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WOOLWORTHS AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE 1999

Release Date: 19/08/1999 08:02
Code(s): WHL
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WOOLWORTHS HOLDINGS LIMITED

AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE 1999 INVESTING FOR THE FUTURE * COUNTRY ROAD REDUCED LOSSES SUBSTANTIALLY * STRONG CASH FLOW / GEARING DOWN
* NEGATIVE IMPACT ON EARNINGS CONTAINED BY TIGHT CONTROLS INCOME STATEMENT
YEAR ENDED
30 JUNE
1999 1998 %
NOTE RM RM CHANGE REVENUE 6 193,3 5 300,8
TURNOVER 5 880,5 5 039,4 16,7 INTEREST AND OTHER REVENUE 312,8 261,4 19,7 NET PROFIT BEFORE EXCEPTIONAL ITEM 1 380,7 402,5 -5,4 EXCEPTIONAL ITEM 2 (8,6) 30,8
NET PROFIT BEFORE TAX 372,1 433,3
TAX 119,9 148,5
NET PROFIT AFTER TAX 252,2 284,8 -11,4 OUTSIDE SHAREHOLDERS' INTEREST (0,9) 1,1 NET PROFIT ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS 253,1 283,7
NUMBER OF SHARES ISSUED (MILLIONS) 866,4 839,6 3,2 WEIGHTED AVERAGE NUMBER OF SHARES (MILLIONS) 852,7 762,8 11,8 EARNINGS PER SHARE (CENTS) 29,7 37,2
DILUTED EARNINGS PER SHARE (CENTS) 3 29,2 36,6
HEADLINE EARNINGS (R MILLION) 4 260,6 267,1 -2,4 HEADLINE EARNINGS PER SHARE (CENTS) 30,6 35,0 -12,6 NET CASH INFLOW FROM OPERATING ACTIVITIES
PER SHARE (CENTS) 39,0 38,3 1,8 DIVIDEND PER SHARE (CENTS) 14,0 14,0 -
INTERIM 6,5 6,5
FINAL PROPOSED 7,5 7,5 DIVIDEND COVER (BASED ON HEADLINE EARNINGS
PER SHARE) 2,2 2,5 GROUP ANALYSIS
TURNOVER 5 880,5 5 039,4 16,7 WOOLWORTHS 4 846,9 4 702,3 3,1 COUNTRY ROAD 1 033,6 337,1 -
NET PROFIT BEFORE EXCEPTIONAL ITEM 380,7 402,5 -5,4 WOOLWORTHS 388,7 433,9 -10,4 INTERIM FUNDING COST FOR
INVESTMENT IN COUNTRY ROAD - (7,8) -
COUNTRY ROAD (8,0) (23,6) 66,1 BALANCE SHEET
30 JUNE
1999 1998 RM RM CAPITAL EMPLOYED
ORDINARY SHAREHOLDERS' INTEREST 1 886,2 1 642,4 OUTSIDE SHAREHOLDERS' INTEREST 29,8 27,8 TOTAL SHAREHOLDERS' INTEREST 1 916,0 1 670,2 LONG-TERM LIABILITIES 25,1 25,8 DEFERRED TAX 12,3 26,4 1 953,4 1 722,4 EMPLOYMENT OF CAPITAL
PROPERTY, PLANT AND EQUIPMENT 1 039,8 1 000,0 INVESTMENTS 0,1 0,1 LOANS 89,8 73,5 CURRENT ASSETS 1 834,4 1 774,1 INVENTORIES 504,8 481,8 DEBTORS 1 109,0 1 087,9 BANK BALANCES AND CASH 220,6 204,4 TOTAL ASSETS 2 964,1 2 847,7 CURRENT LIABILITIES 1 010,7 1 125,3 CREDITORS 594,6 606,3 TAX 94,1 114,8 OVERDRAFTS AND SHORT-TERM LIABILITIES 302,5 392,8 DIVIDENDS 19,5 11,4 1 953,4 1 722,4 NET ASSET BOOK VALUE - PER SHARE (CENTS) 217,7 195,6 INTEREST BEARING DEBT (NET OF CASH): EQUITY RATIO 5,4% 12,6% GROUP ANALYSIS
TOTAL ASSETS 2 964,1 2 847,7 WOOLWORTHS 2 612,8 2 491,3 COUNTRY ROAD 351,3 356,4 INVENTORIES 504,8 481,8 WOOLWORTHS 317,3 294,8 COUNTRY ROAD 187,5 187,0 APPROVED COMMITMENTS FOR CAPITAL EXPENDITURE 222,8 223,0 WOOLWORTHS 188,3 204,4 COUNTRY ROAD 34,5 18,6 CASH FLOW STATEMENT
