• + 17. Inventories
             
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
       
             
    17. Inventories      
             
    Rm   December 2019   December 2018
             
    Food        
    Inventory at cost     3,902.3     4,090.1
    Provisions     (92.6)     (94.7)
          3,809.7     3,995.4
             
    Liquor        
    Inventory at cost     1,312.3     1,241.1
    Provisions     (25.5)     (20.9)
          1,286.8     1,220.2
             
    General Merchandise        
    Inventory at cost     4,984.7     5,097.5
    Provisions     (246.6)     (162.8)
          4,738.1     4,934.7
             
    Home Improvement        
    Inventory at cost     2,146.0     2,106.2
    Provisions     (86.8)     (75.6)
          2,059.2     2,030.6
             
    Total inventory net of provisions     11,893.8     12,180.9
             
    Carrying amount of inventories carried at net realisable value     306.4     181.7
    Inventory recognised as an expense in the year     75,029.6     72,267.5
    Write-down recognised as an expense in the year     618.3     493.8
    Right of return asset     78.5     77.8
             
    No inventory is pledged as security.
  • + 18. Trade and other receivables
                             
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS          
                 
                             
    18. Trade and other receivables                        
                             
    Rm                   December 2019   December 2018
                             
    Trade receivables       2,563.1   2,753.0
    Allowance for doubtful debts       (233.6)   (144.6)
                        2,329.5   2,608.4
    Prepayments       143.3   199.3
    Rebate receivables, including rebates and advertising from buying members       1,709.4   1,808.6
    Other accounts receivable       802.6   1,053.5
    FEC asset (not designated)       28.5   23.4
    Total receivables net of provisions       5,013.3   5,693.2
                             
    Movement in allowance for doubtful debts            
    Balance at the beginning of the year       144.6   108.1
    Change in accounting standards                     9.4
    Amounts previously in the provision written off during the year       (5.3)   (8.9)
    Additional amounts raised       94.3   36.0
    Balance at the end of the year       233.6   144.6
                             
        December 2019   December 2019   December 2018   December 2018        
    Ageing of impaired trade debtors provided for:   Expected credit loss rate   Gross Carrying amount   Expected credit loss rate   Gross Carrying amount        
    0 to 60 days   2%   1,754.0   1%   2,477.9   28.5   21.6
    60 to 90 days   3%   227.1   11%   40.5   7.3   4.3
    90 to 120 days   15%   99.6   25%   24.1   14.7   6.0
    120+ days   38%   482.5   54%   210.5   183.1   112.7
    Total   9.1%   2,563.1   5.3%   2,753.0   233.6   144.6
                             
                             
    Set out above is the information about the credit risk exposure on the Group’s trade receivables and contract assets using a provision matrix.
                             
    Trade receivables days reduced to 8 days (December 2018: 9 Days). Allowance for doubtful debts at year end was 9.1% of trade receivables (December 2018: 5.3%). The impact on the trade receivable days of the Shield arrangement, where revenue is recognised on a net basis however the trade receivables are recognised on a gross basis, is 4 days compared to 5 days in the 2018 financial year.
     
    No interest is charged on the trade receivables and generally repayment terms do not extend past 30 days. Trade receivables between 0 days and more than 120 days are provided for based on ECL impairment method, determined predominatly by reference to past default experience as economic conditions have changed. This assessment includes considerations relating to receivables that are past due and not insured as well as those receivables over which the Group does not hold any security, which as a result of historical experience are not considered to be recoverable.
     
    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. No customer represents more than 5% of the total balance of trade receivables.
     
    Included in the Group’s trade receivables balance are receivables with a carrying amount of R921.7 million (December 2018: R179.8 million) which are past due at the reporting date for which the Group has not provided. The average age of these receivables is 100.6 days (December 2018: 83.4 days).
     
    Other accounts receivable includes accrued rebates receivables, statutory receivables which are non-financial instruments, insurance claim related receivables and other insignificant amounts which do not expose the Group to significant additional credit risk.
     
    The Group recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The Group did not provide detailed information on how the forecast economic conditions have been incorporated in the determination of ECL because the impact is not significant given the short-term and widespread nature of the Group’s customer base. Where considered appropriate, credit guarantee insurance is used to mitigate credit risk exposure on selected trade accounts receivable and as a result a loss allowance may not be recorded even if the debtor falls within a past due ageing. Refer to note 38 for the Group’s management of credit risk exposure.
                             
  • + 19. Non-current assets classified as held for sale
             
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
     
             
    19. Non-current assets classified as held for sale      
             

    At the end of the current year non-current assets classified as held for sale represents properties in the Other operating segment in the process of being sold. The Group is currently negotiating with potential buyers but had not yet entered into a sale agreement and the transfer of the property had not yet been effected.

    In the prior year, non-current assets classified as held for sale represented two properties in the Masscash and Massbuild operating segments which were in the process of being sold. During the course of the 2019 financial year the sale of both properties was executed and the proceeds were received with the resultant profit being recorded in the Income Statement.

             
    Rm   December 2019   December 2018
             
    Included in the Statement of Financial Position        
    Non-current assets   159.5   11.6
    -Freehold land, property, plant and equipment   159.5   11.6
             
    Total assets   159.5   11.6
             
    The fair value of the properties are based on management’s best estimate of the expected selling price taking into account market information and information provided by the Group’s selling agents. For more information on the fair value of these non-current assets held for sale, refer to note 37.
  • + 20. Issued capital
                     
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
               
                     
    20. Issued capital  
                     
        Share capital   Share premium
    Rm   December 2019   December 2018   December 2019   December 2018
                     
    Authorised                
    500 000 000 (December 2018: 500 000 000) ordinary shares of 1 cent each   5.0   5.0    
    20 000 000 (December 2018: 20 000 000) non-redeemable cumulative non-participating preference shares of 1 cent each   0.2   0.2    
    18 000 000 (December 2018: 18 000 000) ‘A’ convertible redeemable non-cumulative participating preference shares of 1 cent each   0.2   0.2    
    4 000 000 (December 2018: 4 000 000) ‘B’ convertible redeemable non-cumulative participating preference shares of 1 cent each        
                     
    Issued                
    219 138 809 (December 2018: 217 179 142) ordinary shares of 1 cent each   2.2   2.2   209.8   139.1
    2 797 675 (December 2018: 2 797 675) ‘B’ convertible redeemable non-cumulative participating preference shares of 1 cent each        
                     
            Number of   Share capital   Share premium
    Ordinary shares       shares   Rm   Rm
    Balance at December 2017       217,145,489   2.2   401.2
    Shares issued in terms of the Massmart Black Scarce Skills Trust   33,653    
    Reclassification of share-based payment reserve within equity upon vesting             (293.3)
    Ordinary shares issued – December 2018   217,179,142   2.2   107.9
    Treasury shares       (1,177,645)     31.2
    Ordinary shares issued excluding treasury shares – December 2018   216,001,497   2.2   139.1
                     
    Balance at December 2018       217,179,142   2.2   139.1
    Shares issued in terms of the scrip dividend declared1   1,959,667     174.4
    Reclassification of share-based payment reserve within equity upon vesting           (109.3)
    Ordinary shares issued – December 2019       219,138,809   2.2   204.2
    Treasury shares       (1,466,504)     5.5
    Ordinary shares issued excluding treasury shares – December 2019   217,672,305   2.2   209.8
                     
    Ordinary shares, which have a par value of 1 cent, carry one vote per share and carry the right to dividends.
                     
    Non-redeemable cumulative non-participating preference shares        
                     
    The non-redeemable cumulative non-participating preference shares are unissued in the current year. It remains within the ambit of the Board of Directors to issue these shares as the need arises.
                     
