Wrap Text
WHL - Woolworths Holdings - Unaudited Condensed Group Results For The 26 Weeks
To 27 December 2009 And Cash Distribution Declaration By Way Of Capital
Reduction
WOOLWORTHS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1929/001986/06
Share code: WHL
ISIN: ZAE000063863
("Woolworths" or "the group" or "the Company")
UNAUDITED CONDENSED GROUP RESULTS FOR THE 26 WEEKS TO 27 DECEMBER 2009 AND CASH
DISTRIBUTION DECLARATION BY WAY OF CAPITAL REDUCTION
financial highlights
- turnover up 9.3%
- SA Retail operating profit margin of 7.5% from 6.7%
- SA Retail profit before tax up 20.1%
- adjusted headline earnings per share up 13.8%
- cash distribution of 38.0 cents
- strong balance sheet
commentary
Group results
The results are not comparable due to the sale of a controlling interest of the
Woolworths Financial Services business on 1 October 2008.
Group retail turnover grew by 9.3% for the twenty-six weeks to
27 December 2009. Comparable store sales growth for the same period was 4.4%.
With better sourcing and good cost control operating margin in Woolworths has
improved.
Adjusted headline earnings per share, which excludes the post-tax foreign
exchange impact of R41.6m and the R75m STC charge on the special dividend paid
in December 2008, increased by 13.8% to 80.1 cents per share.
A distribution of 38.0 cents per share (2008: 31.5) has been declared.
Our strong balance sheet has allowed us to continue to repurchase shares, with
a further R220m purchased during the period.
operating review
SA Retail
Economic conditions have remained tough in the period. Our segmented, more
innovative merchandise offer and improved values has attracted more customers
into our Woolworths stores.
Improved product margin and good cost control has increased the operating
profit margin from 6.7% to 7.5%.
Total footage grew by 5.7%, with a year on year increase of 5.2% in clothing
and general merchandise and 6.9% in food at the end of December 2009. We
anticipate the level of new store rollouts to be more modest with a focus on
larger food stores and full-line stores.
Clothing and general merchandise
Clothing and general merchandise sales increased by 9.7% with market share
gains made for the last nine months. Comparable store sales have increased by
6.2%.
Operating profit margin has increased from 12.0% to 13.1% as a result of the
targeted and focused sourcing programme and good cost control. Price movement
at 11.8% is mainly due to the impact of a weaker rand when this summer
merchandise was procured.
Food
Food sales increased by 8.9%, with a gain in market share in the last two
months of trade. Comparable store sales have increased by 4.7%.
Operating profit margin has increased to 3.8% from 3.4%, driven by our
repositioned prices and value offering. Price movement has declined from 8.2%
at June 2009 to 6.3% at the end of December 2009, and is expected to decline
further.
Country Road
The trading conditions in Australia have been tough. The government`s fiscal
stimulus packages of the previous year have not been repeated again this year
and there have been three interest rate increases in the last six months.
Sales for the period were 12.6% up on last year with comparable store sales of
4.7% (in Australian dollar terms). Market share continues to improve. Customer
reaction to the launch of the new brand, Trenery, in both Australia and South
Africa has been positive.
The operating profit margin of 6.7% (December 2008: 8.4%) has been negatively
impacted by the start-up costs of the Trenery brand.
Woolworths Financial Services (WFS)
The results of WFS segment are not comparable with last year. For the period
ended December 2009 they are equity accounted as a joint venture for the full
period, whilst for the period to December 2008 they were accounted as a
subsidiary for the first quarter and equity accounted for the second quarter.
Consumers continue to manage their use of credit. They are not taking on
significant amounts of additional credit and are continuing to extend their
credit terms.
The closing debtors` books have increased by 1.2% year on year at the end of
December 2009. Bad debts have been well controlled with the impairment rate for
the period at 6.2% down from December 2008 of 7.6% and June 2009 of 7.5%.
Outlook
Conditions in South Africa and Australia will remain challenging. In South
Africa, the upper income consumer is more confident.
As we move out of recession, the group is better positioned to take advantage
of any upliftment in consumer spending.
