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Audited Group results for the 52 weeks ended 24 June 2018, Cash dividend declaration and Changes to the Board
Woolworths Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 1929/001986/06
Share code: WHL
Bond code: WHLI
Share ISIN: ZAE000063863
Bond ISIN: ZAG000147133
('the Group', 'the Company' or 'WHL')
PRELIMINARY AUDITED GROUP RESULTS FOR THE 52 WEEKS ENDED 24 JUNE 2018,
CASH DIVIDEND DECLARATION AND CHANGES TO THE BOARD OF DIRECTORS
HIGHLIGHTS
Turnover and concession sales: +1.6% to R75.2 billion
Adjusted diluted headline earnings per share: -12.8% to 364.1 cps
Headline earnings per share: -17.7% to 346.3 cps
Earnings per share: -165.2% to -369.5 cps
Total dividend per share: -23.6% to 239.0 cps
Return on equity*: 18.0% from 20.8%
*DJ asset impairment added back
COMMENTARY
2018 has been a difficult year. Significant costs and disruption
from transformation initiatives in David Jones and poor performance
in our fashion business in South Africa have led to a result for
the Group that is disappointing. This was exacerbated by
challenging economic and trading conditions in both markets.
A reassessment of the carrying value of the David Jones assets resulted
in the recognition of an impairment charge of A$712.5 million
(R6 927 million) processed in the first half of the financial year.
Group sales for the 52 weeks ended 24 June 2018 increased
by 1.6% compared to the prior year (and by 2.9% in constant
currency).
Woolworths Fashion, Beauty and Home
Sales declined by 1.5% for the year and comparable store sales were
4.1% lower. Price movement was 0.8%. Our womenswear modern range
failed to resonate with our core customer. Gross profit margin was
impacted by higher markdowns and promotional activity, and declined by
1.2% to 46.7%.
Costs were well controlled, with comparable store costs of 2.7% and
total store cost growth of 6.4%, with 2.5% new space added. Other operating
costs were flat on the prior year. Despite good cost control, operating profit
declined by 21.3%, to R1 706 million.
Woolworths Food
Our Food business continued to outperform the market, with
sales growth of 8.4% and comparable store sales growth of
4.8% on price movement of 3.2%.
Store costs increased by 9.5%, with comparable store cost
growth of 5.0%. Net new space grew by 3.5%. Other operating
costs were 2.1% up on last year. Operating profit increased
by 9.6% to R2 167 million.
Woolworths Financial Services
Woolworths Financial Services also had a good year, with the
average debtors book growing by 4.6%. The impairment rate
for the 12 months ended 30 June 2018 reduced by 1.1% to 5.2%,
and operating profit was grew by 11.9%.
David Jones
The business experienced significant change during the year, including the
implementation of new merchandise and finance systems, the re-platforming
of its online systems, the launch of the new food initiative, and the move
of its head office from Sydney to Melbourne.
After a difficult first half, sales increased by 2.2% and by 2.7% in
comparable stores in the second half. Full year sales were 0.9% lower (and 0.4%
lower in comparable stores).
Expenses increased by 8.8% as a result of the investment in food and other strategic
initiatives. Comparable store costs were well controlled at 1.5%, but operating profit
declined by 49.6% to A$64 million.
Net retail space grew by 0.1%, with 4.2% new space offset
by 4.1% of space reductions and closures. The sales disruption
from the refurbishment of the Elizabeth Street store in Sydney
will continue for approximately another 18 months.
Country Road Group (CRG)
Country Road Group had a mixed year. Strong performances from Witchery, Mimco and
Politix were offset by a weaker Country Road womenswear performance, resulting in
comparable store sales, which exclude Politix (acquired in November 2016), declining
by 1.8%. Including Politix, sales increased by 1.7% for the year. Net retail space
grew by 2.5%.
Gross profit margin improved by 2.5% to 62.8% from higher
full-priced sales and reduced promotions.
Store and operating costs increased by 6.1%, mainly as a result of Politix, with
comparable store costs increasing by 1.9%. Operating profit increased by 5.1% to A$103 million.