    ‘A’ convertible redeemable non-cumulative participating preference shares        
                     
    There are no ‘A’ convertible redeemable non-cumulative participating preference shares in issue as the residual shares were automatically redeemed on the vesting of the Massmart Thuthukani Empowerment Trust scheme, in terms of the Trust Deed in the 2013 financial year.
                     
    ‘B’ convertible redeemable non-cumulative participating preference shares   Number of   Share capital   Share premium
            shares   Rm   Rm
                     
    Balance at December 2017       2,831,328    
    Shares converted to ordinary shares       (33,653)    
    Balance at December 2018       2,797,675    
    Shares converted to ordinary shares          
    Balance at December 2019       2,797,675.0    
                     
    1The share capital value is less than R100 000. Please refer to note 9 for additional detail regarding the current year scrip dividend.
     
    B’ convertible redeemable non-cumulative participating preference shares, which have a par value of 1 cent, are held in the Massmart Black Scarce Skills Trust. These shares carry one vote per share, which are cast by the trustees, and do not carry the right to dividends. On election of the beneficiary, the shares will convert to ordinary shares on a one-for-one basis and will rank pari passu with all ordinary shares then in issue.
                     
    Share options granted under the Massmart Holdings Limited Employee Share Trust    
                     
    At December 2019, executives and senior employees have options of 3,583,071 (December 2018: 4,234,937) ordinary shares of which nil (December 2018: 134,782) are unvested.
    Share options granted under the Employee Share Incentive Schemes carry no rights to dividends and no voting rights. Additional information of the Employee Share Incentive Schemes can be found in note 27.
    During the current financial year, 1.1 million shares (0.5% of average shares in issue) were bought in the market by the Massmart Holdings Limited Executive Share Trust at an average price of R43.98 totalling R48.4 million.
    During the prior financial year, 1.9 million shares (0.9% of average shares in issue) were bought in the market by the Massmart Holdings Limited Executive Share Trust at an average price of R127.85 totalling R246.1 million.
    The Directors have the authority, until the next annual general meeting, to issue the ordinary shares of the Company up to a maximum of 5% of the shares already issued.
  • + 21. Other reserves
                   
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
             
                   
    21. Other reserves          
                 
    Rm         December 2019   December 2018
                   
    Foreign currency translation reserve1   (414.7)   (338.1)
    Hedging reserve2    
    Share-based payment reserve3   1,729.5   1,627.0
    Change in non-controlling interest   (581.3)   (581.8)
    Post-retirement medical aid actuarial gain         41.9   33.8
    Other reserves         (11.6)   (11.3)
              763.7   729.6
                   
    1Reconciliation of the foreign currency translation reserve:   December 2019   December 2018
    Balance at the beginning of the year         (338.1)   (413.1)
    Change in accounting standards           (0.7)
    Translation on consolidation         (76.6)   75.7
              (414.7)   (338.1)
                   
    Exchange differences relating to the translation from functional currencies of the Group’s foreign subsidiaries into Rands are accounted for in the foreign currency translation reserve. In addition, exchange differences arising on the Group’s net investment in its foreign operations are also accounted for in the foreign currency translation reserve.
                   
              December 2019   December 2018
    2Reconciliation of the hedging reserve:    
    Balance at the beginning of the year           (14.9)
    Foreign exchange gain in cost of sales           20.8
    Deferred taxation           (5.9)
               
                   
              December 2019   December 2018
    3Reconciliation of the share-based payment reserve:    
    Balance at the beginning of the year         1,627.0   1,454.0
    Share-based payment expense relating to the Massmart Holdings Limited Employee Share Trust 128.0   190.6
    Deferred tax recognised in equity relating to the Massmart Holdings Limited Employee Share Trust (1.5)   (21.6)
    Share-based payment expense relating to the Massmart Black Scarce Skills Trust   4.0
    Share-based payment reserve reclassification relating to freehold land upon vesting (23.2)  
    Share-based payment reserve adjustment upon vesting relating to the Massmart Holdings Limited Employee Share Trust (110.1)   (293.3)
    Reclassification of share-based payment reserve within equity upon vesting 109.3   293.3
              1,729.5   1,627.0
                   
    The share-based payment reserve arises on the granting of share options and share awards to employees under the Employee Share Incentive Schemes. For additional information, refer to note 27.
  • + 22. Non-current liabilities
                 
    NOTES TO THE ANNUAL FINANCIAL STATEMENTS
           
                 
    22. Non-current liabilities    
                 
    Rm       December 2019   December 2018
                 
    Interest-bearing borrowings            
    Secured            
    Medium-term bank loans       2,266.5   2,291.1
    Less: Payable within one year included as current liabilities (note 26)   (266.5)   (616.1)
            2,000.0   1,675.0
                 
    Lease liability       10,335.1   648.1
    Less: Payable within one year included as current liabilities   (1,384.4)   (69.0)
            8,950.7   579.1
                 
    Total non-current interest-bearing liabilities   10,950.7   2,254.1
                 
    Interest-free borrowings            
    Unsecured            
    Loans from non-controlling interests       1.9   1.9
    Operating lease liability – lease smoothing adjustment^         1,357.9
    Other non-current interest-free borrowings       5.1   27.4
    Less: Payable within one year included in trade and other payables (note 24)     (109.0)
    Total non-current interest-free liabilities   7.0   1,278.2
                 
                 
    Reconciliation of lease liability            
                 
                 
    Rm       December 2019   December 2018
                 
                 
    Opening Balance (Gross leases including long and short term)       648.1   580.5
    Adoption on 1 January 2019 upon transition to IFRS 16 standard^       10,060.6  
    Liability arising on new leases entered into during the year       1,049.3   146.8
    Repayments of lease obligations (Cash flow excluding interest component)       (1,551.2)   (79.2)
    Liability adjustments upon entering into modifications of lease terms during the year       158.9  
    Foreign exchange movements       (30.6)  
    Gross lease liabilites       10,335.1   648.1
    Less: Payable within one year included as current liabilities       (1,384.4)   (69.0)
    Long term portion of lease liabilities   8,950.7   579.1
                 
                 
    ^ Refer to note 30            
                 
    Medium-term bank loans
    Included in medium-term bank loans above is a fixed term loan of R600 million (2018: Rnil). The loan is repayable in one final instalment in February 2021. The drawdown of the loan occurred on 27 of February 2019 at a fixed interest rate of 8.26%, the interest is repayable quarterly. The loan is secured by intragroup cross-suretyships.
     
    Included in medium-term bank loans above is a fixed term loan of R1.4 billion (2018: R1.4 billion). The loan is repayable in one final instalment in February 2021. The drawdown of the loan occurred on 31 March 2016 at a fixed interest rate of 10.62%, the interest is repayable quarterly. The loan is secured by intragroup cross-suretyships.
     
    Included in the 2018 medium-term bank loans above was a fixed term loan of R600.0 million. The loan was repayable in one final instalment in February 2019. The initial drawdown of the loan occurred on 31 March 2016 at a fixed interest rate of 9.78%, the interest was repayable quarterly. The loan was secured by intragroup cross-suretyships.
     
    Foreign bank loans comprise of an offshore USD facility (USD 19.0 million), granted by Standard Chartered Bank, available for working capital and general corporate requirements. The Group is using this loan to fund its African expansion. In October 2018 the original loan matured and was refinanced for a period of 2 years. Interest is incurred daily at the 6 monthly USD LIBOR rate plus 205 basis points, in arrears. The loan is repayable in one final instalment in October 2020.
                 
    Lease liability    
    At 29 December 2019 Massmart had 443 stores (2018: 436 stores), 87% of which were leased.
     
    The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on adoption date was 11.9%. Finance costs for the Group was an additional R1.1 billion for the
    year.
     
    The average remaining life of real estate leases is four years, with the exception of the Woodmead land lease which has 73 years remaining.
     
    For more information on the Group’s liquidity risk and interest rate risk management, refer to note 38.
     