DA Hawton SN Susman
Chairman Chief Executive Officer
Cape Town, 17 February 2010
notice of distribution
Notice is hereby given that the directors have resolved to make a capital
reduction out of share premium of 38.0 cents per ordinary share in lieu of the
interim dividend for the twenty-six weeks to 27 December 2009 ("cash
distribution"). The cash distribution will be made out of the Company`s share
premium account if shareholders in general meeting pass the requisite
resolution contained in the circular posted to shareholders on
29 January 2010, authorising the directors to allot and issue ordinary shares
for cash to the Company`s wholly-owned subsidiary, Woolworths (Proprietary)
Limited. Shareholders are referred to the announcement released on SENS on
20 January 2010 in this regard.
If however, such authority is not obtained from the shareholders, an interim
dividend of 38.0 cents per ordinary share for the twenty-six weeks to
27 December 2009 will be paid.
In terms of paragraph 11.31(d) of the JSE Listings Requirements the Company is
required to disclose the financial effects of the cash distribution.
The table below sets out the unaudited pro forma financial effects of the cash
distribution on net asset value ("NAV") and net tangible asset value ("NTAV")
per share based on the published unaudited results of the Company for the
twenty-six weeks to 27 December 2009.
The unaudited pro forma financial effects are the responsibility of the
directors and have been prepared for illustrative purposes only and, because
of their nature, may not provide a fair reflection of the Company`s financial
position after the implementation of the cash distribution.
Shareholders are advised that, as the cash distribution is being made in lieu
of an interim cash dividend, there will be no additional or abnormal reduction
in the cash and cash equivalents and equity attributable to shareholders of the
Company.
Unaudited unadjusted Pro forma
results for the results for the
twenty-six weeks to twenty-six weeks to
27 December 2009 27 December 2009 %
before the distribution(1) after the distribution(2) change
NAV per
share 407.7 369.7 (9.3)
TNAV per
share 359.7 321.7 (10.6)
Notes:
1. As per the published unaudited results of Woolworths for the twenty-six
weeks to 27 December 2009.
2. Adjustments to NAV per share and TNAV per share were made on the
assumptions that:
- the cash distribution to shareholders was paid on 27 December 2009; and
- the cash distribution is paid from cash resources and accordingly cash and
cash equivalents and share premium are reduced by R290.4 million.
The salient dates for the distribution or dividend will be as follows:
2010
Last day to lodge proxy forms (by no later
than 11h00) for the general meeting on Tuesday, 23 February
General meeting held at 11h00 on Thursday, 25 February
Results of general meeting announcement
published on SENS Thursday, 25 February
Results of general meeting announcement
published in the press on Friday, 26 February
Finalisation announcement released on SENS Friday, 12 March
Last day to trade to be eligible to receive
the cash distribution or dividend Thursday, 25 March
Shares trade "ex" the cash distribution
or dividend Friday, 26 March
Record date for the cash distribution
or dividend Thursday, 1 April
Cash distribution or dividend paid to
certificated ordinary shareholders on Tuesday, 6 April
Cash distribution or dividend credited to
accounts of dematerialised ordinary
shareholders held by their CSDP or broker on Tuesday, 6 April
Notes:
1. Any change to the above dates and times will, subject to approval of the
JSE, be communicated to shareholders by notification on SENS and in the press.
2. All times indicated above are South African local times.
3. Share certificates may not be dematerialised or rematerialised between
Friday, 26 March 2010 and Thursday, 1 April 2010, both days inclusive.
In accordance with the Company`s Articles of Association a distribution of
dividend amounting to less than R5.00 due to any one holder of the Company`s
ordinary shares held in certificated form will not be paid, unless otherwise
requested in writing, but will be aggregated with other such amounts and will
be donated to a charity nominated by the directors.
An interim cash dividend of 8.7 cents per preference share for the twenty-six
weeks to 27 December 2009 will be paid to the beneficiaries of the Woolworths
Employee Share Ownership Scheme on Tuesday, 6 April 2010.