Group earnings
Headline earnings per share (HEPS) and adjusted diluted
HEPS, both of which exclude the A$712.5 million impairment
of David Jones assets recognised in the first half of the year, decreased
by 17.7% and 12.8% respectively. Earnings per share, which
includes the impairment, decreased by 165.2%.
Outlook
In South Africa, the change in political leadership has yet
to translate into economic growth. Despite the initial
improved consumer confidence experienced in the second
half of the year, discretionary spending continued to be under
pressure from unemployment and higher costs of living.
In Woolworths Fashion, Beauty and Home, we have made a number of changes to structure,
process and product offering to effect improvement in our
womenswear ranges.
In David Jones, the head office move to Melbourne is complete, as are the significant
systems implementations that began last year. We now look forward to
optimising those systems, focusing on trading the business and
improving the customer experience.
We have now also reduced our cost base by A$25 million across Australia, largely through
a restructure that took place in June.
Trading for the first seven weeks of the new financial year has
shown positive signs. In Australia, David Jones and CRG sales are
3.7% and 2.1% up on last year respectively, while in South Africa,
Food sales are up 7.6%. Sales in Woolworths Fashion, Beauty and Home
are down 1.7%, but mainly due to a relatively smaller winter sale.
Any reference to future financial performance included in this
statement has not been reviewed and reported on by the Group's
external auditors, and does not constitute an earnings forecast.
CHANGES TO THE BOARD OF DIRECTORS
As previously announced on the JSE Stock Exchange News
Service, the following changes to the Board of Directors
were effected during the year under review:
- Peter Bacon - retired from the Board on 28 November 2017;
- John Dixon - resigned from the Board on 21 May 2018;
- Stuart Rose - resigned from the Board on 28 May 2018; and
- Sizakele Mzimela - appointed to the Board on 1 July 2018.
The Board expresses its gratitude to the Directors that have
left the Board and welcomes the appointment of Ms Mzimela.
SN Susman I Moir
Chairman Group Chief Executive Officer
Cape Town, 22 August 2018
DIVIDEND DECLARATION
Notice is hereby given that the Board of Directors has declared a final gross cash dividend per ordinary share (dividend) of
130.5 cents (104.4 cents net of dividend withholding tax) for the 52 weeks ended 24 June 2018, a 27.5% decrease on the prior year's
final dividend of 180.0 cents per share. This brings the total dividend for the year to 239.0 cents, a 23.6% decrease on the prior
year's total dividend of 313.0 cents per share. The dividend has been declared from reserves and therefore does not constitute
a distribution of 'contributed tax capital' as defined in the Income Tax Act, 58 of 1962. A dividend withholding tax of 20% will be
applicable to all shareholders who are not exempt.
The issued share capital at the declaration date is 1 048 313 728 ordinary shares.
The salient dates for the dividend will be as follows:
Last day of trade to receive a dividend Tuesday, 11 September 2018
Shares commence trading 'ex' dividend Wednesday, 12 September 2018
Record date Friday, 14 September 2018
Payment date Monday, 17 September 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 12 September 2018 and Friday,
14 September 2018, both days inclusive. Ordinary shareholders who hold dematerialised shares will have their accounts
at their CSDP or broker credited or updated on Monday, 17 September 2018. Where applicable, dividends in respect of
certificated shares will be transferred electronically to shareholders' bank accounts on the payment date. In the absence
of specific mandates, dividend cheques will be posted to shareholders.
