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WOOLWORTHS HOLDINGS LIMITED - REVIEWED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE
2002
WOOLWORTHS HOLDINGS LIMITED
Registration number 1929/001986/06
JSE Share code: WHL ISIN: ZAE000028288
Reviewed group results for the year ended 30 June 2002
Highlights
* Total dividend per share 33.3% to 20c
* From continuing operations:
- Headline earnings per share 43.2% to 46.2c
- Revenue 23.9% to R8 825.6m
- Profit before exceptional items 47.7% to R640.7m
- Woolworths net profit before
exceptional items 40.1% to R625.5m
- Country Road moves to a profit A$1,1m (2001: (A$3,6m))
Income statement
Year ended
30 June
2002 2001 %
Note Rm Rm Change
Revenue 9 020.7 7 411.1 21.7
Continuing operations 8 825.6 7 120.6 23.9
Discontinued operations 195.1 290.5 (32.8)
Continuing operations
Turnover 8 421.4 6 778.8 24.2
Cost of merchandise 5 571.8 4 484.5 24.2
Gross profit 2 849.6 2 294.3 24.2
Other income 404.2 341.8 18.3
Expenses 2 568.6 2 166.3 18.6
Depreciation 213.5 199.0 7.3
Occupancy cost 503.4 403.3 24.8
Employment cost 1 238.7 1 050.8 17.9
Other operating cost 613.0 513.2 19.4
Operating profit 685.2 469.8 45.8
Interest paid 44.5 36.1 23.3
Net profit before exceptional items 640.7 433.7 47.7
Exceptional items 2 (41.5) -
Net profit before tax 599.2 433.7 38.2
Tax 3 203.6 147.2 38.3
Net profit after tax 395.6 286.5 38.1
Outside shareholders` interest (2.1) 1.3
Net profit from continuing operations 393.5 287.8 36.7
Discontinued operations
Operating loss (14.0) (17.9)
Interest paid (0.7) (0.9)
Loss from discontinued operations (14.7) (18.8)
Exceptional items 2 (139.6) -
Outside shareholders` interest 18.8 2.3
Net loss from discontinued operations (135.5) (16.5)
Total group
Net profit attributable to
ordinary shareholders 258.0 271.3 (4.9)
Reconciliation of headline earnings
Attributable earnings - all operations 258.0 271.3 (4.9)
Loss on discontinuance, net of outside
shareholders` interest 115.6 -
Impairment of property 17.2 -
Goodwill amortisation 12.1 -
Loss on disposal of listed investment 4.8 -
(Profit)/loss on disposal of property,
plant and equipment net of outside
shareholders` interest (8.8) 3.1
Headline earnings 398.9 274.4 45.4
Net loss from discontinued operations
after outside shareholders` interest 19.9 16.5 20.6
Headline earnings from continuing operations 418.8 290.9 44.0
Headline earnings per share (cents)
- All operations 44.0 30.5 44.3
- Continuing operations 46.2 32.3 43.2
Earnings per share (cents)
- All operations 28.5 30.1 (5.3)
- Continuing operations 43.4 31.9 36.2
Diluted earnings per share (cents) 4 28.0 29.9 (6.4)
Dividends per share (cents) 5 20.0 15.0 33.3
Dividend cover (based on headline earnings
from continuing operations) 2.3 2.2
Number of shares issued (millions) 889.7 908.1 (2.0)
Weighted average number of shares
in issue (millions) 905.7 899.8 0.7
Group analysis
Revenue
Turnover 8 421.4 6 778.8 24.2
Woolworths 7 302.0 5 955.4 22.6
- Textiles 3 834.1 3 258.9 17.7
- Foods 3 302.1 2 566.0 28.7
- Logistics services and other 165.8 130.5 27.0
Country Road - continuing operations 1 119.4 823.4 35.9
Interest 355.5 294.6 20.7
Other revenue 48.7 47.2 3.2
Continuing operations 8 825.6 7 120.6 23.9
Discontinued operations 195.1 290.5 (32.8)
9 020.7 7 411.1 21.7
Net profit/(loss) before tax
and exceptional items
Woolworths 625.5 446.4 40.1
Country Road 15.2 (12.7)
Continuing operations 640.7 433.7 47.7
Discontinued operations (14.7) (18.8)
626.0 414.9 50.9
Cash flow statement
Year ended
30 June
2002 2001
Rm Rm
Cash flow from operating activities
Cash inflow from trading 581.7 392.3
Working capital movements (262.0) (106.8)
Cash generated by operating activities 319.7 285.5
Interest received and investment income 355.5 294.8
Interest paid (45.2) (37.0)
Tax paid (284.5) (97.5)
Cash generated by operations 345.5 445.8
Dividends paid (145.8) (103.4)
Net cash inflow from operating activities 199.7 342.4
Continuing operations 187.4 351.0
Discontinued operations 12.3 (8.6)
Cash outflow from investing activities (404.8) (340.8)
Cash flow from financing activities
Shares issued 41.3 28.0
Shares repurchased by subsidiary (134.7) -
Long-term liabilities repaid (0.1) (11.4)
Net cash (outflow)/inflow from financing activities (93.5) 16.6
