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Saving people money so they can live better

Dedicated to Value

Massmart Reviewed Resultsfor the 26 weeks to 25 December 2011

Presentation to Investors, Analysts and Media February 2012

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December 2011Financial Performance

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Income Statement:§ Great performance in three Divisions§ Strong sales growth § High space growth, and two new African stores § Despite expense pressure due to investing in stores & capacity,

comparable expenses +9.4%§ Foreign exchange volatility: a R162m swing from Dec ‘10§ Integration costs § Underlying Group profit before tax growth 4.8% - 6.5%

Balance Sheet:§ Good retail disciplines: inventory days lower & steady supplier

funding levels § Significant capital expenditure

Brief Overview of 1H FY12

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(Rm’s) 2011 2010 Total % Chg

Comp % Chg

Inflation %

Massdiscounters 7 819 6 994 11.8 4.6 (5.0)

Makro 7 800 6 593 18.3 11.6 2.3Massbuild 4 240 3 782 12.1 8.7 0.5Masscash 11 633 10 006 16.3 10.9 5.2Total 31 492 27 375 15.0 9.2 1.1

§ Strong real comparable sales growth in all Divisions

§ Game Africa local sales growth 12.4% and Rand growth 18.1% (comparable)

§ Walmart promotions R308m incremental sales

Sales

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Massdiscounters Makro Massbuild Masscash Total

June 11 113 14 81 105 313

Acquired - - - - -

Closed (1) (1) - (2) (4)

Openings 10 3 3 5 21

Dec 11 122 16 84 108 330

§ Massdiscounters: seven Game, including Enugu, Nigeria, and three Dion Wired. Closed Mauritius

§ Makro: opened Montague Gardens, Nelspruit & Polokwane. Closed Milnerton

§ Massbuild: Opened a Builders Warehouse in Botswana and two Builders Express

§ Masscash stores: four Cambridge opened, one Saverite opened and two Cambridge closed.

Store Portfolio

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YTD sales inflation to December 2011:

§ General Merchandise -6.1%

§ Home Improvement +0.6%

§ Food & Liquor +2.3%

§ Total +1.1%

§ General Merchandise still experiencing imported deflation

§ Rising Food prices

Sales Inflation

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Inflation Basket: CPI vs. Massmart

Why is Massmart sales inflation lower than CPI?§Higher weighting of Food & Liquor; and §Significantly higher weighting of Gen Merch (CPI: Household Goods).

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Massmart Sales Inflation vs. CPI

§ Due to higher proportion of (deflationary) Gen Merch, Massmart’s sales inflation is lower than CPI

§ Higher inflation associated with extreme Rand weakness

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2011 2010

Gross Profit R5 575m R4 944m

As % of Sales 17.7% 18.1%

§ Steady gross margins in Makro & Masscash § Lower gross margins in:§ Massbuild due to some stock clearance activity § Massdiscounters due to higher proportion of Hi-tech &

Appliance sales and slight shift into promotional sales

Gross Profit

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2011 2010

Operating Costs R4 304m R3 763m

As % of Sales 13.67% 13.74%

§ Total costs increased by 14.4%, below sales growth § Comparable expenses up 9.4% (including depreciation)

§ Difficult environment: sales inflation of 1.1% still below SA inflation of 6.1%

§ Larger items:§ New stores & refurbs. Depreciation of R276m +24%§ Investing in Cambridge capacity § Makro new store pre-opening costs +R22m

Operating Costs

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2011 2010

Employment Costs R2 137m R1 837m

As % of Sales 6.79% 6.71%

§ Total increase 16.4%

§ Comparable increase 9.5%

§ And trading space up 5.7% (from December ‘10)

§ 13% increase in staff (FTEs). Staff increases in RDCs and headoffices

Employment Costs (50% of total costs)

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2011 2010

Occupancy Costs R 989m R 827m

As % of Sales 3.1% 3.0%

§ Total increase of 19.6%. Comparable increase of 9.5%

§ 5.7% net new trading space (compared to Dec ‘10)

§ Leases comprise 68% of Occupancy costs

§ Massdiscounters lease-smoothing adverse impact R13m

§ Rates, services & electricity inflation remains high

Occupancy Costs (23% of total costs)

