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Woolworths Holdings Limited - Unaudited Group Results for the six months ended
31 December 2003
Woolworths Holdings Limited
Company registration number 1929/001986/06
Share code WHL
ISIN ZAE000028288
INCOME STATEMENT
Year ended Six months ended
30 June 2003 31 December
(audited) 2003 2002 %
R million Note R million R million Change
10 094.8 Revenue 5 579.7 5 051.3 10.5
9 500.3 Turnover 5 266.0 4 794.9 9.8
6 358.6 Cost of merchandise 3 574.6 3 199.5 11.7
3 141.7 Gross profit 1 691.4 1 595.4 6.0
594.5 Other revenue 313.7 256.4 22.3
2 848.2 Expenses 1 455.1 1 402.0 3.8
227.1 Depreciation 118.3 110.6 7.0
512.4 Occupancy cost 268.3 259.3 3.5
1 276.5 Employment cost 620.4 640.8 (3.2)
832.2 Other operating cost 448.1 391.3 14.5
888.0 Operating profit 550.0 449.8 22.3
87.4 Interest paid 58.1 34.6 67.9
Net profit before exceptional
800.6 items 491.9 415.2 18.5
(22.2) Exceptional items 2 (5.0) (17.2)
778.4 Net profit before tax 486.9 398.0 22.3
227.4 Tax 3 146.0 111.7 30.7
551.0 Net profit after tax 340.9 286.3 19.1
(1.4) Outside shareholders" interest (0.3) (0.3)
Net profit attributable to
549.6 ordinary shareholders 340.6 286.0 19.1
Reconciliation of headline
earnings
549.6 Attributable earnings 340.6 286.0 19.1
10.0 Goodwill amortisation 5.0 5.0
(Profit)/loss on disposal of
property, plant and equipment
net of outside shareholders"
4.9 interest (1.1) 3.4
Reversal of provision for loss
on discontinuance net of
(1.3) outside shareholders" interest - -
563.2 Headline earnings 344.5 294.4 17.0
Headline earnings per share
64.8 (cents) 40.2 33.5 20.0
63.3 Earnings per share (cents) 39.7 32.6 21.8
Diluted earnings per share
61.9 (cents) 4 38.5 31.9 20.7
29.0 Distribution per share (cents) 13.0 10.5 23.8
2.2 Distribution cover 3.1 3.1
Number of shares issued
853.1 (millions) 864.1 868.0 (0.4)
Weighted average number of shares
868.5 in issue (millions) 856.9 877.6 (2.4)
GROUP ANALYSIS
Revenue
9 500.3 Turnover 5 266.0 4 794.9 9.8
8 430.0 Woolworths 4 789.6 4 211.8 13.7
4 280.4 - Clothing and home 2 422.9 2 185.4 10.9
3 980.8 - Foods 2 282.0 1 938.6 17.7
168.8 - Logistics and other 84.7 87.8 (3.5)
1 070.3 Country Road 476.4 583.1 (18.3)
522.3 Interest 270.7 225.2 20.2
72.2 Other revenue 43.0 31.2 37.8
10 094.8 5 579.7 5 051.3 10.5
Operating profit
870.7 Woolworths 545.1 442.4 23.2
17.3 Country Road 5 4.9 7.4 (33.8)
888.0 550.0 449.8 22.3
CASH FLOW STATEMENT
Year ended Six months ended
30 June 2003 31 December
(audited) 2003 2002
R million R million R million
Cash flow from operating activities
657.6 Cash inflow from trading 432.3 357.8
104.4 Working capital movements (67.5) 87.4
(438.2) Net movement in financial services assets (313.7) (214.3)
323.8 Cash generated by operating activities 51.1 230.9
519.5 Interest received and investment income 270.5 225.2
(87.4) Interest paid (58.1) (34.6)
(191.7) Tax paid (175.4) (100.0)
564.2 Cash generated by operations 88.1 321.5
(201.3) Distributions to shareholders (159.2) (110.4)
Net cash (outflow)/inflow from operating
362.9 activities (71.1) 211.1
(322.2) Cash outflow from investing activities (235.7) (190.8)
Cash flow from financing activities
39.5 Shares issued 40.6 16.6
(235.1) Shares repurchased by subsidiary - (120.2)
Net cash inflow/(outflow) from financing
(195.6) activities 40.6 (103.6)
(154.9) Decrease in cash and cash equivalents (266.2) (83.3)
Cash and cash equivalents at the
(362.0) beginning of the period (514.7) (362.0)
10.2 Cash acquired on acquisition of subsidiary - -
(8.0) Effect of foreign exchange rate changes 1.3 (0.9)
Cash and cash equivalents at the end of the
(514.7) period (779.6) (446.2)
GROUP ANALYSIS
755.9 Cash generated by operations - before tax 263.5 421.5
696.8 Woolworths 261.5 388.2
59.1 Country Road 2.0 33.3
Gross capital expenditure on
369.7 property, plant and equipment 253.4 199.0
333.5 Woolworths 235.9 176.5
36.2 Country Road 17.5 22.5
