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Abridge audited group results for the year ended 24 June 2012 and cash dividend declaration
WOOLWORTHS HOLDINGS LIMITED
Share Code: WHL
ISIN: ZAE000063863
Registration Number: 1929/001986/06
ABRIDGED AUDITED GROUP RESULTS FOR THE YEAR ENDED 24 JUNE 2012 AND CASH DIVIDEND DECLARATION
TURNOVER
+11.8%
HEADLINE EARNINGS PER SHARE
+24.4%
DIVIDEND PER SHARE
+38.0%
GROUP RESULTS
The group had a good year with turnover up 11.8%
compared to the prior year and profit before tax
and headline earnings per share up 24.5% and
24.4% respectively.
The group's return on equity increased from 44.1% to 47.1%.
A final dividend of 123 cents per share has been
declared taking the total distribution to 198 cents:
an increase of 38% on the prior year, ensuring that
the full STC saving is distributed to shareholders.
WOOLWORTHS
Woolworths sales grew by 11.6% and by 7.0%
in comparable stores.
Clothing and General Merchandise sales grew
by 11.6% and by 5.8% in comparable stores.
South African clothing and footwear sales grew
at 12.6% and by 5.9% in comparable stores and
General Merchandise sales increased by 7.0%
and by 4.7% in comparable stores.
Clothing and footwear trading performance
improved during the year and the second half saw us
grow by 1.2% above the market.
Clothing and General Merchandise's gross
margin increased 0.8% to 44.5% due to franchise
conversions, which together with good cost
control saw segmental profit before tax up 25%
and return on sales (after excluding unrealised net
foreign exchange gains) increased by 1.1% to 16.7%.
Food experienced strong growth for the year
with sales up 1 1.9% (7.8% comparable) growing
1.3% ahead of the market. Increased margin
together with good cost control resulted in
segmental profit before tax growth of 35.5%
and return on sales increasing 1.0% to 5.8%.
During the year the group acquired a further
34 South African franchise stores at a cost of
R405 million. In total, 59 local stores
have now been acquired at a cost of R580 million
and the remaining 16 will be acquired over the
next 7 years as the franchise agreements expire.
In the rest of Africa we pursued our aim of converting
from a franchise model and entered into a range of
wholly-owned or joint venture arrangements across 8 countries.
Total corporate retail space grew by 3.6%, excluding
franchise conversions.
COUNTRY ROAD
Australian sales contracted 2.6% on the previous
year in Australian dollar terms with comparable
down 6.6%, reflecting the very challenging trading
conditions in that country. Good inventory and
cost control ensured that operating margin and
profit were maintained broadly in line with the
previous year.
On 1st August Country Road announced that it
had entered into an agreement to acquire the
Australian Witchery Group from Gresham Private
Equity for A$172 million. The acquisition will create
one of Australia's largest speciality fashion retailers
with complementary brands and a strong position
in the mid to upper tier specialist retail sector,
which will provide greater scale, a diversified
revenue stream and industry leading margins.
Australia's apparel market is currently at a cyclical
low, providing the opportunity for Country Road
to consolidate its position ahead of the expected
economic recovery.
The transaction will be funded through a
combination of acquisition debt of A$34 million
raised from Australian banks and a A$92 million
rights issue undertaken by Country Road.
As majority shareholder in Country Road
we have undertaken to exercise our rights.
WOOLWORTHS FINANCIAL SERVICES
The joint venture with ABSA performed well with
the debtors' book increasing 8.3% from the prior
year. The quality of the book remains strong with
impairments increasing 0.5% to 1 .9% of gross
receivables, well below the target range of 3.0% 3.5%.
The increase in the impairment charge resulted in
operating profits remaining broadly in line with the
prior year with a return on equity of 23.1%, ahead
of our 22% target.
SHARE PURCHASES
Shares to the value of R286m were repurchased during the year
and shares to the value of R358m were purchased to settle various
employee share schemes that became payable during the year.
OUTLOOK
Trading for the first 8 weeks has been encouraging.
We expect the upper end of the market to remain
resilient whilst the economy as a whole remains
subdued. The Australian economy has shown signs
of recovery and we have seen an improvement in
trading in recent months.
Changes to the Board of Directors
After serving nine years as chairman, Buddy Hawton
retired from the board at the company's annual
general meeting on 17 November 2011. On the same
date, Simon Susman was appointed as chairman,
Tom Boardman was appointed as the lead
independent director and Zarina Bassa was
appointed a non-executive director.
The board wishes to thank Buddy for his wisdom
and guidance during his years as chairman and wish
him a happy and fruitful retirement with his family.
Sindi Zilwa will retire as a non-executive director on
15 November 2012 after having completed eleven
years of service on the Woolworths board. Sindi has
been a passionate, competent and committed director and the
board expresses its gratitude to her and wishes her
well in her future endeavours.
