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WOOLWORTHS HOLDINGS LIMITED
Registration Number 1929/001986/06
Audited group results for the year ended 30 June 2001
* Group revenue up 10,7%
* Group profits
- before exceptional items up 10,3%
- before tax up 23,7%
* Headline EPS up 19,6%
* Increased dividend
* Strong performance by Woolworths
* Difficult trading conditions affect Country Road
Income statement
Year ended
30 June
2001 2000 %
Note Rm Rm Change
Revenue 7 411,1 6 693,1 10,7
Turnover 7 026,6 6 369,6 10,3
Interest 294,6 267,0 10,3
Other revenue 2 89,9 56,5 59,1
Expenses 6 975,6 6 299,8 10,7
Cost of merchandise 4 609,2 4 128,1 11,7
Depreciation 201,5 195,8 2,9
Occupancy cost 426,2 382,0 11,6
Employment cost 1 098,1 1 002,1 9,6
Other operating cost 603,6 544,1 10,9
Interest paid 37,0 47,7 (22,4)
Share of loss from joint venture 1,7 -
Net profit before exceptional items 433,8 393,3 10,3
Exceptional items 3 - 42,6
Net profit before tax 433,8 350,7 23,7
Tax 4 150,4 114,4 31,5
Net profit after tax 283,4 236,3 19,9
Outside shareholders' interest 3,6 (1,8)
Net profit attributable to ordinary
shareholders 287,0 234,5 22,4
Number of shares issued (millions) 908,1 890,6 2,0
Weighted average number of shares
in issue (millions) 899,8 878,9 2,4
Earnings per share (cents) 31,9 26,7 19,5
Diluted earnings per share (cents) 5 31,7 26,3 20,5
Headline earnings per share (cents) 6 32,3 27,0 19,6
Headline earnings, excluding
restructuring costs,
per share (cents) 32,3 30,5 5,9
Dividend per share (cents) 7 15,0 14,0 7,1
Dividend cover
(based on headline earnings) 2,2 2,2
GROUP ANALYSIS
Turnover 7 026,6 6 369,6 10,3
Woolworths 5 916,2 5 286,4 11,9
- Textiles 3 228,3 3 031,1 6,5
- Foods 2 562,3 2 206,5 16,1
- Other 8 125,6 48,8 157,4
Country Road 1 110,4 1 083,2 2,5
Net profit/(loss)
before exceptional items 433,8 393,3 10,3
Woolworths 465,3 378,7 22,9
Country Road (31,5) 14,6 -
Balance sheet
Year ended
30 June
2001 2000
Note Rm Rm
ASSETS
Non-current assets 1 494,5 1 458,4
Property, plant and equipment 1 016,6 1 028,3
Investments 9 24,7 20,9
Loans to customers 115,6 67,2
Participation in export partnerships 229,0 252,7
Other loans 102,8 86,6
Deferred tax 5,8 2,7
Current assets 2 272,2 2 036,7
Inventories 503,9 485,5
Woolworths card debtors 1 148,5 982,3
Accounts receivable 327,4 259,9
Loans to customers 171,6 74,4
Cash and cash equivalents 120,8 234,6
Total assets 3 766,7 3 495,1
equity and liabilities
Capital and reserves 2 366,2 2 136,7
Ordinary shareholders' interest 2 334,5 2 103,9
Outside shareholders' interest 31,7 32,8
Non-current liabilities 266,7 298,8
Interest bearing borrowings 0,5 11,1
Deferred tax 266,2 287,7
Current liabilities 1 133,8 1 059,6
Accounts payable 765,5 604,1
Provisions 66,7 80,3
Tax 116,8 39,3
Interest-bearing borrowings 184,8 335,9
Total equity and liabilities 3 766,7 3 495,1
Net asset book value
- per share (cents) 257,1 236,2
Interest-bearing debt (net of interest
earning cash): equity ratio 3,5% 8,0%
GROUP ANALYSIS
Total assets 3 766,7 3 495,1
Woolworths 3 383,3 3 125,2
Country Road 383,4 369,9
Inventories 503,9 485,5
Woolworths 324,8 318,3
Country Road 179,1 167,2
Cash flow statement
Year ended
30 June
2001 2000
Rm Rm
Cash flow from operating activities
Cash inflow from trading 383,3 356,2
Working capital movements (97,8) (33,4)
Cash generated by operating activities 285,5 322,8
Interest received and investment income 294,8 267,4
Interest paid (37,0) (47,7)
Tax paid (97,5) (94,9)
Cash generated by operations 445,8 447,6
Dividends paid (103,4) (62,8)
Net cash inflow from
operating activities 342,4 384,8
Cash flow from investing activities
Investment in property, plant and
equipment to maintain operations (103,3) (90,0)
Investment in property, plant and
equipment to expand operations (149,6) (115,0)
Proceeds on disposal of property,
plant and equipment 55,3 23,2
Investment in joint venture (5,1) -
Investments (0,3) (36,0)
Loans to customers (145,6) (124,5)
Participation in export partnerships 23,7 (61,4)
Loans advanced to directors and
