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WHL - Woolworths Holdings - Audited group results for the year ended 27
June 2010 and cash dividend declaration
WOOLWORTHS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1929/001986/06
Share code: WHL
ISIN: ZAE000063863
AUDITED GROUP RESULTS FOR THE YEAR ENDED 27 JUNE 2010 AND CASH DIVIDEND
DECLARATION
FINANCIAL HIGHLIGHTS
- TURNOVER UP 10.5%
- SA RETAIL PROFITS UP 22.9%
- ADJUSTED HEADLINE EARNINGS PER SHARE UP 24.7%
- DIVIDEND PER SHARE UP 25.2%
- MARKET SHARE GAINS THROUGHOUT
COMMENTARY
GROUP RESULTS
The group performed well for the year with all retail segments growing
above the market.
Adjusted headline earnings per share increased by 24.7% to 157.2 cents
per share with group turnover increasing by 10.5% (second half up by
11.6%). Woolworths SA retail profit before tax was 22.9% up on the
previous year.
The results are not comparable for the following reasons:
* R380m profit earned on the sale of a controlling interest in WFS
included in 2009 year;
* R75m STC on special dividend paid in 2009 year; and
* R57m (after tax) foreign exchange loss included in 2009 that has
unwound as a
R57m profit in 2010.
Return on equity, based on headline earnings, increased from 26.3% to
39.4%.
The balance sheet remained strong and open market share repurchases of
R410m
were made during the year.
A final dividend of 67.0 cents per share has been declared. A total
distribution of 105.0 cents per ordinary share has been made for the
period.
WOOLWORTHS
The growing increase in customer confidence and the strategies that we
put in place to attract customers back to our stores delivered a sales
increase of 10.4% and market share gains in all categories.
Clothing and general merchandise sales increased by 11.2% for the year,
with comparable stores increasing by 6.7%. Gains in market share have
been made for the past 15 months, with clothing and footwear growth
tracking approximately 5% above the RLC market on a continual basis.
Food sales increased by 9.9% for the year with comparable stores
increasing by 5.6%. Price movement for the year averaged 5.2%. The
second half delivered real volume growth in our comparable stores. The
market has responded positively to our product value offering, with
market share gains in the last nine months and growth exceeding the RLC
market by approximately 6%.
Gross margin increased from 28.0% to 29.8%, achieved through better
sourcing and lower markdowns. The clothing and general merchandise
sourcing strategy delivered our year three targeted margin a year
earlier than anticipated.
Operating margin has shown a strong improvement to 7.0% from 6.2%,
mainly due to the gross margin improvement.
New store expansion was down on the previous year, with seven full-line
stores and nine food stand-alone stores opened. Trading space increased
by 4.8% in clothing and general merchandise and 3.7% in food.
COUNTRY ROAD
The trading conditions in Australia have been challenging. The
government`s fiscal stimulus packages of the previous year were not
repeated and there have been six interest rate increases during the
year.
Sales increased by 8.5% in the year, with a comparable sales increase
of 1.5% (in Australian dollar).
Gross margin decreased from 59.5% to 57.4%, due to heavy discounting
needed to stimulate customer spending.
Operating margin declined to 4.9% from 6.3%, impacted by the reduced
gross margin and the start-up costs of the new Trenery brand.
WOOLWORTHS FINANCIAL SERVICES (WFS)
The results of the WFS segment are not comparable with last year. They
have been equity accounted for the full year ended June 2010, whilst
they were accounted for as a subsidiary for three months and equity
accounted for nine months in the year ended June 2009.
Customer demand for credit remained subdued throughout the year. The
closing debtors` books at year-end were 1.3% down on the previous year.
The quality of the debtors` books have improved considerably with a
reduction in the impairment charge as a percentage of average gross
receivables from 7.5% to 5.1%.
OUTLOOK
We expect economic conditions in South Africa to improve, albeit at a
slower pace. Trading in Australia will remain tough but is expected to
improve in the second half.
Current trading remains positive and in line with expectations. The
business is focused, strategies are delivering and we are well
positioned for continued growth in the year ahead.
The benefit of a lower effective tax rate last year will return to
normal levels.