YEAR ENDED
30 JUNE
1999 1998 RM RM CASH FLOW FROM OPERATING ACTIVITIES
CASH INFLOW FROM TRADING 379,5 433,5 WORKING CAPITAL MOVEMENTS (39,7) (92,7) CASH GENERATED BY OPERATING ACTIVITIES 339,8 340,8 INTEREST RECEIVED AND INVESTMENT INCOME 276,2 231,7 INTEREST PAID (85,4) (83,3) TAX PAID (155,7) (176,8) CASH GENERATED BY OPERATIONS 374,9 312,4 DIVIDENDS PAID (42,5) (20,5) NET CASH INFLOW FROM OPERATING ACTIVITIES 332,4 291,9 CASH FLOW FROM INVESTING ACTIVITIES
INVESTMENT TO MAINTAIN OPERATIONS (96,3) (73,5) INVESTMENT TO EXPAND OPERATIONS (154,9) (188,8) PROCEEDS ON SALE OF PROPERTY, PLANT AND EQUIPMENT 41,7 13,8 INVESTMENT IN SUBSIDIARIES - (304,9) LOANS AND OTHER INVESTMENTS (13,1) - PURCHASE OF OUTSIDE SHAREHOLDERS' INTEREST - (18,2) NET CASH OUTFLOW FROM INVESTING ACTIVITIES (222,6) (571,6) CASH FLOW FROM FINANCING ACTIVITIES
SHARES ISSUED 15,7 460,7 LOANS AND ADVANCES TO RELATED PARTIES - (388,5) LOANS ADVANCED TO DIRECTORS AND EMPLOYEES (10,0) (12,1) LONG-TERM LIABILITIES REPAID (6,8) (46,2) NET CASH (OUTFLOW)/INFLOW FROM FINANCING ACTIVITIES (1,1) 13,9 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 108,7 (265,8) NET CASH/(OVERDRAFTS) AT BEGINNING OF THE YEAR (188,4) 53,6 EFFECT OF EXCHANGE RATE CHANGES (2,2) 23,8 NET CASH/(OVERDRAFTS) AT END OF THE YEAR (81,9) (188,4) GROUP ANALYSIS
CASH FLOW FROM OPERATING ACTIVITIES 332,4 291,9 WOOLWORTHS 309,9 240,9 COUNTRY ROAD 22,5 51,0 CAPITAL EXPENDITURE (GROSS) 251,2 262,3 WOOLWORTHS 205,1 248,4 COUNTRY ROAD 46,1 13,9 NOTES 1. NET PROFIT BEFORE EXCEPTIONAL ITEM IS STATED AFTER INTEREST RECEIVED OF R278,6 MILLION (1998: R231,3 MILLION), INTEREST PAID OF R85,4 MILLION (1998: R83,3 MILLION) AND DEPRECIATION OF R184,7 MILLION (1998: R135,8 MILLION). FOR 1998 COUNTRY ROAD LIMITED RESULTS ARE INCLUDED FOR FIVE MONTHS FROM 1 FEBRUARY 1998. 2. THE EXCEPTIONAL ITEM (R8,6 MILLION) RELATES TO THE REPURCHASE OF SHARES BY THE WOOLWORTHS HOLDINGS SHARE TRUST FROM EMPLOYEES PARTICIPATING IN THE SHARE PURCHASE SCHEME AND THE WRITE-OFF OF A LOAN TO THE TRUST AS A RESULT THEREOF. 3. THE DIFFERENCE BETWEEN EARNINGS PER SHARE AND DILUTED EARNINGS PER SHARE RESULTS SOLELY FROM THE OUTSTANDING OPTIONS IN TERMS OF THE SHARE PURCHASE SCHEME. DILUTED EARNINGS PER SHARE IS BASED ON A WEIGHTED AVERAGE NUMBER OF SHARES OF 867 315 543 (1998: 774 518 321). 4. HEADLINE EARNINGS ARE BASED ON NET PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS ADJUSTED BY THE EXCEPTIONAL ITEM OF R8,6 MILLION (1998: R17,3 MILLION PROFIT) AND NET PROFIT ON SALE OF FIXED ASSETS OF R1,2 MILLION (1998: R0,7 MILLION LOSS). 