    Additional information on the fair value of ‘non-current liabilities’ can be found in note 37.
  • + 23. Post-retirement medical aid liability
                         
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
                         
                         
    23. Provisions                  
                         
    Rm               December 2019   December 2018
                         
    Provision for post-retirement medical aid contributions               91.5   94.1
    Less: Payable within one year included in current provisions (note 25)           (7.7)   (8.6)
                         
                    83.8   85.5
                         
    Reconciliation                    
                         
    Rm   Opening balance   Additional amounts provided   Amounts utilised   Unused amounts reversed   Closing balance
                         
    December 2019                    
    Provision for post-retirement medical aid contributions   85.5       (1.7)   83.8
        85.5       (1.7)   83.8
                         
    December 2018                    
    Provision for post-retirement medical aid contributions   95.6   19.3     (29.4)   85.5
        95.6   19.3     (29.4)   85.5
                         
                         
    Rm       Repayable within 1 year   Repayable in 2 – 5 years   Repayable after 5 years   Total
                         
    December 2019       7.7     83.8   91.5
    December 2018       10.5   85.5     96.0
                         
                         
                         
    Post-retirement medical aid                    
                         
    Employees of Massmart participate on Massmart Health Plan and Resolution Health Medical Scheme administered by Universal Healthcare Proprietary Limited and Agility Global Health Solutions Health Proprietary Limited respectively. The post-retirement subsidy policy is summarised below:
       
    Members who joined Makro and Dion Stores prior to 1 July 1999 are eligible for a subsidy of medical scheme contributions upon retirement. Members who joined Massmart prior to 1 January 2000 are also eligible for a subsidy upon retirement;
     
    Members and their spouses are entitled to a 50% subsidy of medical scheme contributions upon retirement; and
     
    Dependants of eligible continuation members receive a subsidy before and after the death of the principal member.
    If a member eligible for a subsidy of medical scheme contributions upon retirement dies in service, their dependants are eligible for a subsidy of medical scheme contributions as described above for a period of three months.
     
    The significant risks faced by Massmart as a result of the post-retirement healthcare obligation can be summarised as follows:
     
    The risk that future CPI inflation and healthcare cost inflation are higher than expected and uncontrolled; and
     
    The risk that pensioners live longer than expected and thus their healthcare benefit is payable for longer than expected.
     
    The liability is unfunded. The significant assumptions are listed below.
    Of particular importance is the ‘interest rate – medical inflation rate’ gap of 1.5% (December 2018: 1.7%) used in calculating the provision.
                         
                    December 2019   December 2018
                         
    Significant assumptions:                    
    Discount rate               11.2% p.a.   10.6% p.a.
    Healthcare cost inflation               8.5% p.a.   8.9% p.a.
    Consumer Price Index inflation1               6.5% p.a.   6.9% p.a.
    Expected retirement age               65 years   65 years
    Membership discontinued at retirement or death-in-service               0%   0%
                    December 2019   December 2018
    Movements in the post-retirement medical aid liability (Rm):                    
    Opening post-retirement medical aid liability               94.1   98.9
    Current service cost               2.1   8.1
    Interest cost               10.2   11.2
    Employer benefits paid               (3.7)   (3.6)
    Actuarial gain recognised in the year               (11.2)   (20.5)
    Closing defined-benefit obligation               91.5   94.1
                         
    1CPI inflation by itself is not a significant assumption used in the valuation. This assumption has been based on the relationship between current conventional bond yields and current index-linked bond yields. The healthcare cost inflation exceeds CPI inflation by an average of 2.0% per annum over the long term, which is seen to be appropriate.
     
    The last valuation of the liability for the post-retirement medical aid contributions was performed as at December 2019 by Alexander Forbes, Fellow of the Institute of Actuaries. The current financial year costs have been assessed in accordance with the advice of independent actuaries.
     
    The net actuarial gain in the current year arose as a result of a combination of the following factors:
    Unexpected changes in the membership and membership profile resulted in a net gain of R0.3 million (December 2018: R1.7 million);
    Lower than expected healthcare cost inflation resulted in a gain of R1.7 million (December 2018: R4.9 million); and
    An unexpected gain of R13.6 million (December 2018: R8.1 million) arose as a result of an increase in the real discount rate, i.e. an increase in the difference between the discount rate and the healthcare cost inflation assumption from 1.6% per annum to 2.5% per annum (December 2018: 1.5% per annum to 1.7% per annum).
                         
    Projection of post-retirement medical aid liability                    
                         
    Provided that all actuarial assumptions are borne out in practice, the accrued liability is expected to increase each year in line with:
    The rate of discount;
    Plus the cost of an additional year’s accrual for in-service members (service cost); and
    Less the benefit payments made by the employer in respect of continuation members.
                         
    A projection of results:                    
                         
    Rm                   December 2019
                         
    Defined-benefit obligation at December 2019                   91.5
    Current service cost                   1.6
    Interest cost                   10.0
    Expected employer benefits paid                   (4.0)
    Defined-benefit obligation at December 2020                   99.2
                         
                         
    Maturity profile of post-retirement medical aid liability                    
                         
    The expected contributions to the post-retirement medical aid liability in the following financial year is R4.0 million (December 2018: 3.7 million).
    The average duration of the post-retirement medical aid liability at the end of the reporting period is 15.2 years (December 2018: 16.8 years).
                         
                         
    Sensitivity analysis                    
                         
    The valuation results are based on a number of assumptions. The value of the post-retirement medical aid liability could be overstated or understated, depending on the extent to which actual experience differs from the assumptions adopted.
                         
    2019           Central Assumption   Decrease   Increase
                         
    Sensitivity analysis on the post-retirement medical aid liability:                    
    1% decrease or increase in the rate of healthcare cost inflation           8.5%   -1.0%   1.0%
    Defined-benefit obligation in (Rm)           91.5   80.2   105.2
    % change               -12.3%   15.0%
    0.5% decrease or increase in the rate of healthcare cost inflation for the next 5 years, thereafter returning to a healthcare cost inflation of 8.5%           8.5%   -0.5%   0.5%
    Defined-benefit obligation in (Rm)           91.5   85.6   98.0
    % change               -6.5%   7.1%
    5% or 10% increase in the rate of healthcare cost inflation for the next 5 years, thereafter returning to a healthcare cost inflation of 8.5%           8.5%       5.0% – 10.0%
    Defined-benefit obligation in (Rm)           91.5       112.2 – 136.7
    % change                   22.6%- 49.4%
    1% decrease or increase in the discount rate           11.2%   -1.0%   1.0%
    Defined-benefit obligation in (Rm)           91.5   104.9   80.6
    % change               14.7%   -11.9%
    1 year decrease or increase in the expected retirement age           65 years   – 1 year   1 year
    Defined-benefit obligation in (Rm)           91.5   95.6   87.5
    % change               4.5%   -4.3%
    Sensitivity analysis on the aggregate of the current service and interest cost:                    
    1% decrease or increase in the rate of healthcare cost inflation from previous valuation           8.9%   -1.0%   1.0%
    Current service cost and interest cost from the previous valuation (Rm)           12.3   10.5   14.5
    % change               -14.5%   18.0%
                         