DA Hawton SN Susman
Chairman Chief executive officer
Cape Town, 25 August 2010
DIVIDEND DECLARATION
Notice is hereby given that the directors have declared a final cash
dividend of 67.0 cents per ordinary share for the fifty-two weeks ended
27 June 2010.
The salient dates for the dividend will be as follows:
Last day to trade to receive a dividend
Friday, 10 September 2010
Shares commence trading "ex" dividend
Monday, 13 September 2010
Record date
Friday, 17 September 2010
Payment date
Monday, 20 September 2010
Share certificates may not be dematerialised or rematerialised between
Monday, 13 September 2010 and Friday, 17 September 2010 both days
inclusive.
In accordance with the company`s articles of association, dividends
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 be donated
to a charity nominated by the directors.
A final cash dividend of 22.1 cents per preference share for the fifty-
two weeks ended 27 June 2010 will be paid to the beneficiaries of
Woolworths Employee Share Ownership Scheme on 20 September 2010.
CL Lowe
Group secretary
Cape Town, 25 August 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
52 weeks
to 27 June
2010
Notes Rm
Revenue 23 663
Turnover 23 393
Cost of sales 15 656
Gross profit 7 737
Other revenue 3 95
Expenses 6 178
Store costs 3 940
Net bad debt and bad debt provision -
Other operating costs 2 238
Operating profit 1 654
Investment income 3 175
Interest paid 151
Profit before earnings from joint ventures and
associate 1 678
Earnings from joint ventures 75
Earnings from associate 6
Profit before exceptional item 1 759
Profit on disposal of controlling interest in
subsidiary -
Profit before tax 1 759
Tax 491
Profit after tax 1 268
Other comprehensive income:
Net fair value adjustments on financial instruments,
after tax 40
Exchange differences on translation of foreign
subsidiaries 13
Other comprehensive income for the period, net of tax
53
Total comprehensive income for the period 1 321
Profit attributable to: 1 268
Shareholders of the parent 1 258
Non-controlling interest 10
Total comprehensive income attributable to: 1 321
Shareholders of the parent 1 304
Non-controlling interest 17
Reconciliation of headline earnings
Earnings attributable to shareholders of the parent 1 258
BEE preference dividend paid 11
Basic earnings 1 247
Profit on disposal of controlling interest in subsidiary -
Loss on disposal of property, plant and equipment 24
Tax impact of adjustments (7)
Headline earnings 1 264
Abnormal foreign exchange related (gain)/loss 4 (57)
STC on special dividend -
Adjusted headline earnings 1 207
Headline earnings per share (cents) 164.6
Earnings per share (cents) 5 162.4
Adjusted headline earnings per share (cents) 157.2
Diluted headline earnings per share (cents) 159.3
Diluted earnings per share (cents) 5 157.2
Adjusted diluted headline earnings per share (cents) 152.2
Number of shares in issue (millions) 759.5
Weighted average number of shares in issue (millions) 768.0
52 weeks
to 28 June
2009 %
Rm change
Revenue 21 922 7.9
Turnover 21 175 10.5
Cost of sales 14 501 8.0
Gross profit 6 674 15.9
Other revenue 563 (83.1)
Expenses 5 784 6.8
Store costs 3 482 13.2
Net bad debt and bad debt provision 134 (100.0)
Other operating costs 2 168 3.2
Operating profit 1 453 13.8
Investment income 184 (4.9)
Interest paid 281 (46.3)
Profit before earnings from joint ventures and
associate 1 356 23.7
Earnings from joint ventures 58 29.3
Earnings from associate 12 (50.0)
Profit before exceptional item 1 426 23.4
Profit on disposal of controlling interest in
subsidiary 380 (100.0)
Profit before tax 1 806 (2.6)
Tax 546 (10.1)
Profit after tax 1 260 0.6
Other comprehensive income:
Net fair value adjustments on financial
instruments, after tax (54)
Exchange differences on translation of foreign
subsidiaries (81)
Other comprehensive income for the period, net
of tax (135)
Total comprehensive income 1 125 17.4
Profit attributable to: 1 260 0.6
Shareholders of the parent 1 248 0.8
Non-controlling interest 12 (16.7)
Total comprehensive income attributable to: 1 125 17.4
Shareholders of the parent 124 16.0
Non-controlling interest 1 >100
Reconciliation of headline earnings
Earnings attributable to
shareholders of the parent 1 248 0.8