5. SUBSEQUENT TO 30 JUNE 1999, A 13% INTEREST IN NETACTIVE LIMITED WAS ACQUIRED FOR R18,4 MILLION. 6. CONTINGENT LIABILITIES AT THE END OF THE PERIOD AMOUNT TO R1,1 MILLION (1998: R3,1 MILLION). 7. UNUTILISED BANKING FACILITIES AMOUNT TO R975 MILLION (1998: R751 MILLION) WITH NO LIMIT ON THE GROUP'S YEAR END INTEREST BEARING DEBT. STATEMENT OF CHANGES IN ORDINARY SHAREHOLDERS' INTEREST AND RECOGNISED PROFITS AND LOSSES YEAR ENDED
30 JUNE
1999 1998 RM RM ORDINARY SHAREHOLDERS' INTEREST AT BEGINNING OF THE YEAR 1 642,4 1 098,8 MOVEMENTS DURING THE YEAR: ORDINARY SHARE CAPITAL
OFFSHORE PLACEMENT - 0,1 SHARE PREMIUM 15,7 460,7 OFFSHORE PLACEMENT - 442,7 SHARE PURCHASE SCHEME 15,7 18,0 RECOGNISED GAINS AND LOSSES 228,1 82,8 DISTRIBUTABLE RESERVES 206,5 44,9 NET PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS 253,1 283,7 DIVIDENDS (50,6) (21,4) NET PROFITS ON HEDGING INSTRUMENTS
TEMPORARILY CARRIED IN EQUITY 4,0 - PREMIUM ON ACQUISITION AND INTANGIBLE ASSETS WRITTEN OFF - (217,4) NON-DISTRIBUTABLE RESERVES
EXCHANGE DIFFERENCES ON TRANSLATION OF FOREIGN ENTITIES 21,6 37,9 ORDINARY SHAREHOLDERS' INTEREST AT END OF THE YEAR 1 886,2 1 642,4 COMMENT OVERVIEW
THE YEAR UNDER REVIEW WAS DOMINATED BY THE EXTRAORDINARY EVENTS THAT AFFECTED AND INDEED CONTINUE TO AFFECT THE SOUTH AFRICAN ECONOMY. THE VERY RAPID RISE IN INTEREST RATES HAD A SEVERE IMPACT ON THE SPENDING POWER AND CONFIDENCE OF CUSTOMERS AND AS A RESULT THE GROUP'S SOUTH AFRICAN OPERATION, WOOLWORTHS, SUFFERED ACCORDINGLY.
COUNTRY ROAD, THE GROUP'S AUSTRALIAN OPERATION, REDUCED LOSSES SUBSTANTIALLY DURING THE YEAR.
PROFIT BEFORE TAX AND EXCEPTIONAL ITEM DROPPED BY 5,4%. HEADLINE EARNINGS PER SHARE DROPPED BY 12,6%, MAINLY DUE TO THE EFFECT OF ADDITIONAL SHARES IN ISSUE. WOOLWORTHS TRADING
WOOLWORTHS HAS IN THE PAST BEEN ABLE TO COPE WITH DIFFICULT ECONOMIC
CIRCUMSTANCES. TIGHT CONTROLS TOGETHER WITH A VERY STRONG CASH FLOW HAVE PROVIDED A BUFFER TO A DOWNTURN IN SALES. IN THE PAST YEAR, HOWEVER, THE SEVERITY OF THE DOWNTURN WAS THE WORST THAT HAS BEEN EXPERIENCED FOR MANY YEARS.
THE GROUP HAS OVER THE PAST TWO YEARS EMBARKED ON A CAPITAL DEVELOPMENT PROGRAMME THAT RESULTED IN A 19,5% INCREASE IN TRADING SPACE. THE SUBSTANTIAL ADDITIONAL COSTS OF THESE STORES, TOGETHER WITH MATERIAL EXPENDITURE ON YEAR 2000 COMPLIANCE AND THE INVESTMENT IN SUPPLY CHAIN SYSTEMS DEVELOPMENT, MEANT THAT PROFITS WERE SEVERELY IMPACTED. PROFIT BEFORE TAX AND EXCEPTIONAL ITEM IN THE WOOLWORTHS OPERATING GROUP DECLINED BY 10,4% AND AIDED BY THE DROP IN TAX RATES THAT OCCURRED DURING THE YEAR, PROFIT AFTER TAX EXCLUDING EXCEPTIONAL ITEM DECLINED BY 5,8%.
