COMPANY INCOME STATEMENT - Massmart · Income Statement - - Items that will subsequently be re-classified to the Income Statement Revaluation of listed investments 7 (0.1) 0.3 Less

MASSMART COMPANY ANNUAL FINANCIAL STATEMENTS 2015

COMPANY INCOME STATEMENTFor the year ended 27 December 2015

December 2015 December 2014

Rm Notes 52 weeks 52 weeks

Revenue 1 788.1 1,342.9

- Sales 18.9 -

- Management and administration fees received 42.9 23.1

- Dividends received 726.3 1,319.8

Depreciation (0.4) -

Employment costs (45.7) (22.7)

Other income 1.7 0.2

Other operating costs (0.3) (4.5)

Operating profit before interest 2 743.4 1,315.9

- Finance costs (0.7) -

- Finance income 3.2 6.6

Net finance income 3 2.5 6.6

Profit before taxation 745.9 1,322.5

Taxation 4 (3.7) (1.5)

Profit for the year 742.2 1,321.0


COMPANY STATEMENT OF CASH FLOWSFor the year ended 27 December 2015



Cash flows from operating activitiesCash outflow from trading activities 13.1 (25.6) (10.9)

Working capital movements 13.2 (15.7) 10.0

Cash utilised in operations (41.3) (0.9)

Interest paid 3 (0.7) -

Interest received 3 3.2 6.6

Dividends received 1 726.3 1,319.8

Dividends paid 13.3 (905.6) (914.0)

Taxation paid 13.4 (5.4) (3.1)

Net cash (outflow)/inflow from operating activities (223.5) 408.4

Cash flows from investing activitiesInvestment to expand operations 6 (3.3) -

Investment in subsidiaries 5 (13.3) -

Loans advanced to subsidiaries - (8.3)

Proceeds received from/(loans repaid to) subsidiaries 97.9 (381.1)

Other investing activities 13.5 15.5 8.0

Net cash inflow/(outflow) from investing activities 96.8 (381.4)

Cash flows from financing activitiesNet acquisition of treasury shares 13.6 (23.6) (27.4)

Proceeds received from subsidiaries 150.2 -

Net cash inflow/(outflow) from financing activities 126.6 (27.4)

Net decrease in cash and cash equivalents (0.1) (0.4)

Cash and cash equivalents at the beginning of the year 7.0 7.4

Cash and cash equivalents at the end of the year 6.9 7.0


COMPANY STATEMENT OF CHANGES IN EQUITYFor the year ended 27 December 2015

Rm Share capital Share premium Preference shares Other reserves Retained profit Total

Balance as at December 2013 2.2 743.3 - 17.5 1,443.3 2,206.3

Total comprehensive income - - - 0.3 1,321.0 1,321.3

Profit for the year - - - - 1,321.0 1,321.0

Other comprehensive income for the year - - - 0.3 - 0.3

Share trust loss - - - - (27.4) (27.4)

Dividends paid - - - - (914.0) (914.0)

Treasury shares (note 10 and note 11) - (9.9) - (0.3) - (10.2)

Share-based payment expense (note 11) - - - 2.9 - 2.9


Total comprehensive income - - - (0.1) 742.2 742.1

Profit for the year - - - - 742.2 742.2

Other comprehensive loss for the year - - - (0.1) - (0.1)

Share trust loss - - - - (23.6) (23.6)

Dividends paid - - - (914.1) (914.1)

Treasury shares (note 10 and note 11) - (58.3) - 1.4 - (56.9)

Share-based payment expense (note 11) - - - 13.8 - 13.8



Dividend per share (cents)

- Interim 146.0 146.0

- Final 112.2 275.0

258.2 421.0

Declared after the financial year-end.

Value is less than R100,000.

Details of the dividend can be found in note 11 in the Group Financial Statements.