Andrew Higginson was appointed as a non-
executive director on 1 June 2012.
Change of Group Secretary
Cherrie Lowe resigned as group secretary on
31 January 2012. Thobeka Sishuba-Mashego was
appointed as group secretary effective
1 February 2012.
S N Susman I Moir
Chairman Group chief executive officer
Cape Town, 22 August 2012
Cash Dividend Declaration
Notice is hereby given that the directors have
declared a final gross cash dividend of 123.0 cents
(104.55 cents net of dividend withholding tax) per
ordinary share for the fifty two weeks ended
24 June 2012. The dividend has been declared from
income reserves. The company has no secondary
tax on companies credits available. The dividend
withholding tax rate is 15%.
The issued share capital at the declaration date
is 835 378 333 ordinary shares and 89 400 000
preference shares.
The salient dates for the dividend will be as follows:
Last day to trade to receive
a dividend Friday, 7 September 2012
Shares commence trading
"ex" dividend Monday, 10 September 2012
Record date Friday, 14 September 2012
Payment date Monday, 17 September 2012
Share certificates may not be dematerialised or
rematerialised between Monday 10 September 2012
and Friday 14 September 2012 both days inclusive.
In accordance with the company's Memorandum
of Incorporation, 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 gross cash dividend of 85.0 cents (72.25 cents
net of dividend withholding tax) per preference share
for the fifty two weeks ended 24 June 2012 will be paid
to the beneficiaries of Woolworths Employee Share
Ownership Scheme on Monday 17 September 2012.
T Sishuba-Mashego
Group secretary
Cape Town, 22 August 2012
Directorate and Statutory Information
Non-executive Directors:
Simon Susman (Chairman), Peter Bacon (British),
Zarina Bassa, Lindiwe Bakoro, Tom Boardman,
Andrew Higginson (British), Mike Leeming, Chris Nissen,
Sir Stuart Rose (British), Thina Siwendu, Sindi Zilwa
Executive Directors:
Ian Moir (Group chief executive officer) (Australian),
Zyda Rylands, Norman Thomson
Group Secretary: Thobeka Sishuba-Mashego
Share Code: WHL ISIN: ZAE000063863
Registered Address:
PO Box 680, Cape Town 8000
Woolworths House, 93 Longmarket Street
Cape Town 8001
Registration Number: 1929/001986/06
Tax number: 9300/149/71/4
JSE Sponsor: Rand Merchant Bank (A division of
FirstRand Bank Limited)
Transfer Secretaries:
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg 2001
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
52 weeks 52 weeks
to 24 Jun to 26 Jun
2012 2011 %
Notes Rm Rm change
Revenue 28 813 25 841 11.5
Turnover 28 604 25 582 11.8
Cost of sales 18 419 16 683 10.4
Gross profit 10 185 8 899 14.5
Other revenue 127 127
Expenses 7 625 6 904 10.4
Store costs 5 165 4 448 16.1
Other operating costs 2 460 2 456 0.2
Operating profit 2 687 2 122 26.6
Investment income 82 132 (37.9)
Finance costs 38 84 (54.8)
Profit before earnings from joint ventures and associate 2 731 2 170 25.9
Earnings from joint ventures 133 129 3.1
Earnings from associate 6 7 (14.3)
Profit before tax 2 870 2 306 24.5
Tax 811 659 23.1
Profit after tax 2 059 1 647 25.0
Other comprehensive income:
Net fair value adjustments on financial instruments, after tax 21 (17) >(100)
Exchange differences on translation of foreign subsidiaries 117 37 >100
Other comprehensive income for the year 138 20 >100
Total comprehensive income for the year 2 197 1 667 31.8
Profit attributable to: 2 059 1 647 25.0
Shareholders of the parent 2 048 1 631 25.6
Non-controlling interest 11 16 (31.3)
Total comprehensive income attributable to: 2 197 1 667 31.8
Shareholders of the parent 2 167 1 651 31.3
Non-controlling interest 30 16 87.5
Reconciliation of headline earnings
Earnings attributable to shareholders of the parent 2 048 1 631 25.6
BEE preference dividend 38 19 100.0
Basic earnings 2 010 1 612 24.7
(Profit)/loss on disposal of investment property, property, plant
and equipment (15) 4 <(100)
Impairment of property, plant and equipment 1 24 (95.8)
Tax impact of adjustments (8) (100.0)
Headline earnings 1 996 1 632 22.3
Headline earnings per share (cents) 267.3 214.9 24.4
Earnings per share (cents) 2 269.2 212.2 26.9
Diluted headline earnings per share (cents) 260.6 209.8 24.2
Diluted earnings per share (cents) 2 262.4 207.2 26.6
Number of shares in issue (millions) 745.7 755.2 (1.3)
Weighted average number of shares in issue (millions) 746.6 759.5 (1.7)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total Total
Share- Non- 52 weeks 52 weeks
holders of controlling to 24 Jun to 26 Jun
the parent interest 2012 2011
Notes Rm Rm Rm Rm
Interest at the beginning
of the year 4 008 85 4 093 3 453
Movements for the year:
Issue of shares 5 33
Shares repurchased 5 (655) (655) (339)