(Decrease)/increase in cash and cash equivalents (298.6) 18.2
Cash and cash equivalents at the beginning of the year (64.0) (101.3)
Effect of foreign exchange rate changes 0.9 19.1
Cash and cash equivalents at the end of the year (361.7) (64.0)
Continuing operations (361.7) (60.4)
Discontinued operations - (3.6)
group analysis
Cash generated by operations - before tax 630.0 543.3
Woolworths 579.2 535.8
Country Road 50.8 7.5
Gross capital expenditure on plant and equipment 335.0 252.9
Woolworths 273.7 207.1
Country Road 61.3 45.8
Balance sheet
Year ended
30 June
2002 2001
Note Rm Rm
Assets
Non-current assets 1 535.2 1 459.1
Property, plant and equipment 916.1 980.4
Investments 6 81.4 24.7
Loans to customers 180.2 115.6
Participation in export partnerships 210.0 229.0
Premium on acquisition of subsidiary 20.1 -
Other loans 112.6 102.8
Deferred tax 14.8 6.6
Current assets 2 528.6 2 272.2
Inventories 511.2 503.9
Woolworths card debtors 1 348.7 1 148.5
Accounts receivable 347.1 327.4
Loans to customers 201.5 171.6
Tax 1.6 -
Cash and cash equivalents 118.5 120.8
Total assets 4 063.8 3 731.3
Equity and liabilities
Capital and reserves 2 375.8 2 270.1
Ordinary shareholders` interest 2 350.2 2 238.4
Outside shareholders` interest 25.6 31.7
Non-current liabilities 301.1 336.3
Interest bearing borrowings 0.3 0.5
Post-retirement medical-aid liability 111.0 94.5
Deferred tax 189.8 241.3
Current liabilities 1 386.9 1 124.9
Accounts payable 713.0 756.6
Provisions 97.3 66.7
Tax 96.4 116.8
Interest bearing borrowings 480.2 184.8
Total equity and liabilities 4 063.8 3 731.3
Net asset bookvalue - per share (cents) 264.2 246.5
Group analysis
Total assets 4 063.8 3 731.3
Woolworths 3 658.0 3 347.9
Country Road 405.8 383.4
Inventories 511.2 503.9
Woolworths 339.1 324.8
Country Road 172.1 179.1
Approved commitments for capital expenditure
for the next financial year 237.9 233.9
Woolworths 196.7 201.7
Country Road 41.2 32.2
Statement of changes in ordinary shareholders` interest
Year ended
30 June
2002 2001
Rm Rm
Ordinary shareholders` interest at
the beginning of the year 2 238.4 2 023.5
As previously reported 2 334.5 2 103.9
Prior year adjustment to opening balance arising
from the change in accounting policy for:
- Depreciation on owner-occupied property (36.2) (28.0)
- Post retirement medical benefits (59.9) (52.4)
Movements for the year:
Share premium arising from shares issued under share
purchase scheme 41.3 28.0
Shares repurchased by subsidiary (134.7) -
Recognised gains and losses 205.2 186.9
Distributable reserves 125.1 169.8
Net profit attributable to ordinary shareholders 258.0 271.3
Distributions to ordinary shareholders (145.8) (103.4)
Net unrealised gain on hedging instruments 12.9 1.9
Non-distributable reserves
Realisation of translation reserve on closure of
discontinued operations (7.3) -
Exchange differences on translation of foreign entities 87.4 17.1
Ordinary shareholders` interest at the end of the year 2 350.2 2 238.4
Notes
1. The 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, Employee Benefits.
Consequently the actuarial funding obligation is calculated annually. Actuarial
gains and losses are recognised in the income statement, subject to the corridor
approach. This change has the effect of decreasing reported profit after tax by
R11.7m (2001: R7.5m).
Following the introduction of AC135, 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 R7.6m (2001: R8.2m).
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. Exceptional items
2002
Continuing Discontinued 2001
Total operations operations Total
Loss on disposal of
listed investment 4.8 4.8 - -
Impairment of property 17.2 17.2 - -
Goodwill amortisation 12.1 12.1 - -
Provision for onerous
lease commitment 7.4 7.4 - -
Loss on discontinuance 131.6 - 131.6 -
Restructuring costs 8.0 - 8.0 -
181.1 41.5 139.6 -
On 17 January 2002, Country Road`s US operation was placed into Chapter 7
liquidation.
The liquidation is ongoing, and the directors do not believe that any further
liabilities will arise. The loss on discontinuance has been increased by R11.3m
from the amount disclosed in the Interim Report as at 31 December 2001. This was
to adjust for the Foreign Currency Translation Reserve created when Country Road
was acquired by Woolworths in February 1998.
