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WOOLWORTHS HOLDINGS LIMITED
INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 1997
INCOME STATEMENT
THE UNAUDITED GROUP RESULTS ARE SET OUT BELOW:
YEAR ENDED SIX MONTHS ENDED
30 JUNE 31 DECEMBER
1997 1997 1996 %
RM NOTE RM RM CHANGE
4 333.0 REVENUE 2 525.1 2 152.0
4 227.6 TURNOVER 2 402.7 2 103.8 14.2
105.4 INTEREST AND OTHER REVENUE 122.4 48.2
NET PROFIT BEFORE
363.0 EXCEPTIONAL ITEMS 202.7 171.0 18.5
- EXCEPTIONAL ITEMS - 0.4
363.0 NET PROFIT BEFORE TAX 1 202.7 171.4 18.2
133.2 TAX 71.1 60.2 18.0
NET PROFIT ATTRIBUTABLE
229.8 TO ORDINARY SHAREHOLDERS 131.6 111.2 18.3
NUMBER OF SHARES ISSUED
753.2 (MILLIONS) 760.2 706.9
WEIGHTED AVERAGE NUMBER
706.4 OF SHARES (MILLIONS) 754.2 702.0
32.5 EARNINGS PER SHARE (CENTS) 17.5 15.9 10.1
HEADLINE EARNINGS PER
33.3 SHARE (CENTS) 2 17.4 16.0 8.7
13.2 DIVIDEND PER SHARE (CENTS) 6.5 5.7 14.0
2.5 DIVIDEND COVER 2.7 2.8
BALANCE SHEET
30 JUNE 31 DECEMBER
1997 1997 1996
RM NOTE RM RM
CAPITAL EMPLOYED
1 098.8 SHAREHOLDERS` INTEREST 1 225.5 772.1
13.1 LONG-TERM BORROWINGS 7.5 5.7
4.1 SHORT-TERM BORROWINGS 6.1 0.7
27.8 DEFERRED TAX 21.1 27.8
1 143.8 1 260.2 806.3
EMPLOYMENT OF CAPITAL
791.6 PROPERTY, PLANT AND EQUIPMENT 833.8 349.1
52.4 INVESTMENTS 4 66.9 0.1
61.4 LOANS 67.1 52.5
1 283.0 CURRENT ASSETS 1 556.6 1012.0
272.5 INVENTORIES 375.1 305.7
914.4 ACCOUNTS RECEIVABLE 1 023.7 86.9
79.4 CASH AND BANK BALANCES 155.7 131.4
AMOUNTS OWING BY FELLOW
16.7 SUBSIDIARIES 2.1 488.0
2 188.4 TOTAL ASSETS 2 524.4 1413.7
1 044.6 CURRENT LIABILITIES 1 264.2 607.4
463.8 CREDITORS 625.4 448.8
139.4 TAX 117.3 155.6
25.6 OVERDRAFTS 75.0 -
10.6 DIVIDENDS 9.9 -
AMOUNTS OWING TO FELLOW
405.2 SUBSIDIARIES 436.6 3.0
1 143.8 1 260.2 806.3
145.9 NET ASSET VALUE - PER SHARE (CENTS) 161.2 109.2
28.7% DEBT EQUITY RATIO (NET OF CASH) 29.6% -
CASH FLOW STATEMENT
YEAR ENDED SIX MONTHS ENDED
30 JUNE 31 DECEMBER
1997 1997 1996
RM RM RM
CASH FLOW FROM OPERATING
ACTIVITIES
397.9 CASH INFLOW FROM TRADING 196.4 185.7
(710.4) WORKING CAPITAL MOVEMENTS (55.7) 86.4
CASH GENERATED BY/(UTILISED IN)
(312.5) OPERATING ACTIVITIES 140.7 272.1
INTEREST RECEIVED AND INVESTMENT
82.7 INCOME 112.5 38.2
(1.5) INTEREST PAID (33.8) (0.4)
(102.9) TAX PAID (99.7) (13.8)
CASH GENERATED BY/(UTILISED IN)
(334.2) OPERATIONS 119.7 296.1
(15.4) DIVIDENDS PAID (10.8) (8.1)
NET CASH INFLOW/(OUTFLOW) FROM