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2011 2010

Depreciation R276m R222m

As % of Sales 0.88% 0.81%

§ Increase by 24.4%. Greater than sales growth from accelerating capital expenditure

§ And as new stores’ sales lag the incremental depreciation charge

§ Expect to continue ahead of sales growth due to new stores, refurbishments and RDCs

§ Also affected by shift from acquisitions to organic space growth

Depreciation (6% of total costs)

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2011 2010

Integration R42m -

§ Includes all ex-pat costs, and direct charges, travel & accommodation for initial integration work-streams

§ Likely full-year charge of R170m (FY12)§ Most costs are one-off / set-up costs, so we anticipate 2013 full-

year charge of approx R75m, and possibly R50m thereafter § Will not separately disclose this figure after June ’12 as it then

becomes normal Group operating cost

Integration costs

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Rm’s 2011 2010

Massdiscounters 25.4 (57.8)

Other 57 (21.7)

Total 82.4 (79.5)

Translation gains caused by Rand weakness in 1H FY12:

§Massdiscounters: net realised & unrealised gains from African operations’ balance sheet translation

§Other: predominantly unrealised gain from translation of other offshore monetary balances

Forex Gains & Losses

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Rm’s December

2011 2010 %

Massdiscounters 498.3 473.6 5.2

Masswarehouse 446.2 397.1 12.4

Massbuild 215.8 189.5 13.9

Masscash 175.4 224.5 (21.9)

Trading Profit before Interest 1 335.7 1 284.7 4.0

Trading profit excludes foreign exchange losses & Transaction costs

Divisional Trading Profit before Interest

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Rm’s December

2011 2010 %

Massdiscounters 29.7 13.0 128.5

Masswarehouse 28.5 25.3 12.6

Massbuild 21 20.3 3.4

Masscash 9.8 12.3 (20.3)

Corporate (137.1) (111.6) (22.8)

Total interest (48.1) (40.7) (18.2)

§ LY over-stocking fully unwound in Massdiscounters

§ Corporate pays Divisions’ interest & funds Group capital expenditure

Net Interest Paid

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Rm’s December

2011 2010 %

Massdiscounters 528.0 486.6 8.5

Masswarehouse 474.7 422.4 12.4

Massbuild 236.8 209.8 12.9

Masscash 185.2 236.8 (21.8)

Trading Profit before tax 1 424.7 1 335.6 5.1

Divisional Trading Profit after Interest

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2011 2010

Total tax R411m R363m

Tax rate 31.2% 31.7%

§ Effective tax rate will drop slightly as profit grows, from lower proportion of non-deductible expenditure

§ Tax rate includes STC on dividends 1.9% (2010: 2.6%)

§ No STC charge in FY13

Tax Charge

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Dec 2011 Dec 2010

Rms Days Rms Days

Net Stock (1) 8 385 59.0 7 336 59.7

Trade Creditors (1) 12 281 75.9 10 261 73.2

§ Stock days improved in Massdiscounters, Makro & Builders Warehouse

§ Creditors’terms unchanged, but positive timing difference of approx R600m due mostly to new Makro stores

1. Days calculated using historic cost of sales.

Stock & Creditors

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Dec 2011 Dec 2010

Rms Days Rms Days

Gross Trade Debtors 1 668 8.5 1 333 7.8

§ Closely monitor commercial credit

§ Bad debt experience steady

§ RCS still doing well in Massdiscounters

§ Slow pick-up of RCS in Builders Warehouse, and soft-launch shortly for RCS in Makro

Debtors

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Rm’s Dec 2011 Dec 2010

Replacement Capex 324 216Investment Capex 428 350

Total Capex 752 566

Businesses acquired - 87

Total Capital Expenditure 752 653

§ Includes:

§ New Makro stores R210m (and some capex spent in FY11)

§ Cambridge new stores & refurbs R123m

§ Foodco new & refurbs R249m

Net Capital Expenditure

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Main Areas of Capital Expenditure

Current Status Future

Massdiscounters:§RDC§Foodco§Africa

RDC prog. done by FY1215 Foodco storesOne new in FY12

Expenditure on IT & Fresh?Foodco 15-20 stores / yr1-2 new stores / yr

Makro:§Stores§RDC

Three new in FY12Extending RDC now

Two in FY13. Two (?) in FY14-15-

Massbuild:§Stores§RDC

New stores in SA & AfricaConstruction underway

New stores in SA & AfricaRDC operational FY13

Cambridge:§Stores§RDC

Five new stores in FY12Ambient DC

10-20 new stores / yrFresh DC?