Share repurchase costs (1) (1) (1)
Dividends to shareholders (1 299) (14) (1 313) (923)
Share-based payments 245 245 186
Business acquisitions 6 6 17
Total comprehensive income for the year 2 167 30 2 197 1 667
Interest at the end of the year 4 465 107 4 572 4 093
Distribution per ordinary share (cents) 198.0 143.5
Distribution cover (based on headline earnings per share) 1.4 1.5
Distribution per preference share (cents) 121.0 61.4
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At At
24 Jun 26 Jun
2012 2011
Notes Rm Rm
ASSETS
Non-current assets 5 011 4 115
Property, plant and equipment 3 2 225 2 046
Investment properties 106 121
Intangible assets 3 1 219 693
Investment in associate 51 46
Investment in joint ventures 616 578
Prepaid employment costs 13 23
Participation in export partnerships 49 59
Other loans 89 84
Deferred tax 643 465
Current assets 5 034 4 950
Inventories 2 216 1 892
Trade and other receivables 631 733
Derivative financial instruments 41 10
Tax 1 22
Cash 2 145 2 293
Total assets 10 045 9 065
EQUITY AND LIABILITIES
Capital and reserves 4 572 4 093
Interest of shareholders of the parent 4 465 4 008
Non-controlling interest 107 85
Non-current liabilities 1 177 1 460
Interest-bearing borrowings 25 514
Operating lease accrual 457 455
Post-retirement medical benefit liability 335 315
Deferred tax 360 176
Current liabilities 4 296 3 512
Trade and other payables 3 172 3 148
Provisions 230 269
Derivative financial instruments 16 78
Tax 368 1
Interest-bearing borrowings 510 16
Total equity and liabilities 10 045 9 065
Net asset book value per share (cents) 599 531
GROUP ANALYSIS
Total assets 10 045 9 065
Woolworths Retail 6 948 5 719
Country Road 1 156 986
Treasury 1 326 1 783
Woolworths Financial Services 615 577
Inventories 2 216 1 892
Woolworths Retail 1 835 1 547
Country Road 381 345
Approved commitment for capital expenditure 1 216 934
Woolworths Retail 1 043 809
Country Road 173 125
Approved commitment for franchise acquisitions 384
CONSOLIDATED STATEMENT OF CASH FLOWS
52 weeks 52 weeks
to 24 Jun to 26 Jun
2012 2011
Notes Rm Rm
Cash flow from operating activities
Cash inflow from trading 3 259 2 848
Working capital movements (131) 377
Cash generated by operating activities 3 128 3 225
Interest income 73 123
Finance costs (38) (95)
Tax paid (356) (985)
Cash generated by operations 2 807 2 268
Dividends received from associate 1 1
Dividends received from joint venture 95 125
Dividends to ordinary shareholders (1 275) (904)
Dividends to preference shareholders (38) (19)
Net cash inflow from operating activities 1 590 1 471
Cash flow from investing activities
Net investment in PPE and intangible assets (615) (585)
Acquisition of franchise operations 4 (494) (207)
Other 8 21
Net cash outflow from investing activities (1 101) (771)
Cash flow from financing activities
Shares issued 33
Shares repurchased (655) (339)
Share repurchase costs (1) (1)
Finance lease payments (25) (18)
Short-term borrowings repaid (1 020)
Acquisitions non-controlling interest contribution 6 17
Net cash outflow from financing activities (675) (1 328)
Decrease in cash and cash equivalents (186) (628)
Net cash and cash equivalents at the beginning of the year 2 293 2 917
Effect of foreign exchange rate changes 38 4
Net cash and cash equivalents at the end of the year 2 145 2 293
GROUP ANALYSIS
Cash inflow from trading 3 259 2 848
Woolworths Retail 2 975 2 586
Country Road 284 262
Gross capital expenditure 798 624
Woolworths Retail 697 517
Country Road 101 107
SEGMENTAL ANALYSIS
52 weeks 52 weeks
to 24 Jun to 26 Jun
2012 2011 %
Rm Rm change
Revenue
Turnover 28 604 25 582 11.8
Woolworths Retail 25 231 22 609 11.6
Clothing and General Merchandise 9 585 8 591 11.6
Food 15 140 13 535 11.9
Logistics 506 483 4.8
Country Road 3 373 2 973 13.5
Other revenue and investment income 209 259 (19.3)
Woolworths Retail 105 103 1.9
Clothing and General Merchandise 21 25 (16.0)
Food 84 78 7.7
Country Road 29 27 7.4
Treasury 75 129 (41.9)
Total Group 28 813 25 841 11.5
Gross profit
Woolworths Retail 8 174 7 134 14.6
Clothing and General Merchandise 4 264 3 751 13.7
Food 3 817 3 298 15.7
Intra-group 93 85 9.4
Country Road 2 011 1 765 13.9
Total Group 10 185 8 899 14.5
Profit before tax
Woolworths Retail 2 524 1 965 28.4
Clothing and General Merchandise 1 647 1 318 25.0
Food 877 647 35.5
Country Road 172 162 6.2
Woolworths Financial Services 133 129 3.1
Treasury 41 50 (18.0)
Total Group 2 870 2 306 24.5
NOTES
1 Basis of preparation
The abridged group financial statements comply with IAS 34 Interim Financial Reporting. These abridged
group financial statements do not contain all the information and disclosures required in the annual
financial statements.
