Performance in H2 was significantly better than H1 due to most trading restrictions being lifted in H2.


Massmart’s total sales for the 52 weeks of R86.5 billion represent a decline of 7.7%, with a decline of 7.5% in comparable sales and year-to-date internal sales inflation of 5.3%. Sales from our South African stores decreased by 7.9%, with comparable stores sales decreasing by 7.6%. Total sales from our Rest of Africa stores decreased by 5.4% in Rands, and by 6.9% in constant currencies. On a comparable store basis, our Rest of Africa store sales decreased by 6.6% in Rands and by 7.4% in constant currencies.

The sales performance across our major categories is reflective of the dramatically shifting purchasing patterns of consumers during the Covid-19 pandemic, as well as trading restrictions. Food and Liquor sales of R49.1 billion decreased by 8.2%, Home Improvement sales of R13.9 billion decreased by 2.1% and General Merchandise sales of R21.6 billion decreased by 9.9%.


An increased focus on optimising our product and promotional mix, combined with the shift towards the everyday low price (EDLP) proposition resulted in the gross margin increasing by 147 bps to 20.4% from December 2019.

Operating expenses

In light of top-line pressure and the significant impact of the Covid-19 pandemic on cash flows, we remain focused on improving expense management. Continuing the trend from our interim reporting period, further savings have been realised through our sustainable cost saving initiatives. This is reflected in an excellent cost performance with total operating expenses decreasing by 0.3% over the prior year period.

Employment costs, the Group’s largest cost category, decreased by 0.9% (with a comparable decrease of 0.9%), due to the closure of DionWired stores, recruitment freezes and the impact of the TERS and skills development levy relief. We also paid R12 million in once-off bonuses to our frontline associates during April in appreciation of their commitment during the most severe lockdown period.

Occupancy costs decreased by 9.7% (with a comparable decrease of 6.7%), mainly as a result of rental relief from landlords and lower utility costs during lockdown. Rental re-negotiation benefits were also realised, particularly during the second half of the year.

Depreciation and amortisation decreased by 1.2% (and by 1.5% on a comparable basis) due to reduced capital investments with a primary focus on cash preservation.

Included in other operating costs are once-off expenses which relate to value enhancing Turnaround plan costs. Also included are implementation costs associated with the SAP S/4 HANA ERP system go-live in Game during the period, as well as maintenance costs of the Hybris web and fulfilment platform implemented in Makro in 2019.

Reorganisation and restructure cost

For the year, the Group incurred total retrenchment costs of approximately R132.5 million. This related to the closure of the 23 DionWired stores, the previously announced potential closure of 11 Masscash stores, the reorganisation of the Game store level operating model and the reorganisation of certain corporate support functions into centralised Centres of Excellence.

Impairment expense

As a result of current market conditions and as part of an annual impairment assessment, the Group deemed it necessary to perform reviews of the carrying value of Goodwill and certain store assets. Consequently, the Group has impaired goodwill relating to the Cambridge and The Fruitspot businesses. In addition, the Group impaired the assets relating to the meat processing facility in Massfresh. Certain store level assets have also been impaired. The consolidation of the Group’s various head office locations and a strategic shift away from fresh and frozen offerings in the Game business, resulted in further impairments being recognised.

Foreign exchange loss

Fluctuations in Rest of Africa currencies continue to negatively impact the Group, especially in relation to foreign denominated leases and payables. These contributed to the foreign exchange loss of R381.1 million.

Net finance cost

Finance costs relating to borrowings other than lease liabilities amounted to R556 million and decreased by 15.6% compared to the prior year. Total net cash finance costs, including the interest cost related to our lease obligations, remained flat, decreasing by R7.7 million.


The Group’s effective tax rate of 6.5% (2019: -18.9%) resulted from not recognising certain deferred tax assets, disallowed goodwill impairment losses and the taxation charge on profit-making entities.

Impact of Covid-19

Massmart estimates total lost full year sales relating to Covid-19 restrictions, which included extended restrictions on normal trading of liquor and tobacco products, to be approximately R6.1 billion when compared to 2019. During the 2020 reporting period, additional employment and operating costs (R132.4 million) were incurred in response to trading and operational challenges, including ensuring a safe shopping and workplace environment for customers and employees.

