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WOOLWORTHS HOLDINGS LIMITED
UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE EIGHT MONTHS ENDED 28 FEBRUARY 1998 INVESTING FOR THE FUTURE
FURTHER TO THE ANNOUNCEMENTS DATED 15 OCTOBER 1997 AND 8 MAY 1998, WOOLWORTHS HAVE DECIDED TO RAISE APPROXIMATELY US$ 105 MILLION (EXCLUDING ANY OVER ALLOTMENT OPTION) THROUGH AN INTERNATIONAL OFFER ("OFFER") OF ORDINARY SHARES IN THE FORM OF SHARES AND GLOBAL DEPOSITORY RECEIPTS TO REPAY THE BRIDGING LOANS AND RELATED COSTS OF FINANCING THE ACQUISITION OF COUNTRY ROAD LIMITED ("COUNTRY ROAD") AND TO PURCHASE THE SHARES OF COUNTRY ROAD OWNED BY THE MINORITY SHAREHOLDERS (IF AVAILABLE) IN TERMS OF AN ACQUISITION ISSUE AND TO SUPPORT OTHER COUNTRY ROAD INITIATIVES IN TERMS OF A GENERAL ISSUE OF SHARES FOR CASH. ANY SHARES REQUIRED IN TERMS OF AN OVER ALLOTMENT OPTION WILL BE ISSUED IN TERMS OF THE GENERAL AUTHORITY TO ISSUE SHARES FOR CASH.
AS A RESULT, WOOLWORTHS WILL BE ISSUING A PRELIMINARY OFFERING CIRCULAR ("CIRCULAR") TO INTERNATIONAL INSTITUTIONS ON 22 MAY 1998. THE CIRCULAR CONTAINS THE EIGHT MONTH CONSOLIDATED FINANCIAL STATEMENTS OF WOOLWORTHS ("FINANCIAL STATEMENTS") WHICH HAVE NOT BEEN ISSUED TO SOUTH AFRICAN
SHAREHOLDERS PREVIOUSLY. THEREFORE, THE FINANCIAL STATEMENTS ARE PROVIDED BELOW INCOME STATEMENT
YEAR ENDED EIGHT MONTHS ENDED
30 JUNE 28 FEBRUARY
1997 1998 1997 %
RM NOTE RM RM CHANGE
4 333.0 REVENUE 3 330.2 2 799.3
4 227.6 TURNOVER 3 166.0 2 732.1 15.9 INTEREST AND OTHER
105.4 REVENUE 164.2 67.2
363.0 NET PROFIT BEFORE TAX 1 239.9 222.9 7.6
133.2 TAX 87.8 78.0 12.5
229.8 NET PROFIT AFTER TAX 152.1 144.9 5.0
- MINORITY SHAREHOLDERS` 2.4 - - INTERESTS NET PROFIT ATTRIBUTABLE TO
229.8 ORDINARY SHAREHOLDERS 154.5 144.9 6.6 NUMBER OF SHARES
753.2 ISSUED (MILLIONS) 760.8 706.9 WEIGHTED AVERAGE NUMBER OF SHARES
706.4 (MILLIONS) 755.7 703.2 EARNINGS PER SHARE
32.5 (CENTS) 20.4 20.6 (0.8) HEADLINE EARNINGS
33.3 PER SHARE (CENTS) 2 20.4 20.7 (1.3) DIVIDEND PER
13.2 SHARE (CENTS) 6.5 5.7 14.0 BALANCE SHEET
30 JUNE 28 FEBRUARY
1997 1998 1997 RM NOTE RM RM CAPITAL EMPLOYED
1 098.8 ORDINARY SHAREHOLDERS` INTEREST 1 026.8 805.4 - MINORITY SHAREHOLDERS` INTEREST 54.0 - 1 098.8 TOTAL SHAREHOLDERS` INTEREST 1 080.8 805.4 13.1 LONG-TERM BORROWINGS 386.5 5.7 4.1 SHORT-TERM BORROWINGS 49.7 0.5 27.8 DEFERRED TAX 21.1 27.8 1 143.8 1 538.1 839.4 EMPLOYMENT OF CAPITAL
