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Unaudited interim group results for the 26 weeks ended 29 December 2013 and cash dividend declaration
WOOLWORTHS HOLDINGS LIMITED
Registration number: 1929/001986/06
Tax number: 9300/149/71/4
Share code: WHL
ISIN: ZAE000063863
UNAUDITED INTERIM GROUP RESULTS FOR THE 26 WEEKS ENDED 29 DECEMBER 2013 AND CASH DIVIDEND DECLARATION
FINANCIAL HIGHLIGHTS
REVENUE
+16.0%
PROFIT BEFORE TAX
+21.1%
HEADLINE EARNINGS PER SHARE
+17.2%
ADJUSTED HEADLINE EARNINGS PER SHARE
+12.9%
DIVIDEND PER SHARE
+17.4%
RETURN ON EQUITY
55.9%
COMMENTARY
Sales for the 26 weeks to 29 December 2013 increased 16.2% over the comparable period.
The South African Clothing and General Merchandise business performed well, with clothing sales growing ahead
of the SA apparel market. The Food business traded strongly throughout the period, well ahead of the market. The group's
Australian subsidiary Country Road performed extremely well.
Profit before tax increased by 21.1%. Headline earnings increased by 18.5% impacted by an increase in
Country Road's minority interest and a higher BEE preference dividend as the
group's BEE employee incentive scheme entered its seventh year.
The net impact of unrealised foreign exchange losses of R54 million (Dec 2012: R16 million) and last year's R43 million store
restructuring and R52 million Witchery transaction and integration costs (all stated before tax) results in an increase in
adjusted headline earnings per share ("aHEPS") of 12.9%.
Earnings per share ("EPS") and headline earnings per share ("HEPS") increased by 17.0% and 17.2% to 191.2 cents and
192.4 cents, respectively.
Return on equity remained strong at 55.9% (excluding the unrealised foreign exchange movements).
WOOLWORTHS
Clothing and General Merchandise sales grew by 9.7%, with a price movement of 3.8%. Clothing sales grew by
10.1% with a price movement of 4.4%.
Clothing sales in comparable stores grew by 8.0%. General merchandise grew by 6.9% and by 5.1% in comparable
stores. Gross profit margin in Clothing and General Merchandise contracted 0.4% to 45.7% with a higher investment
in entry price points and in-season promotions. Adjusted profit before tax grew 7.4% and return on sales was 18.5%
(18.9% in the prior period).
Food sales grew by 15.3% with a price movement of 7.2%. Sales in comparable stores grew by 11.8%. Gross profit
margin reduced by 0.2% to 25.2% as a result of investment in price and increased promotions. Adjusted profit before tax
grew 16.0% and return on sales improved 0.1% to 6.2%.
Store costs increased 9.4% with the addition of 3.5% of net footage. Other operating costs (excluding the impact
of unrealised foreign exchange movements and last year's restructuring costs) grew by 16.0%, mainly due to the
phasing of the comparable period cost base where costs had been deferred into the second half of the year.
COUNTRY ROAD GROUP
With the inclusion of the Witchery Group for the full period (compared to one quarter in the prior period), sales
increased 27.5% in Australian dollar terms. Sales in comparable stores increased 5.5% and net space (excluding the
acquisition) increased by 4.2%.
Gross margin improved from 61.3% to 63.0% as a result of improved sourcing as well as the
contribution of the higher margin Witchery business. Operating costs were well controlled resulting in a 50.0%
increase in adjusted profit before tax from A$34 million to A$51 million. Return on sales (adjusted) increased to 12.6%
from 10.6% in the prior period. Return on equity increased from 28.5% to 34.6%.
WOOLWORTHS FINANCIAL SERVICES
The debtors book reflected year-on-year growth of 13.8% at the end of December 2013, with the
annualised impairment rate (including collection costs) for the six months to December 2013 at 4.3% (December
2012: 2.7%). Net interest income grew 16.7% on the prior period with non-interest revenue up 17.4%. Operating costs
were well controlled, up 8.1% on the previous period. The higher impairment constricted growth in profit before tax
to 4.3% although return on equity remains above the target range of 22.0% at 24.2% (December 2012:
26.8%).