There is no tax effect from the exceptional items, other than R2.2m in respect
of the onerous lease provision.
3. The effective tax rate of 34.0% on continuing operations is due to the
incidence of STC, the effect of the losses of certain subsidiaries, tax on
foreign dividends and the exceptional items.
4. The difference between earnings per share and diluted earnings per share
results from outstanding options in terms of the share purchase scheme.
5. Dividends comprise the interim dividend of 7.5c per share, paid on 30 April
2002 and the final dividend of 12.5c per share declared on 21 August 2002.
6. Investments include listed securities with a carrying value of R11.3m (2001:
R20.0m) and a market value of R13.4m (2001: R13.9m).
7. Contingent liabilities at the end of the year amount to Rnil (2001: R3.0m).
8. Unutilised banking facilities amount to R1 549.3m (2001: R1 031.9m). In
terms of the Articles of Association, the borrowing powers of the group are
unlimited.
Commentary
Financial results
The directors are pleased to report an excellent performance in Woolworths
operating group and the turnaround in Country Road Limited.
Country Road`s exit from the US market in the first half of the year resulted in
a write-off of net assets amounting to A$18,9m and other costs and provisions of
A$5,0m. This translated to R122,7m after minority interests.
To improve utilisation of shareholder funds, a share repurchase programme was
initiated. A total of 33,3 million shares representing 3.6% of the issued share
capital has been repurchased at a cost of R134,7m and at an average price of
R4,05 per share. As the share repurchase was undertaken towards the end of the
year, the benefits will be more fully reflected next year.
A final dividend of 12,5c has been declared, increasing the total dividend by
33.3% to 20c per share (2001: 15c), reflecting our growing confidence that the
business is back on track.
Woolworths operating group
The Woolworths operating group increased sales by 22.6%
in the 53 weeks to June 2002, compared to a 52 week period last year. The impact
of the additional week was approximately 2.3%.
This reflects our efforts to build on "the Woolies difference" by consistently
offering our customers higher quality, innovative, beautiful goods at remarkable
value.
The 40.1% increase in net profit before exceptional items showed a strong
performance and reflected a great effort from our people.
Textile sales for the 53 week period increased by 17.7% over last year and by
12.2% on a comparable store basis.
Food sales for the 53 weeks rose 28.7% over last year and by 18.7% on a
comparable store basis.
Interest received increased by 20.7% as a result of Woolworths Financial
Services` drive to broaden our customer base in our Woolworths card and personal
loan products. The card base increased to over a million active customers in the
year. The debtors portfolios were well managed and bad debts are at acceptable
levels.
Country road limited
Country Road took the hard decision to exit the USA, reduced costs and
focussed on growing sales in Australia.
Margins suffered from increased promotional activity to counter significant
discounting among competitors and unusually warm winter weather. Australasian
sales grew however at 2.6% over last year in Australian dollar terms.
This together with excellent cost management led to a net profit of A$1,1m
from continuing operations which represents a turnaround of A$4,7m from last
year`s result.
Prospects
Whilst we expect the trading conditions to be tougher in the year ahead,
current indications are that we should deliver positive growth in earnings.
Review of independent auditors
The group`s auditors, Ernst & Young, have reviewed the group results. Their
unqualified report is available for inspection at the company`s registered
office.
Final dividend
Notice is hereby given that a final dividend of 12.5c per share has been
declared in respect of dividend number 10 for the financial year ended 30 June
2002.
Shareholders are advised that the last day of trade "cum the dividend" in
order to participate in the dividend will be Friday, 6 September 2002. The
shares will trade "ex" the dividend from Monday, 9 September 2002 and the record
date will be Friday, 13 September 2002. The dividend will be payable on Monday,
16 September 2002.
Share certificates may not be dematerialised or re-materialised between
Monday, 9 September 2002 and Friday, 13 September 2002, both days inclusive.
On behalf of the Board of Directors.
CA Hall SN Susman
Chairman Chief executive officer
Cape Town
22 August 2002
Directorate
Non-executive directors: CA Hall (Chairman), M Barnes (British),
NL Colne (British), BJ Frost, SV Zilwa
Executive directors: SN Susman (CEO), MR Canning, GP de Kock,
RJD Inskip, NW Thomson
Company Secretary: CL Lowe
Woolworths Holdings Limited: Company Registration Number 1929/001986/06
Share code: WHL ISIN ZAE000028288
Auditors: Ernst & Young
Sponsor: HSBC Investment Services (Africa) (Pty) Ltd
Registered Office: Woolworths House, 93 Longmarket Street,
Cape Town 8001
Transfer Secretaries: Computershare Services, 10th Floor,
11 Diagonal Street,
Johannesburg 2001
Date: 22/08/2002 08:00:00 AM Supplied by www.sharenet.co.za
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