791.6 PROPERTY, PLANT AND EQUIPMENT 908.0 357.0 52.4 INVESTMENTS 5 - - 61.4 LOANS 61.7 51.3 - OTHER NON CURRENT ASSETS 18.5 - 1 283.0 CURRENT ASSETS 1 806.6 910.2 272.5 INVENTORIES 577.2 319.4 914.4 ACCOUNTS RECEIVABLE 1 013.2 92.5 79.4 CASH AND BANK BALANCES 211.9 72.0 16.7 AMOUNTS OWING BY FELLOW SUBSIDIARIES 4.3 426.3 2 188.4 TOTAL ASSETS 2 794.8 1 318.5 1 044.6 CURRENT LIABILITIES 1 256.7 479.1 463.8 CREDITORS 573.1 389.1 139.4 TAX 60.0 89.5 25.6 OVERDRAFTS 50.7 0.4 10.6 DIVIDENDS 9.9 - 405.2 AMOUNTS OWING TO FELLOW SUBSIDIARIES 563.0 0.1 1 143.8 1 538.1 839.4 145.9 NET ASSET VALUE - PER SHARE (CENTS) 142.1 113.9 BORROWINGS TO TOTAL SHAREHOLDERS`
28.7% FUNDS (NET OF CASH) 76.9% - CASH FLOW STATEMENT
YEAR ENDED EIGHT MONTHS ENDED 30 JUNE 28 FEBRUARY 1997 1998 1997 RM RM RM CASH FLOW FROM OPERATING ACTIVITIES
397.9 CASH INFLOW FROM TRADING 229.1 242.0 (710.4) WORKING CAPITAL MOVEMENTS (163.8) 3.7 CASH (UTILISED IN)/GENERATED BY OPERATING
(312.5) ACTIVITIES 65.3 245.7 82.7 INTEREST RECEIVED 152.2 54.4 (1.5) INTEREST PAID (52.8) (0.8) (102.9) TAX PAID (173.8) (97.7) (334.2) CASH (UTILISED IN)/GENERATED BY OPERATIONS (9.1) 201.6 (15.4) DIVIDENDS PAID (10.8) (8.1) (349.6) NET CASH (OUTFLOW)/INFLOW FROM OPERATIONS (19.9) 193.5 CASH FLOW FROM INVESTING ACTIVITIES
(573.7) INVESTMENT IN OPERATIONS (108.9) (111.1) - ACQUISITION OF SUBSIDIARY (294.9) - (52.4) LOANS AND OTHER INVESTMENTS - - (626.1) NET CASH OUTFLOW FROM INVESTING ACTIVITIES (403.8) (111.1) CASH FLOW FROM FINANCING ACTIVITIES
227.9 SHARES ISSUED 6.7 1.9 - MINORITY INTERESTS 0.4 - LOANS AND ADVANCES FROM/(TO) GROUP
738.0 COMPANIES 170.1 (76.7) LOANS (ADVANCED TO)/REPAID BY DIRECTORS
(9.8) AND EMPLOYEES (0.2) 0.2 9.1 LONG-TERM LIABILITIES RAISED 309.9 1.7 NET CASH INFLOW/(OUTFLOW) FROM FINANCING
965.2 ACTIVITIES 486.9 (72.9) NET (DECREASE)/INCREASE IN CASH
(10.5) AND CASH EQUIVALENTS 63.2 9.5 CASH AND CASH EQUIVALENTS AT BEGINNING
60.2 OF PERIOD 49.7 61.4 - EFFECT OF EXCHANGE RATE CHANGES (1.4) 0.2 49.7 CASH AND CASH EQUIVALENTS AT END OF PERIOD 111.5 71.1 NOTES: 1. NET PROFIT BEFORE TAX IS STATED AFTER INTEREST PAID R52.8M (1997: R0.8M), INTEREST RECEIVED R152M (1997: R54.2) AND DEPRECIATION OF R79.6M (1997: R68.2M). 2. HEADLINE EARNINGS PER SHARE IS BASED ON NET PROFIT AFTER TAX ADJUSTED BY NET PROFIT/(LOSS) ON SALE OF FIXED ASSETS OF R0.4M (1997: - R0.5M). 3. COMMITMENTS FOR THE NEXT FOUR MONTHS IN RESPECT OF CAPITAL EXPENDITURE APPROVED BY DIRECTORS AMOUNT TO R143.1M (1997: R39.8M).