Included in the employment and occupancy costs are Government supported Temporary Employment Relief Scheme (TERS) benefits and negotiated rental relief of R288 million received by the Group during the period.

* Restated 2019 to apply the SAICA Circular 1/2019 on headline earnings which resulted in a prior year amount of R5.7 million relating to the pre-tax loss arising from the partial or full termination of leases no longer being a headline earnings adjustment.

Business unit operational review

Game total sales for the 52 weeks of R16.7 billion were 15.5% lower than December 2019, while comparable stores sales contracted by 13.2%. Product inflation was estimated at 5.0%. Trading restrictions in South Africa resulted in reduced categories permitted to be traded during the course of the year. Furthermore, reduced mall foot traffic, adjusted trading hours and sub-optimal in-stocks, as a result of systems issues and vendor supply issues, significantly impacted sales during the course of the year. Lost sales from the Covid-19 pandemic impact is estimated to be R0.9 billion. Online sales increased by 77.5% compared to the prior period. Sales from the South African Game stores declined by 13.2%. Sales from the Rest of Africa stores decreased by 10.0% in Rands and by 12.3% in constant currencies due to continued currency weaknesses during the period.

Reduced stock obsolescence from improved stock management and optimising product and promotional mix from the shift towards the EDLP proposition improved gross margin by 230bps to 27.4% from 25.1% in the prior year. Cost saving initiatives implemented resulted in savings in occupancy costs from successful rental re-negotiations, better supplier price negotiations and efficiencies realised through improved overtime scheduling. Expenses decreased by 3.8% and comparable expenses decreased by 1.2%. Included in this are the IT costs associated with the system implementation.

Builders total sales of R13.9 billion were 2.1% lower than December 2019, while comparable store sales declined by 2.9%, with product inflation estimated at 6.0%. Trading restrictions resulted in the temporary closure of all South African Builders stores under lockdown level 5 in April 2020. Lost sales from the Covid-19 pandemic impact are estimated to be R1.0 billion. Sales from South African stores declined by 3.0% and by 3.6% on a comparable store sales basis. Sales from the Rest of Africa stores increased by 8.0% with a 10.8% increase in constant currencies and by 4.4% and 12.9%, respectively, on a comparable store sales basis. Efforts made in online fulfilment practices have been beneficial with online sales increasing by 111.0% compared to the prior period. Yard sales were down significantly compared to the prior year due to the suspension of the construction industry during the lockdown period, with the industry battling to recover for the balance of the year. This decrease was offset by an increase in retail sales as consumers continued to prioritise home improvement and DIY projects. This, combined with optimising product and promotional mix, improved gross margin by 220bps compared to December 2019.

Expenses were well managed and efforts made with cost saving initiatives continue to reap benefits. Furthermore rental relief contributed to an overall decline in occupancy cost. Expenses increased by only 0.2% during the period, with a 1.1% decrease on a comparable basis.

Cambridge and Rhino total sales of R8.3 billion declined by 13.5%, and by 14.8% on a comparable store sales basis. Product inflation was estimated at 7.1%. Sales were further impacted by temporary store closures during the period due to positive Covid-19 cases and store sanitisation. Lost sales from the Covid-19 pandemic impact is estimated to be R0.8 billion.

Increased commodities and retail sales and optimising product and promotional mix with the EDLP proposition led to gross margin improving by 19.1% compared to the prior year. Continued focus on working capital initiatives led to minimal stock obsolescence and stable stock aging. Expenses increased by only 0.9% with a 0.5% decrease on a comparable basis.

Massmart Wholesale comprises mainly Makro and Cash & Carry. Makro, The Fruitspot and the meat processing plant total sales of R27.2 billion decreased by 7.3% compared to December 2019, with comparable store sales contracting by 7.8%. Product inflation was estimated at 4.1%, and margins improved by 40bps compared to December 2019. Lost sales from the Covid-19 pandemic impact is estimated to be R2.6 billion. Online sales increased by 40.2% during the period. Cash & Carry total sales of R20.4 billion declined by 1.8%, and similarly on a comparable store sales basis. Product inflation was estimated at 6.1%. Sales from South African stores declined by 1.2% and by the same percentage on a comparable store sales basis. Sales from the rest of Africa stores decreased by 5.3% with a 7.0% decrease in constant currencies and by the same percentage on comparable store sales. Lost sales from the Covid-19 pandemic impact is estimated to be R0.8 billion. Optimising product and promotional mix from the EDLP proposition and shelf-pricing improvements led to improved margins of 120bps compared to December 2019.