    2018           Central Assumption   Decrease   Increase
                         
    Sensitivity analysis on the post-retirement medical aid liability:                    
    1% decrease or increase in the rate of healthcare cost inflation           8.9%   -1.0%   1.0%
    Defined-benefit obligation in (Rm)           94.1   85.2   114.8
    % change               -13.4%   16.6%
    0.5% decrease or increase in the rate of healthcare cost inflation for the next 5 years, thereafter returning to a healthcare cost inflation of 8.9%           8.9%   -0.5%   0.5%
    Defined-benefit obligation in (Rm)           94.1   91.5   106.2
    % change               -7.1%   7.9%
    5% or 10% increase in the rate of healthcare cost inflation for the next 5 years, thereafter returning to a healthcare cost inflation of 8.9%           8.9%       5.0% – 10.0%
    Defined-benefit obligation in (Rm)           94.1       120.9 – 147.6
    % change                   22.9%- 50.0%
    1% decrease or increase in the discount rate           10.6%   -1.0%   1.0%
    Defined-benefit obligation in (Rm)           94.1   114.6   85.5
    % change               16.4%   13.1%
    1 year decrease or increase in the expected retirement age           65 years   – 1 year   1 year
    Defined-benefit obligation in (Rm)           94.1   103.1   94.1
    % change               4.7%   -4.4%
    Sensitivity analysis on the aggregate of the current service and interest cost:                    
    1% increase or decrease in the rate of healthcare cost inflation from previous valuation           10.1%   -1.0%   1.0%
    Current service cost and interest cost from the previous valuation (Rm)           19.3   11.4   15.8
    % change               -14.8%   18.4%
                         
                         
  • + 24. Trade and other payables

     

                 
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
                 
                 
    24. Trade and other payables      
               
    Rm       December 2019   December 2018
                 
    Trade payables       17,764.3   18,698.2
    Operating lease liability – lease smoothing adjustment^     109.0
    Payroll accruals       496.2   493.0
    FEC liability (Not designated)       37.4   24.8
    Income received in advance       151.6   162.1
    Rebate payables including rebates and advertising owing to buying members   136.5   128.7
    Interest accrual on loans and borrowings       202.4   79.7
    Amounts due to Walmart       3.3   0.1
    Sundry payables and other accruals   2,220.3   2,102.2
            21,012.0   21,797.8
                 
    ^Refer to note 30 for the adoption of the new standards.
                 
    Trade payables do not attract interest.
     
    The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe, normally around 60 – 90 days, following industry norm. During the year credit days decreased by seven days to 74 days (December 2018: 81 days) due to the change in the mix of goods purchased. Settlement discounts received range between 1.0% to 5.0%.
     
    Sundry payables and other accruals comprises other sundry creditor accruals and VAT payables. Included in income received in advance is a gift card liability of R111.3 million (December 2018: R115.4 million).
     
    For more information on the Group’s liquidity risk management, refer to note 38.
  • + 25. Provisions
                               
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
                               
                               
    25. Provisions            
                               
    Rm                     December 2019   December 2018
                               
    Onerous lease provision       1.9
    Provisions raised on asset acquisitions    
    Provision for Supplier Development Fund       10.8
    Provision for post-retirement medical aid contributions     7.7     8.6
    Provision for restructuring       6.6
    Right of return and other                       97.3     99.4
                            105.0     127.3
                               
    The Group established the Supplier Development Fund in line with the judgement of the Competition Appeal Court at the time of the Walmart transaction. The purpose of the fund is to assist the Group’s suppliers, particularly Black Economic Empowerment suppliers, in order to promote and benefit from the growth of their businesses. The fund has no fixed utilisation requirements per year.
                               
                               
    Reconciliation of provisions            
                               
    Rm   Opening balance   Change in acccounting standard   Amounts provided   Amounts utilised   Unused amounts reversed   Closing balance
                               
    December 2019                          
    Onerous lease provision     1.9         (1.9)    
    Provision for Supplier Development Fund     10.8         (10.8)    
    Provision for post-retirement medical aid contributions     8.6       7.7     (8.6)       7.7
    Provision for restructuring       6.6         (5.0)     (1.6)  
    Right of return     99.4       20.0     (4.6)     (17.5)     97.3
            127.3       27.7     (30.9)     (19.1)     105.0
                               
    December 2018                        
    Onerous lease provision     3.1       1.9     (3.1)       1.9
    Provisions raised on acquisitions     31.5       0.1     (20.0)     (11.6)     0.0
    Provision for Supplier Development Fund     34.5         (23.7)       10.8
    Provision for post-retirement medical aid contributions     3.3       8.9     (3.6)       8.6
    Provision for restructuring           130.1     (122.2)     (1.3)     6.6
    Right of return         85.0     38.2     (1.3)     (22.5)     99.4
    Other     11.1           (11.1)  
            83.5     85.0     179.2     (173.9)     (46.5)     127.3
  • + 26. Interest bearing borrowings
                 
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
                 
                 
    26. Interest bearing borrowings    
               
    Rm       December 2019   December 2018
                 
    Medium-term bank loans   266.5   600.0
    Massmart Education Foundation loan   6.3   5.8
    Lamberti Education Foundation Trust loan         10.3
    Interest-bearing borrowings       272.8   616.1
    Debt facilities       1,300.0   1,744.0
    Total interest-bearing borrowings       1,572.8   2,360.1
                 
    Medium-term loans        
    Foreign bank loans comprise of an offshore USD facility (USD 19.0 million), granted by Standard Chartered Bank, available for working capital and general corporate requirements. The Group is using this loan to fund its African expansion. In October 2018 the original loan matured and was refinanced for a period of 2 years. Interest is incurred daily at the 6 monthly USD LIBOR rate plus 205 basis points, in arrears.
     
    Included in the 2018 medium-term bank loans above was a fixed term loan of R600.0 million. The loan was repayable in one final instalment in February 2019. The initial drawdown of the loan occurred on 31 March 2016 at a fixed interest rate of 9.78%, the interest was repayable monthly. The loan was secured by intragroup cross-suretyships.
     
    The Massmart Education Foundation loan represents cash reserves invested with Group Treasury. Interest was incurred at a fixed rate of 8.8% (December 2018: fixed rate of 8.8%), is unsecured and has no fixed terms of repayment. The Massmart Education Foundation is a related party of the Group.
     
    The Lamberti Education Foundation Trust loan represented cash reserves invested with Group Treasury. Interest was incurred at the Group borrowing rate which is a fixed rate of 8.8% (December 2018: 8.8%) . The loan had no fixed terms of repayment and was unsecured. The loan was fully repaid during the current financial year.
                 
    Debt facilities        
    At the end of the current financial year the Group had an outstanding overnight debt facility amounting to R1 300 million owing to CITI Bank. The debt facility bears interest at the South African prime lending rate less 2.75%. This debt facility facility was advanced during the current financial year at the ZAR equivalent value of USD 100 million (R1 450 million). The debt facility is not secured by intra-group crosssuretyships.
     
    At the end of the prior financial year the Group had an outstanding overnight debt facility amounting to R500 million owing to Investec Bank. The debt facility bore interest at a rate which was subjected to the daily base rate determined by the Bank’s treasury desk on drawdown date. The rate as at 30 December 2018 was 7.75%. The debt facility was secured by intra-group crosssuretyships. As at 29 December 2019 no balance was outstanding related to this debt facility.
     
    At the end of the prior financial year the Group had an outstanding overnight debt facility amounting to R710 million owing to Rand Merchant Bank. The debt facility bore interest at a rate which was subjected to the daily base rate determined by the Bank’s treasury desk on drawdown date. The rate as at 30 December 2018 was 7.75%. The debt facility was secured by intra-group crosssuretyships. As at 29 December 2019 no balance was outstanding related to this debt facility.
     
    At the end of the prior financial year the Group had an outstanding overnight debt facility amounting to R500 million owing to BNP Paribas. The debt facility bore interest at a rate which was subjected to the daily base rate determined by the Bank’s treasury desk on drawdown date. The rate as at 30 December 2018 was 7.75%. The debt facility was secured by intra-group crosssuretyships. As at 29 December 2019 no balance was outstanding related to this debt facility.
     
    For more information on the Group’s liquidity risk and interest rate risk management, refer to note 38.
     