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Accelerating Capex …

§ Group capex is increasingly organic in nature, and is now 2.4% of sales compared to 1.5% some years ago

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… And Accelerating Depreciation

§ The increasing proportion of organic expenditure and RDCs is driving depreciation higher as % of sales

§ Since 2006, 66% of space growth has been organic

1H of FY11 & FY12

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§ Average Group net gearing of R1 344m (FY10: R1 163m), and debt /equity ratio 32% (2010: 31%)

§ Making progress with selected property acquisitions (large stores) in Makro and Builders Warehouse – for new sites and existing leased properties

§ Capital expenditure for whole of FY2012 remains R1.6bn, and excludes acquisitions

Group Gearing

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Rm’s 2011 2010

Operating cashflows 1 644 1 316

Working capital released 1 939 864

Cash from Operations 3 583 2 180

Interest & Tax paid (411) (358)

Replacement capex (324) (216)

Free cashflow 2 848 1 606

Dividends paid (291) (287)

Net investment capex & acquisitions (380) (374)

Cash inflow before Financing 2 177 945

Cashflow Statement

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ROCE = EBITA / Average Capital Employed. EBITA in FY11 excludes Transaction Costs

ROE = Headline Earnings / Average Shareholders Equity. Headline Earnings in FY11 excludes Transaction Costs

Returns

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2011 2010

Total dividend per share (cents) 252 252

§ Despite lower headline earnings since 2008, have held the dividend per share constant

§ Current dividend policy x1.7 cover on headline earnings

§ After the changes to taxes on dividends in April ‘12 however, will likely adjust future dividend levels in response to the tax-effect on shareholders

Dividend

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§ To align with Walmart, will change to December financial year-end with effect from December 2012

§ Consequences:§ Will report a six-month period to December ’12§ Annual report for six-months to December ’12§ And June 2013 will be our first Interim results release

Change in Financial Year-end

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Highlights of the Operational Performance

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Dec 11

Total Sales growth +15.0% 6% Gross additional space

Comparable Sales growth +9.2% Very high volume growth

Comparable store expense growth +9.4% High rates, electricity,

depreciation

Increase in Trading Profit excl Forex and Integration costs +4.8%

Lower than sales growth due to high organic expansion and investment in Food retail skills and assets

Increase in Inventories +14.3% Below sales growth

Increase in Cash Generated by Ops +60.4% Controls / Stock in good

shape

Good progress with Retail Food R7bn Saverite, Cambridge, Foodco, Makro

FTE jobs created 3 879 Since Dec 2010

Group Operating Performance Highlights

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Home Improvement

16.7%

General Merchandise

31.1%

Food and Liquor52.2%

Total Contribution by Category

Comp Sales 10.0%Inflation 2.3%

Comp Sales 7.2%Deflation 6.1%

Comp Sales 8.7%Inflation 0.6%

Contribution and Performance by Category

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Divisional Performance

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Dec 11 % changeSales R 7 819m 11.8%

PBT excl Forex R528m 8.5%

PBT margin 6.8%

§ Comparable sales 4.6%, deflation 5.0%§ Game SA: difficult sales (SA comps 1.8%)§ Game Africa had a great performance (Total sales 24.5%)§ Dion Wired had another strong performance with sales up 41%§ Effectively now on the RDC system nationally, including Durban

although we will move the warehouse§ 15 Game Foodco stores (8 in the Cape, 5 in greater Gauteng and 2

in Africa)§ Next focus of Foodco conversions will be Gauteng.§ Trading space increased 5.9%

Massdiscounters

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Dec 11 % change

Sales R 7 800m 18.3%

PBT R475m 12.4%

PBT margin 6.1%

§ Exceptional performance whilst opening three stores and closing one

§ Before pre-opening costs, profits increased ahead of sales§ Full fresh offering now in five stores§ Fruitspot acquired from 2 Jan 2012§ Trading space increased by 15.9%