CA Reddiar
Group Company Secretary
Cape Town, 22 August 2018
GROUP STATEMENT OF COMPREHENSIVE INCOME
Restated*
52 weeks 52 weeks
to 24 Jun to 25 Jun
2018 2017 %
Notes Rm Rm change
Revenue 70 572 69 230 1.9
Turnover and concession sales 75 232 74 052 1.6
Concession sales (6 640) (6 862) (3.2)
Turnover 68 592 67 190 2.1
Cost of sales 41 700 40 518 2.9
Gross profit 26 892 26 672 0.8
Other revenue 1 909 1 944 (1.8)
Expenses 23 542 22 410 5.1
Store costs 16 960 16 233 4.5
Other operating costs 6 582 6 177 6.6
Operating profit 5 259 6 206 (15.3)
Impairment of David Jones assets 3 6 927 -
Profit on sale of property in Sydney, net of impairment - 1 420
Profit on sale of property - 1 762
Impairment due to sale of property - 342
Investment income 71 96 (26.0)
Finance costs 1 124 1 256 (10.5)
(Loss)/profit before earnings from joint ventures (2 721) 6 466 >(100)
Earnings from joint ventures 287 260 10.4
(Loss)/profit before tax (2 434) 6 726 >(100)
Tax 1 115 1 278 (12.8)
(Loss)/profit for the year (3 549) 5 448 >(100)
Other comprehensive income:
Amounts that may be reclassified to profit or loss
Fair value adjustments on financial instruments, after tax 182 (123)
Exchange differences on translation of foreign subsidiaries 263 (3 087)
Amounts that may not be reclassified to profit or loss
Post-retirement medical benefit liability: actuarial gain, after tax 1 15
Other comprehensive income for the year 446 (3 195)
Total comprehensive (loss)/income for the year (3 103) 2 253
(Loss)/profit attributable to: (3 549) 5 448
Shareholders of the parent (3 550) 5 446
Non-controlling interests 1 2
Total comprehensive (loss)/income attributable to: (3 103) 2 253
Shareholders of the parent (3 104) 2 251
Non-controlling interests 1 2
Reconciliation of headline earnings
Basic (loss)/earnings attributable to shareholders of the parent (3 550) 5 446 >(100)
Net loss/(profit) on disposal of property, plant and equipment and intangible assets 42 (1 752)
Impairment of property, plant and equipment and intangible assets 6 954 382
Tax impact of adjustments (119) (31)
Headline earnings 3 327 4 045 (17.8)
Relocation and restructure costs, net of grants received 126 173
Onerous leases 147 -
Transaction and swap close-out costs - 53
Unrealised foreign exchange gains (6) (11)
Tax impact of adjustments (75) (60)
Tax base adjustments on David Jones assets at acquisition - (164)
Adjusted headline earnings 9 3 519 4 036 (12.8)
(Loss)/earnings per share (cents) 2 (369.5) 566.7 >(100)
Headline earnings per share (cents) 346.3 420.9 (17.7)
Adjusted headline earnings per share (cents) 366.3 420.0 (12.8)
Diluted (loss)/earnings per share (cents) 2 (367.3) 563.7 >(100)
Diluted headline earnings per share (cents) 344.2 418.7 (17.8)
Adjusted diluted headline earnings per share (cents) 364.1 417.7 (12.8)
Number of shares in issue (millions) 960.6 961.7 (0.1)
Weighted average number of shares in issue (millions) 960.8 961.0 -
* Comparative information has been restated for the change in classification of trunking revenue within the Woolworths Logistics segment, as it was
established that gross rebates received from suppliers should have been presented as part of Cost of sales and not Turnover. Consequently, R221 million
previously reported under Turnover and concession sales has been reclassified to Cost of sales. The reclassification has had no impact on the prior year
statement of financial position, statement of changes in equity, statement of cash flows, nor on earnings per share and other share measures.