(349.6) OPERATIONS 108.9 288.0
CASH FLOW FROM INVESTING
ACTIVITIES
(26.8) INVESTMENT TO MAINTAIN OPERATIONS (46.0) (16.6)
(546.9) INVESTMENT TO EXPAND OPERATIONS (57.4) (68.9)
(52.4) LOANS AND OTHER INVESTMENTS (14.5) (0.1)
NET CASH OUTFLOW FROM INVESTING
(626.1) ACTIVITIES (117.9) (85.6)
CASH FLOW FROM FINANCING
ACTIVITIES
227.9 SHARES ISSUED 6.4 1.9
LOANS AND ADVANCES FROM/(TO) FELLOW
738.0 SUBSIDIARIES 40.1 (135.6)
LOANS ADVANCED TO DIRECTORS
(9.8) AND EMPLOYEES (5.7) (0.9)
9.1 LONG-TERM LIABILITIES (REPAID)/RAISED (5.7) 1.6
NET CASH INFLOW/(OUTFLOW) FROM FINANCING
965.2 ACTIVITIES 35.1 (133.0)
NET INCREASE/(DECREASE) IN CASH AND CASH
(10.5) EQUIVALENTS 26.1 69.4
CASH AND CASH EQUIVALENTS AT BEGINNING
60.2 OF PERIOD 49.7 60.7
- EFFECT OF EXCHANGE RATE CHANGES (1.2) 0.6
CASH AND CASH EQUIVALENTS AT END OF
49.7 PERIOD 74.6 130.7
NOTES 1. NET PROFIT BEFORE TAX IS STATED AFTER INTEREST PAID R39.7M (1996:
R0.4M), INTEREST RECEIVED R112.3M (1996: R37.9M) AND DEPRECIATION OF R62.0M
(1996: R51.4M). 2. HEADLINE EARNINGS PER SHARE ARE BASED ON NET PROFIT AFTER
TAX ADJUSTED BY EXCEPTIONAL ITEMS AFTER TAX OF RNIL (1996: R0.3M) AND NET
PROFIT/(LOSS) ON THE SALE OF FIXED ASSETS OF R0.5M (1996: -R1.4M). 3.
COMMITMENTS FOR THE NEXT SIX MONTHS IN RESPECT OF CAPITAL EXPENDITURE APPROVED
BY DIRECTORS AMOUNT TO R153.1M (1996: R64.5M). 4. INVESTMENTS INCLUDE THE
INVESTMENT IN COUNTRY ROAD LIMITED AT A COST OF R66.9M (1996: RNIL). THE MARKET
VALUE OF THIS INVESTMENT AMOUNTS TO R68.0M (1996: RNIL).
5. CONTINGENT LIABILITIES AS AT THE END OF THE PERIOD AMOUNT TO R3.0M (1996:
R3.0M).COMMENTWOOLWORTHS IS PLEASED TO REPORT THE FIRST SET OF HALF YEAR
RESULTS OF THE COMPANY SINCE RETURNING TO THE BOARDS OF THE JSE. THE LISTING OF
WOOLWORTHS HAS NOT ONLY BEEN VERY WELL RECEIVED BY THE MARKET, BUT HAS CREATED
MUCH EXCITEMENT AMONG WOOLWORTHS PEOPLE.
TURNOVER
THE 15,9% INCREASE IN TEXTILES SALES, COMPRISING CLOTHING, FOOTWEAR AND
ACCESSORIES, TOILETRIES AND COSMETICS, AND HOMEWARE WAS PARTICULARLY PLEASING.
ESPECIALLY STRONG GROWTH WAS EXPERIENCED IN CHILDRENSWEAR, MENSWEAR AND
ACCESSORIES. MARKET SHARE INCREASED TO 15,2%.
THE FOOD DIVISION MAINTAINED MARKET SHARE AND INCREASED SALES BY 11,7% WITH
GOOD GROWTH IN PRODUCE AND DAIRY PRODUCTS.
INVESTMENT IN THE BUSINESS
SUBSTANTIAL INVESTMENT IN WOOLWORTHS TOOK PLACE DURING THE PERIOD UNDER REVIEW.