    Additional information on the fair value of ‘non-current liabilities’ can be found in note 37.
  • + 27. Employee Share Incentive Schemes
                                 
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
                                 
                                 
    27. Employee Share Incentive Schemes
                               
                                 
    Massmart Holdings Limited Employee Share Trust
                                 
    Massmart introduced a Share Incentive Scheme in the 2013 financial year referred to as the Employee Share Incentive Plan. Massmart Holdings Limited’s shareholders approved the scheme at the Annual General Meeting held on 22 May 2013. The new scheme entails participation through a restricted share grant and a performance share award, further explained below. The first grant of restricted grants and performance awards under the new scheme was made on 16 September 2013. The purpose of the new scheme is to replace the existing Employee Share Option Scheme which had its last grant date on 1 May 2013. The Employee Share Option Scheme gave rise to an equity-settled share-based payment expense until the end of the December 2018 financial year. The final options of this scheme will expire in the 2023 financial year. Both Employee Share Incentive Schemes are administered through the Massmart Holdings Limited Employee Share Trust.
                                 
    Shares to satisfy awards and options
                                 
    It is Massmart’s practice to satisfy grants, awards and options granted under the Employee Share Incentive Schemes through shares purchased in the market and held by the Massmart Holdings Limited Employee Share Trust, which was established for the purpose of satisfying grants, awards and options under the Employee Share Incentive Schemes, and is funded by the Group.
                                 
    Employee Share Option Scheme        
                                 
    Massmart granted share options entitling certain employees within the Group to its shares under the Employee Share Option Scheme. The options were granted by Massmart in its own shares resulting in them being accounted for as equity-settled share-based payments. Employees are required to be employed up to the date of vesting in order to receive the share options earned by them. The share-based payment valuation was performed by Alexander Forbes for all periods with respect to the share options.
                                 
    Vesting occurs over a five-year period as follows:        
    – 25% two years after the offer date;        
    – 50% three years after the offer date;        
    – 75% four years after the offer date;        
    – 100% five years after the offer date; and        
    – expires ten years after the offer date.        
                                 
                                 
    The following options granted to employees and Executive Directors in terms of the Employee Share Option Scheme have not yet been exercised:
                                 
    2019                            
    Offer date   Expiry date   Exercise price (R)   No of options at December 2018   No of options forfeited and expired   No of options exercised   No of options December 2019    
                                 
    27 May 2009   26 May 2019   77.56   139,118   54,691   84,427      
    1 September 2009   31 August 2019   79.15   6,929     6,929      
    16 November 2009   15 November 2019   88.71   10,272   10,272        
    1 May 2010   30 April 2020   110.00   8,781       8,781    
    1 September 2010   31 August 2020   120.42   44,399       44,399    
    1 September 2011   31 August 2021   153.84   1,794,584   233,767     1,560,817    
    1 November 2011   31 October 2021   157.27   218,731   15,937     202,794    
    1 March 2012   28 February 2022   174.88   247,566   84,807     162,759    
    1 April 2012   31 March 2022   164.09   58,041       58,041    
    16 May 2012   15 May 2022   159.62   213,042       213,042    
    1 September 2012   31 August 2022   168.03   743,629   46,802     696,827    
    15 October 2012   14 October 2022   167.06   295,193       295,193    
    1 March 2013   28 February 2023   186.05   420,745   114,234     306,511    
    1 May 2013   30 April 2023   187.53   33,907       33,907    
                4,234,937   560,510   91,356   3,583,071    
                                 
                                 
                                 
    2018                            
    Offer date   Expiry date   Exercise price (R)   No of options at December 2017   No of options forfeited and expired   No of options exercised   No of options December 2018    
                                 
    1 April 2008   31 March 2018   66.91   38,205     38,205      
    26 May 2008   25 May 2018   72.86   120,113     120,113      
    1 September 2008   31 August 2018   79.86   61,471     61,471      
    15 November 2008   14 November 2018   79.91   27,245     27,245      
    1 March 2009   28 February 2019   70.71   5,258     5,258      
    27 May 2009   26 May 2019   77.55   199,475     60,357   139,118    
    1 September 2009   31 August 2019   79.15   9,367     2,438   6,929    
    16 November 2009   15 November 2019   88.71   10,272       10,272    
    1 March 2010   28 February 2020   90.49   22,057     22,057      
    1 May 2010   30 April 2020   110.00   8,781       8,781    
    1 September 2010   31 August 2020   120.42   64,261     19,862   44,399    
    1 September 2011   31 August 2021   153.84   2,306,948   100,187   412,177   1,794,584    
    1 November 2011   31 October 2021   157.27   294,560   28,962   46,867   218,731    
    1 March 2012   28 February 2022   174.88   284,334   36,768     247,566    
    1 April 2012   31 March 2022   164.09   58,041       58,041    
    16 May 2012   15 May 2022   159.62   241,638     28,596   213,042    
    1 September 2012   31 August 2022   168.03   854,133   65,405   45,099   743,629    
    15 October 2012   14 October 2022   167.06   321,729   10,004   16,532   295,193    
    1 March 2013   28 February 2023   186.05   505,059   84,314     420,745    
    1 May 2013   30 April 2023   187.53   33,907       33,907    
                                 
                5,466,854   325,640   906,277   4,234,937    
                                 
                                 
                                 
                            December 2019   December 2018
    Reconciliation of the number of shares options issued   000s   000s
                                 
                                 
    Total shares and options available to the scheme     39,500   39,500
    Shares and treasury shares issued to the scheme   (16,493)   (16,493)
    Remaining capacity for issue in terms of the JSE practice   23,007   23,007
                                 
    Opening balance of shares and options issued   4,403   5,715
    Shares and options sold by employees and Executive Directors   (152)   (986)
    Shares repurchased from/ forfeited by employees and options lapsed/ forfeited   (561)   (326)
    Closing balance of shares and options issued   3,689   4,403
                                 
    The closing balance includes 105,448 (December 2018: 168,102) shares and 3,583,071 (December 2018: 4,234,931) options. Shares and options previously issued to employees who then subsequently left the Group are excluded from the figures above.
                                 
    Once the options have vested they may be exercised at any time, up to ten years, from the offer date. Once exercised, the relevant shares can be sold at the discretion of the participants. In terms of the scheme rules, share trust loans have been raised on offers made to Executive Directors and other employees. Refer to note 15 on Employee Share Trust loans to Executive Directors and other employees.
                                 
    Movement in the year                    
    The following options granted to employees and Executive Directors in terms of the Employee Share Option Scheme have not yet been exercised:    
       
                    December 2019   December 2018
                    Number of share options   Weighted average exercise price   Number of share options   Weighted average exercise price
                      Rand     Rand
                                 
    Outstanding at the beginning of the year   4,234,937   159   5,466,854   154.24
    Exercised during the year       (91,356)   77.70   (906,277)   125.47
    Forfeited or expired during the year       (560,510)   156.20   (325,640)   168.12
    Outstanding at the end of the year       3,583,071   161.90   4,234,937   159.33
                         
    Exercisable at the end of the year 3,583,071       4,234,937    
                                 
    In December 2019, the weighted average share price at the date of exercise for share options exercised during the year was R77.70. The options outstanding at the end of the year had a weighted average remaining contractual life of 2.2 years. No options were granted in the current financial year.
                                 
    In December 2018, the weighted average share price at the date of exercise for share options exercised during the year was R125.47. The options outstanding at the end of the year had a weighted average remaining contractual life of 3.1 years. No options were granted in the current financial year.
                                 