2

1

1

2


COMPANY STATEMENT OF FINANCIAL POSITIONFor the year ended 27 December 2015

Rm Notes December 2015 December 2014

ASSETSNon-current assets 1,199.9 1,185.0

Investment in subsidiaries 5 1,181.2 1,167.9

Property, plant and equipment 6 2.9 -

Other financial assets 7 13.6 14.1

Deferred taxation 8 2.2 3.0

Current assets 1,917.8 2,018.1

Other current financial assets 9 - 15.1

Trade and other receivables 16.5 3.7

Amounts owing by subsidiaries 5 1,894.4 1,992.3

Cash on hand and bank balances 6.9 7.0

Total assets 3,117.7 3,203.1

EQUITY AND LIABILITIESCapital and reserves 2,340.2 2,578.9

Share capital 10 2.2 2.2

Share premium 10 675.1 733.4

Other reserves 11 35.5 20.4

Retained profit 1,627.4 1,822.9

Total equity 2,340.2 2,578.9

Current liabilities 777.5 624.2

Trade and other payables 26.7 21.1

Taxation 4.1 6.6

Amounts owing to subsidiaries 5 746.7 596.5

Total equity and liabilities 3,117.7 3,203.1


COMPANY STATEMENT OF COMPREHENSIVE INCOMEFor the year ended 27 December 2015



Profit for the year 742.2 1,321.0

Items that will not subsequently be re-classified to the

Income Statement- -

Items that will subsequently be re-classified to the Income

Statement

Revaluation of listed investments 7 (0.1) 0.3

Less taxation relating to the revaluation of listed shares - -

Total other comprehensive (loss)/income for theyear, net of taxation

(0.1) 0.3

Total comprehensive income for the year 742.1 1,321.3


1

1


NOTES TO THE COMPANY ANNUAL FINANCIAL STATEMENTSFor the year ended 27 December 2015

Accounting policies and critical accounting judgements and key sources of estimation uncertainty

With the exception of the accounting policies relevant to the basis of consolidation, the accounting policies and standards and interpretations issued are in line with the Massmart Group

accounting policies. Refer to note 1 and note 3 in the Group Financial Statements. The accounting policy of the Company is to hold investments in subsidiaries at cost less impairment.

Details of critical accounting judgements and key sources of estimated uncertainty are disclosed in note 2 of the Group Financial Statements, where relevant.



1. Revenue


Rm 52 weeks 52 weeks

Sales 18.9 -

Dividends received 726.3 1,319.8

Management and administration fees received 42.9 23.1

788.1 1,342.9



2. Operating profit before interest



Other income comprises:

Foreign exchange gain 1.7 0.2

Charges to operating profit includes:

Share-based payment expense 13.8 2.9

Contribution to pension scheme 0.5 1.3



3. Net finance income



Finance costs

Interest on Group loans (0.7) -

Finance income

Interest on Group loans 3.0 6.6

Interest from Banks 0.1 -

Interest other 0.1 -

3.2 6.6

Net finance income 2.5 6.6



4. Taxation



Current year

South African normal taxation

– Current taxation 2.9 2.6

– Deferred taxation 0.8 (1.1)

Total 3.7 1.5

% December 2015 December 2014

The rate of taxation is reconciled as follows:

Standard corporate taxation rate 28.0 28.0

Exempt income (27.3) (27.9)

Other (0.2) -

Effective rate 0.5 0.1



5. Interest in subsidiaries

Rm December 2015 December 2014

Interest in subsidiaries

Capensis Investments 241 Proprietary Limited 698.0 698.0

Game Discount World (Mauritius) Limited 0.1 0.1

Massbuild Proprietary Limited 296.2 296.2

Masscash Holdings Proprietary Limited 82.2 82.2

Massmart International Holdings Limited 81.4 81.4

Unison Risk Management Alliance Proprietary Limited 13.3 -

Tiradeprops 60 Proprietary Limited 5.0 5.0

Tiradeprops 66 Proprietary Limited 5.0 5.0

1,181.2 1,167.9


Amounts owing by subsidiaries

Imagegate Limited 8.8 6.9

Massbuild Proprietary Limited 81.7 828.3

Masscash Holdings Proprietary Limited 1,439.6 807.8

Massmart Management and Finance Company Proprietary Limited - 12.1

Micawber 269 Proprietary Limited 14.2 11.5

Mystic Blue Trading 62 Proprietary Limited 200.0 200.0

Fresh Food Direct Proprietary Limited (previously The Fruit Spot Proprietary Limited) 27.6 3.2