Masswarehouse

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Dec 11 % change

Sales R4 240m 12.1%

PBT R237m 12.9%

PBT margin 5.6%

§ Solid performance in a weak market§ Trade Depot and Kangela stable but at a low margin with low

growth.§ Warehouse and Express performing strongly§ First international store in Gaborone, Botswana, doing well § Supply Chain strategy and plan approved, first DC in Midrand under

construction§ Branded credit card started slowly, but building§ Trading space increased 2.2%

Massbuild

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Dec 11 % change

Sales R11 633m 16.3%

PBT R185m -21.8%

PBT margin 1.6%

§ Strong sales growth with comparable sales 10.9%§ High cost growth with investment in Saverite and Cambridge

brands, capacity and pre-opening costs§ Gauteng RDC opened and running well§ A few own goals – Fruit and Veg, DC move, shrinkage – lessons

learnt§ Rhino acquired and approved, expected to be implemented 1 March

2012. Need to sell 2+2 stores.§ Trading space increased 3.2%

Masscash

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Environment

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Environment – Competitive Retail§ Retail market:§ Consumer health appears to be improving with real wage growth and

improving employment§ Indebtedness of the middle market still a threat§ Product inflation still low, although CPI at 6.1%§ Shift back to credit card spend from cash, particularly store cards§ Lots of regulatory demands putting pressure on smaller retailers and

suppliers§ Very competitive with increasing levels of aggressive promotions

§ Massmart performance was affected by:§ Food inflation improving the Food business, particularly in commodities§ GM and HI volumes strong compensating for deflation overall but not

amongst middle-income consumers who are using the savings to buy food and clothing where inflation is higher

§ Strong volume growth driving costs§ Multimedia being stimulated by lower price points (growing at 30%)§ There are some signs of new activity amongst building contractors

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Environment§ Challenges§ Increased regulatory demand (CPA, Labour Amendment

Bill, BEE Amendment Bill, National/Provincial Liquor Licence Legislation, etc.)

§ Freeze on Liquor Licences in Gauteng hampering job creation

§ Rising service costs (rates, electricity, water, etc.)

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Strategic Priorities

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§ Trading Disciplines§ Supply Chain§ Private Brand§ Financial Services§ Food Retail (Saverite, Cambridge, Foodco and Makro)§ Organic Growth

Priority 1 – Improve Operations

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§ Trading Disciplines§ Supply Chain§ Private Brand§ Financial Services§ Food Retail (Saverite, Cambridge, Foodco and Makro)§ Organic Growth– Trading space planned growth (including store acquisitions):

• 2012 – 8.0% (6%)• 2013 – 8.0%• 2014 – 5.0%

– New stores 2012 – (including store acquisitions)• 30 stores: (20)

o 11 Game (7), 3 (3) Dion Wiredo 1 Makro (2)o 0 Wholesale Cash and Carryo 10 Retail Cash and Carry (5)o 3 Builders Warehouse (1), 2 Builders Express (2), 0 Builders Trade Depot (0)

§ African Growth - City Strategy

Priority 1 – Invest in Operational Improvements

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South Africa§ Awaiting South African Competition Appeal Court judgement § Reach out to interveners to rebuild relationships

Namibia§ Awaiting decision of Minister of Trade & Industry in Namibia§ Reach out to his Department§ Consider our legal options post his ruling

Priority 2 – Complete the Transaction …

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No Deal-related Retrenchments§ Relatively simple to implement§ Where we close a site (non-deal related) we will offer employment at

other sites

No Union De-recognition§ Relatively simple to implement§ We have never tested a recognition level§ Therefore no change

Offer of re-employment to 503 Retrenched employees§ Process underway§ Some success§ Appointed an external agency to assist

R100m Supplier Development Fund§ We are ready to start the first expenditure§ Governance in place§ Projects in Manufacturing, Agriculture, Fisheries and Services§ We are also assisting a number of local companies to connect with the

greater Walmart to export their products§ Reaching out to Government, Unions and Industry

Priority 2 – ... and Implement the Conditions

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§ So far on track with toolkits being implemented§ Costs to date R40m. R170m for the full year§ We are sending 370 employees to the Walmart Shareholders