OUTLOOK
We believe that economic conditions in South Africa will remain constrained, especially in the lower and middle
income segments of the market where consumer debt levels remain under pressure. However the upper income
segment in which we operate continues to show resilience. Trading for the first six weeks of the second half of the
financial year has been positive, and we expect sales growth to be broadly in line with the first half.
In Australia, where consumer confidence remains cautious, there are signs of an improved retail market and we
expect sales to be ahead of the market.
Any reference to future financial performance included in this statement has not been reviewed and reported on
by the company's external auditors and does not constitute an earnings forecast.
CHANGES TO THE BOARD OF DIRECTORS
The board of Woolworths Holdings is pleased to announce that Sam Ngumeni, the Chief operating officer of
Woolworths, has been appointed as an executive director to the board of the company with effect from 12 February 2014.
Sam has been with the group for 13 years and is responsible for supply chain, information technology, people and transformation.
He is also a member of the board of Woolworths Financial Services where he was previously CEO.
Norman Thomson retired from the board at the conclusion of the annual general meeting on 26 November 2013. Norman served in a
number of senior positions during his 20-year career at Woolworths culminating in his role as Finance Director for
the group. We wish Norman well in his retirement.
Lindiwe Bakoro retired from the board at the conclusion of the annual general meeting on 26 November 2013. We thank Lindiwe
for her considerable contribution.
Reeza Isaacs was appointed to the board effective 26 November 2013 and has assumed the responsibilities of Finance Director.
S N Susman I Moir
Chairman Group chief executive officer
Cape Town, 12 February 2014
DIVIDEND DECLARATION
Notice is hereby given that the directors have declared an interim gross cash dividend of 101.0 cents (85.85 cents
net of dividend withholding tax) per ordinary share for the 26 weeks ended 29 December 2013. The dividend has
been declared from income reserves and a dividend withholding tax of 15% will be applicable to all shareholders
who are not exempt. The company has no STC credits to be utilised to offset the 15% dividend withholding tax.
The issued share capital at the declaration date is 847 004 975 ordinary shares and 89 192 096 preference shares.
The salient dates for the dividend will be as follows:
Last day of trade to receive a dividend Friday, 28 February 2014
Shares commence trading "ex" dividend Monday, 3 March 2014
Record date Friday, 7 March 2014
Payment date Monday, 10 March 2014
Share certificates may not be dematerialised or rematerialised between Monday, 3 March 2014 and
Friday, 7 March 2014, both days inclusive.
An interim gross cash dividend of 101.0 cents (85.85 cents net of dividend withholding tax) per preference share
for the 26 weeks ended 29 December 2013 will be paid to the beneficiaries of the Woolworths Employee Share
Ownership Scheme on Monday, 10 March 2014.