GROUP STATEMENT OF FINANCIAL POSITION
At 24 Jun At 25 Jun
2018 2017
Notes Rm Rm
ASSETS
Non-current assets 28 650 34 706
Property, plant and equipment 3 13 959 13 846
Intangible assets 3 13 410 19 595
Investment in joint ventures 978 1 015
Fair value lease adjustment 59 65
Other loans 56 42
Derivative financial instruments 7 18 3
Deferred tax 170 140
Current assets 11 497 10 287
Inventories 7 542 6 990
Trade and other receivables 1 487 1 218
Derivative financial instruments 7 174 40
Tax 271 252
Cash and cash equivalents 2 023 1 787
TOTAL ASSETS 40 147 44 993
EQUITY AND LIABILITIES
TOTAL EQUITY 13 126 19 066
Equity attributable to shareholders of the parent 13 113 19 038
Non-controlling interests 13 28
Non-current liabilities 15 076 15 336
Interest-bearing borrowings 11 711 12 137
Operating lease accrual and fair value lease adjustment 1 906 1 980
Post-retirement medical benefit liability 404 386
Provisions 297 156
Derivative financial instruments 7 - 19
Deferred tax 758 658
Current liabilities 11 945 10 591
Trade and other payables 8 728 8 262
Provisions 752 825
Operating lease accrual and fair value lease adjustment 115 114
Derivative financial instruments 7 77 176
Tax 124 26
Overdrafts and interest-bearing borrowings 2 149 1 188
TOTAL LIABILITIES 27 021 25 927
TOTAL EQUITY AND LIABILITIES 40 147 44 993
Net asset book value per share (cents) 1 365 1 980
GROUP ANALYSIS
Total assets 40 147 44 993
Woolworths* 13 198 12 680
David Jones 18 804 24 217
Country Road Group 7 130 7 044
Woolworths Financial Services 969 1 007
Treasury 46 45
Inventories 7 542 6 990
Woolworths* 3 610 3 550
David Jones 2 747 2 191
Country Road Group 1 185 1 249
Total liabilities 27 021 25 927
Woolworths* 6 143 5 893
David Jones 5 474 6 703
Country Road Group 1 573 1 586
Treasury 13 831 11 745
Approved capital commitments 3 839 4 697
Woolworths* 1 811 2 035
David Jones 1 648 2 157
Country Road Group 380 505
* Includes Woolworths Fashion, Beauty and Home, Woolworths Food and Woolworths Logistics.
GROUP STATEMENT OF CASH FLOWS
52 weeks 52 weeks
to 24 Jun to 25 Jun
2018 2017
Notes Rm Rm
Cash flow from operating activities
Cash inflow from trading 7 371 8 177
Working capital movements (305) (615)
Cash generated by operating activities 7 066 7 562
Investment income received 71 96
Finance costs paid (1 117) (1 216)
Tax paid (1 037) (1 701)
Cash generated by operations 4 983 4 741
Dividends received from joint ventures 325 223
Dividends paid to ordinary shareholders (2 782) (3 015)
Net cash inflow from operating activities 2 526 1 949
Cash flow from investing activities
Investment in property, plant and equipment and intangible assets to maintain operations (1 664) (1 439)
Investment in property, plant and equipment and intangible assets to expand operations (1 004) (1 126)
Proceeds on disposal of property, plant and equipment and intangible assets 79 13
Proceeds on disposal of property in Sydney - 3 677
Acquisition of subsidiary, net of cash acquired - (711)
Loans (advanced)/repaid (12) 8
Net cash (outflow)/inflow from investing activities (2 601) 422
Cash flow from financing activities
Settlement of share-based payments through share purchase 5 (122) (39)
Share purchase costs (1) (2)
Finance lease payments (12) (14)
Borrowings raised 3 306 1 900
Borrowings repaid (3 000) (3 852)
Net cash inflow/(outflow) from financing activities 171 (2 007)
Increase in cash and cash equivalents 96 364
Net cash and cash equivalents at the beginning of the year 1 761 1 497
Effect of foreign exchange rate changes 21 (100)
Net cash and cash equivalents at the end of the year 1 878 1 761
GROUP ANALYSIS
Cash generated by operating activities 7 066 7 562
Woolworths 5 249 5 050
David Jones 414 1 075
Country Road Group 1 403 1 437
GROUP STATEMENT OF CHANGES IN EQUITY
Total Total