Expenses were well managed, despite increased bad debts (mainly from the liquor and hospitality industries), stock obsolescence and increased IT costs related to the Makro Hybris web and fulfillment platform. This increase was offset against rental savings as a result of relief provided by landlords as well as successful rental re-negotiations. Makro expenses decreased by 1.9% during the period, with a 3.4% decrease on a comparable basis while Cash & Carry expenses decreased by 0.1% during the period, with a similar decrease in comparable expenses.


Financial position

Property, plant and equipment

Capital expenditure was cautiously managed to preserve cash during the period. The Group continued to invest in IT infrastructure and the refurbishment of existing stores. Total capital expenditure for the period amounted to R1,034.1 million, down 24.6% from the same period in 2019. This, together with the impact of asset impairments, resulted in property, plant and equipment decreasing by 4.4%. Expansionary capital expenditure amounted to R764.2 million, of which IT infrastructure was R292.9 million mostly associated with the SAP S/4 HANA ERP system in Game, while replacement capital expenditure amounted to R269.9 million.

Working capital management

We continue to focus on improving working capital. Operating cash inflows before working capital movements of R4,559.5 million improved by 6.1% over the prior period, resulting from concerted efforts in cash preservation. The Group’s inventory balance remained relatively flat compared to 2019 levels. Substantial progress has been made in clearing the Group’s aged stock, however, lower than expected sales in December resulted in a higher stock holding with inventory days increased by six days. While trade receivables decreased by 6.3%, debtors days remained unchanged at eight days, despite pressure on our wholesale and commercial customers. Trade creditors decreased by 1.7 % while creditors days increased by six days.

Cash flow management

Despite the Group incurring a R1,753.4 million net loss during this reporting period, ongoing focus on liquidity, and proactive management of cash flow resulted in net debt (excluding debt related to lease liabilities) increasing by only R152.6 million representing a 6.3% increase compared to the prior period.


Due to the headline loss reported and the need to preserve cash, as a result of the uncertain economic outlook, no final dividend has been declared.


2020 has been a year that will live long in the memory due not only to the many challenges but also to the many triumphs we have shared as a finance community. I am sincerely appreciative to all the finance teams in the Group for their hard work and commitment to deliver quality financial results and for embracing new ways of working in such an exemplary fashion.

Mohammed Abdool-Samad
Chief Financial Officer
8 April 2021



Summary consolidated
income statement



Headline earnings



Summary consolidated statement of comprehensive income



Summary consolidated statement of financial position



Summary consolidated statement of cash flows



Summary consolidated statement of changes in equity



Fair value hierarchy


The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments identified below. The table below reflects ‘Financial instruments’ and ‘Non-current assets classified as held for sale’ carried at fair value, and those ‘Financial instruments’ and ‘Non-current assets classified as held for sale’ that have carrying amounts that differ from their fair values, in the Statement of Financial Position:

  • Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
  • Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly; and
  • Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data.