Thobeka Sishuba-Mashego
Group secretary
Cape Town, 12 February 2014
INTERIM GROUP STATEMENT OF COMPREHENSIVE INCOME
Restated
53 weeks 26 weeks 26 weeks
to 30 Jun to 29 Dec to 23 Dec
2013 2013 2012 %
Rm Notes Rm Rm change
35 399 Revenue 19 454 16 771 16.0
35 227 Turnover 19 382 16 683 16.2
21 674 Cost of sales 11 828 10 319 14.6
13 553 Gross profit 7 554 6 364 18.7
115 Other revenue 45 54 (16.7)
10 199 Expenses 5 513 4 720 16.8
6 828 Store costs 3 668 3 178 15.4
3 371 Other operating costs 1 845 1 542 19.6
3 469 Operating profit 2 086 1 698 22.9
57 Investment income 27 34 (20.6)
68 Finance costs 37 34 8.8
3 458 Profit before earnings from joint ventures and associate 2 076 1 698 22.3
180 Earnings from joint ventures 88 85 3.5
9 Earnings from associate 1 5 (80.0)
3 647 Profit before tax 2 165 1 788 21.1
1 009 Tax 598 505 18.4
2 638 Profit for the period 1 567 1 283 22.1
Other comprehensive income:
Amounts that may be reclassified to profit or loss
88 Net fair value adjustments on financial instruments, after tax (20) (4)
92 Exchange differences on translation of foreign subsidiaries 63 39
Amounts that may not be reclassified to profit or loss
31 Post-retirement medical benefit liability-actuarial gain 10 – –
211 Other comprehensive income for the period 43 35
2 849 Total comprehensive income for the period 1 610 1 318
2 638 Profit attributable to: 1 567 1 283
2 597 Shareholders of the parent 1 505 1 261
41 Non-controlling interests 62 22
2 849 Total comprehensive income attributable to: 1 610 1 318
2 779 Shareholders of the parent 1 531 1 288
70 Non-controlling interests 79 30
Reconciliation of headline earnings
2 597 Earnings attributable to shareholders of the parent 1 505 1 261 19.3
62 BEE preference dividend 58 38 52.6
2 535 Basic earnings 1 447 1 223 18.3
Loss on disposal of property, plant and equipment, intangible
15 assets and investment property – 9
Net impairment of property, plant and equipment and intangible
12 assets 10 –
(8) Tax impact of adjustments (1) (3)
2 554 Headline earnings 1 456 1 229 18.5
(67) Abnormal foreign exchange related loss/(gain) 54 16
77 Transaction and integration costs – 52
43 Restructuring costs – 43
(15) Tax impact of adjustments (15) (31)
2 592 Adjusted headline earnings 1 495 1 309 14.2
340.4 Headline earnings per share (cents) 192.4 164.2 17.2
337.9 Earnings per share (cents) 2 191.2 163.4 17.0
345.5 Adjusted headline earnings per share (cents) 197.5 174.9 12.9
333.8 Diluted headline earnings per share (cents) 189.4 160.2 18.2
331.3 Diluted earnings per share (cents) 2 188.2 159.4 18.1
338.7 Adjusted diluted headline earnings per share (cents) 194.5 170.6 14.0
753.4 Number of shares in issue (millions) 759.3 750.9 1.1
750.3 Weighted average number of shares in issue (millions) 756.8 748.4 1.1
INTERIM GROUP STATEMENT OF FINANCIAL POSITION
Restated Restated
At 30 Jun At 29 Dec At 23 Dec
2013 2013 2012
Rm Notes Rm Rm
ASSETS
6 778 Non-current assets 6 968 6 564
2 683 Property, plant and equipment 3 2 903 2 522
43 Investment properties 36 43
2 440 Intangible assets 3 2 403 2 438
60 Investment in associate – 56
713 Investment in joint ventures 764 666
– Prepaid employment costs – 8
38 Participation in export partnerships 35 49
83 Other loans 69 66
718 Deferred tax 758 716
5 347 Current assets 6 007 4 808
2 901 Inventories 3 229 2 667
668 Trade and other receivables 801 944
211 Derivative financial instruments 50 25
5 Tax – –
1 562 Cash and cash equivalents 1 927 1 172
63 Non-current assets held for sale 9 63 63
12 188 TOTAL ASSETS 13 038 11 435
EQUITY AND LIABILITIES
5 922 TOTAL EQUITY 6 358 4 869
5 637 Equity attributable to shareholders of the parent 10 6 045 4 636