    Fair value of share options granted during the year
                                 
    There were no grants issued during the current financial year.        
                                 
                                 
    Employee Share Incentive Plan        
                                 
    Massmart granted restricted share grants and performance share awards entitling certain employees within the Group to fully-paid shares under the Employee Share Incentive Plan. The grants and awards were granted by Massmart in its own shares resulting in the grants and awards being treated as equity-settled share-based payments. The Employee Share Incentive Plan is split into two incentive structures, mainly, restricted share grants and performance share awards. Restricted share grants require the employee to remain employed at the date of vesting in order to receive the shares earned by them. In determining the spot price at grant date its fair market value is the volume weighted average price of a share on the Johannesburg Stock Exchange (JSE) over the ten trading days immediately prior to the day in question. Performance share awards are subject to non-market conditions in years one, two and three based 50% on Group Return of Investment (ROI) and 50% on Group nominal sales against the budgeted equivalent for that year. The share-based payment valuation was performed using a valuation system acquired by the Group with the necessary model inputs having been determined by management. Management derived these inputs through consultation with various financial institutions, and they are representative of the market data available for Massmart Holdings Limited’s share at the reporting date. Vesting occurs over a five-year period for restricted share grants and over a three-year period for performance share awards as follows:
                                 
            Restricted share grants   Performance share awards                
    – Three years after the offer date   33%   100%                
    – Four years after the offer date   33%   N/A                
    – Five years after the offer date   33%   N/A                
                                 
                                 
    The following grants and awards granted to employees and Executive Directors in terms of the Employee Share Incentive Plan have not yet been exercised:
                    December 2019   December 2018
    Restricted share grants               Number of share grants and awards   Vesting Period   Number of share grants and awards   Vesting Period
    15 September 2014                 2018 to 2019    
    16 March 2015               6,227   2018 to 2020   163,264   2018 to 2019
    15 September 2015               163,918   2018 to 2020   28,339   2018 to 2020
    16 September 2016               387,190   2019 to 2021   385,989   2018 to 2020
    18 April 2017               2,974   2020 to 2022   692,089   2019 to 2021
    15 September 2017               824,445   2020 to 2022   25,275   2020 to 2022
    14 September 2018               1,308,794   2021 to 2023   965,337   2020 to 2022
    13 September 2019               2,745,462   2022 to 2024   1,480,672   2021 to 2023
    Performance share awards                            
    18 March 2016                 2019     2018
    18 April 2017               781,175   2020   972,130   2019
    13 April 2018               675,171   2021   1,195,001   2020
    12 April 2019               1,842,657   2022   1,067,154   2021
    Total awards               8,738,013       6,975,250    
    Exercisable at the end of the year                    
                                 
    Movement in the Year                            
                    December 2019   December 2018
                    Number of share grants and awards   Weighted average exercise price   Number of share grants and awards   Weighted average exercise price
                      Rand     Rand
                                 
    Outstanding at the beginning of the year   6,975,250     6,733,071  
    Granted during the year   4,792,392     2,614,914  
    Vested during the year   (1,536,413)     (1,540,033)  
    Forfeited or expired during the year   (1,493,216)     (832,702)  
    Outstanding at the end of the year   8,738,013     6,975,250  
    Exercisable at the end of the year            
                                 
    The estimated fair values of the restricted share grants at grant date was R80.08 (December 2018: R102.83) and the performance share awards was R115.05 (December 2018: R132.53).
           
    These fair values were calculated using the Lattice Model. The inputs into the model at grant date were as follows:        
    Restricted share grants (13 September 2019)       December 2019   December 2018
    10 day volume weighted average share price (Rand)         45.9   103.3
    Expected volatility                       54.16%-66.72%   28.87%-33.95%
    Expected life                       2.75 – 4.25 years   2.75 – 4.25 years
    Risk-free rate                       6.59%-6.87%   7.88%-8.19%
    Expected dividend yield                       0.00%   3.44%
    Performance share awards and restricted share grants (12 April 2019)            
    10 day volume weighted average share price (Rand)       80.0   164.2
    Expected volatility                       32.97%   39.34%
    Expected life                       2.25 years   2.25 years
    Risk-free rate                       7.18%   6.93%
    Expected dividend yield                       3.34%   3.22%
    Exercise price                        
                                 
    Expected volatility was determined by calculating the historical volatility of the Company’s share price over the number of previous years corresponding with the share awards vesting period. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The risk-free rate used was the swap rate over the vesting period of the share grants and awards.
                                 
    Massmart Black Scarce Skills Trust
                                 
    The Black Scarce Skills Trust is a share-scheme used to attract and retain African, Coloured and Indian employees. The Executive Committee of each of the Divisions and the Massmart Remuneration Committee submit their nominations to the Black Scarce Skills Trust trustees for approval, upon which allocations are made bi-annually in April and October of each year. A beneficiary can only receive one allocation.
                                 
    Vesting occurs over a five-year period as follows:        
    – 25% two years after the offer date;        
    – 50% three years after the offer date;        
    – 75% four years after the offer date;        
    – 100% five years after the offer date; and        
    – expires five years after the offer date.        
                                 
    The following options granted to eligible employees in terms of the Massmart Black Scarce Skills Trust have not yet been exercised:
                                 
    Offer date   Expiry date   Exercise price (R)   No of options opening balance   No of options forfeited and expired   No of options exercised   New options granted   No of options closing balance
                                 
    December 2019                            
    1 April 2014   30 March 2019   136.69   131,377   131,377      
    1 October 2014   30 September 2019   120.29   294,131   294,131      
                425,508   425,508      
                                 
    December 2018                      
    1 April 2013   30 March 2018   189.13   91,625   91,625      
    1 October 2013   30 September 2018   170.31   633,976   633,976      
    1 April 2014   30 March 2019   136.69   212,776   8,136   73,263     131,377
    1 October 2014   30 September 2019   120.29   370,899     76,768     294,131
                1,309,276   733,737   150,031     425,508
                                 
                            December 2019   December 2018
                            000s   000s
    Reconciliation of the number of options issued        
    Opening balance of share options   425   1,309
    New share options offered to employees    
    Share options sold by employees     (150)
    Share options repurchased from/forfeited by employees and options lapsed/forfeited   (425)   (734)
    Closing balance of share options     425
    Number of options exercisable    
                                 
    In the current financial year no options were exercised.
    In the year ending December 2018, 150,031 options were exercised. The options outstanding at the end of the year had a weighted average remaining contractual life of 0.6 years.
                                 
                                 
    Expense recognised in Profit or Loss      
    The expense recognised for employee services received during the year on equity-settled share-based payment transactions is shown in the following table:
                                 
    Rm                       December 2019   December 2018
                                 
    Expense arising from Employee Share Option Scheme   0.2   (5.3)
    Expense arising from Employee Share Incentive Plan   127.8   195.9
    Expense arising from Black Scarce Skills Trust     4.0
    Total expense arising from equity-settled share-based payment transactions   128.0   194.6
  • + 28. Retirement benefit information
           
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
           
           
    28. Retirement benefit information    
         
    All full-time permanent Massmart staff are members of either the Massmart Pension Fund, the Massmart Provident Fund or the SACCAWU National Provident Fund. These funds are defined contribution funds and are subject to the Pension Funds Act, 1956.
           
    The Massmart Pension Fund and Massmart Provident Fund have been classified as valuation exempt. The Board of Trustees successfully submitted the renewal applications for exemption from valuation in 2019 and the funds therefore remain exempt from the provisions of sections 9A and 16 of the Pension Funds Act. The exemption expires on 31 May 2022. This exemption may be extended upon submission of an application in terms of the Notice, which must be submitted to the registrar on or before 31 May 2022; failing which the fund must undergo a statutory actuarial valuation as at 31 May 2022, which must be submitted to the registrar by 31 May 2023. The fund will reapply if required.
           