BEE preference dividend paid 9
Basic earnings 1 239 0.6
Profit on disposal of controlling interest in subsidiary
(380)
Loss on disposal of property, plant and equipment 4
Tax impact of adjustments (1)
Headline earnings 862 46.6
Abnormal foreign exchange related (gain)/loss 57
STC on special dividend 75
Adjusted headline earnings 994 21.4
Headline earnings per share (cents) 109.3 50.6
Earnings per share (cents) 157.2 3.3
Adjusted headline earnings per share (cents) 126.0 24.7
Diluted headline earnings per share (cents) 107.5 48.2
Diluted earnings per share (cents) 154.0 2.0
Adjusted diluted headline earnings per share
(cents) 123.7 23.0
Number of shares in issue (millions) 774.7 (2.0)
Weighted average number of shares in issue
(millions) 788.3 (2.6)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 27 June At 28 June
2010 2009
Notes Rm Rm
ASSETS
Non-current assets 3 633 3 436
Property, plant and equipment 6 1 991 1 937
Investment property 121 121
Intangible assets 6 392 351
Investment in associate 40 35
Investment in joint ventures 574 534
Prepaid employment costs 29 37
Participation in export partnerships 63 65
Other loans 95 126
Derivative financial instruments 1 -
Deferred tax 327 230
Current assets 5 377 4 869
Inventories 1 676 1 723
Trade and other receivables 759 745
Derivative financial instruments 19 6
Tax 6 4
Cash 2 917 2 391
Total assets 9 010 8 305
EQUITY AND LIABILITIES
Capital and reserves 3 453 3 072
Interest of shareholders of the parent 3 396 3 025
Non-controlling interest 57 47
Non-current liabilities 1 362 2 342
Interest-bearing borrowings 521 1 532
Operating lease accrual 447 457
Derivative financial instruments 15 16
Post-retirement medical aid liability 292 272
Deferred tax 87
65
Current liabilities 4 195 2 891
Trade and other payables 2 608 2 373
Provisions 248 250
Derivative financial instruments 20 142
Tax 285 111
Interest-bearing borrowings 1 034 15
Total equity and liabilities 9 010 8 305
Net asset book value - per share (cents) 447 391
GROUP ANALYSIS
Total assets 9 010 8 305
SA Retail 5 207 4 923
Country Road 788 836
Treasury 2 442 2 013
Financial Services 573 533
Inventories 1 676 1 723
SA Retail 1 416 1 474
Country Road 260 249
Approved commitment for capital
expenditure 786 624
SA Retail 652 473
Country Road 134 151
CONSOLIDATED STATEMENT OF CASH FLOWS
52 weeks 52 weeks
to 27 June to 28 June
2010 2009
Rm Rm
Cash flow from operating activities
Cash inflow from trading 2 220 1 651
Working capital movements 215 67
Cash applied to financial services assets - 21
Cash generated by operating activities 2 435 1 739
Interest received 167 549
Finance costs paid (152) (312)
Tax paid (367) (370)
Cash generated by operations 2 083 1 606
Dividends received from associate 1 1
Dividends received from WFS 35 -
Distributions to shareholders (725) (655)
Net cash inflow from operating activities 1 394 952
Cash flow from investing activities
Net investment in PPE (543) (614)
Proceeds on disposal of controlling interest in
subsidiary - 875
Replacement of WFS debt funding by joint venture
partner - 2 909
Cash disposed of on sale of controlling interest
in subsidiary - (535)
Costs incurred on disposal of controlling
interest in subsidiary - (48)
Other 29 38
Net cash (outflow)/inflow from investing activities (514) 2 625
Cash flow from financing activities
Shares issued 47 26
Repurchase of treasury shares (410) (317)
Special dividend to shareholders - (750)
Share repurchase costs (1) (5)
Payment of finance lease liabilities (20) (9)
Short-term borrowings raised 20 -
Net cash outflow from financing activities (364) (1 055)
Increase in cash and cash equivalents 516 2 522
Cash and cash equivalents at the beginning of the
period 2 391 (91)
Effect of foreign exchange rate changes 10 (40)
Cash and cash equivalents at the end of the period 2 917 2 391
GROUP ANALYSIS
Cash inflow from trading 2 220 1 651
SA Retail 2 022 1 449
Country Road 198 202
Gross capital expenditure 607 753
SA Retail 460 611
Country Road 147 143
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share-
holders Non-
of the controlling
parent interest
Notes Rm Rm
Interest at the beginning of the period 3 025 47
Movements for the period:
Issue of shares 7 47 -