CL Lowe
Group secretary
Cape Town, 17 February 2010
unaudited condensed group results for the 26 Weeks to 27 december 2009
consolidated statement of comprehensive income
52 weeks to
28 June
2009
Rm Notes
Revenue 21 922.3
Turnover 21 175.0
Cost of sales 14 501.1
Gross profit 6 673.9
Other revenue 747.3
Expenses 5 783.7
Store costs 3 481.9
Net bad debt and bad debt provision 134.2
Other operating costs 2 167.6
Operating profit 1 637.5
Finance costs 281.2
Earnings from joint ventures 58.1
Earnings from associate 11.7
Profit before exceptional item 1 426.1
Profit on disposal of controlling interest
in subsidiary 380.0
Profit before tax 1 806.1
Tax 546.3 5
Profit after tax 1 259.8
Other comprehensive income:
Net fair value adjustments on financial
instruments (53.9)
Exchange differences on translation of
foreign subsidiaries (81.0)
Other comprehensive income for the period,
net of tax (134.9)
Total comprehensive income for the period 1 124.9
Profit attributable to: 1 259.8
Shareholders of the parent 1 247.7
Non-controlling interest 12.1
Total comprehensive income attributable to: 1 124.9
Shareholders of the parent 1 124.2
Non-controlling interest 0.7
Reconciliation of headline earnings
Earnings attributable to shareholders of
the parent 1 247.7
BEE preference dividend paid 8.6
Basic earnings 1 239.1
Profit on disposal of controlling interest
in subsidiary (380.0)
Loss/(profit) on disposal of property,
plant and equipment 3.5
Tax impact of adjustments (1.0)
Headline earnings 861.6
Abnormal foreign exchange (profit)/loss 56.9 6
STC on special dividend 75.0
Adjusted headline earnings 993.5
Headline earnings per share (cents) 109.3
Earnings per share (cents) 157.2 7
Adjusted headline earnings per share
(cents) 126.0
Diluted headline earnings per share (cents) 107.5
Diluted earnings per share (cents) 154.0 7
Adjusted diluted headline earnings per
share (cents) 123.7
Number of shares in issue (millions) 774.7
Weighted average number of shares in issue
(millions) 788.3
Restated
26 weeks to 26 weeks to
27 December 28 December
2009 2008 %
Rm Rm change
Revenue 11 696.0 11 147.1 4.9
Turnover 11 549.8 10 562.9 9.3
Cost of sales 7 705.5 7 274.1 5.9
Gross profit 3 844.3 3 288.8 16.9
Other revenue 146.2 584.2 (75.0)
Expenses 2 989.6 2 847.3 5.0
Store costs 1 945.3 1 721.1 13.0
Net bad debt and bad debt
provision - 134.2 (100.0)
Other operating costs 1 044.3 992.0 5.3
Operating profit 1 000.9 1 025.7 (2.4)
Finance costs 75.0 195.2 (61.6)
Earnings from joint ventures 26.9 27.4 (1.8)
Earnings from associate 3.1 7.6 (59.2)
Profit before exceptional item 955.9 865.5 10.4
Profit on disposal of
controlling interest in
subsidiary - 380.0 (100.0)
Profit before tax 955.9 1 245.5 (23.3)
Tax 285.8 365.5 (21.8)
Profit after tax 670.1 880.0 (23.9)
Other comprehensive income:
Net fair value adjustments on
financial instruments (2.7) 62.6 (104.3)
Exchange differences on
translation of foreign
subsidiaries 17.0 16.2 4.9
Other comprehensive income
for the period, net of tax 14.3 78.8 (81.9)
Total comprehensive income
for the period 684.4 958.8 (28.6)
Profit attributable to: 670.1 880.0 (23.9)
Shareholders of the parent 662.4 872.1 (24.0)
Non-controlling interest 7.7 7.9 (2.5)
Total comprehensive income
attributable to: 684.4 958.8 (28.6)
Shareholders of the parent 674.5 960.7 (29.8)
Non-controlling interest 9.9 (1.9) (621.1)
Reconciliation of headline
earnings
Earnings attributable to
shareholders of the parent 662.4 872.1 (24.0)
BEE preference dividend paid 6.8 5.2
Basic earnings 655.6 866.9
Profit on disposal of
controlling interest in
subsidiary - (380.0)
Loss/(profit) on disposal of
property, plant and equipment 7.5 (1.4)
Tax impact of adjustments (2.1) 0.4
Headline earnings 661.0 485.9 36.0
Abnormal foreign exchange
(profit)/loss (41.6) -