Wild Developments Proprietary Limited 122.5 122.5

1,894.4 1,992.3


Amounts owing to subsidiaries

Massmart Management and Finance Company Proprietary Limited (168.3) -

Game Discount World (Mauritius) Limited - (0.1)

Masstores Proprietary Limited (563.9) (581.9)

The Drop Inn Group of Liquor Supermarkets Proprietary Limited (2.7) (2.7)

Tiradeprops 60 Proprietary Limited (5.9) (5.9)

Tiradeprops 66 Proprietary Limited (5.9) (5.9)

(746.7) (596.5)

The loan with Massmart Management and Finance Company Proprietary Limited is unsecured, bears interest at a variable rate linked to the South African (SA) prime overdraft rate,

and is payable or receivable on demand. The rest of the loans are unsecured, interest free and are payable on demand.



6. Property, plant and equipment

Rm Cost

Accumulated

depreciation and

impairment

Net book

value

December 2015

Owned assets

Motor vehicles 3.3 (0.4) 2.9

Total property, plant and equipment 3.3 (0.4) 2.9

Reconciliation of property, plant and equipment

December 2015 Opening net bookvalue

Additions DepreciationClosing net book

valueRm

Owned assets

Motor vehicles - 3.3 (0.4) 2.9

Total property, plant and equipment - 3.3 (0.4) 2.9

The Company has reviewed the residual values and useful lives at year end. No significant adjustment resulted from such review in the current financial year.



7. Other financial assets


Loans and receivables

Employee Share Trust Loans to the Executive Directors and other employees of Massmart

Holdings Limited:

Balance at the beginning of the year 13.1 36.5

Advanced during the year 0.4 0.9

Repayments (0.8) (9.2)

Less included in other current financial assets (note 9) - (15.1)

12.7 13.1

Available-for-sale investments

Investment in listed shares 0.9 1.0

0.9 1.0

13.6 14.1

The Employee Share Trust Loans to Executive Directors and other employees of the Company are non-interest bearing and are secured by the

underlying ordinary shares in Massmart Holdings Limited. The loans are repayable 10 years after the grant date. Recourse is not limited to these shares

and should shares sold to repay these loans be insufficient to recover the balance outstanding, the unrecovered portion remains a debt due and

payable. 186,377 (December 2014: 481,045) shares with a market value of R19,234,106 (December 2014: R69,236,807) have been pledged.

For more information on the recognition and measurement of these loans and receivables, and these available-for-sale investments refer to note 16

and note 17 of the Group Annual Financial Statements.

1

1



8. Deferred taxation


The major movements during the year are analysed as follows:

Asset at the beginning of the year 3.0 1.9

Charge to the Income Statement for the year (0.8) 1.1

Charge to Other comprehensive income for the year - -

Asset at the end of the year 2.2 3.0

The major components of deferred taxation are analysed as follows:

Other temporary differences 2.2 3.0

2.2 3.0


1

1



9. Other current financial assets


Employee Share Trust Loans to the Executive Directors and other employees of

Massmart Holdings Limited- 15.1

- 15.1

For more information on the terms and conditions of the Share Trust Loans, refer to note 7.

The current portion in the prior year relates to Grant Pattison’s loan, which was transferred to current upon his resignation.

Share options granted under the Massmart Holdings Limited Employee Share Trust

At December 2015, executives and senior employees have options of 7,673,705 (December 2014: 8,773,054) ordinary shares of which 2,289,364 (December 2014: 4,303,031) areunvested. Share options granted under the Employee Share Incentive Scheme carry no rights to dividends and no voting rights. Additional information of the Employee Share Incentive Scheme

can be found in note 29 of the Group Annual Financial Statements. The share-based payment reserve relates to the executive directors, refer to note 36 in the Group Financial

Statements, for details of the Directors interest in the Company’s shares. During the current financial year, 0.9 million shares (0.4% of average shares in issue) were bought in the market by the Massmart Holdings Limited Executive Share Trust at an averageprice of R148.88 totalling R135.5 million. During the prior financial year, 0.6 million shares (0.3% of average shares in issue) were bought in the market were by the Massmart Holdings Limited Executive Share Trust at anaverage price of R128.22 totalling R73.7 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.



