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Woolworths - Unaudited group results

Release Date: 21/02/2002 07:31
Code(s): WHL
Wrap Text
Woolworths Holdings Limited
  Company Registration Number 1929/001986/06
  JSE Share code: WHL
  ISIN ZAE000028288

Unaudited group results for the six months ended 31 December 2001 * From continuing operations: - Revenue up 19.1% - Profit before exceptional item up 33.6% - Headline earnings per share up 32.3% * Interim dividend per share up 15.4% to 7.5c
* Woolworths net profit before exceptional item up 26.9% * Country Road exits the US income statement Year ended
30 June Six months ended
2001 31 December
(audited) 2001 2000 %
Rm Note Rm Rm Change 7 411.1 Revenue 4 385.3 3 670.7 19.5 7 173.1 Continuing operations 4 190.2 3 517.7 19.1 238.0 Discontinued operations 195.1 153.0 27.5 6 994.5 Expenses 4 098.5 3 440.2 19.1 6 746.1 Continuing operations 3 888.7 3 293.1 18.1 4 511.7 Cost of merchandise 2 654.2 2 223.8 19.4 201.3 Depreciation 99.9 100.0 (0.1) 383.4 Occupancy cost 221.2 196.9 12.3 1 050.9 Employment cost 586.8 499.3 17.5 562.7 Other operating cost 303.1 248.6 21.9 36.1 Interest paid 23.5 24.5 (4.1) 248.4 Discontinued operations 209.8 147.1 42.6 Share of loss from joint venture -
1.7 continuing operations 1.4 - Net profit/(loss) before
414.9 exceptional items 285.4 230.5 23.8 425.3 Continuing operations 300.1 224.6 33.6 (10.4) Discontinued operations (14.7) 5.9
- Exceptional items 133.1 -
- Provision for discontinuance 2 (120.3) -
- Restructuring costs (8.0) -
- Write-down of listed investment (4.8) -
414.9 Net profit before tax 152.3 230.5 (33.9) 425.3 Continuing operations 295.3 224.6 31.5 (10.4) Discontinued operations (143.0) 5.9
147.2 Tax 3 100.5 80.7 24.5 267.7 Net profit after tax 51.8 149.8 (65.4) 3.6 Outside shareholders' interest 15.9 (0.3) Net profit attributable to
271.3 ordinary shareholders 67.7 149.5 (54.7) Headline earnings per share (cents) 4
30.5 - All operations 18.7 16.4 14.0 31.5 - Continuing operations 20.9 15.8 32.3 Earnings per share (cents)
30.1 - All operations 7.4 16.7 (55.7) 31.1 - Continuing operations 21.2 16.2 30.9 29.9 Diluted earnings per share (cents) 5 7.3 16.4 (55.5) 15.0 Dividend per share (cents) 7.5 6.5 15.4 2.0 Dividend cover
(based on headline earnings) 2.5 2.5
908.1 Number of shares issued (millions) 907.0 900.1 0.8 Weighted average number of
899.8 shares in issue (millions) 912.0 895.5 1.8 GROUP ANALYSIS Revenue
7 069.3 Turnover 4 199.5 3 525.7 19.1 5 955.4 Woolworths 3 499.5 2 957.9 18.3 3 258.9 - Textiles 1 863.5 1 654.3 12.6 2 566.0 - Foods 1 547.8 1 244.6 24.4 130.5 - Other 6 88.2 59.0 49.5 1 113.9 Country Road 700.0 567.8 23.3 875.9 Continuing operations 504.9 414.8 21.7 238.0 Discontinued operations 195.1 153.0 27.5 294.6 Interest 164.6 137.1 20.1 47.2 Other revenue 21.2 7.9 168.4 7 411.1 4 385.3 3 670.7 19.5 Net profit/(loss) before tax and exceptional items
446.4 Woolworths 289.8 228.3 26.9 (31.5) Country Road (4.4) 2.2
(21.1) Continuing operations 10.3 (3.7)
(10.4) Discontinued operations (14.7) 5.9
414.9 285.4 230.5 23.8 statement of changes in ordinary shareholders' interest Year ended
30 June Six months ended 2001 31 December
(audited) 2001 2000 Rm Rm Rm Ordinary shareholders' interest at the
2 023.5 beginning of the period 2 238.4 2 023.5 2 103.9 As previously reported 2 334.5 2 103.9 Prior year adjustment to opening balance arising from the change in accounting policy for:
(28.0) Depreciation on owner-occupied property (36.2) (28.0) (52.4) Post-retirement medical benefits (59.9) (52.4) Movements for the period: Share premium arising from shares issued
28.0 under share purchase scheme 25.5 6.8 - Shares repurchased by subsidiary (38.5) -
186.9 Recognised gains 116.4 107.8 169.8 Distributable reserves 38.1 106.3 271.3 Net profit attributable to
ordinary shareholders 67.7 149.5 (103.4) Distributions to ordinary shareholders (77.9) (44.6) 1.9 Net unrealised gain on hedging instruments 48.3 1.4 Non-distributable reserves 17.1 Exchange differences on translation of
foreign entities 78.3 1.5 2 238.4 Ordinary shareholders' interest at the end of
the period 2 341.8 2 138.1 balance sheet Year ended
30 June Six months ended 2001 31 December