Share- Non- 52 weeks Share- Non- 52 weeks
holders of controlling to 24 Jun holders of controlling to 25 Jun
the parent interests 2018 the parent interests 2017
Notes Rm Rm Rm Rm Rm Rm
Shareholders' interest at
the beginning of the year 19 038 28 19 066 19 826 27 19 853
Movements for the year:
(Loss)/profit for the year (3 550) 1 (3 549) 5 446 2 5 448
Other comprehensive income 446 - 446 (3 195) - (3 195)
Total comprehensive
(loss)/income for the year (3 104) 1 (3 103) 2 251 2 2 253
Share-based payments,
including issues, settlements and costs (55) - (55) (25) - (25)
Transfer between reserves 15 (15) - - - -
Dividends to ordinary shareholders (2 781) (1) (2 782) (3 014) (1) (3 015)
Shareholders' interest at
the end of the year 13 113 13 13 126 19 038 28 19 066
Dividend per ordinary share (cents) 239.0 313.0
Dividend cover (based on headline earnings) 1.45 1.34
SEGMENTAL ANALYSIS
Restated
52 weeks 52 weeks
to 24 Jun to 25 Jun
2018 2017 %
Notes Rm Rm change
REVENUE
Turnover 68 592 67 190 2.1
Woolworths Fashion, Beauty and Home 13 687 13 894 (1.5)
Woolworths Food 29 332 27 075 8.3
Woolworths Logistics 429 376 14.1
David Jones 14 455 15 030 (3.8)
Country Road Group 10 689 10 815 (1.2)
Other revenue and investment income 1 980 2 040 (2.9)
Woolworths Fashion, Beauty and Home 18 19 (5.3)
Woolworths Food 130 124 4.8
David Jones 2 221 2 139 3.8
Country Road Group 81 52 55.8
Treasury 11 69 (84.1)
Intragroup 11 (481) (363) 32.5
Total Group 70 572 69 230 1.9
GROSS PROFIT
Woolworths Fashion, Beauty and Home 6 390 6 650 (3.9)
Woolworths Food 7 343 6 794 8.1
David Jones 6 206 6 506 (4.6)
Country Road Group 6 712 6 520 2.9
Intragroup 11 241 202 19.3
Total Group 26 892 26 672 0.8
ADJUSTED (LOSS)/PROFIT BEFORE TAX
Woolworths Fashion, Beauty and Home 1 707 2 168 (21.3)
Woolworths Food 2 167 1 977 9.6
Woolworths Financial Services 286 259 10.4
David Jones 650 1 279 (49.2)
Country Road Group 1 032 958 7.7
Treasury (1 062) (1 096) (3.1)
Total Group-adjusted 4 780 5 545 (13.8)
Adjustments (7 214) 1 181
Impairment of David Jones assets 3 (6 927) -
Relocation and restructure costs, net of grants received (146) (173)
Onerous leases (147) -
Transaction and swap close-out costs - (77)
Unrealised foreign exchange gains 6 11
Profit on sale of property in Sydney - 1 762
Impairment due to sale of property - (342)
Total Group - unadjusted (2 434) 6 726 >(100)
Woolworths Fashion, Beauty and Home 1 712 2 177 (21.4)
Woolworths Food 2 168 1 979 9.6
Woolworths Financial Services 286 259 10.4
David Jones (6 527) 2 502 >(100)
Country Road Group 991 939 5.5
Treasury (1 064) (1 130) (5.8)
NOTES
1. STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
The preliminary Group Annual Financial Statements have been prepared in accordance with the framework concepts and
the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and interpretations
adopted by the International Accounting Standards Board (IASB), IAS 34: Interim Financial Reporting, the South African
Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting Practices Committee,
Financial Pronouncements as issued by the Financial Reporting Standards Council (FRSC), the requirements of the
Companies Act of South Africa and the JSE Limited Listings Requirements.
Accounting policies applied in the preparation of these preliminary Group Annual Financial Statements are consistent with
those applied in the preparation of the Group Annual Financial Statements for the 52-week period ended 24 June 2018,
and are consistent with the prior year. The preliminary Group Annual Financial Statements have been prepared on the
going concern and historical cost bases, except where otherwise indicated. The presentation and functional currency is
the South African rand, rounded to the nearest million, except where otherwise indicated.