285 Non-controlling interests 313 233
1 890 Non-current liabilities 1 869 1 858
705 Interest-bearing borrowings 676 695
487 Operating lease accrual 483 467
338 Post-retirement medical benefit liability 10 350 360
360 Deferred tax 360 336
4 376 Current liabilities 4 811 4 708
3 837 Trade and other payables 3 997 4 070
297 Provisions 463 343
8 Derivative financial instruments 14 8
107 Tax 206 200
127 Interest-bearing borrowings 131 87
6 266 TOTAL LIABILITIES 6 680 6 566
12 188 TOTAL EQUITY AND LIABILITIES 13 038 11 435
748 Net asset book value - per share (cents) 796 617
GROUP ANALYSIS
12 188 Total assets 13 038 11 435
7 492 Woolworths* 7 983 7 420
3 901 Country Road Group 4 027 3 431
87 Woolworths Treasury 267 (81)
708 Woolworths Financial Services 761 665
2 901 Inventories 3 229 2 667
2 200 Woolworths* 2 416 2 029
701 Country Road Group 813 638
6 266 Total liabilities 6 680 6 566
4 395 Woolworths* 4 658 4 857
1 871 Country Road Group 2 022 1 709
2 063 Approved commitment for capital expenditure 1 228 876
1 703 Woolworths* 940 730
360 Country Road Group 288 146
– Approved commitment for franchise acquisitions 13 379 –
* Includes Woolworths Clothing and General Merchandise, Woolworths Food and Woolworths Logistics
INTERIM GROUP STATEMENT OF CASH FLOWS
53 weeks 26 weeks 26 weeks
to 30 Jun to 29 Dec to 23 Dec
2013 2013 2012
Rm Notes Rm Rm
Cash flow from operating activities
4 450 Cash inflow from trading 2 689 2 207
(196) Working capital movements (125) 192
4 254 Cash generated by operating activities 2 564 2 399
48 Interest income 25 30
(63) Finance costs paid (37) (37)
(1 140) Tax paid (533) (740)
3 099 Cash generated by operations 2 019 1 652
83 Dividends received from joint ventures 35 35
– Dividends received from associate 61 –
(1 578) Dividends to ordinary shareholders (1 177) (927)
(62) Dividends to preference shareholders (58) (38)
1 542 Net cash inflow from operating activities 880 722
Cash flow from investing activities
(781) Net investment in property, plant and equipment and intangible assets (520) (392)
(1 490) Acquisition of subsidiary, net of cash acquired – (1 490)
(67) Acquisition of franchise operations 4 (10) (6)
26 Other 17 28
(2 312) Net cash outflow from investing activities (513) (1 860)
Cash flow from financing activities
(192) Shares repurchased 5 (5) (198)
(1) Share repurchase costs – (1)
(15) Finance lease payments (8) (6)
872 Borrowings raised – 746
(607) Borrowings repaid – (500)
108 Acquisitions – non-controlling interest contribution – 96
165 Net cash (outflow)/inflow from financing activities (13) 137
(605) Increase/(decrease) in cash and cash equivalents 354 (1 001)
2 145 Net cash and cash equivalents at the beginning of the period 1 562 2 145
22 Effect of foreign exchange rate changes 11 28
1 562 Net cash and cash equivalents at the end of the period 1 927 1 172
GROUP ANALYSIS
4 450 Cash inflow from trading 2 689 2 207
3 578 Woolworths 2 087 1 857
872 Country Road Group 602 350
2 313 Gross capital expenditure 505 373
788 Woolworths 428 341
1 525 Country Road Group 77 32
INTERIM GROUP STATEMENT OF CHANGES IN EQUITY
Restated Restated
Total Total Total
Share- Share-
53 weeks holders Non- 26 weeks holders Non- 26 weeks
to 30 Jun of the controlling to 29 Dec of the controlling to 23 Dec
2013 parent interests 2013 parent interests 2012
Rm Notes Rm Rm Rm Rm Rm Rm
Shareholders' interest at the
beginning of the period as
4 572 previously reported 5 637 285 5 922 4 465 107 4 572
Post-retirement medical
(13) benefit liability restatement 10 – – – (13) – (13)
Shareholders' interest at the
beginning of the period as
4 559 restated 5 637 285 5 922 4 452 107 4 559
