouraged that we have overstated our electricity usage thus far and that in the last reporting period our Scope 2 emissions intensity has declined from 181 KWH/m2 in 2009/2010 to 178 KWH/m2 in 2010/2011. Please refer to Scorecards in the accountability here.

Were there any significant changes from the previous reporting periods in the scope, boundary, or measurement methods applied in the report?

In terms of energy intensity figures, GLA and not Trading Area (TA) was used to calculate per m2 intensity figures. For Africa Operations, CSI spend was reported in Rm rather than as a Percentage of Profit after Tax (PAT).

3.13

Assurance

What is Massmart’s policy and practice with regard to seeking external assurance for the report? Explain the scope of the external assurance provided and the relationship between Massmart and the assurance provider.

Massmart’s Internal Audit Department was again responsible for the verification of the statistical scorecard information contained in our Sustainability Report due to their intimate knowledge of the Group and our information systems and given their independence.

The objective of the review was to provide an opinion, based on the AA1000 Assurance Standard principles of completeness, materiality and responsiveness on the:

• Aaccuracy, adequacy and relevance of data presented in the Scorecards;
• Processes and mechanisms in place for the preparation and delivery of the Sustainability Scorecards;
• Compliance of the Scorecards with the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines 2006 v3; and
• Massmart’s sustainability reporting is aligned with the guidelines given by the King III report on corporate governance.

Internal Audit Opinion  : 

The Massmart Internal Audit department (MIAS) conducted a review of the data reported in the preliminary and final Sustainability Scorecards.  The review was conducted in terms of assurance standards and entailed the verification of the authenticity of data presented against internal and external sources. All significant reported internal audit findings have been satisfactorily addressed prior to publication. On this basis we are satisfied to report that the data presented in the reported Scorecards fairly represents the position of Massmart’s Sustainability performance for the financial year ending 30 June 2011.

King III requires an external verification on the accuracy of sustainability information. Massmart has been ahead of this requirement. Sustainability information been independently assured by MIAS for the past six years and disclosure has been integrated with the company’s financial reporting. Management are of the view that the quality of the verification performed by MIAS will supersede an external verification. Management are satisfied that this deviation from King III can be acceptably “explained”.