10. Issued capital

Share capital Share premium

Rm December 2015 December 2014 December 2015 December 2014

Authorised

500,000,000 (December 2014: 500,000,000) ordinary shares of 1 cent each 5.0 5.0 - -

20,000,000 (December 2014: 20,000,000) non-redeemable cumulative non-participatingpreference shares of 1 cent each

0.2 0.2 - -

18,000,000 (December 2014: 18,000,000) ‘A’ convertible redeemable non-cumulativeparticipating preference shares of 1 cent each

0.2 0.2 - -

4,000,000 (December 2014: 4,000,000) ‘B’ convertible redeemable non-cumulativeparticipating preference shares of 1 cent each

- - - -

Issued

217,136,334 (December 2014: 217,118,072) ordinary shares of 1 cent each 2.2 2.2 675.1 733.4

2,840,483 (December 2014: 2,858,745) ‘B’ convertible redeemable non-cumulativeparticipating preference shares of 1 cent each

- - - -

Number of Share capital Share premium

shares Rm Rm

Ordinary shares

Balance at December 2013 217,109,044 2.2 743.3

Shares issued in terms of the Massmart Black Scarce Skills Trust 9,028 - -

Ordinary shares issued – December 2014 217,118,072 2.2 743.3

Treasury shares (194,765) - (9.9)

Ordinary shares issued excluding treasury shares – December 2014 216,923,307 2.2 733.4

Balance at December 2014 217,118,072 2.2 733.4

Shares issued in terms of the Massmart Black Scarce Skills Trust 18,262 - -

217,136,334 2.2 733.4

Treasury shares (575,563) - (58.3)

Ordinary shares issued excluding treasury shares – December 2015 216,560,771 2.2 675.1

Ordinary shares, which have a par value of 1 cent, carry one vote per share and carry the right to dividends.

‘B’ convertible redeemable non-cumulative participating preference shares

Balance at December 2013 - - `

Net shares issued in terms of the Massmart BEE transaction 2,867,773 - -

Shares converted to ordinary shares (9,028) - -

Balance at December 2014 2,858,745 - -

Net shares issued in terms of the Massmart BEE transaction 2,858,745 - -

Shares converted to ordinary shares (18,262) - -

Balance at December 2015 2,840,483 - -

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 2015, executives and senior employees have options of 7,673,705 (December 2014: 8,773,054) ordinary shares of which 2,289,364 (December 2014: 4,303,031) areunvested.

Share options granted under the Employee Share Incentive Scheme carry no rights to dividends and no voting rights. Additional information of the Employee Share Incentive Scheme

can be found in note 29 of the Group Annual Financial Statements. The share-based payment reserve relates to the executive directors, refer to note 36 in the Group Financial

Statements, for details of the Directors interest in the Company’s shares.

During the current financial year, 0.9 million shares (0.4% of average shares in issue) were bought in the market by the Massmart Holdings Limited Executive Share Trust at an averageprice of R148.88 totalling R135.5 million.

During the prior financial year, 0.6 million shares (0.3% of average shares in issue) were bought in the market were by the Massmart Holdings Limited Executive Share Trust at an averageprice of R128.22 totalling R73.7 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.



11. Other reserves



Treasury shares 1.4 (0.3)


Revaluation of listed investments (0.1) 0.3

35.5 20.4

Reconciliation of the treasury share reserve

Balance at the beginning of the year (0.1) 0.2

Movement on treasury shares 1.4 (0.3)

1.3 (0.1)

Reconciliation of the share-based payment reserve


Share-based payment expense related to Massmart Holdings Limited Employee Share Trust 13.8 2.9

33.2 19.4

Reconciliation of the available-for-sale investment


Revaluation of listed investments to market value (0.1) 0.3

1.0 1.1

The Group introduced a new Employee Share Incentive Scheme in the 2013 financial year. The share-based payment reserve arises on the granting of share options, referred to as the

Employee Share Option Scheme, and retention share grants and performance share awards, referrred to as the Employee Share Incentive Plan, to employees under the Employee

Share Incentive Schemes of the Group. Details of the Employee Share Incentive Schemes can be found in note 29 in the Group Financial Statements. The share-based payment

valuation of the Employee Share Option Scheme was performed by Alexander Forbes. The share-based payment valuation of the Employee Share Incentive Plan 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.