The preliminary Group Annual Financial Statements have been prepared under the supervision of the Group Finance
Director, Reeza Isaacs CA(SA), and are the full responsibility of the directors.
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 (refer to note 5).
3. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
The Group acquired property, plant and equipment at a fair value of R2 097 million (2017: R1 962 million) and intangible
assets at a fair value of R564 million (2017: R1 382 million).
As a result of the cyclical downturn and structural changes that have impacted performance across the Australian retail
sector, and the impact of poor or delayed execution in certain key initiatives within David Jones, the carrying value of
property, plant and equipment and intangible assets within David Jones was reassessed during the year. Consequently,
an impairment charge of R6 927 million (A$712.5 million) relating to goodwill and other assets was recognised.
4. PROFIT BEFORE TAX
During the period, the Group received government grants from the State of Victoria, Australia, in respect of operating
expenses and capital expenditure, on the establishment of an Australian regional head office for the Group's subsidiaries,
David Jones and Country Road Group. Included in profit before tax are grants received in respect of income, which have
been deducted from the related expenses in terms of IAS 20: Government Grants. Grants received in respect of capital
expenditure have been recognised in profit before tax on a systematic basis over the useful life of the assets. There are
no unfulfilled conditions and contingencies attached to the grants recognised in the current period.
5. ISSUE AND PURCHASE OF SHARES
2 300 294 (2017: 489 382) ordinary shares totalling R137 million (2017: R39 million) were purchased from the market by
Woolworths Proprietary Limited for the purposes of share incentive schemes and are held as treasury shares by the Group.
266 700 (2017: 27 186) ordinary shares totalling R15 million (2017: R2 million) were sold to the market in terms of the Group's
Restricted Share Plan. 444 714 (2017: 250 042) ordinary shares totalling R35 million (2017: R18 million) were purchased and
allocated to employees in terms of the Group's Restricted Share Plan.
465 934 (2017: 1 820 950) ordinary shares totalling R24 million (2017: R138 million) were issued and allocated to employees in
terms of the Group's other share incentive schemes.
6. ACCOUNTING POLICIES
The adoption of certain new standards, which became effective in the current year, has resulted in minor changes to accounting
policies and disclosure, none of which have a material impact on the financial position or performance of the Group.
STANDARDS ISSUED, NOT YET EFFECTIVE
The Group has undertaken initial assessments of the financial impact of IFRS 9: Financial Instruments, IFRS 15: Revenue from
Contracts with Customers and IFRS 16: Leases, and have identified the following, which will impact on the Group's financial
results in the periods that these standards are adopted:
IFRS 9: The standard is effective for financial periods beginning on or after 1 January 2018. The measurement of provisions
against receivables will be revised to comply with the expected credit loss method. Accordingly, a reduction of between
13% and 17% of the carrying value of the Group's investment in the joint venture with ABSA Limited, Woolworths Financial
Services, is expected. Excluding this, the Group does not consider the potential impact of application of the standard to
be material.
IFRS 15: The standard is effective for financial periods beginning on or after 1 January 2018. The Group recognises
revenue from the principal activities of retailing and associated activities, such as logistics services and concession sales
commission.
Management has assessed the effects of applying the new standard on the Group's financial statements and has
identified the following areas that are likely to be affected:
- Rights of return: IFRS 15 requires separate presentation on the statement of financial position of the right to recover the
goods from the customer and the refund obligation. The requirements of IFRS 15 are not expected to result in a change
in the provisioning for refunds, nor is the right of return asset expected to exceed 0.2% of sales, and is therefore not
considered material;
- Gift card breakage: IFRS 15 requires the Group to estimate the value of gift cards that would expire and recognise
this amount as revenue. The Group currently does not recognise revenue for future gift card breakage. The value of
expected gift card breakage is not expected to exceed 0.1% of sales, and is therefore not considered material;
- Customer loyalty programmes: The standard specifies that, when the Group grants a customer the option to acquire
additional goods or services in terms of customer loyalty programmes, and that option is a separate performance
obligation, the Group should defer the recognition of revenue relating to the option until the performance obligations
are fulfilled. Management has estimated that the impact on revenue is not expected to exceed 0.1% of sales, and is
therefore not considered material.
