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Woolworths Holdings Limited
Unaudited group results for the six months ended 31 December 2000 * Net profit before tax up 17.2% * Improved performance by the Woolworths chain * Headline earnings up 8.1% * Strong balance sheet * Dividend maintained Income statement Year ended
30 June Six months ended
2000 31 December
(audited) 2000 1999 % Rm Note Rm Rm Change 6 678.6 Revenue 3 670.7 3 386.9
6 369.6 Turnover 3 500.5 3 234.1 8.2 267.0 Interest 137.1 130.8 4.8 42.0 Other revenue 33.1 22.0 50.5 6 285.3 Expenses 3 431.2 3 182.6 7.8 4 128.1 Cost of merchandise 2 291.7 2 134.8
195.8 Depreciation 100.7 95.7
382.0 Occupancy cost 230.7 191.0
1 002.1 Employment cost 525.2 495.0
529.6 Other operating cost 257.7 244.2
47.7 Interest paid 25.2 21.9
393.3 Net profit before exceptional items 239.5 204.3 17.2 42.6 Exceptional items - -
350.7 Net profit before tax 239.5 204.3 17.2 114.4 Tax 2 82.2 65.4 25.7 236.3 Net profit after tax 157.3 138.9 13.2 1.8 Outside shareholders' interest 0.3 0.5 Net profit attributable to
234.5 ordinary shareholders 157.0 138.4 13.4 890.6 Number of shares issued (millions) 900.1 880.6 2.2 Weighted average number of shares
878.9 in issue (millions) 895.5 872.9 2.6 26.7 Earnings per share (cents) 17.5 15.9 10.1 26.3 Diluted earnings per share (cents) 3 17.4 15.6 12.1 27.0 Headline earnings per share (cents) 4 17.3 16.0 8.1 Headline earnings, excluding
30.5 restructuring costs, per share (cents) 17.3 16.0 8.1 14.0 Dividend per share (cents) 6.5 6.5
2.2 Dividend cover 2.7 2.5 GROUP ANALYSIS
6 369.6 Turnover 3 500.5 3 234.1 8.2 5 286.4 Woolworths 2 934.4 2 687.1 9.2 3 031.1 Textiles 1 637.2 1 572.4 4.1 2 206.5 Foods 1 242.7 1 090.2 14.0 48.8 Other 54.5 24.5 122.4 1 083.2 Country Road 566.1 547.0 3.5 Net profit before tax and
393.3 exceptional items 239.5 204.3 17.2 378.7 Woolworths 237.3 199.9 18.7 14.6 Country Road 2.2 4.4 -50.0 Balance sheet Year ended
30 June Six months ended 2000 31 December (audited) 2000 1999 Rm Note Rm Rm ASSETS
1 458.4 Long-term assets 1 506.6 1 483.3 1 028.3 Property, plant and equipment 1 042.7 1 043.0 20.9 Investments 5 21.3 28.4 67.2 Loans to customers 110.9 60.6 252.7 Participation loans to export partnerships 241.6 264.3 89.3 Other loans 90.1 87.0 2 036.7 Current assets 2 139.3 2 058.7 485.5 Inventories 511.9 596.5 1 242.2 Debtors 1 453.7 1 213.7 74.4 Loans to customers 81.9 24.9 234.6 Bank balances and cash 91.8 223.6 3 495.1 Total assets 3 645.9 3 542.0 EQUITY AND LIABILITIES
2 136.7 Capital and reserves 2 260.9 2 049.4 2 103.9 Ordinary shareholders' interest 2 225.9 2 019.4 32.8 Outside shareholders' interest 35.0 30.0 298.8 Long-term liabilities 277.5 308.5 11.1 Interest bearing borrowings 0.6 31.0 287.7 Deferred tax 276.9 277.5 1 059.6 Current liabilities 1 107.5 1 184.1 684.4 Creditors and provisions 749.5 740.6 39.3 Tax 82.9 49.7 335.9 Interest bearing borrowings 275.1 393.8 3 495.1 Total equity and liabilities 3 645.9 3 542.0 236.2 Net asset book value - per share (cents) 247.3 229.3 8.0% Debt: equity ratio 8.7% 10.3% GROUP ANALYSIS
3 495.1 Total assets 3 645.9 3 542.0 3 125.2 Woolworths 3 247.1 3 169.0 369.9 Country Road 398.8 373.0 485.5 Inventories 511.9 596.5 318.3 Woolworths 331.9 412.4 167.2 Country Road 180.0 184.1 233.9 Approved commitments for capital expenditure 93.5 92.9 201.7 Woolworths 1.7 76.2 32.2 Country Road 11.8 16.7 Cash flow statement Year ended
