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WOOLWORTHS HOLDINGS LIMITED
AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE 1998
INVESTING FOR THE FUTURE
INCOME STATEMENT
1998 1997 %
NOTE RM RM CHANGE
REVENUE 5,300.8 4,333.0 22.3
TURNOVER 5,039.4 4,227.6 19.2
INTEREST AND OTHER REVENUE 261.4 105.4 148.0
NET PROFIT BEFORE EXCEPTIONAL ITEMS 1 402.5 363.0 10.9
EXCEPTIONAL ITEMS 2 30.8 -
NET PROFIT BEFORE TAX 433.3 363.0 19.4
TAX 148.5 133.2 11.5
NET PROFIT AFTER TAX 284.8 229.8 23.9
MINORITY INTERESTS 1.1 -
NET PROFIT ATTRIBUTABLE
TO ORDINARY SHAREHOLDERS 283.7 229.8 23.5
NUMBER OF SHARES ISSUED (MILLIONS) 839.6 753.2
WEIGHTED AVERAGE NUMBER
OF SHARES (MILLIONS) 762.8 706.4
EARNINGS PER SHARE (CENTS) 37.2 32.5 14.4
HEADLINE EARNINGS PER SHARE (CENTS) 3 35.0 33.3 5.2
DIVIDEND PER SHARE (CENTS) 14.0 13.2 6.1
INTERIM 6.5 5.7
FINAL 7.5 7.5
DIVIDEND COVER 2.5 2.5
BALANCE SHEET
1998 1997
NOTE RM RM
CAPITAL EMPLOYED
SHAREHOLDERS' INTEREST 4 1,670.1 1,098.8
LONG-TERM BORROWINGS 25.8 13.1
DEFERRED TAX 26.4 27.8
1,722.3 1,139.7
EMPLOYMENT OF CAPITAL
PROPERTY, PLANT AND EQUIPMENT 1,000.0 791.6
INVESTMENTS - 52.4
LOANS 73.5 61.4
CURRENT ASSETS 1,773.9 1,283.0
INVENTORIES 481.8 272.5
DEBTORS 1,086.6 914.4
BANK BALANCES AND CASH 204.4 79.4
AMOUNTS OWING BY FELLOW SUBSIDIARIES 1.1 16.7
TOTAL ASSETS 2,847.4 2,188.4
CURRENT LIABILITIES 1,125.1 1,048.7
CREDITORS 604.3 463.8
TAX 114.7 139.4
OVERDRAFTS AND SHORT-TERM BORROWINGS 392.7 29.7
DIVIDENDS 11.4 10.6
AMOUNTS OWING TO FELLOW SUBSIDIARIES 2.0 405.2
1,722.3 1,139.7
NET ASSET VALUE - PER SHARE (CENTS) 198.9 145.9
DEBT EQUITY RATIO (NET OF CASH) 12.8% 28.7%
CASH FLOW STATEMENT 1998 1997
RM RM
CASH FLOW FROM OPERATING ACTIVITIES
CASH INFLOW FROM TRADING 463.0 397.9
WORKING CAPITAL MOVEMENTS (89.3) (710.4)
CASH GENERATED BY/(UTILISED IN)
OPERATING ACTIVITIES 373.7 (312.5)
INTEREST RECEIVED AND INVESTMENT INCOME 231.7 82.7
INTEREST PAID (83.3) (1.5)
TAX PAID (173.4) (102.9)
CASH GENERATED BY/(UTILISED IN) OPERATIONS 348.7 (334.2)
DIVIDENDS PAID (20.5) (15.4)
NET CASH INFLOW/(OUTFLOW) FROM OPERATIONS 328.2 (349.6)
CASH FLOW UTILISED IN INVESTING ACTIVITIES
INVESTMENT TO MAINTAIN OPERATIONS (59.6) (26.8)
INVESTMENT TO EXPAND OPERATIONS (196.8) (546.9)
INVESTMENT IN SUBSIDIARIES (314.7) (52.4)
LOANS AND OTHER INVESTMENTS (20.7) -
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (591.8) (626.1)
CASH FLOW FROM FINANCING ACTIVITIES
SHARES ISSUED 460.7 227.9
LOANS AND ADVANCES (TO)/FROM
FELLOW SUBSIDIARIES (387.6) 738.0
LOANS ADVANCED TO DIRECTORS AND EMPLOYEES (12.1) (9.8)
LONG-TERM LIABILITIES (REPAID)/RAISED (44.7) 9.1
NET CASH INFLOW FROM FINANCING ACTIVITIES 16.3 965.2
NET DECREASE IN CASH AND CASH EQUIVALENTS (247.3) (10.5)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 59.0 60.2
EFFECT OF EXCHANGE RATE CHANGES - 9.3
CASH AND CASH EQUIVALENTS AT END OF PERIOD (188.3) 59.0
NOTES
1. NET PROFIT BEFORE TAX IS STATED AFTER INTEREST PAID OF R83.3M (1997: R1.5M),
INTEREST RECEIVED OF R231.3M (1997: R82.4M) AND DEPRECIATION OF R135.8M (1997:
R90.9M) AND INCLUDES COUNTRY ROAD LIMITED WITH EFFECT FROM 1 FEBRUARY 1998.