12. Cross-suretyships and promissory notes


Cross-suretyships under banking and other financial facilities 10,865.6 9,003.1

10,865.6 9,003.1

Banking facilities incorporate, amongst others, letters of credit, forward exchange contracts and electronic fund transfers. These facilities have been secured by cross-suretyships

between Group companies.

First National Bank has provided shared facilities amounting to R1.3 billion (December 2014: R0.7 billion) to the Company and fellow Group companies.

ABSA Bank has provided shared facilities amounting to R3.8 billion (December 2014: R3.2 billion) to the Company and fellow Group companies.

Nedbank has provided shared facilities amounting to R2.5 billion (December 2014: R2.0 billion) to the Company and fellow Group companies.

Gross cross-suretyships to the value of R0.6 billion (December 2014: R0.6 billion) have been lodged as security by and between the Company and fellow Group companies with

Walmart.


Standard Bank.


Investec.

Gross cross-suretyships to the value of R0.6 billion (December 2014: R0.6 billion) have been lodged as security by and between the Company and fellow Group companies with Ivuzi

Investments (RF) Ltd.

Gross cross-suretyships to the value of R0.4 billion have been lodged as security by and between the Company and fellow Group companies with Citibank.

At the reporting date the Massmart Group was net cash positive.



13. Notes to the statement of cash flows



13.1 Cash outflow from trading activities

Profit before taxation 745.9 1,322.5

Adjustment for:

Depreciation 0.4 -

Finance costs 0.7 -

Finance income (3.2) (6.6)

Dividends received (726.3) (1,319.8)


Treasury share acquisitions (25.0) (6.3)

Other non-cash movements (31.9) (3.6)

(25.6) (10.9)

13.2 Working capital movements

(Decrease)/increase in trade and other payables (2.9) 2.7

(Increase)/decrease in trade and other receivables (12.8) 7.3

(15.7) 10.0

13.3 Dividends paid

Shareholder for dividends 8.5 -

Dividends declared to shareholders (914.1) (914.0)

(905.6) (914.0)

13.4 Taxation paid

Amounts owing at the beginning of the year (6.6) (7.1)

Amounts charged to the Income Statement (3.7) (1.5)

Deferred taxation 0.8 (1.1)

Amounts owing at the end of the year 4.1 6.6

(5.4) (3.1)

13.5 Other investing activities

Other financial assets 15.5 8.0

13.6 Net acquisition of treasury shares

Share trust losses (23.6) (27.4)

Other non-cash movements includes the share premium on shares issued in the period, other reserve movements and the fair value adjustment on the listed investments.



14. Related parties

Rm

Dividends

received

Management and

administration fees

Interest

received Dividends paid Interest paid

December 2015

Income Statement transactions between related parties are as follows

- Massbuild Proprietary Limited 238.1 - - - -

- Masscash Holdings Proprietary Limited 58.6 - - - -

- Game Discount World (Mozambique) - - - - -

- Masstores Proprietary Limited 411.2 42.9 - - -

- Massmart Management & Finance Company Proprietary Limited - - 3.0 - 0.7

- Massmart Black Scarce Skills Trust 0.3 - - - -

- Main Street 830 Proprietary Limited - - - 479.3 -

708.2 42.9 3.0 479.3 0.7

December 2014

Income Statement transactions between related parties are as follows

- Massbuild Proprietary Limited 447.6 - - - -

- Masscash Holdings Proprietary Limited 270.0 - - - -

- Game Discount World (Mozambique) - - - - -

- Masstores Proprietary Limited 602.2 23.1 - - -

- Massmart Management & Finance Company Proprietary Limited - - 6.6 - -

- Main Street 830 Proprietary Limited - - - 479.3 -

1,319.8 23.1 6.6 479.3 -

Additional information can be found in note 1 for dividends and management fees received in the Company Financial Statements.