employees (15,9) (11,0)
Net cash outflow from
investing activities (340,8) (414,7)
Cash flow from financing activities
Shares issued 28,0 21,3
Long-term liabilities repaid (11,4) (11,7)
Net cash inflow from
financing activities 16,6 9,6
Decrease/(increase) in cash and
cash equivalents 18,2 (20,3)
Cash and cash equivalents at
the beginning of year (101,3) (81,9)
Effect of foreign exchange rate changes 19,1 0,9
Cash and cash equivalents at
the end of year (64,0) (101,3)
GROUP ANALYSIS
Cash generated by operations
- before tax 543,3 542,5
Woolworths 535,8 478,6
Country Road 7,5 63,9
Gross capital expenditure on plant
and equipment 252,9 205,0
Woolworths 207,1 161,8
Country Road 45,8 43,2
Notes: This preliminary report has been extracted from financial information
which complies with South African Generally Accepted Accounting Practice
("GAAP") and accounting policies used are consistent with those employed in
the previous financial year, except as set out in note (1). 1. The group's
policy for providing for dividends and the related STC has been changed as
required by GAAP. Dividends and STC are now recorded in the period in which
they are paid, rather than in the period for which the dividend is
recommended. Comparative figures have been restated. In addition, certain
other comparative figures have been changed to bring them in line with
classifications used in the current year. 2. Other revenue comprises of
royalties, franchise and other commissions. 3. The exceptional items of
R42,6 million in the comparative figures consist of: restructuring costs of
R41,6 million, write-down of investment of R8,8 million, offset by profit on
disposal of Namibian stores of R7,8 million. 4. The effective tax rate of
34,7% is due to the incidence of STC and the effect of the losses of Country
Road. 5. The difference between the earnings per share and diluted earnings
per share results from outstanding options in terms of the share purchase
scheme. 6. Headline earnings per share are based on net profit attributable
to ordinary shareholders, adjusted by the net loss on the sale of property,
plant and equipment, after tax and after outside shareholders' interest. 7.
Dividends comprise the interim dividend of 6,5 cents per share paid on 11
April 2001 and the final dividend of 8,5 cents per share declared on 15
August 2001. 8. Other turnover is derived mainly from logistics services. 9.
Investments include listed securities with a carrying value of R20,0 million
(market value: R13,9 million). The directors consider the shortfall against
carrying value to be of a temporary nature. 10. Contingent liabilities at
the end of the year amount to R3,0 million (2000: R3,0 million). 11.
Unutilised banking facilities amount to R1 031,9 million (2000: R828,3
million), with no limit on the group's authority to raise interest-bearing
debt. 12. Approved commitments for capital expenditure for next year amount
to R248,4 million (2000: R233,9 million).
Statement of changes in ordinary shareholders' interest
Year ended
30 June
2001 2000
Rm Rm
Ordinary shareholders' interest at
the beginning of the year 2 103,9 1 909,5
As previously reported 2 071,3 1 886,2
Prior year adjustment to opening
balance arising from the change in
accounting policy for dividends paid 32,6 23,3
Movements for the year:
Share premium arising from shares
issued under share purchase scheme 28,0 21,3
Recognised gains and losses 202,6 173,1
Distributable reserves 185,5 163,2
Net profit attributable to
ordinary shareholders 287,0 234,5
Distributions to ordinary shareholders (103,4) (62,8)
Net unrealised gain/(loss)
on hedging instruments 1,9 (2,3)
Premium on acquisition of subsidiaries
and intangible assets written off - (6,2)
Non-distributable reserves
Exchange differences on translation
of foreign entities 17,1 9,9
Ordinary shareholders' interest at
the end of the year 2 334,5 2 103,9
COMMENTARY
Woolworths Holdings
The group has delivered satisfactory results considering the tough South
African and Australian retail environments.