4. CONTINGENT LIABILITIES AS AT THE END OF THE PERIOD AMOUNT TO R3.1M (1997: R3.1M). 5. THE GROUP HAS A CONTINGENT ASSET BEING SHARES WHICH WILL BE RECEIVED BY COUNTRY ROAD LIMITED THROUGH A DEMUTUALISATION IN AUSTRALIA.
IT IS ANTICIPATED THAT THIS CONTINGENT ASSET WILL BE RECOGNISED IN THE CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 1998 AS IT IS EXPECTED THAT A RELIABLE MEASURE OF THE VALUE OF THE ASSET WILL BE AVAILABLE BY THAT DATE. THIS RECOGNITION OF THIS ASSET WILL GIVE RISE TO A DECREASE IN THE AMOUNT OF THE PREMIUM ON ACQUISITION AND INTANGIBLE ASSETS WRITTEN OFF AGAINST RESERVES IN THE CONSOLIDATED FINANCIAL STATEMENTS TO 28 FEBRUARY 1998. COUNTRY ROAD LIMITED HAS BEEN CONSOLIDATED WITH EFFECT FROM 1 FEBRUARY 1998.
6. THE SHARES IN COUNTRY ROAD HAVE BEEN MORTGAGED TO RMB AUSTRALIA LIMITED AND MIDLAND BANK PLC AS SECURITY AGAINST LOANS ADVANCED FOR THE PURCHASE OF THE COUNTRY ROAD SHARES. INTERIM 1998 PERIOD COMPARED TO INTERIM 1997 PERIOD THE TERMS THE INTERIM 1998 PERIOD AND THE INTERIM 1997 PERIOD AS USED BELOW REFER TO THE COMPANY`S EIGHT MONTH PERIODS ENDED 28 FEBRUARY 1998 AND 1997 RESPECTIVELY.
THE FINANCIAL STATEMENTS FOR THE INTERIM 1998 INCLUDES ONE MONTH`S TRADING OF COUNTRY ROAD LIMITED WITH COUNTRY ROAD CONSOLIDATED WITH EFFECT FROM 1 FEBRUARY 1998.
TURNOVER. TURNOVER FOR THE INTERIM 1998 PERIOD INCREASED BY R434 MILLION, OR APPROXIMATELY 16%, AS COMPARED TO THE INTERIM 1997 PERIOD. THIS INCREASE WAS PRIMARILY ATTRIBUTABLE TO AN INCREASE IN TRADING FLOOR SPACE AND, TO A LESSER EXTENT, THE INCLUSION OF COUNTRY ROAD`S TURNOVER FOR THE ONE MONTH ENDED 28 FEBRUARY 1998 IN THE CONSOLIDATED TURNOVER OF THE COMPANY.
INTEREST RECEIVED ON THE WOOLWORTHS-CREDIT CARD. INTEREST RECEIVED ON THE WOOLWORTHS-CREDIT CARD WAS R146 MILLION DURING THE INTERIM 1998 PERIOD. SINCE THE COMPANY ONLY ACQUIRED THE CREDIT CARD DEBTORS BOOK AS OF 30 JUNE 1997, THERE IS NO COMPARABLE FIGURE FOR THE INTERIM 1997 PERIOD.