Additional information can be found in note 3 for interest received and paid in the Company Financial Statements.

Additional information can be found in note 5 for loans to and from related parties in the Company Financial Statements.

Additional information can be found in note 34, note 35 and note 36 in the Group Financial Statements with regards to Directors’ emoluments and interest of directors in the

Company’s Share Incentive Schemes respectively.



15. Fair Value

Fair value hierarchy

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments identified below. The table below reflects ‘Financial

instruments’ carried at fair value and those ‘Financial instruments’ 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

Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data

Financial instruments in the Statement of Financial Position

Rm

Total Carrying

Amount Total Fair Value Level 1 Level 2 Level 3

December 2015

Financial AssetsLoans andreceivables

12.7 9.2 - 9.2 -

- Employee share trust loans 12.7 9.2 - 9.2 -

Available-for- salefinancialinstruments

0.9 0.9 0.9 - -

- Investment in listed shares 0.9 0.9 0.9 - -

13.6 10.1 0.9 9.2 -

There were no transfers between the fair value categories during the December 2015 financial year.

The financial assets and financial liabilities have been presented based on an analysis of their respective natures, characteristics and risks.

The carry value of the financial instruments disclosed as current assets and current liabilities equate to their fair value due to their short term nature.

Financial instruments in the Statement of Financial Position

Rm

Total Carrying

Amount Total Fair Value Level 1 Level 2 Level 3

December 2014

Financial AssetsLoans andreceivables

28.2 23.7 - 23.7 -

- Employee share trust loans 28.2 23.7 - 23.7 -

Available-for- salefinancialinstruments

1.0 1.0 1.0 - -

- Investment in listed shares 1.0 1.0 1.0 - -

29.2 24.7 1.0 23.7 -

There were no transfers between the fair value categories during the December 2014 financial year.

The financial assets and financial liabilities have been presented based on an analysis of their respective natures, characteristics and risks.

The carry value of the financial instruments disclosed as current assets and current liabilities equate to their fair value due to their short term nature.

Fair value measurement and valuation techniques for level 2 financial instruments

Type of financial instrument

Fair value at

December 2015

(Rm)

Valuation

technique Significant inputs

Financial Assets

Loans and receivables 9.2

Employee share trust loans 9.2 DCF Market interest rate

9.2

Type of financial instrument

Fair value at

December 2014

(Rm)

Valuation

technique Significant inputs

Financial Assets

Loans and receivables 23.7

Employee share trust loans 23.7 DCF Market interest rate

23.7

Valuation techniqueDescription ofvaluation technique

Discounted cash flow (DCF)

The DCF method involves the projection of a series of cash flows. To this projected cash flow

series, an appropriate, market-derived discount rate is applied to establish the present value

of the cash flow stream associated with the item. With regards to assets, the fair value is

estimated using explicit assumptions regarding the benefits and liabilities of ownership over

the asset’s life including an exit or terminal value. To this end, the Company applies Method

2 of the expected present value technique in terms of IFRS 13 Fair Value Measurement.



16. Financial Instruments

The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity

balances.

The capital structure of the Company consists of equity attributable to equity holders of the parent, comprising share capital, share premium, other reserves and retained profit. Additional

information can be found in note 10 and note 11 respectively.

The targeted level of gearing is determined after consideration of the following key factors:

- the needs of the Company to fund current and future capital expenditure to achieve its stated production growth target; and

- the desire of the Company to maintain its gearing within levels considered to be acceptable taking into account potential business opportunities and the position of the Company in the business

cycle.

The targeted level of gearing was adequately managed in the current financial year.