Fair value measurements categorised within Level 3 reconciliation



Business unit operational review



Business unit assets and liabilities





  1. These summary 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 summary consolidated results are in terms of IFRS and are consistent in all material respects with those applied in the most recent Annual Financial Statements, except for the IFRS 16 practical expedient on lease concessions as well as the SAICA Circular 1/2019 on headline earnings which were applied for the first time in the June 2020 interim press release.
  2. During the reporting period, as part of the Turnaround plan, the Group operating model was restructured from its previous four Divisions into two business units. The four Divisions comprised of Massdiscounters (incorporating the Game and DionWired brands); Masswarehouse (incorporating the Makro and The Fruitspot brands); Massbuild (incorporating the Builders Warehouse; Builders Express; Builders Trade Depot and Builders Superstore brands); and Masscash (incorporating the Jumbo; Cambridge Food; Rhino; Trident; Jumbo Shield and Saverite brands). The two new business units comprise of Massmart Retail (incorporating Game, Builders, Cambridge and Rhino); and Massmart Wholesale (incorporating Makro, The Fruitspot, Wholesale Cash & Carry). In terms of the requirements of IFRS 8 the composition of the Group’s reportable segments were restated due to this structure change. The Group’s reportable segments comprise Game (incorporating the Game and DionWired brands), Builders (incorporating the Builders Warehouse; Builders Express; Builders Trade Depot and Builders Superstore brands), Cambridge and Rhino (incorporating the Cambridge Food and Rhino brands) and Massmart Wholesale (incorporating the Makro The Fruitspot, Jumbo, Trident; Jumbo Shield and Saverite brands).
  3. As part of the Group’s continued IFRS 9 ‘Financial Instruments’ compliance assessment it was noted that the Group has historically presented certain rebate receivable balances from vendors as part of the ‘Trade, other receivables and prepayments’ balance as opposed to offsetting these against the ‘Trade, other payables and provisions’ line as required by the accounting standard. This error has been corrected in the current year with rebate receivable balances of R1 709 million relating to the 2019 financial year and R1 809 million relating to the 2018 financial year being reclassified from the ‘Trade, other receivables and prepayments’ line to the ‘Trade, other payables and provisions’ line. This affects the Statement of financial position lines as follows:

  4. In May 2020, the International Accounting Standards Board issued an amendment to IFRS 16 ‘Leases’, dealing specifically with Covid-19 related rent concessions. In line with the practical expedient provided in the amendment, the Group recognised R102 million rental relief in the occupancy costs line of the summary consolidated income statement relating to rent concessions meeting the conditions specified and occurring as a direct consequence of the Covid-19 pandemic.
  5. The majority of Massmart’s realised and unrealised foreign exchange loss was primarily a result of currency weakness in Mozambique, Nigeria and Zambia as well as the foreign exchange movements arising from the foreign exchange contracts entered into relating to the Walmart loan.
  6. Following the announcement of the Group entering into a consultation process in terms of section 189 and section 189A of the Labour Relations Act 66 of 1995, as amended (the LRA) relating to 10 Cambridge and Rhino stores and one Wholesale Cash & Carry store, the Group received interest from various parties to acquire these stores. On 16 February 2021, the Competition Tribunal approved the transaction covering eight stores with a condition linked to employment security. The potential sale of the remaining three stores is still being contemplated. Subsequent to the announcement of the aforementioned 11 Masscash stores, a decision was taken to divest the Qwa Qwa Masscash store. A suitable buyer was found for the store and the transaction will close shortly.
  7. On 21 January 2021 the Group announced that it had concluded a managed services agreement covering the Group’s financial transaction processing activities with Genpact, a strategic partner of Walmart Enterprise Business Services (Walmart EBS). The managed services will affect Accounts Payable, Accounts Receivable, and defined activities in Financial Control, Tax, Treasury and FP&A transaction processing in the Massmart head office and our trading banner home offices. The agreement became effective in March 2021. In a separate agreement, Walmart, through Walmart EBS, will assist Massmart and Genpact with the managed services.
  8. On 19 February 2021 the Group announced via SENS that following a more comprehensive strategic review, the Group had taken the decision to divest its interest in an additional 14 Cash & Carry stores. This decision is aligned to the Group’s previously referenced Turnaround objective to optimise the Group store portfolio and is enabled by the good progress that the Group has made toward consolidating the Makro and Masscash Wholesale store base within the Massmart Wholesale business unit.
  9. In an effort to optimise the Group’s store portfolio, in line with the revised strategy, and to take a focused approach to deliver sustainable, profitable growth and best serve our customers, the board made the decision, subsequent to year-end, to appoint Barclays to facilitate the disposal of the Group’s Cambridge/Rhino and Massfresh (comprising The Fruitspot and a meat processing facility) assets. These proposed transactions are still in the exploratory stages with an uncertain outcome and as a consequence it is difficult to estimate what the financial impact will be on the Group. As at the 27 December 2020 financial year-end the relative contribution of these businesses to the Group’s results were as follows:

  10. On 24 April 2020 Walmart, through its UK subsidiary, advanced an amount of R4 billion to the Group. This loan was Rand denominated, bore interest at the South African prime rate and was repayable by 24 July 2020. On 24 July 2020 the R4 billion Rand denominated loan was repaid and a new loan agreement was entered into with Walmart for a R4 billion US dollar denominated loan. This loan bore interest at the United States prime lending rate and was repayable within a 3-month period. A forward exchange contract was entered into to mitigate the foreign exchange risk. On 20 October 2020 a further loan modification agreement was entered into on substantially the same terms except for the maturity date which was amended to 26 January 2021. As at 27 December 2020 the foreign exchange risk related to the US dollar denominated loan continued to be mitigated by the forward exchange contract entered into. The prevailing United States prime lending rate as at this date was 3.25%. On 26 January 2021 a further loan modification agreement was entered into on substantially the same terms except for the maturity date which was amended to 26 April 2021.
  11. Massmart and its business units enter into certain transactions with related parties in the normal course of business. As a 52.8% shareholder, Main Street 830 Proprietary Limited, a subsidiary of Walmart, is entitled to a dividend based on their number of shares held. A net amount of R3.6 billion remains payable to Walmart, largely due to the loan advanced during the financial year. Non-loan related amounts due to and from Walmart are accounted for in ‘trade, other payables and provisions’ and ‘trade, other receivables and prepayments’ respectively.
  12. Massmart offers a diverse range of retail offerings to the market consisting of Food & Liquor, General Merchandise and Home Improvement. Due to the cyclical nature of this industry, higher revenues and operating profits are usually expected in the second half of the year rather than in the first six months. Higher sales during the period October to December are mainly attributed to the increased demand for non-Food categories as a result of an increase in discretionary spend leading up to
    the Black Friday and Christmas holiday periods. This information is provided to allow for a better understanding of the results.

  13. The constant currency information included in these summary consolidated results has been presented to illustrate the Group’s underlying ex-SA business performance excluding the effect of foreign currency fluctuations. In determining the application of constant currency, sales for the prior comparable financial reporting period have been adjusted to take into account the average monthly exchange rate for the current period. The table below depicts the percentage change in sales in both reported currency and constant currency for the given material currencies. The constant currency information incorporated in these summary consolidated results has not been audited or reviewed or otherwise reported on by our external auditors. The constant currency information is the responsibility of the Directors of Massmart. It has been prepared for illustrative purposes only and due to its nature, may not present Massmart’s financial position, changes in equity, results of operations or cash flows.

  14. Total interest-bearing borrowings and debt facilities, including bank overdrafts and lease liabilities, increased by R2.8 billion since December 2019. The increase is largely attributable to the loan received from Walmart, an additional drawdown on the Group’s debt facilities as well as a R632.2 million increase in the Group’s lease liabilities. This was offset through cash generation largely as a result of stringent working capital management and various cash preservation initiatives being applied. On 26 February 2021 the Group concluded agreements for the roll-over of its medium term bank loans. The repayment date of the Group’s R600 million ZAR denominated fixed term loan was extended to February 2023 and the repayment date of the Group’s R1 400 million ZAR denominated fixed term loan was extended to February 2024. All other terms have remained substantially unchanged.
  15. The Group’s effective tax rate, of 6.5% (2019: -18.9%) is mainly as a result of limiting the recognition of certain deferred tax assets, disallowed expenses relating to goodwill impairments and the taxation charge on profit-making entities. Deferred tax assets (i.e. arising from unutilised tax losses in trading entities) are recognised as a result of the reassessment of the recoverable amount of the deferred tax asset. The assessment considers the probability of forecasted future taxable income, which may include future tax planning opportunities.
  16. These summary consolidated results have been audited by independent external auditors, Ernst & Young Inc. and their unmodified summary report is available for inspection at the Company’s registered office. 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 report. 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 Chief Financial Officer, Mohammed Abdool-Samad CA (SA), supervised the preparation of the Group’s summary consolidated results.