Movements for the period:
2 638 Profit for the period 1 505 62 1 567 1 261 22 1 283
211 Other comprehensive income 10 26 17 43 27 8 35
Total comprehensive income
2 849 for the period 1 531 79 1 610 1 288 30 1 318
337 Shares issued 5 246 – 246 233 – 233
(192) Shares repurchased 5 (5) – (5) (198) – (198)
(1) Share repurchase costs – – – (1) – (1)
(1 640) Dividends to shareholders (1 184) (51) (1 235) (965) – (965)
239 Share-based payments 66 – 66 60 – 60
Settlement of share-based
(337) payments through share issue 5 (246) – (246) (233) – (233)
Non-controlling interest
arising on business
108 acquisitions – – – – 96 96
Shareholders' interest at the
5 922 end of the period 6 045 313 6 358 4 636 233 4 869
234.0 Dividend per ordinary share (cents) 101.0 86.0
1.4 Dividend cover (based on headline earnings per share) 1.9 1.9
207.0 Dividend per preference share (cents) 101.0 59.0
SEGMENTAL ANALYSIS
53 weeks 26 weeks 26 weeks
to 30 Jun to 29 Dec to 23 Dec
2013 2013 2012 %
Rm Rm Rm change
Revenue
35 227 Turnover 19 382 16 683 16.2
10 764 Woolworths Clothing and General Merchandise 5 756 5 249 9.7
17 469 Woolworths Food 9 498 8 238 15.3
561 Woolworths Logistics 214 262 (18.3)
6 433 Country Road Group 3 914 2 934 33.4
172 Other revenue and investment income 72 88 (18.2)
14 Woolworths Clothing and General Merchandise 7 8 (12.5)
74 Woolworths Food 33 37 (10.8)
45 Country Road Group 16 19 (15.8)
39 Woolworths Treasury 16 24 (33.3)
35 399 Total group 19 454 16 771 16.0
Gross profit
4 994 Woolworths Clothing and General Merchandise 2 630 2 420 8.7
4 475 Woolworths Food 2 390 2 094 14.1
100 Woolworths Intragroup 66 50 32.0
3 984 Country Road Group 2 468 1 800 37.1
13 553 Total group 7 554 6 364 18.7
Profit before tax-adjusted
1 856 Woolworths Clothing and General Merchandise 1 066 993 7.4
1 060 Woolworths Food 586 505 16.0
588 Country Road Group 471 310 51.9
180 Woolworths Financial Services 88 85 3.5
16 Woolworths Treasury 8 6 33.3
3 700 Total group-adjusted 2 219 1 899 16.9
NOTES
1. BASIS OF PREPARATION
These abridged interim group financial statements comply with IAS 34 Interim Financial Reporting.
Accounting policies used in the abridged interim group financial statements are consistent with the prior
period, and are the same as those used to prepare the 30 June 2013 group annual financial statements,
with the exception of all new and revised standards and interpretations that became effective during the
period as disclosed in notes 10 and 11. They have been prepared in compliance with International Financial
Reporting Standards (IFRS) and the Companies Act of South Africa and under the supervision of the group's
Finance Director, Reeza Isaacs, 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 period, the group acquired property, plant and equipment at a cost of R452 million (2012:
R495 million) and acquired intangible assets (including goodwill) at a cost of R71 million (2012: R1 336 million).
This includes acquisitions related to business combinations (refer to note 4) as well as R8 million goodwill
remeasurement relating to the acquisition of the Witchery Group.
4. ACQUISITION OF FRANCHISE OPERATIONS
During the period, the group acquired a previously franchised store in South Africa for a cash consideration
of R10 million. In the prior period, the previously franchised store in Lesotho was acquired for a cash
consideration of R6 million.
Dec 2013 Dec 2012
Rm Rm
Fair value of assets acquired at the date of acquisition
Reacquired rights 2 –
Deferred tax liability (1) –
Goodwill arising on acquisition 9 6
Consideration 10 6
Goodwill of R9 million represents growth and synergies expected to accrue from the acquisition.