30 June Six months ended 2000 31 December (audited) 2000 1999 Rm Rm Rm Cash flow from operating activities
350.4 Cash inflow from trading 204.2 206.5 (27.6) Working capital movements (154.8) (75.9) 322.8 Cash generated by operating activities 49.4 130.6 267.4 Interest received and investment income 137.3 131.1 (47.7) Interest paid (25.2) (21.9) (94.9) Tax paid (45.5) (44.1) 447.6 Cash generated by operations 116.0 195.7 (62.8) Dividends paid (44.6) (32.6) 384.8 Net cash inflow from operating activities 71.4 163.1 Cash flow from investing activities
Investment in property, plant and equipment to
(90.0) maintain operations (42.0) (50.0) Investment in property, plant and equipment to
(115.0) expand operations (83.6) (58.6) 23.2 Proceeds on disposal of property,
plant and equipment 19.7 6.8 (36.0) Investments (0.4) (28.4) - Investment in subsidiaries - (1.8) (124.5) Loans to customers (51.2) (68.4) Participation loans to export partnerships
(61.4) repaid/(advanced) 11.1 (66.0) (11.0) Loans advanced to directors and employees (2.3) (10.7) (414.7) Net cash outflow from investing activities (148.7) (277.1) Cash flow from financing activities
21.3 Shares issued 6.8 16.8 (11.7) Long-term liabilities repaid (10.5) 9.6 9.6 Net cash (outflow)/inflow
from financing activities (3.7) 26.4 (20.3) Increase in net overdrafts (81.0) (87.6) (81.9) Net overdrafts at the beginning of the period (101.3) (81.9) 0.9 Effect of foreign exchange rate changes (1.0) (0.7) (101.3) Net overdrafts at the end of the period (183.3) (170.2) GROUP ANALYSIS
542.5 Cash generated by operations - before tax 161.4 239.8 478.6 Woolworths 125.9 224.5 63.9 Country Road 35.5 15.3 Gross expenditure on property, plant and
205.0 equipment 125.6 108.6 161.8 Woolworths 106.3 96.6 43.2 Country Road 19.3 12.0 Notes: 1. The interim financial statements comply with South African Statements of Generally Accepted Accounting Practice. Accounting policies used are consistent with those applicable for the 30 June 2000 financial statements, except as follows. The Group's policy for providing for dividends and the related STC are now recorded in the period in which they are paid, rather than in the period for which the dividend is recommended. The change has the effect of marginally decreasing the reported profits after tax. Comparative figures have been restated to give effect to this change and have been adjusted where expense and income classifications have been changed in the current year. 2. The effective tax rate has increased through the incidence of STC and tax on the foreign earnings. 3. The difference between the earnings per share and diluted earnings per share result from outstanding options in terms of the share purchase scheme. 4. Headline earnings per share is based on net profit attributable to the ordinary shareholders adjusted by the net profit on the sale of property, plant and equipment of R1.2m (1999: R1.1m loss). 5.
Investments consist of listed shares with a market value of R15.7m. The directors consider the shortfall against carrying value to be of a temporary nature. 6. Contingent liabilities at the end of the period amount to R3m (1999: R1.1m). 7. Unutilised banking facilities amount to R983m (1999: R897m), with no limit on the group's interest bearing debt. 8. Sales occur approximately evenly during the first and second six months. Monthly sales fluctuate with the occurrence of Christmas, Eid and other similar events. Other turnover is derived from the supply chain.