(audited) 2001 2000 Rm Note Rm Rm ASSETS
1 458.3 Non-current assets 1 518.8 1 475.0 980.4 Property, plant and equipment 895.3 1 011.1 24.7 Investments 7 63.4 21.3 115.6 Loans to customers 179.0 110.9 229.0 Participation in export partnerships 219.0 241.6 - Premium on acquisition of subsidiary 27.1 -
102.8 Other loans 130.2 86.2 5.8 Deferred tax 4.8 3.9 2 272.2 Current assets 2 780.3 2 139.3 503.9 Inventories 636.0 511.9 1 148.5 Woolworths card debtors 1 222.8 1 072.0 327.4 Accounts receivable 464.5 381.7 171.6 Loans to customers 178.2 81.9 120.8 Cash and cash equivalents 278.8 91.8 3 730.5 Total assets 4 299.1 3 614.3 EQUITY AND LIABILITIES
2 270.1 Capital and reserves 2 371.2 2 173.1 2 238.4 Ordinary shareholders' interest 2 341.8 2 138.1 31.7 Outside shareholders' interest 29.4 35.0 335.5 Non-current liabilities 319.1 339.7 0.5 Interest-bearing borrowings 0.4 0.6 94.5 Post-retirement medical-aid liability 102.8 86.2 240.5 Deferred tax 215.9 252.9 1 124.9 Current liabilities 1 608.8 1 101.5 756.6 Accounts payable 998.9 676.1 66.7 Provisions 86.2 67.4 116.8 Tax 88.1 82.9 184.8 Interest-bearing borrowings 435.6 275.1 3 730.5 Total equity and liabilities 4 299.1 3 614.3 246.5 Net asset book value - per share (cents) 258.2 237.5 Interest-bearing debt (net of interest earning cash):
3.7% equity ratio 9.4% 9.1% GROUP ANALYSIS
3 730.5 Total assets 4 299.1 3 614.3 3 347.1 Woolworths 3 835.5 3 215.5 383.4 Country Road 463.6 398.8 503.9 Inventories 636.0 511.9 324.8 Woolworths 416.0 331.9 179.1 Country Road 220.0 180.0 cash flow statement Year ended
30 June Six months ended 2001 31 December
(audited) 2001 2000 Rm Rm Rm Cash flow from operating activities
392.3 Cash inflow from trading 274.5 198.2 (106.8) Working capital movements (92.4) (148.9) 285.5 Cash generated by operating activities 182.1 49.3 294.8 Interest received and investment income 165.2 137.3 (37.0) Interest paid (24.2) (25.2) (97.5) Tax paid (160.0) (45.5) 445.8 Cash generated by operations 163.1 115.9 (103.4) Dividends paid (77.9) (44.6) 342.4 Net cash inflow from operating activities 85.2 71.3 347.0 Continuing operations 88.9 67.3 (4.6) Discontinued operations (3.7) 4.0 Cash flow from investing activities
Investment in property, plant and equipment to
(103.3) maintain operations (45.1) (42.0) Investment in property, plant and equipment to
(149.6) expand operations (130.3) (83.6) 55.3 Proceeds on disposal of property,
plant and equipment 152.9 19.7 - Investment in subsidiary (25.7) -
(5.1) Investment in joint venture (46.6) -
(0.3) Investments - (0.4) (145.6) Loans to customers (70.0) (51.2) 23.7 Participation in export partnerships 10.0 11.1 (15.9) Other loans advanced (27.0) (2.3) (340.8) Net cash outflow from investing activities (181.8) (148.7) (333.2) Continuing operations (180.1) (142.6) (7.6) Discontinued operations (1.7) (6.1) Cash flow from financing activities - continuing operations
28.0 Shares issued 25.5 6.8 - Shares repurchased by subsidiary (38.5) -
(11.4) Non-current liabilities repaid - (10.5) 16.6 Net cash (outflow)/inflow from
financing activities (13.0) (3.7) 18.2 (Increase)/decrease in net overdrafts (109.6) (81.1) Cash and cash equivalents at the beginning
(101.3) of the period (64.0) (101.3) 19.1 Effect of foreign exchange rate changes 16.8 (1.0) (64.0) Cash and cash equivalents
at the end of the period (156.8) (183.4) (60.4) Continuing operations (156.8) (186.0) (3.6) Discontinued operations - 2.6 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 June 2001 financial statements, except as follows: The group's policy for providing for post-retirement medical-aid benefits of retired employees has changed following the introduction of AC116, Employment Benefits. Consequently the actuarial gains and losses are accounted for in the income statement during the period in which they arise. This change has the effect of decreasing reported profit after tax by R5.8m (2000: R3.8m). Following the introduction of AC134, Investment properties, depreciation is now provided on owner-occupied property in accordance with AC123, Property, Plant and Equipment. This change has the effect of decreasing reported profit after tax by R4.1m (2000: R3.7m). 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 period.