Shares repurchased 7 (410) -
Share repurchase costs (1) -
Distributions to shareholders (718) (7)
Share-based payments 149 -
Total comprehensive income for the period 1 304 17
Interest at the end of the period 3 396 57
Distribution per ordinary share (cents)
- ordinary
- special
Distribution cover (based on headline
earnings per share excluding special
dividend)
Distribution per preference share (cents)
Total Total
52 weeks 52 weeks
to 27 June to 28 June
2010 2009
Rm Rm
Interest at the beginning of the period 3 072 3
578
Movements for the period:
Issue of shares 47 26
Shares repurchased (410) (317)
Share repurchase costs (1) (5)
Distributions to shareholders (725) (1 405)
Share-based payments 149 70
Total comprehensive income for the period 1 321 1 125
Interest at the end of the period 3 453 3 072
Distribution per ordinary share (cents)
- ordinary 105.0 85.0
- special - 94.0
Distribution cover (based on headline
earnings per share excluding special dividend) 1.6 1.3
Distribution per preference share (cents) 30.8 17.3
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 group`s executives collectively. Management has
determined the operating segments based on the main internal reporting
segments. The group has identified five reportable segments:
- Clothing and General Merchandise (C&GM) (Clothing, homeware, beauty
and other lifestyle products)
- Foods
- Country Road (Clothing retailers operating in Australasia)
- Woolworths Financial Services (WFS) (Financial products and services)
- Treasury (Cash management activities)
The executive directors evaluate the segmental performance based on
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 an 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 27 June
2010
Notes Rm
Revenue
Turnover 23 393
SA Retail 20 897
Clothing and General Merchandise 8 253
Foods 12 227
Logistics 417
Country Road 2 496
Woolworths Financial Services (subsidiary to
30 September 2008) -
Other revenue 270
SA Retail 86
Clothing and General Merchandise 21
Foods 65
Country Road 52
Woolworths Financial Services (subsidiary to
30 September 2008) -
Treasury 175
Intra-group (43)
Total group 23 663
Gross profit
SA Retail 6 304
Clothing and General Merchandise 3 310
Abnormal foreign exchange related gain 4 79
Foods 2 838
Intra-group 77
Country Road 1 433
Woolworths Financial Services (subsidiary to
30 September 2008) -
Total group 7 737
Profit before tax and exceptional item
SA Retail 1 537
Clothing and General Merchandise 1 013
Abnormal foreign exchange related gain/(loss) 4 79
Foods 445
Country Road 119
Woolworths Financial Services (subsidiary to
30 September 2008)
-
Woolworths Financial Services (joint venture from
1 October 2008) 75
Treasury 28
Total group 1 759
52 weeks
to 28 June
2009 %
Rm
change
Revenue
Turnover 21 175 10.5
SA Retail 18 936 10.4
Clothing and General Merchandise 7 423 11.2
Foods 11 126 9.9
Logistics 387 7.8
Country Road 2 235 11.7
Woolworths Financial Services (subsidiary to
30 September 2008) 4 (100.0)
Other revenue 747 (63.9)
SA Retail 96 (10.4)
Clothing and General Merchandise 38 (44.7)
Foods 58 12.1
Country Road 17 205.9
Woolworths Financial Services
(subsidiary to 30 September 2008) 470 (100.0)
Treasury 184 (4.9)
Intra-group (20) 115.0
Total group 21 922 7.9
Gross profit
SA Retail 5 310 18.7
Clothing and General Merchandise 2 731 21.2
Abnormal foreign exchange related gain - -
Foods 2 510 13.1
Intra-group 69 11.6
Country Road 1 360 5.4
Woolworths Financial Services (subsidiary to
30 September 2008) 4 (100.0)
Total group 6 674 15.9
Profit before tax and exceptional item
SA Retail 1 108 38.7
Clothing and General Merchandise 780 29.9
Abnormal foreign exchange related gain/(loss) (79) -
Foods 407 9.3
Country Road 139 (14.4)
Woolworths Financial Services (subsidiary to
30 September 2008) 72 (100.0)
Woolworths Financial Services (joint venture from
1 October 2008) 57 31.6
Treasury 50 (44.0)
Total group 1 426
NOTES
1 Basis of preparation
The abridged group financial statements comply with IAS 34 Interim
Financial
Reporting. These abridged financial statements do not contain all the
information and disclosures required in the annual financial
statements, and comply with International Financial Reporting
Standards.