ELEVEN NEW STORES WERE OPENED, ENLARGED OR RELOCATED. AS MUCH OF THIS
INVESTMENT WAS DONE TOWARDS THE END OF THE SIX MONTHS TRADING, ALL OPENING
COSTS WERE FULLY ACCOUNTED FOR, BUT THE BENEFIT OF ONLY NINE WEEKS SALES
ACCRUED.
EXTENSIVE INVESTMENTS WERE MADE IN BOTH TEXTILES AND FOODS SUPPLY CHAIN SYSTEMS
AND TEXTILES DISTRIBUTION CENTRES WERE OPENED IN CAPE TOWN AND JOHANNESBURG.
WHILE GOOD PROGRESS HAS BEEN MADE IN THE IMPLEMENTATION OF THE TEXTILES SUPPLY
CHAIN, THE PROBLEMS OF FOODS REPLENISHMENT ARE NOW RECEIVING PRIORITY. IT
WILL, HOWEVER, BE SOME TIME BEFORE THE EFFECT OF THIS WILL BE FELT.
A FURTHER 5% OF COUNTRY ROAD WAS ACQUIRED AT A COST OF R14M, BRINGING THE TOTAL
INTEREST TO 19,9% AT 31 DECEMBER 1997. FURTHER DEVELOPMENTS IN THIS REGARD ARE
DEALT WITH BELOW.
SUBSTANTIAL SYSTEMS COSTS HAVE BEEN AND CONTINUE TO BE INCURRED IN ENSURING
THAT WOOLWORTHS IS FULLY YEAR 2000 COMPLIANT.
IN ADDITION:
A PROPERTY PORTFOLIO OF R339M WAS ACQUIRED FROM WOOLTRU PROPERTIES. THIS WAS
SETTLED PARTLY IN CASH AMOUNTING TO R123M AND THE BALANCE BY THE ISSUE OF 38,4M
SHARES DURING JUNE 1997.
THE DEBTORS BOOK WAS ACQUIRED FROM STANDARD BANK FOR R820M ON
30 JUNE 1997.
PROFITS
DESPITE THE DIFFICULT TRADING CLIMATE AND THE IMPACT OF THE SIGNIFICANT
INVESTMENTS IN THE BUSINESS, THE COMPANY INCREASED TRADING PROFIT BY 10,3%.
THIS WAS BOOSTED TO 18,2% BY THE CONTRIBUTION FROM PROPERTIES (R14M PROFIT
BEFORE TAX) WHICH WAS NOT INCLUDED IN THE COMPARABLE PERIOD.
FINANCIAL STRENGTH
IN THE LIGHT OF THE INVESTMENTS REFERRED TO ABOVE, IT IS PLEASING TO NOTE THAT
THE DEBT EQUITY RATIO (NET OF CASH) OF 29,6% HAS REMAINED WELL WITHIN THE LEVEL
OF RISK DEEMED PRUDENT BY THE BOARD.
DEBTORS BOOK
THERE HAS BEEN A STEADY IMPROVEMENT IN THE QUALITY OF THE DEBTORS BOOK SINCE
ITS ACQUISITION FROM STANDARD BANK. BAD DEBT WRITE OFFS ARE NOW IN LINE WITH
THE NORM FOR A BOOK OF THIS NATURE.
COUNTRY ROAD
COUNTRY ROAD IS A LEADING AUSTRALIAN BRAND WHICH MARKETS MEN`S AND WOMEN`S
APPAREL AND ACCESSORIES AS WELL AS HOMEWARES. IT IS A SINGLE BRAND BUSINESS
WHICH HAS DEVELOPED A UNIQUE MARKET NICHE.
FOLLOWING THE ANNOUNCEMENT MADE ON 15 OCTOBER 1997 TO OFFER THE SHAREHOLDERS OF
COUNTRY ROAD LIMITED, AUS$2,00 PER SHARE FOR THEIR ORDINARY SHARES, THE COMPANY
HAS GAINED A SHAREHOLDING OF 84,6% TO DATE. THE OFFER, WHICH ORIGINALLY
EXPIRED ON 22 JANUARY 1998, HAS BEEN EXTENDED UNTIL 27 FEBRUARY 1998.