BALANCE SHEET
30 June 2003 31 December
(audited) 2003 2002
R million Note R million R million
ASSETS
1 560.2 Non-current assets 1 701.1 1 597.5
1 037.6 Property, plant and equipment 1 145.1 966.7
12.4 Investments 18.8 119.7
182.3 Loans to customers 200.5 170.6
183.2 Participation in export partnerships 177.8 187.9
10.1 Goodwill 5.0 15.0
117.7 Other loans 134.4 125.0
16.9 Deferred tax 19.5 12.6
3 235.3 Current assets 3 750.0 2 982.1
564.4 Inventories 684.9 601.3
1 669.3 Woolworths card debtors 1 901.3 1 508.6
105.9 Credit card receivables 131.5 -
406.6 Accounts receivable 529.8 463.2
273.1 Loans to customers 301.4 229.7
216.0 Cash 201.1 179.3
4 795.5 Total assets 5 451.1 4 579.6
EQUITY AND LIABILITIES
2 434.6 Capital and reserves 2 672.0 2 376.0
2 412.4 Ordinary shareholders" interest 2 647.9 2 354.1
22.2 Outside shareholders" interest 24.1 21.9
285.1 Non-current liabilities 289.1 282.1
130.8 Post-retirement medical aid liability 140.0 119.1
154.3 Deferred tax 149.1 163.0
2 075.8 Current liabilities 2 490.0 1 921.5
1 233.6 Accounts payable 1 396.6 1 186.7
111.5 Provisions 112.7 109.3
730.7 Interest-bearing borrowings 6, 7 980.7 625.5
4 795.5 Total equity and liabilities 5 451.1 4 579.6
282.8 Net asset value per share (cents) 306.4 271.2
GROUP ANALYSIS
4 795.5 Total assets 5 451.1 4 579.6
4 431.6 Woolworths 5 093.0 4 230.1
363.9 Country Road 358.1 349.5
564.4 Inventories 684.9 601.3
433.3 Woolworths 557.9 471.6
131.1 Country Road 127.0 129.7
189.2 Approved commitments for capital expenditure 250.0 140.9
152.6 Woolworths 233.1 120.2
36.6 Country Road 16.9 20.7
STATEMENT OF CHANGES IN ORDINARY SHAREHOLDERS" INTEREST
Year ended Six months ended
30 June 2003 31 December
(audited) 2003 2002
R million R million R million
Ordinary shareholders" interest at the
2 337.3 beginning of the period 2 412.4 2 337.3
2 336.1 As previously reported 2 411.2 2 336.1
Adjustment to opening balance arising from
the change in accounting policy for:
- consolidation of the Woolworths Holdings
1.2 Share Trust 1.2 1.2
Movements for the period:
Share premium arising from shares issued
39.5 under share purchase scheme 40.6 16.6
(235.1) Shares repurchased by subsidiary - (120.2)
270.7 Recognised gains and losses 194.9 120.4
306.1 Distributable reserves 187.9 158.5
Net profit attributable to ordinary
549.6 shareholders 340.6 286.0
(201.3) Distributions to shareholders (159.2) (110.4)
(42.2) Net unrealised loss on hedging instruments 6.5 (17.1)
Non-distributable reserves
Exchange differences on translation of
(35.4) foreign entity 7.0 (38.1)
Ordinary shareholders" interest at the end
2 412.4 of the period 2 647.9 2 354.1
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 2003 financial statements, except for the
consolidation of the Woolworths Holdings Share Trust. The Trust has been
consolidated in line with the ruling of the JSE"s GAAP Monitoring Panel.
Comparatives have been restated accordingly.
Certain other comparative figures have been changed to bring them in line
with classifications used in the current period.
2 Exceptional items
Year ended Six months ended
30 June 2003 31 December
(audited) 2003 2002
R million R million R million
10.0 Goodwill amortisation 5.0 5.0
13.7 Provision for onerous lease commitments - 12.2
Reversal of provision for loss on
discontinuance - -
22.2 5.0 17.2
3 The effective tax rate is 30,0% (2002: 28,1%). There is no STC charge in the
current period due to the distribution of share premium, in lieu of a dividend.
4 The difference between earnings per share and diluted earnings per share
results from outstanding options in terms of the share purchase scheme.
5 Country Road"s operating profit is A$1,0m (2002: A$1,6m).
6 Unutilised banking facilities amount to R1 149,8m (2002: R1 470,6m).
7 Included in borrowings is a R400m fully hedged funding transaction comprising
of a net derivative position which matured on 15 January 2004.