2. EXCEPTIONAL ITEMS INCLUDE COUNTRY ROAD LIMITED'S PROFIT ON SALE OF THE
AUSTRALIAN MUTUAL PROVIDENT SOCIETY SHARES OF R22.2M AND THE COMPENSATION
RECEIVED OF R8.6M FOLLOWING THE TERMINATION OF A DISTRIBUTION AGREEMENT.
3. HEADLINE EARNINGS PER SHARE ARE BASED ON NET PROFIT AFTER TAX ADJUSTED BY
EXCEPTIONAL ITEMS AFTER TAX AND MINORITIES OF R17.3M (1997: R NIL) AND NET LOSS
ON SALE OF FIXED ASSETS OF R0.7M (1997: R5.4M).
4. PREMIUM ON ACQUISITION OF COUNTRY ROAD LIMITED AND INTANGIBLE ASSETS
ACQUIRED TOTALLING R217.4M ARE WRITTEN OFF AGAINST RETAINED PROFIT.
5. COMMITMENTS FOR THE NEXT YEAR IN RESPECT OF CAPITAL EXPENDITURE APPROVED BY
DIRECTORS AMOUNT TO R222.8M (1997: R237.6M).
6. CONTINGENT LIABILITIES AT THE END OF THE PERIOD AMOUNT TO R3.0M (1997:
R3.0M).
THE YEAR UNDER REVIEW WAS INDEED ONE OF THE MOST EXCITING AND EVENTFUL IN THE
LONG AND PROUD HISTORY OF WOOLWORTHS. FOR OVER 60 YEARS WOOLWORTHS HAS BROUGHT
SOUTH AFRICA EXCELLENT QUALITY MERCHANDISE AT VALUE FOR MONEY PRICES. THIS HAS
RESULTED IN A REWARDING RELATIONSHIP WITH OUR CUSTOMERS AND SHAREHOLDERS. THE
1998 FINANCIAL YEAR WAS NO EXCEPTION AS THE FOLLOWING HIGHLIGHTS SHOW.
- ON 20 OCTOBER 1997, WOOLWORTHS HOLDINGS LIMITED WAS SUCCESSFULLY RELISTED ON
THE JOHANNESBURG STOCK EXCHANGE AFTER AN ABSENCE OF 17 YEARS.
- THE WOOLWORTHS OPERATING COMPANY INCREASED PROFIT BEFORE TAX BY 18.8% (14.9%
AFTER NON-COMPARABLE PROPERTY PROFITS).
- WOOLWORTHS HOLDINGS ACQUIRED 88% OF COUNTRY ROAD, THE PRE-EMINENT CLOTHING
AND HOMEWARE BRAND IN AUSTRALIA.
- IN EXTREMELY DIFFICULT FINANCIAL MARKETS, WOOLWORTHS HOLDINGS RAISED R445.8M
ON INTERNATIONAL MARKETS AND ESTABLISHED A SECONDARY LISTING ON THE LONDON
STOCK EXCHANGE.
- THE FINANCIAL STRENGTH OF THE COMPANY ALLOWED SUBSTANTIAL EXPENDITURE ON
PROPERTIES, NEW STORES AND SYSTEMS, THE FUNDING OF THE ACQUISITION COSTS AND
TRADING LOSSES OF COUNTRY ROAD AND THE PURCHASE OF THE DEBTORS BOOK FROM
STANDARD BANK. GEARING WAS DOWN TO 12.8% AT YEAR END.