    Contributions received by the funds for the year ended December 2019 amounted to R841.7 million (December 2018: R719.5 million). The Group’s contribution of R489.4 million (December 2018: R428.6 million) was included in the Income Statement for the year in ‘Employee costs’.
  • + 29. Commitments
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
    29. Commitments
    Rm December 2019 December 2018
    Commitments in respect of capital expenditure approved by Directors:
    Contracted for
    Stores to be opened   160.1   513.5
    Stores to be refurbished   62.6   7.2
    Purchase of plant and equipment   15.7   11.3
    Purchase of new system software   179.5   322.8
    Purchase of new computer hardware   53.5   46.6
    Purchase of motor vehicles   0.2
    Store relocations   373.7   18.9
    Minor revamps
    Store expansion and reduction   28.1   17.9
    Distribution centre to be opened   145.1   20.4
      1,018.3   958.8
    Not contracted for
    Stores to be opened   52.4   524.1
    Stores to be refurbished   255.1   96.3
    Purchase of plant and equipment   217.6   240.8
    Purchase of new system software   156.0   318.2
    Purchase of new computer hardware   208.5   104.5
    Purchase of motor vehicles   9.6   16.5
    Store expansion and reduction   16.8   8.4
    Distribution centre to be opened   78.3   58.0
    Logistical expansion   15.0
    Store relocations   49.3   32.1
    Minor revamps   3.7
      1,047.3   1,413.9
      2,065.6   2,372.7
  • + 30. Adjustments recognised on adoption of IFRS 16
                 
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS    
                 
                 
    30. Adjustments recognised on adoption of IFRS 16            
               
    The Group has adopted IFRS 16 ‘Leases’ using the modified retrospective approach, by recognising the cumulative effect of initially applying IFRS 16 as an adjustment to the opening balance of equity at 31 December 2018.
    IFRS 16 has had a significant impact for the Group, given the number of stores that are leased. IFRS 16 had no impact on the accounting of previously existing finance leases. It has however impacted most leases that were previously recorded as operating leases under IAS 17, where only the occupancy charge was recorded in the Income Statement. IFRS 16 now requires leases to be recognised in the Statement of Financial Position in the form of a capitalised right-of-use asset and corresponding liability. Changes to the Income Statement result in occupancy costs being replaced by an amortisation of the right-of-use asset and lease finance costs on the liability.

    In applying IFRS 16 for the first time, the Group has used the following expedients permitted by the standard:

    a. Modified retrospective adoption – no comparatives required to be disclosed
    b. Combine lease and non-lease components
    c. Exemption of short-term leases and leases for low value assets
    d. Portfolio approach applied to classes of leases that have similar characteristics
    e. Interest rate based on remaining lease term for existing leases at transition date

    For leases previously classified as finance leases the Group recognised the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right of use asset and the lease liability at the date of initial recognition. The measurement principles of IFRS 16 are only applied after this date. Remeasurements to lease liabilities were recognised as adjustments to the related right-of-use assets immediately after the date of initial recognition.
                 
    Rm           December 2019
                 
                 
    Net lease commitments as at 30 December 2018            
                 
    Real Estate            
                 
    Short-term            
    Year 1           2,343.8
    Years 2 to 5           7,807.2
    Subsequent to year 5           6,102.7
                16,253.7
    Long-term 1            
    Year 1           5.0
    Years 2 to 20           212.8
    Years 21 to 50           2,209.8
    Subsequent to year 50           12,719.4
                15,147.0
    Non-real estate            
    Year 1           52.1
    Years 2 to 5           68.3
    Subsequent to year 5          
                120.4
                 
    Lease commitments disclosed as at 30 December 2018           31,521.1
                 
    Discounted using the lessees’ incremental borrowing rate of
    at the date of initial application
              (21,051.4)
    Add: Finance lease liabilities recognised as at 30 December 2018           396.2
    (Less): low-value leases recognised on a straight-line basis as expense           (88.2)
                 
    Lease liability recognised as at adoption date           10,777.7
                 
    Of which are:            
    Non-current lease liabilities           9,598.3
    Current liabilities           1,179.4
                10,777.7
                 
    All line items on the Group Statement of Financial Position impacted by the adoption of IFRS 16 are as follows:      
                 
        December
    2018
    (Audited)
      IFRS 16 at adoption adjustment   2019
    Opening
    Balance
    (Adjusted)
           
                 
    Non-current assets            
    Lease assets   537.7   8,530.0   9,067.7
                 
    Current assets            
    Trade, other receivables and prepayments   5,693.2   (118.1)   5,575.1
                 
    Total assets   6,230.9   8,411.9   14,642.8
                 
    Equity attributable to owners of the parent            
    Retained profit   5,643.1   (227.1)   5,416.0
                 
    Non-current liabilities            
    Lease liability   648.1   8,950.2   9,598.3
    Interest-free borrowings   1,278.2   (1,276.3)   1.9
                 
    Current liabilities            
    Trade and other payables   21,797.8   (145.3)   21,652.5
    Lease liability   69.0   1,110.4   1,179.4
                 
    Total equity and liabilities   29,436.2   8,411.9   37,848.1
                 
    The associated right-of-use assets for property leases were measured on a modified retrospectively basis as if the new rules had always been applied. Right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payment as well as any lease smoothing and onerous lease balances relating to that lease as at 30 December 2018.
    The adoption of IFRS 16 and the related change in accounting policy affected a number of line items on the Statement of Financial Position.
                 
    The net impact to retained earnings was an amount of R227.1 million representing the day-one impairment of certain right-of-use assets on adoption date.
                 
    Leases on properties are normally contracted for periods of between 3 and 12 years with renewal options averaging a further 3 to 10 years. Rental comprises minimum monthly payments and in some cases, contingent payments based on turnover levels. Turnover rentals, where applicable, average 1.1% of turnover. Rental escalations vary, but are between 0% and 10% p.a.
         
    1The long-term lease of land relates to a 99-year lease arrangement that was entered into in 1994 for the Makro Woodmead Store. The basic rental escalation is set at 7.5%. The present value of the minimum lease payments was R251.9 million as at 30 December 2018. This was the only finance lease included in the 2018 net lease commitments disclosure.
  • + 31. Contingent liabilities
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
    31. Contingent liabilities
    Rm December 2019 December 2018
    Contingent liabilities
    During 2019, we managed litigation, regulatory challenges and some other contingent liabilities, some of which have been resolved and others that are ongoing but are unlikely to impact the group. The Competition Commission probe into the Grocery Retail Market Inquiry was finalised with a report being issued in November of 2019 stating that all lease exclusivities must be phased out in a period of 5 years from the date of report, amongst other things. The Commission will seek to enforce regulations governing this going forward.
  • + 32. Related-party transactions
             
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
             
             
    32. Related-party transactions      
             
    Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.
             
        December 2019   December 2018
    Rm   52 weeks   52 weeks
             
    Compensation of key management personnel:        
             
    The remuneration of Executive Directors and other key management were as follows:        
    Short-term benefits (salaries, benefits and short-term incentives)   124.5   87.3
    Retirement benefits   4.4   4.2
    Other long-term benefits   38.5   0.5
    Gains on exercise of share options   17.4   33.6
        184.8   125.6
             
    Other related-party transactions:        
             
    Refer to note 24 for the outstanding balance owed to Walmart at the end of the current financial year. Operational costs of R20.6 million (2018: R30.1 million) were recovered from Walmart during the current financial year. Interest amounting to Rnil (2018: R12.5 milion) was paid to Walmart during the current financial year.
     
    Main Street 830 Proprietary Limited, a subsidiary of Wal-Mart Stores, Inc. and the direct holding company of Massmart Holdings Limited receives dividends from the Company. A scrip dividend of R159.4 million (December 2018: R385.7 million cash dividend) was distributed during the current financial year.
     
    Loans to Executive Directors and Executive Committee members have been disclosed in note 15.
     
    Loans owing to Massmart Education Foundation and Lamberti Education Foundation Trust have been disclosed in note 26. R0.5 million (2018: R0.5 million) interest was paid to Massmart Education Foundation and R0.1 million (2018: R0.5 million) interest was paid to Lamberti Education Foundation Trust during the current financial year.
     