Accounting policies used in the abridged consolidated financial
statements are
the same as those used to prepare the group annual financial
statements.
2 Significant accounting policies
The accounting policies applied are consistent with those followed in
the preparation of the consolidated annual financial statements for the
period ended 28 June 2009, except for the adoption of the following
IFRS, IFRIC interpretations, amendments and circulars that became
effective during the current period. These changes 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 Payments: Vesting Conditions and
Cancellation
- IAS 38 Improvements - 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 following amendments have been early adopted by the group, but had
no material impact on the reported results:
- IFRS 8 Improvements - Operating Segments
- IAS 36 Improvements - Impairment of Assets
- IFRS 2 Amendments - Share-based Payment: Group Share-based Payment
Transactions
3 Reclassification of comparative figures
Income received relating to investment activities has been separately
disclosed from other revenue and is excluded from operating profit.
4 Abnormal foreign exchange related (gain)/loss
An unrealised foreign exchange loss of R79m (R57m after tax) on the
marking-to-market of foreign exchange contracts was incurred at 28 June
2009. A subsequent gain of R79m (R57m after tax) is included in gross
profit in the current period.
5 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.
6 Property, plant and equipment and intangible assets
During the financial period, the group acquired property, plant and
equipment with a cost of R500m (2009: R617m) and acquired intangible
assets with a cost of R107m (2009: R137m). The current period`s FEC
adjustment is insignificant.
7 Issue and repurchase of shares
During the current financial period to 27 June 2010, 6 172 402 (2009:
5 595 343) ordinary shares were issued in terms of the group`s
executive share incentive scheme.
17 378 892 (2009: 26 384 969) shares were repurchased from the market
by E-Com (Proprietary) Limited and 4 061 222 (2009: nil) shares were
repurchased from the market by Woolworths (Proprietary) Limited. These
shares are held as treasury shares by the group.
40 497 604 (2009: nil) shares were issued to Woolworths (Proprietary)
Limited and are held as treasury shares.
8 Contingent liabilities
Various group companies are parties to legal disputes and
investigations which have arisen in the ordinary course of business.
Whilst the outcome of some ofthese matters cannot readily be foreseen,
the directors do not expect the outcomes to have a material financial
effect.
9 Borrowing facilities
Unutilised banking facilities amount to R2 443m (2009: R3 477m). There
is no limit in the articles of association on the group`s authority to
raise interest-bearing debt.
10 Related party transactions
The group entered into related party transactions during the period.
Information regarding the related parties is included in the annual
financial statements.
11 Events subsequent to reporting date
No event material to the understanding of these financial statements
has occurred between the end of the financial period and the date of
approval.
12 Approval of annual financial statements
The annual financial statements were approved by the board of directors
on 25 August 2010.
13 Audit opinion
These abridged consolidated group financial statements have been
extracted from the audited annual financial statements on which Ernst &
Young Inc and SAB&T Inc have issued an unqualified report. This report
is available for inspection at the company`s registered office.
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:
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
visit our investor relations site: www.woolworthsholdings.co.za
Date: 26/08/2010 07:05:01 Supplied by www.sharenet.co.za
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