STC on special dividend - 75.0
Adjusted headline earnings 619.4 560.9 10.4
Headline earnings per
share (cents) 85.4 61.0 40.0
Earnings per share (cents) 84.7 108.8 (22.2)
Adjusted headline earnings per
share (cents) 80.1 70.4 13.8
Diluted headline earnings per
share (cents) 83.4 60.3 38.3
Diluted earnings per
share (cents) 82.7 107.1 (22.8)
Adjusted diluted headline
earnings per share (cents) 78.2 69.5 12.5
Number of shares in issue
(millions) 764.2 786.3 (2.8)
Weighted average number of
shares in issue (millions) 773.6 796.6 (2.9)
consolidated statement of financial position
At
28 June
2009
Rm Notes
ASSETS
Non-current assets 3 436.4
Property, plant and equipment 1 936.9 8
Investment property 120.8
Intangible assets 350.5 8
Investment in associate 35.5
Investment in joint ventures 534.1
Prepaid employment costs 37.0
Participation in export partnerships 65.4
Other loans 126.2
Derivative financial instruments -
Deferred tax 230.0
Current assets 4 868.7
Inventories 1 722.7
Trade and other receivables 745.2
Derivative financial instruments 5.8
Tax 3.9
Cash 2 391.1
Total assets 8 305.1
EQUITY AND LIABILITIES
Capital and reserves 3 071.9
Interest of shareholders of the parent 3 024.7
Non-controlling interest 47.2
Non-current liabilities 2 341.5
Interest-bearing borrowings 1 531.6
Operating lease accrual 456.8
Derivative financial instruments 15.7
Post-retirement medical aid liability 272.1
Deferred tax 65.3
Current liabilities 2 891.7
Trade and other payables 2 372.8
Provisions 250.4
Derivative financial instruments 141.6
Tax 111.7
Interest-bearing borrowings 15.2
Total equity and liabilities 8 305.1
Net asset book value - per share (cents) 390.4
GROUP ANALYSIS
Total assets 8 305.1
Woolworths 7 468.5
Country Road 836.6
Inventories 1 722.7
Woolworths 1 474.0
Country Road 248.7
Approved commitment for capital expenditure 623.8
Woolworths 473.1
Country Road 150.7
At Restated at
27 December 28 December
2009 2008
Rm Rm
ASSETS
Non-current assets 3 532.2 3 309.7
Property, plant and equipment 1 988.7 1 928.2
Investment property 120.8 120.8
Intangible assets 366.8 249.2
Investment in associate 37.5 32.6
Investment in joint ventures 541.0 503.3
Prepaid employment costs 33.0 41.0
Participation in export partnerships 65.0 65.7
Other loans 125.3 143.0
Derivative financial instruments - 0.7
Deferred tax 254.1 225.2
Current assets 5 301.2 5 613.3
Inventories 1 813.9 1 551.8
Trade and other receivables 910.4 943.1
Derivative financial instruments 3.4 130.5
Tax 0.9 74.7
Cash 2 572.6 2 913.2
Total assets 8 833.4 8 923.0
EQUITY AND LIABILITIES
Capital and reserves 3 168.4 3 255.3
Interest of shareholders of the parent 3 115.9 3 215.9
Non-controlling interest 52.5 39.4
Non-current liabilities 1 339.9 2 356.2
Interest-bearing borrowings 528.0 1 515.0
Operating lease accrual 464.8 449.4
Derivative financial instruments 17.0 9.2
Post-retirement medical aid liability 283.0 259.7
Deferred tax 47.1 122.9
Current liabilities 4 325.1 3 311.5
Trade and other payables 2 753.2 2 828.1
Provisions 219.2 218.0
Derivative financial instruments 26.0 13.3
Tax 320.5 243.5
Interest-bearing borrowings 1 006.2 8.6
Total equity and liabilities 8 833.4 8 923.0
Net asset book value - per share (cents) 407.7 409.0
GROUP ANALYSIS
Total assets 8 833.4 8 923.0
Woolworths 7 919.7 8 016.7
Country Road 913.7 906.3
Inventories 1 813.9 1 551.8
Woolworths 1 533.0 1 323.8
Country Road 280.9 228.0
Approved commitment for capital expenditure 400.2 574.2
Woolworths 397.2 553.4
Country Road 3.0 20.8
consolidated statement of cash flows
52 weeks
to 28 June
2009
Rm
Cash flow from operating activities
Cash inflow from trading 1 650.6
Working capital movements 67.3
Cash applied to financial services assets 20.6
Cash generated by operating activities 1 738.5