Classification of financial instruments

Rm

Financial

instrument

Liability at

amortised

cost

Loans and

receivables

Available-

for-sale

financial

instruments

Non-financial

instruments

December 2015

Non-current assets 13.6 - 12.7 0.9 1,186.3-

Investment

in

subsidiaries

- - - - 1,181.2

- Property, plant and equipment - - - - 2.9

- Other financial assets 13.6 - 12.7 0.9 -

- Deferred taxation - - - - 2.2

Current assets 1,917.8 - 1,917.8 - -

- Trade and other receivables 16.5 - 16.5 - -

- Amounts owing by subsidiaries 1,894.4 - 1,894.4 - -

- Cash on hand and bank balances 6.9 - 6.9 - -

Total assets 1,931.4 - 1,930.5 0.9 1,186.3

Current liabilities 755.3 755.3 - - 22.2

- Trade and other payables 8.6 8.6 - - 18.1

- Taxation - - - - 4.1

- Amounts owing to subsidiaries 746.7 746.7 - - -

Total liabilities 755.3 755.3 - - 22.2

Rm

Financial

instrument

Liability at

amortised

cost

Loans and

receivables `

Available-

for-sale

financial

instruments

Non-financial

instruments

December 2014

Non-current assets 14.1 - 13.1 1.0 1,170.9

- Investment in subsidiaries - - - - 1,167.9

- Other financial assets 14.1 - 13.1 1.0 -

- Deferred taxation - - - - 3.0

Current assets 2,018.1 - 2,018.1 - -

- Other current financial assets 15.1 - 15.1 - -

- Trade and other receivables 3.7 - 3.7 - -

- Amounts owing by subsidiaries 1,992.3 - 1,992.3 - -

- Cash on hand and bank balances 7.0 - 7.0 - -

Total assets 2,032.2 - 2,031.2 1.0 1,170.9

Current liabilities 605.1 605.1 - - 19.1

- Trade and other payables 8.6 8.6 - - 12.5

- Taxation - - - - 6.6

- Amounts owing to subsidiaries 596.5 596.5 - - -

Total liabilities 605.1 605.1 - - 19.1

Financial risk management

The Company does not trade in financial instruments, but in the ordinary course of business operations, the Company is exposed to a variety of financial risks arising from the use of financial

instruments. These risks include:

- market risk (comprising interest rate risk and currency risk);

- liquidity risk; and

- credit risk.

The Company has developed a comprehensive risk management process to facilitate, control and monitor these risks. This process includes formal documentation of policies, including limits,

controls and reporting structures. The Executive Committee is responsible for risk management activities within the Company.

Market risk management

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The market risks that the Company is primarily exposed to

include interest rate risk and currency risk. Market risk is managed by identifying and quantifying risks on the basis of current and future expectations and ensuring that all trading occurs within

defined parameters. This involves the review and implementation of methodologies to reduce risk exposure. The reporting on the state of the risk and risk practices to executive management is

part of this process. The processes set up to measure, monitor and mitigate these market risks are described below. There has been no change to the Company’s exposure to market risk or the

manner in which it manages and measures the risk since the prior period.

Interest rate risk management

The Company is exposed to interest rate risk because it borrows and invests surplus funds with Massmart Management and Finance Proprietary Limited through floating rate borrowings to fund its

operations.

The carrying amount of the Group’s financial assets and liabilities at reporting date that are subject to interest rate risk is as follows :

December 2015 Subject to interest rate

movement

Non-interest

bearing Total

Rm Fixed Floating

Non-current assets - - 13.6 13.6

- Other financial assets - - 13.6 13.6Currentassets

- 6.9 1,910.9 1,917.8

- Trade and other receivables - - 16.5 16.5

- Amounts owing by subsidiaries - - 1,894.4 1,894.4

- Cash on hand and bank balances - 6.9 - 6.9

Total assets - 6.9 1,924.5 1,931.4

Current liabilities - 168.3 587.0 755.3

- Trade and other payables - - 8.6 8.6

- Amounts owing to subsidiaries - 168.3 578.4 746.7

Total liabilities - 168.3 587.0 755.3

December 2014Subject to interest rate

movement

Non-interest

bearing Total

Rm Fixed Floating

Non-current assets - - 14.1 14.1

- Other financial assets - - 14.1 14.1

Current assets - 19.1 1,999.0 2,018.1

- Other current financial assets - - 15.1 15.1

- Trade and other receivables - - 3.7 3.7

- Amounts owing by subsidiaries - 12.1 1,980.2 1,992.3

- Cash on hand and bank balances - 7.0 - 7.0

Total assets - 19.1 2,013.1 2,032.2

Current liabilities - - 605.1 605.1

- Trade and other payables - - 8.6 8.6

- Amounts owing to subsidiaries - - 596.5 596.5

Total liabilities - - 605.1 605.1

Interest rate sensitivity

The Company is sensitive to the movements in the SA Prime interest rate. The rates of sensitivity represents management’s assessment of the possible change in interest rates. The average interest