THE ACQUISITION, EFFECTIVE 1 FEBRUARY 1998, WILL BE INITIALLY FUNDED THROUGH
DEBT RAISED OFF-SHORE.
IT IS NECESSARY TO HARMONISE THE ACCOUNTING POLICIES OF COUNTRY ROAD WITH THOSE
OF WOOLWORTHS. WHILE THE EXTENT OF ADJUSTMENTS, IF ANY, ARE STILL BEING
DETERMINED, IT IS LIKELY THAT THE APPLICATION OF THE MORE CONSERVATIVE
ACCOUNTING POLICIES OF WOOLWORTHS COULD RESULT IN AN IMPACT ON THE CURRENT
COUNTRY ROAD RESULTS.
WHILE THE EXCITING TURNAROUND PROSPECTS OF COUNTRY ROAD WERE KEY TO THE
INVESTMENT DECISION, IT WILL BE SOME TIME BEFORE THE IMPROVEMENTS THAT ARE
REQUIRED TAKE EFFECT.
PROSPECTS
THE SIX MONTHS JUST COMPLETED AND THE PERIOD AHEAD COVER AN EXCITING PHASE OF
EXPANSION BY THE COMPANY. THE SUBSTANTIAL INVESTMENT IN NEW AND ENLARGED
STORES, SUPPLY CHAIN INITIATIVES AND INFORMATION TECHNOLOGY INFRASTRUCTURE WILL
CONTINUE AS PLANNED DESPITE THE DIFFICULT TRADING CONDITIONS EXPECTED FOR THE
REMAINDER OF THE YEAR.
THE COMPANY`S PROVEN CONTROLS OVER STOCKS AND EXPENSES SHOULD RESULT IN A
SATISFACTORY PROFIT GROWTH IN THE SECOND HALF.
CAPITALISATION SHARE AWARD AND INTERIM CASH DIVIDEND
THE DIRECTORS HAVE RESOLVED TO ISSUE CAPITALISATION SHARES TO ORDINARY
SHAREHOLDERS REGISTERED AS SUCH ON FRIDAY, 27 FEBRUARY 1998 ( THE LAST DAY TO
REGISTER`), PROVIDED THAT SUCH SHAREHOLDERS MAY ELECT INSTEAD TO RECEIVE AN
INTERIM CASH DIVIDEND OF 6,5 CENTS PER SHARE DECLARED IN RESPECT OF THE SIX
MONTH PERIOD ENDED
31 DECEMBER 1997.
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 6,5 CENTS MULTIPLIED BY 1,07 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,
26 MARCH 1998.
DOCUMENTATION DEALING WITH THE CAPITALISATION SHARE ISSUE AND THE CASH
ALTERNATIVE WILL BE POSTED TO ORDINARY SHAREHOLDERS ON OR ABOUT FRIDAY, 6 MARCH
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, 27 MARCH 1998. THE LAST DAY FOR THE RECEIPT OF LATE POSTAL
ACCEPTANCES WILL BE 12H00 ON WEDNESDAY, 1 APRIL 1998. THE NEW ORDINARY SHARES
WILL BE ISSUED AND THE CASH DIVIDEND PAID ON OR ABOUT MONDAY, 6 APRIL 1998.
AUDITORS` REVIEW
THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 31 DECEMBER 1997 SET OUT
ABOVE HAS BEEN REVIEWED, BUT NOT AUDITED, BY THE COMPANY`S AUDITORS, ERNST &
YOUNG. THEIR REVIEW REPORT WAS UNQUALIFIED AND IS AVAILABLE FOR INSPECTION AT
THE COMPANY`S REGISTERED OFFICE.
ON BEHALF OF THE BOARD OF DIRECTORS.
C L LOWE
COMPANY SECRETARY
CAPE TOWN
13 FEBRUARY 1998
DIRECTORATE EXECUTIVE CHAIRMAN S A MULLER DIRECTORS B J FROST (JOINT MANAGING
DIRECTOR), F M RATNER (JOINT MANAGING DIRECTOR), C A GROLMAN, I L STURROCK, S N
SUSMAN, A J VAN VUUREN
NON-EXECUTIVE DIRECTORS N L COLNE (BRITISH), F JAKOET, C A 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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