Interest received 549.5
Finance costs paid (312.0)
Tax paid (370.3)
Cash generated by operations 1 605.7
Dividends received from associate 1.2
Dividends received from WFS -
Distributions to shareholders (654.8)
Net cash inflow from operating activities 952.1
Cash outflow from investing activities
Net investment in PPE (614.2)
Proceeds on disposal of controlling interest in subsidiary 875.0
Replacement of WFS debt funding by joint venture partner 2 908.8
Cash disposed of on sale of controlling interest in subsidiary (535.1)
Costs incurred on disposal of controlling interest in subsidiary (48.1)
Other 38.5
Net cash (outflow)/inflow from investing activities 2 624.9
Cash flow from financing activities
Shares issued 25.6
Repurchase of treasury shares (316.6)
Special dividend to shareholders (750.0)
Share repurchase costs (5.0)
Payment of finance lease liabilities (9.1)
Net cash outflow from financing activities (1 055.1)
Increase in cash and cash equivalents 2 521.9
Cash and cash equivalents at the beginning of the period (90.7)
Effect of foreign exchange rate changes (40.1)
Cash and cash equivalents at the end of the period 2 391.1
GROUP ANALYSIS
Cash inflow from trading 1 650.6
Woolworths 1 448.4
Country Road 202.2
Gross capital expenditure 753.0
Woolworths 610.5
Country Road 142.5
Restated
26 weeks to 26 weeks to
27 December 28 December
2009 2008
Rm Rm
Cash flow from operating activities
Cash inflow from trading 1 061.6 785.5
Working capital movements 107.7 495.5
Cash applied to financial services assets - 20.6
Cash generated by operating activities 1 169.3 1 301.6
Interest received 82.5 454.4
Finance costs paid (80.3) (225.2)
Tax paid (111.4) (102.4)
Cash generated by operations 1 060.1 1 428.4
Dividends received from associate 1.1 -
Dividends received from WFS 20.0 -
Distributions to shareholders (426.7) (410.3)
Net cash inflow from operating activities 654.5 1 018.1
Cash outflow from investing activities
Net investment in PPE (309.1) (268.0)
Proceeds on disposal of controlling interest in
subsidiary - 875.0
Replacement of WFS debt funding by joint
venture partner - 2 822.2
Cash disposed of on sale of controlling
interest in subsidiary - (535.1)
Costs incurred on disposal of controlling
interest in subsidiary - (48.1)
Other 4.5 15.1
Net cash (outflow)/inflow from investing
activities (304.6) 2 861.1
Cash flow from financing activities
Shares issued 17.9 15.7
Repurchase of treasury shares (220.0) (152.5)
Special dividend to shareholders - (750.0)
Share repurchase costs (0.7) (3.4)
Payment of finance lease liabilities (6.0) (1.4)
Net cash outflow from financing activities (208.8) (891.6)
Increase in cash and cash equivalents 141.1 2 987.6
Cash and cash equivalents at the beginning of
the period 2 391.1 (90.7)
Effect of foreign exchange rate changes 40.4 16.3
Cash and cash equivalents at the end of the
period 2 572.6 2 913.2
GROUP ANALYSIS
Cash inflow from trading 1 061.6 785.5
Woolworths 938.2 660.1
Country Road 123.4 125.4
Gross capital expenditure 315.6 294.7
Woolworths 224.5 251.5
Country Road 91.1 43.2
consolidated statement of changes in equity
Shareholders`
interest
52 weeks to before non-
28 June controlling
2009 interest
Rm Notes Rm
Shareholders` interest at the
beginning of the period 3 577.8 3 024.7
Movements for the period:
Issue of shares 25.6 9 17.9
Shares repurchased (316.6) 9 (220.0)
Share repurchase costs (5.0) (0.7)
Distributions to shareholders (1 404.8) (422.1)
Share-based payments 70.0 41.6
Total comprehensive
income for the year 1 124.9 674.5
Shareholders` interest at
the end of the period 3 071.9 3 115.9
Distribution per ordinary
share (cents)
- ordinary 85.0
- special 94.0
Distribution cover (based on
headline earnings per share
excluding special dividend) 1.3
Distribution per preference