COMMENTARY
Headline earnings per share at 40,2 cents (December 2002: 33,5 cents) were up
20.0% for the period compared to last year. The distribution per share has been
increased by 23.8% to 13 cents (December 2002: 10,5 cents), maintaining interim
cover at 3.1 times earnings.
Operating profit of R550,0m (December 2002: R449,8m) was up 22.3% on an
increased total revenue of R5 579,7m (December 2002: R5 051,3m).
The net debt to equity ratio increased to 29.2% (December 2002: 18.8%), largely
driven by the growth in the debtors book.
TRADING RESULTS
WOOLWORTHS
Woolworths" operating profit grew by R102,7m to R545,1m, up 23.2% compared to
last year benefiting from higher interest income on the larger debtors book and
good expense control.
Clothing and Home grew sales by 10.9% and by 7.9% within comparable South
African stores. Womenswear, lingerie, footwear and accessories performed well,
with womenswear continuing to gain significant market share. Childrenswear in
particular, has been impacted by price deflation in the market at entry-price
level. The success in womenswear, achieved by developing more focused ranges for
specific customer groups and adding newness, is being applied across all groups
to enhance their performance. Homeware is showing early signs of improvement on
the back of more exciting goods, better values and modernisation of the shopping
experience in key stores.
The Foods division has exceeded our expectations with sales growing by 17.7% and
by 7.0% in comparable South African stores. Customers are increasingly choosing
Woolworths as their main shop destination. Our Woolworths" "Good Food" strategy
together with a better than expected price proposition continue to deliver good
results with new and existing customers responding well to Woolworths" high
quality, comprehensive range and continued attention to safety issues.
Woolworths" convenience store expansion programme has performed beyond
expectations and seven stores were opened.
Woolworths Financial Services achieved substantial growth of 25.8% over the last
twelve months in store card, credit card and personal loan books, offsetting the
impact of falling interest rates. Bad debts were well managed and the net bad
debt experience remained low. Woolworths Financial Services has started further
expansion of the Woolworths" store card, credit card and personal loan books and
an exciting loyalty offer is currently being trialled for Visa cardholders in
the Western Cape.
Franchise operations in South Africa have performed well achieving high growth
levels. The continued strength of the rand negatively impacted our international
franchise operations. The franchise in Saudi Arabia was terminated as it could
not meet its viability targets and trading elsewhere in the Middle East and
Africa was difficult. The closure of the Saudi Arabian operation and the impact
of stock cancellations and related costs have been fully provided for in this
period.
COUNTRY ROAD LIMITED
Sales for the Australian subsidiary, Country Road Limited, for the six months of
A$98,6m (December 2002: A$106,0m) at 7.0% below the same period last year, in
Australian dollar terms, were disappointing. Expenses have been well controlled
and an operating profit of A$1,0m (December 2002: A$1,6m) has been achieved
despite extremely competitive trading conditions for the period with discounting
and promotional activity across the market.
Country Road is now moving to a retail format, with an improved design process
and shorter lead times. This transition over the next 6 months, will build the
foundation for future growth.
APPRECIATION
Our people are the heartbeat of our two very special brands. We thank them for
all their extra effort over the period.
PROSPECTS
The lower interest rate environment should encourage retail spend but will
negatively impact income from our debtors book. Consequently we are projecting
conservative growth in earnings for the second half.
On behalf of the board of directors.
DA Hawton
Non-executive chairman
SN Susman
Chief executive officer
Cape Town
12 February 2004
CASH DISTRIBUTION
Notice is hereby given that the directors have declared a cash distribution of
13 cents per share, in lieu of an ordinary interim dividend, for the six months
ended 31 December 2003. The payment will be made by way of a reduction in the
share premium account and in terms of the general authority granted at the
annual general meeting held in November 2003.
Shareholders are advised that the last day to trade in order to participate in
the cash distribution will be on Friday, 27 February 2004. The shares will trade
"ex" the distribution from commencement of business on Monday, 1 March 2004 and
the record date will be Friday, 5 March 2004. The distribution will be payable
on Monday, 8 March 2004.
Share certificates may not be dematerialised or rematerialised between Monday, 1
March 2004 and Friday, 5 March 2004, both days inclusive.
On behalf of the board of directors.
CL Lowe
Group company secretary
Cape Town
12 February 2004
DIRECTORATE
Non-executive directors DA Hawton (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
Joint Auditors Ernst & Young and SAB & T
Sponsor HSBC Investment Services (Africa) (Pty) Ltd
Registered Office Woolworths House, 93 Longmarket Street, Cape Town 8001
Transfer Secretaries Computershare Limited, 70 Marshall Street, Johannesburg
2001
Date: 12/02/2004 08:15:09 AM Supplied by www.sharenet.co.za
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