NET PROFIT. NET PROFIT IN THE INTERIM 1998 PERIOD INCREASED BY R9,6 MILLION OR APPROXIMATELY 6,6%, AS COMPARED TO THE INTERIM 1997 PERIOD. THIS INCREASE WAS PRIMARILY ATTRIBUTABLE TO THE INCREASE IN OPERATING PROFITS OF R117.7 MILLION WHICH WAS MAINLY DUE TO THE INCLUSION OF THE INTEREST RECEIVABLE RELATING TO THE CREDIT CARD BUSINESS AND THE INCREASE IN TURNOVER, PARTIALLY OFFSET BY THE INCREASE IN INTEREST PAID AND AN INCREASE IN THE EFFECTIVE TAX RATE.
INCREASE IN BORROWINGS. THE INCREASE IN BORROWINGS TO TOTAL SHAREHOLDERS` FUNDS (NET OF CASH) FROM 28,7% AT THE END OF JUNE 1997 TO 76,9% AT THE END OF FEBRUARY IS PRINCIPALLY DUE TO THE INCREASE IN BORROWINGS TO FUND THE
ACQUISITION OF COUNTRY ROAD LIMITED IN AUSTRALIA AND TO THE WRITE OFF TO SHAREHOLDERS` INTEREST OF GOODWILL ARISING ON CONSOLIDATION AND THE INTANGIBLE ASSETS IN COUNTRY ROAD LIMITED OF R221,6 MILLION. COUNTRY ROAD ACQUISITION
AS AT THE END OF MARCH 1998 WOOLWORTHS OWNED 87,85% OF COUNTRY ROAD ("THE ACQUISITION"), AN AUSTRALIAN APPAREL RETAILER LISTED ON THE AUSTRALIAN STOCK EXCHANGE.
COUNTRY ROAD IS A DESIGNER, DEVELOPER, WHOLESALER AND RETAILER OF HIGH QUALITY MENSWEAR, WOMENSWEAR, ACCESSORIES AND HOMEWARE PRODUCTS. THE COUNTRY ROAD BRAND IS ONE OF AUSTRALIA`S LEADING APPAREL AND HOMEWARE BRANDS, AND THE BRAND`S DISTINCTIVE STYLE AIMS TO BE REPRESENTATIVE OF THE RELAXED AUSTRALIAN
LIFESTYLE. COUNTRY ROAD HAS BEEN RECOGNISED WITH INDUSTRY AWARDS FOR ITS EXCELLENCE IN DESIGN AND RETAILING.
GIVEN WOOLWORTHS` PROVEN TRACK RECORD IN OPERATIONAL CONTROL AND STRONG RETAILING SKILLS, MANAGEMENT ARE CONFIDENT THAT THEY CAN FACILITATE THE TRANSFORMATION OF COUNTRY ROAD INTO A SUCCESSFUL COMPANY DELIVERING CONSISTENT GROWTH IN PROFITS OVER TIME.
THE FINANCIAL EFFECTS OF THE OFFER WILL BE PROVIDED TO SHAREHOLDERS WHEN THE ISSUE PRICE OF THE OFFER AND THE RELATED NUMBER OF SHARES TO BE ISSUED IS ESTABLISHED ON OR ABOUT 9 JUNE 1998.
AS PER THE REQUIREMENTS OF THE JOHANNESBURG STOCK EXCHANGE SHAREHOLDERS ARE ADVISED TO EXERCISE CAUTION WHEN DEALING IN THEIR SHARES UNTIL A FURTHER ANNOUNCEMENT IS MADE ON OR ABOUT 10 JUNE 1998. AUDITORS` REVIEW
THE FINANCIAL INFORMATION FOR THE EIGHT MONTHS ENDED 28 FEBRUARY 1998 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
22 MAY 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