THE GROUP GENERATED CASH FROM OPERATING ACTIVITIES OF R310M DURING THE YEAR AND ENDED THE PERIOD WITH A BALANCE SHEET THAT IS PRACTICALLY UNGEARED.
THE TEXTILE DIVISION TRADED POORLY FOR MUCH OF THE YEAR. SALES WERE ONLY SLIGHTLY AHEAD OF LAST YEAR AND PROFITS FROM THIS DIVISION SUFFERED. WERE IT NOT FOR THE EXCEPTIONAL CONTROLS THAT ARE IN PLACE IN THIS DIVISION THE PROFIT FALL WOULD HAVE BEEN MUCH GREATER.
FOODS GREW AT 6,6% IN THE FACE OF THE MOST INTENSE COMPETITION ENCOUNTERED BY THIS DIVISION FOR SOME YEARS. TIGHT CONTROL OVER WASTE, SHRINKAGE AND OTHER COSTS RESULTED IN THIS DIVISION IMPROVING PROFIT AND NET MARGIN TO SALES. THE QUALITY OF THE DEBTORS BOOK REMAINS EXCELLENT DESPITE THE SUBSTANTIAL FINANCIAL STRAIN THAT CUSTOMERS HAVE BEEN UNDER. A SHORT-TERM LOAN PRODUCT WAS TRIALED AND THIS, THE FIRST IN A SERIES OF FINANCIAL SERVICE PRODUCTS, WILL BE LAUNCHED TO WOOLWORTHS CUSTOMERS. COUNTRY ROAD
COUNTRY ROAD MADE SIGNIFICANT PROGRESS TOWARDS THE RESTORATION OF
PROFITABILITY. THE TRADING LOSS BEFORE TAX OF A$2,6M COMPARES FAVOURABLY TO THE LOSS OF A$7,2M INCURRED IN THE FIVE MONTH POST ACQUISITION PERIOD ACCOUNTED FOR LAST YEAR AND A$11M FOR A COMPARABLE TWELVE MONTH PERIOD. IT IS NOTABLE THAT THE CURRENT YEAR'S LOSS TAKES INTO ACCOUNT A$0,6M FOR EXCEPTIONAL RENTAL CHARGES, TRADE MARK AMORTISATION OF A$0,3M AND A$1,8M IN HIGHER MERCHANDISE PURCHASE COSTS DUE TO ADVERSE MOVEMENTS IN THE US DOLLAR/AUSTRALIAN DOLLAR EXCHANGE RATE.
COUNTRY ROAD WAS FAVOURED BY THE STRONG AUSTRALIAN ECONOMY THAT GREW BY 4% DESPITE BEING INITIALLY AFFECTED BY THE TRAVAILS OF THE FAR EASTERN ECONOMIES. INTEREST RATES STAYED LOW, PROTECTING CONSUMER CONFIDENCE. IN AUSTRALASIA, COUNTRY ROAD RETAIL STORES INCREASED SALES BY 4,7% AND IN THE USA BY 5%. WHOLESALE SALES WERE FLAT. STOCKS WERE WELL CONTROLLED AND YEAR END STOCKS WERE 12% DOWN ON LAST YEAR IN AUSTRALIAN DOLLAR.
NEW FLAGSHIP STORES WERE OPENED IN THE CITY CENTRE OF PERTH, THE CHADSTONE CENTRE IN MELBOURNE AS WELL AS THE FLATIRON DISTRICT OF NEW YORK. THE COUNTRY ROAD TEAM HAS DONE AN OUTSTANDING JOB IN A VERY SHORT SPACE OF TIME AND THE GROUP HAS BEEN SUBSTANTIALLY RESTRUCTURED WITH KEY FUNCTIONS NOW PLACED ON A MUCH IMPROVED FOOTING. THIS FOUNDATION SHOULD BEAR SIGNIFICANT BENEFITS IN THE YEAR TO COME. GROUP PROSPECTS
WOOLWORTHS HOLDINGS ENTERS THE NEW FINANCIAL YEAR IN AN EXTREMELY STRONG FINANCIAL POSITION. THE HEAVY DEVELOPMENT EXPENDITURE AND ASSET ACQUISITION THAT HAS TAKEN PLACE OVER THE LAST FEW YEARS HAVE LEFT US LARGELY WITH A MODERN STOCK OF STORES IN EXCELLENT LOCATIONS. THE BALANCE SHEET HAS STRENGTHENED. CASH FLOW FROM OPERATING ACTIVITIES OF R332M HAS BEEN GENERATED AND THE DEBT TO EQUITY RATIO AT YEAR END IS ONLY 5,4%. THIS ENVIABLE POSITION LED TO THE FORMATION OF A NEW ENTERPRISE DIVISION THAT WILL EXPLORE OPPORTUNITIES OUTSIDE THE CURRENT OPERATIONS OF THE GROUP.