There has been no material impact on revenue and profit before tax since the date of acquisition. Had the
acquisition been effective from the beginning of the period, the directors consider that, on a pro forma
basis, the contribution to revenue for the 26 weeks ended 29 December 2013 would have been R2 million,
and to profit before tax, R1 million.
5. ISSUE AND REPURCHASE OF SHARES
During the period, 4 361 450 (2012: 5 297 843) ordinary shares totalling R246 million (2012: R233 million) were
issued to employees and in the prior year, 2 710 328 ordinary shares were purchased from the market and
transferred to employees at a net cost of R151 million, in settlement under the group's share incentive schemes.
125 799 (2012: 391 512) ordinary shares totalling R8 million (2012: R25 million) were purchased from the
market by Woolworths (Proprietary) Limited and are held as treasury shares by the group and 62 371 shares
totalling R3 million (2012: nil) were forfeited by employees. 1 114 674 ordinary shares totalling R63 million
(2012: nil) were allocated to employees in terms of the group's Restricted Share Plan.
6. CONTINGENT LIABILITIES
Group companies are party to legal disputes 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 a material
financial effect.
7. BORROWING FACILITIES
Unutilised banking facilities amounted to R2 659 million (2012: R2 379 million). There is no limit imposed by
the Memorandum of Incorporation on the group's authority to raise interest-bearing debt.
8. RELATED PARTY TRANSACTIONS
During the period the group entered into related party transactions, the substance of which is similar to
that explained in the group's 2013 annual financial statements.
9. NON-CURRENT ASSETS HELD FOR SALE
Two fixed properties remain subject to suspensive conditions under a sale agreement. The directors
consider the conclusion of the sale to be highly probable.
At 29 December 2013 these assets are recognised at the lower of their carrying amounts and fair value,
less costs to sell. The fair value has been determined using the highest and best use of the assets. No
depreciation has been recognised.
Dec 2013 Dec 2012
Rm Rm
Non-current assets held for sale 63 63
10.RESTATEMENT OF COMPARATIVE FIGURES
In terms of the revised IAS 19: Employee Benefits, comparative figures have been restated to recognise actuarial
gains and losses in other comprehensive income. The opening balance of the post-retirement medical benefit
liability as at 25 June 2012 has been restated by R13 million (from R347 million to R360 million) and the liability as
at 30 June 2013 has been further restated by R18 million (from R356 million to R338 million) representing the gain
during the 2013 financial year. The adjustments have no impact on earnings per share or headline earnings per
share. The group's policy is to perform an annual valuation at the end of the financial year.
11.IFRS 13: FAIR VALUE MEASUREMENT
The application of the new standard IFRS 13: Fair value measurement has not materially impacted fair value
measurements of the group.
12.APPROVAL OF ABRIDGED INTERIM GROUP FINANCIAL STATEMENTS
The abridged interim group financial statements were approved by the board of directors on
12 February 2014.
13.EVENTS SUBSEQUENT TO THE REPORTING DATE
Agreements to purchase a further three stores in South Africa and 33 stores in Botswana, Namibia,
Swaziland and Ghana for a total cash consideration of R379 million are effective from dates subsequent to
this report.
14.AUDIT OPINION
These abridged interim group financial statements have not been reviewed or audited.
DIRECTORATE AND STATUTORY INFORMATION
Non-executive directors:
Simon Susman (Chairman), Peter Bacon (British), Zarina Bassa, Tom Boardman (Lead independent director),
Andrew Higginson (British), Mike Leeming, Chris Nissen, Stuart Rose (British), Thina Siwendu
Executive directors:
Ian Moir (Group chief executive officer) (Australian), Reeza Isaacs, Zyda Rylands
Group secretary:
Thobeka Sishuba-Mashego
Share code:
WHL
ISIN:
ZAE000063863
Registered address:
Woolworths House, 93 Longmarket Street, Cape Town, 8001
PO Box 680, Cape Town, 8000
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
RELEASE DATE: 13 FEBRUARY 2014
Date: 13/02/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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