Group turnover for the year increased by 10,3% to R7 027 million and
profit before exceptional items grew by 10,3% to R434 million. Headline
earnings per share at 32,3 cents reflects an increase of 19,6%.
During the year the board was strengthened and balanced by the
appointment of
Messrs M R Canning, G P de Kock, R J D Inskip and N W Thomson as
executive directors who collectively have significant retail experience.
Based on the encouraging performance of the South African operation,
Woolworths, an increased final dividend of 8,5 cents per share has been
declared.
Woolworths
The turnaround in Woolworths' performance which began 18 months ago has been
sustained. Profit before tax and exceptional items rose to R465 million
which represents a 22,9% increase over last year.
Woolworths' textile business has performed better, reflected in
Woolworths' market share, which has risen to 16,3% on a twelve month average
(2000 - 15,9%) as measured by the Retail Liaison Committee. We have re-
focused on quality and good value, classic merchandise and improved
availability.
The expansion of the franchise business in Africa and the Middle East is
delivering a growing contribution. There are now 66 franchise stores of
which 31 are outside South Africa.
Foods turnover is up 16% and market share has increased from 6,0% to 6,3%
on a twelve month average. This has been achieved through an 8,4% increase
in the trading area of food stores and through better availability and
innovative products. The launch of a limited range of branded groceries and
the opening of small convenience stores has been well received.
Financial services continues to grow its product offering with the launch
of a Woolworths Visa credit card and growth in personal loans to customers.
Sound management of debtors has resulted in a strong contribution to
profits, despite the pressure exerted on interest margins. Bad debts
experience continues to improve.
Country Road
Country Road made a loss of R31,5 million (2000 - Profit R14,6 million)
as a result of weak sales in Australia and the USA. Our merchandise offering
also fell short of meeting our customers' expectations. Costs were tightly
controlled, as was the investment in stock and debtors.
Prospects
The group expects further steady improvement in its profits. The main
challenges are maintaining the impetus in the Woolworths textiles business.
The investment in Country Road has been reviewed and the group continues
to be committed to the business. We believe in the company and in the
ability of its management. We recognise the difficult market conditions the
company faces, and have adopted a conservative view of the company's
performance in the short term.
There are considerable synergies between our brands and our businesses
that we have yet to capitalise on, and we are jointly developing strategies
to ensure that this happens and the business is restored to profitability.
Dividend
Notice is hereby given that an increased final dividend of 8,5 cents per
share has been declared in respect of dividend No 8 for the financial year
ended 30 June 2001.
Shareholders are advised that the last day to trade ("cum" the dividend)
will be Friday, 31 August 2001. The shares will trade "ex" the dividend from
commencement of business on Monday, 3 September 2001, the record date will
be Friday 7 September 2001 and the dividend will be payable on Wednesday, 10
October 2001.
Strate
The board implemented the STAR programme on 19 February 2001 to assist
shareholders in validating their shares prior to conversion to STRATE. To
date, a majority of the company's shareholders have validated their shares.
Woolworths will officially be transferred to the new STRATE system of
electronic settlement on the JSE Securities Exchange South Africa (JSE) and
its shares will be dematerialised with effect from 15 October 2001.
Electronic trading on the shares commences on 5 November 2001, with
settlement on electronic trading taking place on 12 November 2001.
Consequently, the company's share certificates will no longer be good for
delivery in respect of the transactions entered into on the JSE on or after
Monday, 5 November 2001. Those shareholders who have not surrendered their
share certificates for validation under the STAR programme, are reminded to
do so before 5 November 2001.
On behalf of the Board of Directors.
C A Hall S N Susman
Chairman CEO
Cape Town
15 August 2001
DIRECTORATE Chairman C A Hall Executive directors S N Susman (CEO), M R
Canning, G P de Kock, R J D Inskip, N W Thomson
Non-executive directors M Barnes (British), N L Colne (British), B J Frost,
I N Thomson (British) 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
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