MEDIA RELEASE
22 August 2012
Massmart Financial Results for the 52 weeks ending 24 June 2012.
Massmart results reflect record R1.7 billion investment in long-term growth

Sales up by 15.6%, headline earnings up 38%

62.8% increase in cash generated from operations to R2.7 billion
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25 new stores opened, 15 acquired

Level 4 BBBEE status maintained
Massmart’s first year as a Walmart subsidiary has delivered strong sales growth. Good trading
momentum was maintained amid intensified competition, while the group invested significantly in
stores and infrastructure.
Massmart increased sales by 15.6%, operating profit by 21% and headline earnings by 38%.
Excluding costs related to the Walmart transaction, operating profit increased by 3.7% and headline
earnings by 8.9%. Comparable sales increased by 9.6% and product inflation remained low at only
1.8%.
Cash flow generation increased 62.8% to R2.7 billion, underpinned by a solid working capital
performance. A record R1.7 billion in capital was invested in stores and infrastructure. Trading space
increased by 7.3% to a total of 1,350,300m² and the group now has 348 stores (with 25 stores
opened, 15 acquired and 5 closed).
The intensified investment in new space, converting space for food retail and new distribution centre
infrastructure caused occupancy costs and depreciation to increase ahead of sales growth. This
together with above-inflation increases in local taxes and services contributed to a 19.8% increase in
costs.
“The results reflect the Group’s continued investment for growth across all divisions, but specifically
for Food Retail. This has driven sales and market share growth, while suppressing margin growth in
the short term,” said Massmart CEO Grant Pattison.
Pattison added that he was pleased with the continued improvement in government relations and
particularly the support for the Massmart-Walmart inspired direct-to-farm programme.
Operating Environment
According to Pattison, Massmart’s high comparative sales growth suggests consumers are generally
in good shape. “Middle-income consumers, particularly those that rely on unsecured credit to fund
their purchases, came under pressure, and in Massdiscounters we saw a decline in credit spending
on a comparable account basis. The large growth in new consumer credit accounts also points
towards a trend of increasing use of unsecured credit.”
Pattison also highlighted increased competition in most product categories as the battle for market
share intensified, indicative of a healthy competitive environment. “Most major retailers are being
highly innovative in their search for growth, whilst independent retailers remain nimble, exploiting
gaps in the market,” he said.
Labour relations remain sound and the group has successfully settled most of its collective wage
agreements for the 2013 financial year earlier than in the previous year, with two-year agreements
reached in some instances.
Strategic and Operational Review
Pattison said he was pleased with the progress made on the group’s four strategic priorities, two of
them related to the Walmart transaction and integration. Legally, the transaction has been completed
save for the final ruling from the Competition Appeal Court on the Supplier Development Fund.
“We began implementing the Supplier Development Fund in terms of our commitments but, pending
the outcome of the Competition Appeal Court ruling, have put new commitments on hold,” said
Pattison, adding that of the 503 employees that had previously been retrenched, 222 have been reemployed within the group.
The main integration project, which saw the alignment of governance and the bedding down of basic
processes to continually extract value from the transaction, are in place. The formal integration
process will wind down over the next 12 months.
Good progress had also been made maintaining trading momentum, another of Massmart’s strategic
priorities. “We completed the Massdiscounters Regional Distribution Centre (RDC) network, opened
the first food RDC, improved our competence in Fresh and continued with Food Retail. Our Private
Label and Financial Services penetration also increased during the period,” said Pattison.
The group maintained its Level 4 BBBEE status and its focus on environmental sustainability saw it
driving supplier advocacy and reducing its environmental footprint through continued focus on waste
management and energy efficiency.
The focus on building constructive relationships with government departments was maintained
through partnerships with the Departments of Basic Education, Agriculture, Forestry and Fisheries,
South African Police Services, the South African Bureau of Standards, Treasury and SANDF.
Prospects
For the eight weeks to 19 August 2012, total sales increased by 17.7% and comparable sales
increased by 9.8%, continuing the trends experienced towards the close of the financial year.
With the change to year-end, the next full reporting period will be the 26 weeks to December. Sales
and gross margins are expected to perform well, although cost pressures as a result of investments
remain. No net margin growth is expected for either the 26 weeks to December 2012 or for the
subsequent 52 weeks to December 2013. Where value is extracted from integration, Massmart will
invest much of it in price.
Commenting on the group’s prospects, Pattison said: “The capital investments, our broad and
growing relationship with Walmart, and our renewed focus on operating the business and delivering
the strategy, positions us well for both growth in sales and trading margin in the medium to long term.”
Ends
Additional Notes
Financial Highlights at a glance.

Total sales increased by 15.6% to R61,209million
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Low overall product inflation (1.8%);
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Gross profit of 18.38%, higher than the prior year’s18.26%
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Operating profit up 3.7% to R2,135million before transaction costs

Headline earnings before transaction costs increased by 8.9% to R1,364million

Headline EPS before transaction costs increased by 2.8%
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Return on equity of 32.8%, excluding transaction costs
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Total cash dividend at 146 cents per share

Thuthukani dividend of 146 cents per share, equivalent to 100% of the ordinary dividend
About Massmart
Massmart is a managed portfolio of four divisions, each focused on high-volume, low-margin,
low-cost distribution of mainly branded consumer goods for cash, in 12 countries in sub-Saharan
Africa comprising 348 stores.
The Group is the second largest distributor of consumer goods in Africa, the leading retailer of general
merchandise, liquor and home improvement equipment and supplies, and the leading wholesaler of
basic foods.
Issued by:
Brunswick Group LLP
011 502 7300
For Media Enquiries:
Brian Leroni, Massmart Group Corporate Affairs Executive
011 517 0000
Cecilia de Almeida, Brunswick 083 325 9169
Gordon Letsoalo, Brunswick 079 510 6127