share (cents) 17.3
Restated
Total Total
Non- 26 weeks to 26 weeks to
controlling 27 December 28 December
interest 2009 2008
Rm Rm Rm
Shareholders` interest at
the beginning of the period 47.2 3 071.9 3 577.8
Movements for the period:
Issue of shares - 17.9 15.7
Shares repurchased - (220.0) (152.5)
Share repurchase costs - (0.7) (3.4)
Distributions to shareholders (4.6) (426.7) (1 160.3)
Share-based payments - 41.6 19.2
Total comprehensive income for
the year 9.9 684.4 958.8
Shareholders` interest at the
end of the period 52.5 3 168.4 3 255.3
Distribution per ordinary
share (cents)
- ordinary 38.0 31.5
- special - 94.0
Distribution cover (based on
headline earnings per share
excluding special dividend) 2.2 1.9
Distribution per preference
share (cents) 8.7 5.0
segmental analysis
The group has adopted IFRS 8 Operating Segments with effect from 1 July 2009.
IFRS 8 requires operating segments to be identified on the basis of internal
reporting about components of the group that are regularly reviewed by the
chief operating decision-maker (CODM) to allocate resources to the segments and
to assess their performance. The CODM has been identified as the executive
directors. Management has determined the operating segments based on the
internal reports. The group has identified five reportable segments as
follows:
- The Clothing and General Merchandise (C&GM) segment supplies clothing,
homeware, beauty and other lifestyle products.
- The Foods segment offers a wide variety of food products ranging from
ready-cooked meals to fresh produce, bakery, meat and other consumables.
- The Country Road segment operates in Australasia, trading in upmarket
fashion apparel for men, women and children.
- The Woolworths Financial Services (WFS) segment offers financial products
and services.
- The Treasury segment generates net interest as a result of cash management
activities of the group.
The executive directors evaluate the segment performance based on operating
profit or loss before tax and exceptional items.
To increase transparency and comparability of revenue, the group has included
additional voluntary disclosure of revenue from logistics services.
The new segments are different from the segments previously disclosed as
Woolworths Retail has been subdivided into Foods and Clothing and General
Merchandise. Woolworths Financial Services remains a segment accounted for on
equity basis subsequent to the disposal of the controlling interest on
1 October 2008.
The following is an analysis of the group`s revenue and operating results by
reportable segment:
52 weeks to 26 weeks to
28 June 27 December
2009 2009
Rm Rm
Revenue
Turnover 21 175.0 11 549.8
SA Retail 18 936.5 10 242.8
Clothing and General Merchandise 7 422.9 4 104.1
Foods 11 126.1 5 937.4
Logistics 387.5 201.3
Country Road 2 234.5 1 307.0
Financial Services (to 30 September 2008) 4.0 -
Other revenue 747.3 146.2
SA Retail 96.3 55.0
Clothing and General Merchandise 37.8 18.9
Foods 58.5 36.1
Country Road 17.3 31.5
Financial Services (to 30 September 2008) 469.7 -
Treasury 184.4 85.6
Intra-group (20.4) (25.9)
Total group 21 922.3 11 696.0
Gross profit
SA Retail 5 310.0 3 024.6
Clothing and General Merchandise 2 731.3 1 618.1
Foods 2 509.8 1 372.8
Intra-group 68.9 33.7
Country Road 1 359.9 762.0
Financial Services (to 30 September 2008) 4.0 -
Abnormal foreign exchange profit - 57.7
Total group 6 673.9 3 844.3
Profit before tax and exceptional item
SA Retail 1 185.5 769.1
Clothing and General Merchandise 821.4 541.8
Foods 364.1 227.3
Country Road 140.5 90.3
Financial Services (to 30 September 2008) 71.8 -
Share of earnings from WFS (from 1 October 2008) 57.4 26.8
Treasury 49.9 12.0
Abnormal foreign exchange profit/(loss) (79.0) 57.7
Total group 1 426.1 955.9