Accounting policies used in the abridged group financial statements are the same as those used
to prepare the group annual financial statements, and consistent with the prior year, which have been prepared in compliance with
International Financial Reporting Standards (IFRS) and the South African Companies Act (No. 71 of 2008,
as amended). These summary financial statements have been prepared under the supervision of the
group finance director, Norman Thomson CA(SA).
2 Earnings per share
The difference between earnings per share and diluted earnings per share is due to the impact of
unexercised options under the group's share incentive schemes.
3 Property, plant and equipment and intangible assets
During the financial year, the group acquired property, plant and equipment at a cost of R652 million
(2011: R527 million) and acquired intangible assets (including goodwill and reacquired rights) at a cost
of R657 million (2011: R377 million).
4 Acquisition of franchise operations
The group continues to wind down its South African franchise operations, acquiring 34 (2011: 22)
stores in the current year, as well as 10 (2011: 1) stores in Africa for a cash consideration of R451 million
(2011: R250 million).
2012 2011
Rm Rm
Fair value of assets acquired at the date of acquisition
Property, plant and equipment 18 8
Reacquired rights 276 138
Deferred tax liability (78) (39)
Goodwill arising on acquisition 235 143
Consideration 451 250
Accrual prior year 43 (43)
Cash outflow 494 207
The goodwill of R235 million represents growth and synergies expected to accrue from the acquisitions.
From the dates of acquisition, these acquisitions have contributed an additional revenue of R314 million
and profit before tax of R66 million to the group.
The directors consider that, on a pro-forma basis, had the acquisitions been effective from the beginning
of the year, group revenue for the year would have been R79 million higher, and profit before tax
R28 million higher.
5 Issue and repurchase of shares
223 938 (2011: 1 122 568) shares totalling R11 million (2011: R28 million) were repurchased from the market by
Woolworths (Proprietary) Limited and held as treasury shares by the group. 9 298 259 (2011: 7 056 052)
shares totalling R286 million (2011: R193 million) were repurchased from the market and cancelled.
10 418 262 (2011: 3 998 422) shares totalling R358 million (2011: R118 million) were purchased from the market
in the current year and allocated to employees in terms of the group's executive incentive schemes.
In the prior year, 3 945 838 ordinary shares totalling R33 million were issued in terms of the group's
executive incentive schemes.
6 Contingent liabilities
Group companies are party to legal disputes and investigations that have arisen in the ordinary course
of business. Whilst the outcome of these matters cannot readily be foreseen, the directors do not expect
them to have any material financial effect. Refer also to note 9.
7 Borrowing facilities
Unutilised banking facilities amount to R2 710 million (2011: R2 049 million). There is no limit in the
Memorandum of Incorporation on the group's authority to raise interest-bearing debt.
8 Related party transactions
The group entered into related party transactions during the year, the substance of which are similar
to those explained in the group's annual financial statements.
9 Events subsequent to the reporting date
On 1 August 2012, the group's 88% held Australian subsidiary Country Road Limited announced its intention
to acquire 100% of the voting shares of unlisted Australian company Witchery Australia (Pty) Limited
("Witchery Group") at an enterprise value of R1 445 million (A$172 million). The acquisition is on a cash-free,
debt-free basis with a normalised level of working capital.
Based on the unaudited net asset values of the Witchery Group as at 31 December 2011, goodwill of
approximately R765 million (A$91 million) is expected to result on acquisition, representing the value of
the business in excess of the fair value of its net assets, subject to finalisation at completion.
10 Approval of annual financial statements
The annual financial statements were approved by the Board of directors on 22 August 2012.
11 Audit opinion
These abridged consolidated group financial statements have been extracted from the audited annual
financial statements upon which Ernst & Young Inc. and NEXIA SAB&T have issued an unqualified report.
The group annual financial statements is available for inspection at the company's registered office.
visit our investor relations site: www.woolworthsholdings.co.za
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