AGAINST THIS BACKGROUND, IT IS OUR PLEASURE TO REPORT ON THE RESULTS AND
OPERATIONS OF WOOLWORTHS HOLDINGS LIMITED.
OVERVIEW
IN WHAT HAS BEEN A DIFFICULT YEAR IN BOTH THE SOUTH AFRICAN AND AUSTRALIAN
RETAIL MARKETS, WOOLWORTHS HOLDINGS INCREASED TURNOVER BY 19.2% AND PROFIT
BEFORE TAX BY 19.4% (15.5% AFTER NON-COMPARABLE PROPERTY PROFITS). HEADLINE
EARNINGS PER SHARE INCREASED BY 5.2% AND WAS AFFECTED BY FUNDING COSTS ARISING
FROM THE PURCHASE OF COUNTRY ROAD, THE LOSSES INCURRED DURING THE FIVE MONTH
PERIOD SINCE ACQUISITION AND THE ADDITIONAL SHARES ISSUED IN THE PURCHASE OF
CERTAIN PROPERTIES FROM WOOLTRU LAST YEAR.
WOOLWORTHS TRADING
WOOLWORTHS COPED WELL IN A SUBDUED SOUTH AFRICAN ECONOMY AND INCREASED PROFIT
BEFORE TAX BY 18.8% (14.9% AFTER NON-COMPARABLE PROPERTY PROFITS) ON A TURNOVER
INCREASE OF 11.2%. NET PROFIT BEFORE TAX TO TURNOVER REACHED 9.2%, THE HIGHEST
LEVEL IN 8 YEARS. THIS WAS ACHIEVED BY TIGHT CONTROLS OVER STOCKS, DEBTORS,
COSTS AND CAPITAL EXPENDITURE. THE WOOLWORTHS TEAM, UNDER THE JOINT
STEWARDSHIP OF BRIAN FROST AND FARRELL RATNER, CAN BE JUSTIFIABLY PROUD OF THIS
PERFORMANCE.
COUNTRY ROAD
WOOLWORTHS HOLDINGS ACQUIRED FULL CONTROL OF COUNTRY ROAD IN FEBRUARY.
THERE WERE TWO MAIN OBJECTIVES IN THIS ACQUISITION. THE FIRST WAS TO DIVERSIFY
THE REVENUE AND EARNINGS OF WOOLWORTHS AND THE SECOND TO USE THE EXPOSURE
GAINED IN TRADING IN AN INTERNATIONAL ENVIRONMENT TO STRENGTHEN OUR SOUTH
AFRICAN OPERATIONS. WHILE IT WILL TAKE UP TO THREE YEARS TO SEE THE EFFECT OF
THE FIRST OBJECTIVE, THE BENEFITS OF THE SECOND ARE ALREADY APPARENT AND
INCLUDE NEW IDEAS ON STYLING, FABRICS AND PROCUREMENT.
THE COMPANY TRADED POORLY PRIOR TO ACQUISITION AND CONTINUED TO STRUGGLE.
LOSSES, EXCLUDING ABNORMAL PROFITS AND ACCOUNTING REVERSALS IN REGARD TO
TAXATION, AMOUNTED TO AUS$7.2M (R23.6M) IN THE POST ACQUISITION PERIOD. A FULL
REVIEW OF THE BUSINESS WAS COMPLETED PRIOR TO ACQUISITION AND THE TURNAROUND
PLAN TO PUT COUNTRY ROAD ON A PROFITABLE FOOTING IS NOW BEING IMPLEMENTED.
THE POOR RESULTS IN FACT CREATED THE OPPORTUNITY TO ACQUIRE ONE OF AUSTRALIA'S
BEST KNOWN APPAREL AND HOMEWARE BRANDS. WE ARE EXCITED BY THE OPPORTUNITIES IN
COUNTRY ROAD, AND THE RETURN OF THIS BUSINESS TO FULL PROFITABILITY WILL ADD
SIGNIFICANTLY TO THE EARNINGS BASE OF THE GROUP IN THE FUTURE.
INTERNATIONAL SHARE PLACEMENT
AN OFFSHORE LOAN OF AUS$116.8M AROSE FROM THE ACQUISITION OF COUNTRY ROAD. IN
ORDER TO SETTLE THIS LOAN US$90M WAS RAISED IN AN INTERNATIONAL SHARE
PLACEMENT. ALTHOUGH THE PLACEMENT OCCURRED AT A TIME OF ENORMOUS TURMOIL IN
THE EMERGING MARKETS, 71.4M SHARES WERE ISSUED AT R6.50 PER SHARE.