Restated
26 weeks to
28 December
2008 %
Rm change
Revenue
Turnover 10 562.9 9.3
SA Retail 9 388.9 9.1
Clothing and General Merchandise 3 742.3 9.7
Foods 5 449.8 8.9
Logistics 196.8 2.3
Country Road 1 170.0 11.7
Financial Services (to 30 September 2008) 4.0 (100.0)
Other revenue 584.2 (75.0)
SA Retail 46.9 17.3
Clothing and General Merchandise 20.2 (6.4)
Foods 26.7 35.2
Country Road 6.6 377.3
Financial Services (to 30 September 2008) 469.7 (100.0)
Treasury 81.4 5.2
Intra-group (20.4) 27.0
Total group 11 147.1 4.9
Gross profit
SA Retail 2 564.6 17.9
Clothing and General Merchandise 1 325.6 22.1
Foods 1 204.5 14.0
Intra-group 34.5 (2.3)
Country Road 720.2 5.8
Financial Services (to 30 September 2008) 4.0 (100.0)
Abnormal foreign exchange profit - 100.0
Total group 3 288.8 16.9
Profit before tax and exceptional item
SA Retail 640.4 20.1
Clothing and General Merchandise 452.7 19.7
Foods 187.7 21.1
Country Road 93.5 (3.4)
Financial Services (to 30 September 2008) 71.8 (100.0)
Share of earnings from WFS (from 1 October 2008) 27.4 (2.2)
Treasury 32.4 (63.0)
Abnormal foreign exchange profit/(loss) - 100.0
Total group 865.5 10.4
notes
1 Basis of preparation
The interim financial statements comply with IAS 34 Interim Financial Reporting
and International Financial Reporting Standards (IFRS). These condensed
consolidated financial statements do not contain all the information and
disclosures required in the annual financial statements, and should be read in
conjunction with the group consolidated annual financial statements as at
28 June 2009.
2 Significant accounting policies
The accounting policies applied are consistent with those followed in the
preparation of the consolidated annual financial statements for the year ended
28 June 2009, except for the adoption of the following IFRS, IFRIC
interpretations, amendments and circular that became effective
during the current period and had no significant impact on the reported results
other than giving rise to additional disclosures and a revision to the relevant
accounting policies:
- IFRS 8 Operating Segments
- IAS 1 Revised - Presentation of Financial Statements
- IFRS 7 Amendments - Financial Instruments Disclosure
- IAS 23 Amendments - Borrowing Costs
- IAS 27 Amendments - Consolidated and Separate Financial Statements
- IFRS 3 Revised - Business Combinations
- IFRS 2 Amendments - Share-based Payment: Vesting Conditions and Cancellation
- IAS 38 Amendments - Intangible Assets: Expenditure on Advertising and
Promotional Activities
- IAS 39 Amendments - Eligible Hedged Items
- IFRS 5 Amendments - Non-current Assets Held for Sale and Discontinued
Operations
- Circular 3/2009 - Headline Earnings
The amendment to IFRS 8 Operating Segments has been early adopted and had no
financial impact on the reported results.
3 Restatement of comparative figures and reclassifications
3.1 Restatements
An insurance cell-captive over which Woolworths has significant influence was
equity accounted for the first time at June 2009.
The consolidation of this investment has resulted in a net increase in
December 2008 profit of R7.6m and increase of R25.0m for years prior to 2008.
Profit before and after tax for the period to 28 December 2008 has been reduced
by R21.6m (with a corresponding increase in the group tax liability) as a result
of the reallocation of WFS income from the period before the disposal of the
controlling interest, when the entity became an equity accounted joint venture.
The reallocation relates to group timing differences identified during
completion of the disposal, and the restatement aligns to the segmental profit
for WFS as reported at 28 June 2009. There is no impact on the profit on
disposal of the controlling interest as reported in the previous year.