2. On 17 January 2002, Country Road's US operation was placed into Chapter 7 liquidation. Due to the uncertainty of the amounts receivable in respect of the groups' claims against Country Road's US operation, the net assets have been written off in full as at 31 December 2001, resulting in an exceptional charge, after outside shareholders' interest, of R105.7m. In due course, any amounts received will be set off against this write-off. There is no effect on taxation as the US operation was in an assessed loss position.
3. The effective tax rate of 35.2% before exceptional items is due to the incidence of STC, the effect of the losses of certain subsidiaries and the amortisation of goodwill.
4. Headline earnings per share is based on net profit attributable to the ordinary shareholders adjusted by the provision for discontinuance of Country Road's US operation of R105,7m, the write-down of a listed investment of R4.8m goodwill amortisation of R3.0m, and the net pro fit on sale of property, plant and equipment of R10.2m.
5. The difference between earnings per share and diluted earnings per share results from outstanding options in terms of the share purchase scheme. 6. Other turnover is derived mainly from logistics services. Sales occur approximately evenly during the first and second six months.
7. Investments include listed securities with a carrying value of R15.9m (2000: R20.2m) and a market value of R16.8m (2000: R15.7m).
8. Unutilised banking facilities amount to R1 215m (2000: R983m), with no limit on the group's ability to raise interest bearing debts.
9. Approved capital commitments for capital expenditure amount to R133.7m (2000: R93.5m). Commentary group results
The group achieved an increase of 32.3% in headline earnings per share from continuing operations during the period under review. Profit before tax and exceptional items from continuing operations was R300.1m (2000: R224.6), an increase of 33.6%.
Country Road's exit from the US market resulted in a write-off of net assets amounting to A$18.9m and other costs and provisions of A$5m (R112.8m after minority interests). The loss in discontinued US operations limited the increase in headline earnings from all operations to 14.0% for the period under review and net profit before tax and exceptional items to 23.8%.
A dividend of 7.5 cents has been declared, a 15.4% increase on the previous period. woolworths
Trading in all divisions of Woolworths was encouraging and profit before tax for the six months to December 2001 rose by 26.9% to R289.8m.
The textiles business concentrated on better styled, classic and modern merchandise of superior quality and improved availability. This resulted in a rise in sales of 12.6% and a growth in market share on a twelve month moving average to 16.7% (2000 - 15.9%). Like on like turnover improved by 7.1%.
Foods sales increased by 24.4% and market share rose to 6.3% (2000 - 5.8%) for the period. This was attributable to the positive response of our customers to improved innovation and the increased number of locations where Woolworths quality food is to be found. Like on like turnover improved by 13.9%.
Woolworths Financial Services continued to grow the Woolworths card and the personal loan books. The books are in a low risk part of the market and management remains vigilant. Net bad debts were within budgeted levels. country road
Having exited the US market, Country Road in Australasia returned a small profit of A$0.3m (2000: A$1.2m loss) mainly due to tight expense control. The R10.3m profit resulted from second quarter profits being translated at an exchange rate significantly weaker than the rate at which first quarter losses were sustained.
Country Road is now able to concentrate on the core Australasian market and markets with similar climates. The production of one range will result in significant cost savings and importantly will ensure greater focus on the design and delivery of that range. directorate
The board was strengthened by the appointment of Sindi Zilwa as a non- executive director with effect from 1 January 2002. Sindi brings to the board a wealth of financial expertise and business acumen, and will enrich board deliberations. prospects
If the current performance in both South Africa and Australia continues, we expect a positive second half. dividends
Notice is hereby given that an interim dividend of 7.5 cents per share has been declared in respect of dividend no 9 for the six months ended 31 December 2001.
Shareholders are advised that the last day of trade ("cum" the dividend) in order to participate in the dividend will be Friday, 8 March 2002. The shares will trade "ex" the dividend from commencement of business on Monday, 11 March 2002 and the record date will be Friday, 15 March 2002. The dividend will be payable on Monday, 18 March 2002.
Share certificates may not be dematerialised or re-materialised between Monday, 4 March 2002 and Friday, 15 March 2002, both days inclusive. On behalf of the Board of Directors. CA Hall SN Susman
Chairman Chief executive officer Cape Town 21 February 2002 Directorate Non-executive directors
CA Hall (Chairman), M Barnes (British), NL Colne (British), BJ Frost, IN Thomson (British), SV Zilwa Executive directors
SN Susman (CEO), MR Canning, GP de Kock, RJD Inskip, NW Thomson Company Secretary C L Lowe Woolworths Holdings Limited Company Registration Number 1929/001986/06 JSE Share code: WHL ISIN: ZAE000028288 Sponsor HSBC Investment Services (Africa) (Pty) Ltd Registered Office
Woolworths House, 93 Longmarket Street, Cape Town 8001 Transfer Secretaries Mercantile Registrars Limited, 10th Floor, 11 Diagonal Street, Johannesburg 2001

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