GROUP PROSPECTS
BUDGETS HAVE BEEN TIGHTLY SET IN BOTH OUR TRADING COMPANIES. WOOLWORTHS SHOULD
SHOW A REASONABLE INCREASE IN BOTH TURNOVER AND PROFITS. GROUP EARNINGS WILL,
OF COURSE, BE INFLUENCED BY THE RESULTS OF COUNTRY ROAD. IN ADDITION, THE FULL
EFFECT OF THE ADDITIONAL SHARES IN ISSUE WILL IMPACT ON EARNINGS PER SHARE.
CAPITALISATION SHARE AWARD AND FINAL CASH DIVIDEND
THE DIRECTORS HAVE RESOLVED TO ISSUE CAPITALISATION SHARES TO ORDINARY
SHAREHOLDERS REGISTERED AS SUCH ON FRIDAY, 28 AUGUST 1998 ("THE LAST DAY TO
REGISTER"), PROVIDED THAT SUCH SHAREHOLDERS MAY ELECT INSTEAD TO RECEIVE A CASH
DIVIDEND OF 7.5 CENTS PER SHARE DECLARED IN RESPECT OF THE YEAR ENDED 30 JUNE
1998.
THE AWARD OF CAPITALISATION SHARES TO ORDINARY SHAREHOLDERS REGISTERED AT THE
CLOSE OF BUSINESS ON THE LAST DAY TO REGISTER WILL BE DETERMINED BY THE RATIO
THAT 7.5 CENTS MULTIPLIED BY 1.05 BEARS TO THE WEIGHTED AVERAGE TRADING PRICE
OF THE WOOLWORTHS ORDINARY SHARES ON THE JOHANNESBURG STOCK EXCHANGE FOR THE
FOUR BUSINESS DAYS ENDING AT THE CLOSE OF BUSINESS ON THURSDAY, 24 SEPTEMBER
1998.
DOCUMENTATION DEALING WITH THE CAPITALISATION SHARE ISSUE AND THE CASH
ALTERNATIVE WILL BE POSTED TO ORDINARY SHAREHOLDERS ON OR ABOUT FRIDAY,
4 SEPTEMBER 1998. IN ORDER TO BE VALID, COMPLETED ELECTION FORMS WILL HAVE TO
BE RECEIVED BY MERCANTILE REGISTRARS, WOOLWORTHS' TRANSFER SECRETARIES, BY NO
LATER THAN 12H00 ON FRIDAY, 25 SEPTEMBER 1998. THE LAST DAY FOR
THE RECEIPT OF LATE POSTAL ACCEPTANCES WILL BE 12H00 ON WEDNESDAY,
30 SEPTEMBER 1998. THE NEW ORDINARY SHARES WILL BE ISSUED AND THE CASH
DIVIDEND PAID ON MONDAY, 5 OCTOBER 1998.
ON BEHALF OF THE BOARD OF DIRECTORS.
S A MULLER
EXECUTIVE CHAIRMAN
F M RATNER B J FROST
JOINT MANAGING DIRECTOR JOINT MANAGING DIRECTOR
CAPE TOWN
12 AUGUST 1998
THIS INFORMATION IS ALSO AVAILABLE ON THE INTERNET: WWW.EDATA.CO.ZA/WOOLWORTHS
DIRECTORATE
EXECUTIVE CHAIRMAN
S A MULLER
DIRECTORS
BJ FROST (JOINT MANAGING DIRECTOR), FM RATNER (JOINT MANAGING DIRECTOR), CA
GROLMAN, IL STURROCK, SN SUSMAN, AJ VAN VUUREN
NON-EXECUTIVE DIRECTORS
NL COLNE (BRITISH), F JAKOET, CA HALL, G SEABROOK (AUSTRALIAN).
WOOLWORTHS HOLDINGS LIMITED COMPANY
REGISTRATION NUMBER 05/01986/06
REGISTERED OFFICE
WOOLWORTHS HOUSE, 93 LONGMARKET STREET, CAPE TOWN 8001
TRANSFER SECRETARIES
MERCANTILE REGISTRARS LIMITED
94 PRESIDENT STREET, JOHANNESBURG 2001
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