In terms of IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors, the above adjustments have been accounted for retrospectively and the
comparative financial statements have been restated.
3.2 Reclassifications
Finance lease liabilities are separately disclosed from trade and other
payables and are included in interest-bearing borrowings.
The Woolworths segment now includes certain South African premium brand
products previously disclosed under the Country Road segment.
None of these reclassifications had an impact on reported results.
4 Comparability of interim turnover
No material variations in the turnover of the group are expected to occur
between the first and second half of the financial year.
5 Tax
The effective tax rate of 29.9% (2008: 42.2%) is higher than the standard rate
of normal tax mainly due to the non-deductible IFRS 2 charge arising from the
group`s BEE employee share ownership and executive share incentive schemes.
6 Abnormal foreign exchange (profit)/loss
An unrealised loss of R79m (R56.9m after tax) on the marking-to-market of
foreign exchange contracts was incurred at 28 June 2009. A subsequent gain of
R57.7m (R41.6m after tax) is included in gross profit in the current period. It
is expected that the balance will accrue in the second half of the year.
7 Earnings per share
The difference between earnings per share and diluted earnings per share is due
to the impact of outstanding options under the group share incentive schemes
and preference shares issued in terms of the BEE employee share ownership
scheme.
8 Property, plant and equipment and intangible assets
During the twenty-six weeks to 27 December 2009, the group acquired property,
plant and equipment with a cost of R266.1m (2008: R249.5m) and acquired
intangible assets with a cost of R49.5m (2008: R45.2m).
9 Issue and repurchase of shares
During the twenty-six weeks to 27 December 2009, 2 496 007 (2008: 3 134 401)
ordinary shares were issued in terms of the group`s executive share incentive
scheme.
11 878 892 (2008: 12 387 116) shares were repurchased from the market by E-Com
(Proprietary) Limited and are held as treasury shares by the group.
29 497 604 (2008: nil) shares were issued to Woolworths (Proprietary) Limited
and are held as treasury shares by the group.
In addition, a further 1 184 000 (2008: nil) shares were repurchased from the
market by Woolworths (Proprietary) Limited and are held as treasury shares.
10 Contingent liabilities
Various group companies are parties to legal disputes and investigations which
arise in the ordinary course of business, whilst the outcome of some of these
matters cannot readily be foreseen, the directors believe that they will be
disposed of without material effect.
11 Borrowing facilities
Unutilised committed banking facilities amount to R1 600m (2008:
R1 500m). In terms of the Articles of Association, there is no limit on the
group`s authority to raise interest-bearing debt.
12 Events subsequent to balance sheet date
No event material to the understanding of these financial statements has
occurred between the end of the interim period and the date of approval.
13 Related party transactions
During the six months to 27 December 2009, group companies entered into various
transactions. These transactions were entered into in the ordinary course of
business and under terms that are no less favourable than those arranged with
independent third parties. All such subsidiary-related intra-group related
party transactions and outstanding balances are eliminated in preparation of
the consolidated financial statements of the group. All transactions with joint
ventures and the associate are concluded on an arm`s length basis.
14 Approval of interim financial statements
The interim financial statements were approved by the board of directors on
17 February 2010.
15 Unaudited results
These results have not been reviewed or audited.
These results are available on: www.woolworthsholdings.co.za
directorate and statutory information
Non-executive directors:
Buddy Hawton (Chairman), Peter Bacon (British), Lindiwe Bakoro,
Nigel Colne (British), Brian Frost, Mike Leeming, Chris Nissen,
Thina Siwendu, Sindi Zilwa
Executive directors:
Simon Susman (CEO), Ian Moir (Australian), Zyda Rylands, Norman Thomson
Group secretary:
Cherrie Lowe
Share code: WHL
ISIN: ZAE000063863
Registration address (postal and physical):
PO Box 680, Cape Town 8000
Woolworths House, 93 Longmarket Street, Cape Town 8001
Registration number:
1929/001986/06
Auditors:
Ernst & Young Inc and SAB & T Inc
Bankers:
The Standard Bank of South Africa Limited
JSE sponsor:
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Transfer secretaries:
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg 2001
Date: 18/02/2010 08:00:12 Supplied by www.sharenet.co.za
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