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