    The Massmart Health Plan and Resolution Health Medical Scheme, Massmart Pension Fund and Massmart Provident Fund are managed for the benefit of past and current employees of the Group. Additional information can be found in note 23 and note 28.
     
    Refer to note 33 and note 34 for more information regarding Directors remuneration and interests in the Company’s Share Incentive Schemes.
  • + 33. Directors’ emoluments
                                         
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
                                         
                                         
    33. Directors’ emoluments                                    
                                         
    R’000   Services as Directors of Massmart Holdings Limited   Salary and allowances   Bonuses and performance related payments1   Other benefits   Retirement and related benefits   Subtotal   Fringe benefit of interest-free loans used to finance shares2   Gains on exercise of share options and on shares purchased by Directors   Total
                                         
    For the 52 weeks ended December 2019                                    
    Executive Directors                                    
    Slape, M3     744   2,679   3,080     6,503       6,503
    Abdool-Samad, M4     2,100   10,097   321   221   12,739       12,739
    Hayward, GRC5     18,828     258   686   19,772   218   1,369   21,359
    van Lierop, JJM6     18,769     1,047     19,816     3,070   22,886
          40,441   12,776   4,706   907   58,830   218   4,439   63,487
    Non-Executive Directors                                    
    Dlamini, KD   2,313           2,313       2,313
    Seabrooke, CS7   403           403       403
    Burnley, R8                  
    Gwagwa, NN   1,141           1,141       1,141
    Ighodaro, O   1,086           1,086       1,086
    Langeni, P   1,702           1,702       1,702
    Mthimunye, L   720           720       720
    Muigai, S                  
    Ostale, E                  
    Suarez, JP                  
        7,365           7,365       7,365
                                         
    Total   7,365   40,441   12,776   4,706   907   66,195   218   4,439   70,852
                                         
    1In order to match incentive awards with the performance to which they relate, bonuses above reflect the amounts accrued in respect of each year and not amounts paid in that year
    2Held in terms of the rules of the Company’s share scheme
    3Appointed with effect from 1 September 2019                        
    4Appointed with effect from 1 August 2019                        
    5Resigned as an Executive Director with effect from 31 August 2019                        
    6Resigned with effect from 31 July 2019                        
    7Resigned with effect from 23 May 2019                        
    8Resigned with effect from 27 February 2019                        
                                         
                                         
    R’000   Services as Directors of Massmart Holdings Limited   Salary and allowances   Bonuses and performance related payments1   Other benefits   Retirement and related benefits   Subtotal   Fringe benefit of interest-free loans used to finance shares2   Gains on exercise of share options and on shares purchased by Directors   Total
                                         
    For the 53 weeks ended December 2018                                    
    Executive Directors                                    
    Hayward, GRC     6,345   1,306   228   666   8,545   332   3,921   12,798
    van Lierop, JJM     5,566   1,055   2,603     9,224     13,017   22,241
          11,911   2,361   2,831   666   17,769   332   16,938   35,039
    Non-Executive Directors                                    
    Dlamini, KD   2,262           2,262       2,262
    Seabrooke, CS   1,965           1,965       1,965
    Burnley, R                  
    Gwagwa, NN   845           845       845
    Ighodaro, O3   533           533       533
    Langeni, P   1,541           1,541       1,541
    Muigai, S                  
    Ostale, E                
        7,146           7,146       7,146
                                         
    Total   7,146   11,911   2,361   2,831   666   24,915   332   16,938   42,185
                                         
    1In order to match incentive awards with the performance to which they relate, bonuses above reflect the amounts accrued in respect of each year and not amounts paid in that year
    2Held in terms of the rules of the Company’s share scheme
    3Appointed with effect from May 2018      
  • + 34. Interests of Directors in the Company’s share scheme
                         
    NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
                 
                         
    34. Interests of Directors in the Company’s share scheme
                       
    Details of Directors’ shares and share options per Director:
        Grant dates   Subscription price (R)   Number of shares/share options   Gain on sale/exercise (R 000’s)   Expiry date
    M Abdool-Samad                    
    Employee Share Incentive Plan (note 27)                  
    Balance at December 2018                  
    Restricted share grants   13-Sep-19     47,474     13-Sep-22
    Restricted share grants   13-Sep-19     47,474     13-Sep-23
    Restricted share grants   13-Sep-19     47,492     13-Sep-24
    Balance at December 2019           142,440        
                         
    GRC Hayward                    
    Employee Share Option Scheme (note 27)                  
    Balance at December 2018           375,977        
    Options exercised/ shares sold                  
    Balance at December 2019           375,977        
    Comprising: Shares 27-May-09   77.56   105,448    
      Options 1-Sep-11   153.84   120,987     1-Sep-21
      Options 16-May-12   159.62   149,542     16-May-22
                         
    Employee Share Incentive Plan (note 27)                  
    Balance at December 2018           169,458        
    Performance shares vested   18-Mar-16     (27,157)     18-Mar-19
    Performance share award forfeitures*   18-Mar-16     (7,637)     18-Mar-19
    Performance share award forfeitures*   18-Apr-17     (7,981)     18-Apr-20
    Performance share award forfeitures*   13-Apr-18     (7,316)     13-Apr-21
    Restricted share grants   15-Sep-14     (3,838)     15-Sep-19
    Restricted share grants   15-Sep-15     (4,732)     15-Sep-19
    Restricted share grants   16-Sep-16     (4,650)     16-Sep-19
    Balance at December 2019         106,147      
    Comprising: Performance share awards 18-Apr-17     27,811     17-Apr-20
    Performance share awards 13-Apr-18     28,834     12-Apr-21
    Restricted share grants   15-Sep-15     4,734     15-Sep-20
    Restricted share grants   16-Sep-16     4,650     16-Sep-20
    Restricted share grants   16-Sep-16     4,653     16-Sep-21
    Restricted share grants   15-Sep-17     5,345     15-Sep-20
    Restricted share grants   15-Sep-17     5,345     15-Sep-21
    Restricted share grants   15-Sep-17     5,348     15-Sep-22
    Restricted share grants   14-Sep-18     6,475     14-Sep-21
    Restricted share grants   14-Sep-18     6,475     14-Sep-22
    Restricted share grants   14-Sep-18     6,477     14-Sep-23
                         
                         
    JJM van Lierop                    
    Employee Share Incentive Plan (note 27)                  
    Balance at December 2018           150,706        
    Performance shares vested   18-Mar-16     (26,782)     18-Mar-19
    Performance share award forfeitures*   18-Mar-16     (7,532)     18-Mar-19
    Performance shares vested   18-Apr-17     (11,439)     18-Apr-20
    Performance share award forfeitures*   18-Apr-17     (16,482)     18-Apr-20
    Performance shares vested   13-Apr-18     (3,262)     13-Apr-21
    Performance share award forfeitures*   13-Apr-18     (21,660)     13-Apr-21
    Restricted share grants   16-Mar-15     (15,889)     16-Mar-18
    Restricted share grants   15-Sep-15     (8,235)     15-Sep-18
    Restricted share grants   16-Sep-16     (11,578)     16-Sep-19
    Restricted share grants   15-Sep-17     (12,086)     15-Sep-20
    Restricted share grants   14-Sep-18     (15,761)     14-Sep-21
    Balance at December 2019                  
                         
                         
    The Directors’ interest in the Company’s shares and options held at reporting date can be found in the Directors’ Report.
    At the date of approval of the Group Annual Financial Statements, M Slape held 0 shares and 0 share options/grants/awards, M Abdool-Samad held 0 shares and 142,440 share options/grants/awards, GRC Hayward held 230,389 shares and 376,676 share options/grants/awards and JJM van Lierop held 0 shares and 0 share options/grants/awards. There were no other changes in the interests held by the Directors in the Company’s shares after the reporting date up to the date of approval.