Statement of changes in ordinary shareholders' interest Year ended
30 June Six months ended 2000 31 December (audited) 2000 1999 Rm Rm Rm Ordinary shareholders' interest at the
1 909.5 beginning of the period 2 103.9 1 909.5 1 886.2 As previously reported 2 071.3 1 886.2 Prior year adjustment to opening balance arising from 23.3 the change in accounting policy for
dividends paid 32.6 23.3 Movements for the period: Share premium arising from shares issued
21.3 under share purchase scheme 6.7 16.8 173.1 Recognised gains and losses 115.3 93.1 163.2 Distributable reserves 113.8 95.4 234.5 Net profit attributable to ordinary shareholders 157.0 138.4 (62.8) Distributions to ordinary shareholders (44.6) (32.6) (2.3) Net unrealised gain/(loss) on
hedging instruments 1.4 1.1 Premium on acquisition of subsidiaries and
(6.2) intangible assets written off - (11.5) Non-distributable reserves Exchange differences on translation of
9.9 foreign entities 1.5 (2.3) Ordinary shareholders' interest at the end
2 103.9 of the period 2 225.9 2 019.4 COMMENTARY Group Results
Trading conditions in South Africa and Australia continue to be difficult as a result of low consumer confidence and changing consumer spending patterns. Under the circumstances, the group has delivered satisfactory attributable profits of R157m, which reflects a 13.4% increase compared to the same period of the previous year. Headline earnings per share have increased by 8.1%. Woolworths
The improvement in Woolworths' performance, which commenced in the second half of the last financial year, has continued. Profit before tax for the 6 months to December 2000 rose by 18.7% over that of the same period of the previous year to R237.3m.
Woolworths' market share of the clothing and footwear trade as measured by the Retail Liaison Committee has improved to 14.5% (1999 - 14.2%). The textile business continues to be tough and the increase in volumes of textiles sold has been largely negated by the deflation in retail clothing prices.
The offering in our stores has improved through the benefits of the merchandise replenishment systems and through the continued efforts to improve range selection to meet our customers' needs. Overhead costs have been favourably impacted by the restructuring program implemented in the prior financial year. Seven more stores have been franchised and opportunities to expand our franchise business are being pursued.
Food sales are up 14% on the same period of the previous year. The new store format and their convenient locations have been well received by our customers and market share has increased marginally to 6,2%. Availability of product on our shelves has improved significantly as a result of the enhanced supply chain The financial services division has traded successfully during the period, despite the lower level of interest rates. Besides administering the debtors arising from Woolworths card sales, the division now has loans to customers of R193m, a local unit trust and an international unit trust, and it is shortly to launch a Woolworths Visa credit card.
Debtors and loans continue to be well managed and net bad debts are within budgeted levels. Country Road
In Australia the introduction of GST and a post-Olympics decline in the levels of consumer spending have resulted in the sales increase (in AU$) being limited to 0.6%.
Country Road's profit before tax for the 6 months is R2.2m (1999 - R4.4m). A profit was achieved in the USA and New Zealand whilst a loss was returned in Australia.
The current apparel retail trading environment is a difficult one in both Australasia and the USA. Consistent with most retailers we do not foresee an improvement in consumer demand or market conditions over the next six months. Management is committed to bringing about efficiencies and economies that will result in lower costs across the business. Group Prospects
Management is encouraged by the group results at a time when many retailers, particularly clothing retailers, are struggling to maintain profitability. It is expected that the current trend of a modest improvement in profitability will continue into the second half of the year. Dividend
Notice is hereby given that an interim dividend of 6.5 cents per share was declared on 15 February 2001 in respect of the six months ended 31 December 2000, payable to ordinary shareholders registered in the books of the company at the close of business on Friday, 2 March 2001. Where electronic transfer instructions are in place, dividends will be credited to shareholders' bank accounts on or about 11 April 2001. In the absence of such mandates, dividend cheques will be posted to shareholders on the same date. The dividend is declared payable in the currency of the Republic of South Africa. Strate
In order to assist shareholders and to facilitate an orderly transition ahead of the company's entry to STRATE scheduled for October 2001, the directors have considered it prudent to implement STAR, a service offered by Mercantile Bank to assist issuers and shareholders to validate and dematerialise their listed shares prior to their admission to STRATE.
Documentation setting out the details of the programme and the action required will be posted to shareholders on Monday, 19 February 2001. On behalf of the Board of Directors. C A Hall S N Susman Chairman CEO Cape Town 16 February 2001
Directorate Chairman C A Hall Executive director S N Susman (CEO) Non-executive directors M Barnes (British), N L Colne (British), B J Frost, I N Thomson Company Secretary C L Lowe
Woolworths Holdings Limited Company Registration Number 1929/001986/06 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 or www.woolworths.co.za