IN BOTH THE CORE OPERATIONS OF WOOLWORTHS IN SOUTH AFRICA AND COUNTRY ROAD IN AUSTRALIA, WE LOOK FORWARD TO A RECOVERY. PLANS ARE IN PLACE IN BOTH THESE BUSINESSES THAT WILL HERALD A NEW PERIOD OF GROWTH FOR THE GROUP. YEAR 2000
THE GROUP'S YEAR 2000 COMPLIANCE PROJECT IS PROGRESSING WELL AND WITHIN BUDGET. WORK ON ALL MAJOR AND CRITICAL SYSTEMS AT WOOLWORTHS HAS BEEN COMPLETED AND WORK ON THE SYSTEMS OF COUNTRY ROAD SHOULD BE COMPLETED BY SEPTEMBER.
CONTINUITY PLANS ARE BEING DEVELOPED TO MITIGATE THE EFFECTS OF POTENTIAL DISRUPTIONS THAT MAY OCCUR AT THE DATE CHANGEOVER. CAPITALISATION SHARE AWARD AND FINAL CASH DIVIDEND
THE DIRECTORS HAVE RESOLVED TO AWARD CAPITALISATION SHARES ("NEW ORDINARY SHARES") TO ORDINARY SHAREHOLDERS REGISTERED AS SUCH ON FRIDAY, 3 SEPTEMBER 1999 ("THE LAST DAY TO REGISTER"), PROVIDED THAT SUCH SHAREHOLDERS MAY ELECT INSTEAD TO RECEIVE A FINAL CASH DIVIDEND OF 7,5 CENTS PER SHARE DECLARED IN RESPECT OF THE FINANCIAL YEAR ENDED 30 JUNE 1999.
THE AWARD OF NEW ORDINARY 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 TRADED PRICE OF THE WOOLWORTHS ORDINARY SHARES ON THE JOHANNESBURG STOCK EXCHANGE FOR THE FOUR BUSINESS DAYS ENDING AT THE CLOSE OF BUSINESS ON THURSDAY, 30 SEPTEMBER 1999. DOCUMENTATION DEALING WITH THE CAPITALISATION SHARE AWARD AND THE CASH ALTERNATIVE WILL BE POSTED TO ORDINARY SHAREHOLDERS ON OR ABOUT FRIDAY, 10 SEPTEMBER 1999. 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, 1 OCTOBER 1999. THE LAST DAY FOR THE RECEIPT OF LATE POSTAL ACCEPTANCES WILL BE 12H00 ON WEDNESDAY, 6 OCTOBER 1999. THE NEW ORDINARY SHARES WILL BE ISSUED AND THE CASH DIVIDEND PAID ON WEDNESDAY, 13 OCTOBER 1999. ON BEHALF OF THE BOARD OF DIRECTORS. SA MULLER EXECUTIVE CHAIRMAN CAPE TOWN 18 AUGUST 1999 DIRECTORATE EXECUTIVE CHAIRMAN SA MULLER DIRECTORS
BJ FROST (MANAGING DIRECTOR), FM RATNER (MANAGING DIRECTOR), IL STURROCK, SN SUSMAN, AJ VAN VUUREN NON-EXECUTIVE DIRECTORS
NL COLNE (BRITISH), CA GROLMAN, CA HALL, F JAKOET, G SEABROOK (AUSTRALIAN) COMPANY SECRETARY CL LOWE WOOLWORTHS HOLDINGS LIMITED COMPANY REGISTRATION NUMBER 05/01986/06 REGISTERED OFFICE
WOOLWORTHS HOUSE, 93 LONGMARKET STREET, CAPE TOWN 8001 TRANSFER SECRETARIES MERCANTILE REGISTRARS LIMITED, 10TH FLOOR, 11 DIAGONAL STREET, JOHANNESBURG 2001
THIS INFORMATION IS ALSO AVAILABLE ON THE INTERNET: WWW.EDATA.CO.ZA/WOOLWORTHS

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