rate for the Company for the year was 7.82 % (December 2014: 7.20%), and the variable interest paid was R0.7 million (December 2014: Nil). If the SA Prime interest rate increased or decreased by

100 basis points (December 2014: increased or decreased by 100 basis points) at year end, the profit for the year would have increased or decreased by R0.8 million respectively (December 2014:

increased or decreased by R0.8million respectively).

Currency risk management

All liabilities are South African Rand (ZAR) denominated. Foreign-denominated assets are not covered by forward exchange contracts.

The carrying amount of the Group’s foreign currency denominated monetary assets at reporting date is as follows :

Rm ZAR Euro GBP Total

December 2015


Other financial assets 13.6 - - 13.6

Trade receivables 16.5 - - 16.5

Amounts owing by subsidiaries 1,885.7 0.5 8.2 1,894.4

Cash on hand and bank balances 6.9 - - 6.9

1,922.7 0.5 8.2 1,931.4

December 2014


Other financial assets 29.2 - - 29.2

Trade receivables 3.7 - - 3.7

Amounts owing to subsidiaries 1,985.4 0.4 6.5 1,992.3

Cash on hand and bank balances 7.0 - - 7.0

2,025.3 0.4 6.5 2,032.2

Foreign currency sensitivity

The Company is primarily exposed to the movements in the British Pound (GBP). The rates of sensitivity represents management’s assessment of the possible change in currency rates. If the GBP

increased or decreased by 10% (December 2014: increased or decreased by 10%) at year end, the profit for the year would have increased or decreased by R0.82 million respectively (December

2014: increased or decreased by R0.02 million respectively).

Liquidity risk management

Liquidity risk is the risk that the Company will be unable to meet a financial commitment in any location or currency. This risk is minimised through the holding of cash balances and sufficient

available borrowing facilities. In addition, detailed cash flow forecasts are regularly prepared and reviewed so that the cash needs of the Company are managed according to its requirements.

The following table details the Company’s contractual maturity for its non-derivative financial liabilities. The table has been compiled based on the undiscounted cash flows of financial liabilities

based on the earliest date on which the Company will be required to repay the liability. The cash flows include both the principal and interest payments.

Rm

Repayable

within 1

year

Repayable

1 – 5 years Total

December 2015

Financial liabilities

Trade and other payables 8.6 - 8.6

Amounts owing to subsidiaries 746.7 - 746.7

Total undiscounted cash flows of the Company’s financial liabilities 755.3 - 755.3

Less: Future finance charges -

Total financial liabilities 755.3

Rm

Repayable

within 1

year

Repayable

1 – 5 years Total

December 2014

Financial liabilities

Trade and other payables 8.6 - 8.6

Amounts owing to subsidiaries 596.5 - 596.5

Total undiscounted cash flows of the Company’s financial liabilities 605.1 - 605.1

Less: Future finance charges -

Total financial liabilities 605.1

The effect of discounting on the current financial liabilities are deemed immaterial due to their short-term nature.

Credit risk management

The carrying amount of the financial assets represents the Company’s maximum exposure to credit risk without taking into consideration any collateral provided. All loans and receivables are

considered to be of low credit risk at the end of the current and prior financial year.



17. Events after the reporting date

The Directors are not aware of any material event which occurred after the reporting date and up to the date of this report that would impact the financial information disclosed in the

Company Financial Statements in the current year.

Documents

COMPANY INCOME STATEMENT - Massmart · Income Statement - - Items that will subsequently be re-classified to the Income Statement Revaluation of listed investments 7 (0.1) 0.3 Less