Conference later this year to showcase Africa§ Integration likely completed by end of Dec 2012§ Ongoing integration costs estimated at R50m§ We are now focussed on extracting measurable value§ Value will appear in the Divisions and not the Centre§ Each toolkit will be evaluated on its own merits§ Some value will be given back to customer and some retained§ Will be difficult to pin-point exactly in the Income Statement or Balance

Sheet§ We will do our best to communicate it as we identify it§ After FY2012 – will become part of the business and we won’t

specifically measure it further

Priority 3 – Integrate into Walmart

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§ Department of Trade and Industry – SABS ISO9000 quality standard§ Department of Finance – Procurement strategies, structures, systems

and controls§ Department of Agriculture – assisting small emerging farmers and

fishermen and women§ Department of Safety and Security – supporting orphans of police-men

and -women§ Department of Basic Education – school feeding schemes and equipment§ Department of Defence – Christmas hampers to families of deployed

soldiers§ Post-Walmart transaction BEE score – 72% - Level 4

Priority 4 – Good Corporate Citizen

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Risks & Prospects

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Massmart’s 2012 Prospects

§ 34 Weeks to 19 February 2012 comparable stores sales growth 9.2% and total sales 15.1%

§ Integration costs higher in the second half (R170m full year)

§ Investment in growth, capacity and integration will continue

§ Integration value will start flowing

§ Cost pressures will remain

§ Operating margins under pressure

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Risks

§ Local and Provincial Government service costs and taxes§ Legislative environment§ GM inflation remaining very negative§ Middle-income debt levels and confidence§ Competitor response to our market share gains in all categories

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Conclusion

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Conclusion§ Strong sales growth§ Strong headline performance supported by weakening Rand§ Operating profit growth inhibited by investment in growth§ Transaction completed, awaiting appeal rulings§ Integration on track§ Leader in Corporate Citizenship§ Group positioned well in medium-term for growth post the current

investment cycle

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Thank You & Questions?

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Additional Financial Data

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% Dec 2011 Dec 2010

Standard tax rate 28.0 28.0Disallowed expenses 7.0 3.1Exempt income (0.1) (0.1)Foreign income (0.1) (0.2)Prior year (4.3) (1.0)

STC 1.9 2.6Other (1.2) (0.7)Group tax rate 31.2 31.7

Headline Tax Rate Reconciliation

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Rm’s Dec 2011 Dec 2010

SA tax 312.3 307.9

STC 33.1 28.6

Deferred tax 3.8 2.8

Foreign tax 46.1 29.2

Foreign deferred tax 15.6 (6.0)

Income Statement Charge 410.9 362.5

Analysis of Tax Charge

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Rm’s Dec 2011 Dec 2010

Land & buildings 63.1 54.4

Leasehold improvements 103.6 67.1

PPE 458.4 346.0

Computers 92.9 74.4

Motor vehicles 34.2 24.1

Total 752.2 566.0

These figures exclude acquisitions

Capital Expenditure

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Rm Dec 2011 Dec 2010

Attributable earnings 893.0 738.5

Impairment of assets 0.3 -

Profit / Loss on fixed asset disposals

2.4 0.8

Release of negative goodwill - (0.2)

Loss on sale of assets classified as held for sale

- 0.7

Tax effects on adjustments (0.5) (0.3)

Headline earnings 895.2 739.5

Headline Earnings Reconciliation

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(000’s)

At June 2011 213 883

Shares issued 1 970

At December 2011 215 853

Weighted-average for period 215 209

Fully-diluted weighted average 219 778

Number of Shares

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§ June 2011 trading space 1 257 985m²§ Net new space 63 248m²§ Opened 75 680m²§ Closed or sold 12 432m²

§ 5.0% net space growth (unweighted)§ December 2011 trading space 1 321 233m²

Trading Space

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Int-bearing Debt : Equity < 30%

Return on Capital Employed (ROCE) > 45%

Return on Equity > 35%

ROCE = EBITA / Average capital employed, excluding goodwill and deferred tax assets

ROE = Headline Earnings / Average shareholders equity, excluding goodwill and deferred tax assets

ROCE is not same as the Walmart-defined ROIC (return on invested capital)

Targets

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