Excluding these areas, the Group does not consider other potential impacts of application of the standard to be material.
IFRS 16: The standard is effective for financial periods beginning on or after 1 January 2019. The standard is expected to
have a material impact due to the significant number of leases, and will result in changes to the statement of financial
position, whereby a right-of-use asset and lease liability will be recognised. Changes to the statement of comprehensive
income will result in the current operating lease costs being replaced by an amortisation of the right-of-use asset and
associated finance costs. The standard will also impact a number of statutory measures such as operating profit and cash
generated from operations, and will require normalisation of performance measures and covenants. The Group continues
to assess the impact on its Annual Financial Statements in respect of the application of IFRS 16, including understanding the
practical application of the principles of the standard. It is therefore not practical to provide a reasonable estimate of the
financial effect until this review is complete.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of trade and other receivables, trade and other payables and borrowings approximate their fair values.
In terms of IFRS 13: Fair Value Measurement, the Group's borrowings are measured at amortised cost and its derivative
financial instruments at fair value. These are determined to be Level 2 under the fair value hierarchy. Derivatives are valued
using valuation techniques with market observable inputs, with derivatives being mainly in respect of interest rate swaps and
foreign exchange forward contracts. The most frequently applied valuation technique include forward pricing and swap
models, using present value calculations. The models incorporate various inputs, including the credit quality of counterparties,
foreign exchange spot and forward rates, interest rate curves and forward rate curves of the underlying index.
8. 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.
9. PRO FORMA FINANCIAL INFORMATION
Adjusted headline earnings and constant currency information presented in these preliminary Group Annual Financial
Statements constitute pro forma financial information.
2018 2017 %
Rm Rm change
9.1 Adjusted headline earnings
Headline earnings 3 327 4 045 (17.8)
Adjustments 192 (9)
Relocation and restructure costs, net of grants received 126 173
Onerous leases 147 -
Transaction and swap close-out costs - 53
Unrealised foreign exchange gains (6) (11)
Tax impact of adjustments (75) (60)
Tax base adjustments on David Jones assets at acquisition - (164)
Adjusted headline earnings 3 519 4 036 (12.8)
9.2 Constant currency information
Turnover and concession sales 76 168 74 052 2.9
Notes
1. The accounting policies adopted by the Group in the latest Annual Financial Statements, which have been
prepared in accordance with IFRS, have been used in preparing the pro forma financial information.
2. Adjusted headline earnings is arrived at, after excluding from headline earnings, costs of a non-recurring nature.
3. Constant currency information has been presented to illustrate the impact of changes in the Group's major
foreign currency, the Australian dollar. In determining the constant currency information, amounts denoted
in Australian dollars for the current financial reporting period have been adjusted by application of the
aggregated monthly average Australian dollar exchange rate for the prior comparable period of R10.25/A$.
4. The pro forma financial information, which is the responsibility of the Group's directors, has been presented for
illustrative purposes only and is consistent with the prior reporting period.
5. Accordingly, the pro forma financial information may not fairly present the Group's financial position, changes
in equity, results of operations or cash flows.
6. The Group's external auditors, EY, have issued a Reporting Accountant's assurance report in terms of ISAE 3420:
Assurance Engagements to Report on the Compilation of Pro Forma Financial Information, on the pro forma financial
information contained in this announcement, a copy of which is available at the Company's registered office.
10. BORROWING FACILITIES
Unutilised banking and debt facilities amount to R10 716 million (2017: R11 833 million) as follows:
2018 2017
Rm Rm
Committed 10 216 11 033
Uncommitted 500 800
Total 10 716 11 833
Notes to the value of R2.5 billion were issued under the Domestic Medium Term Note (DMTN) programme, which is
a further source of funding to the Group. The DMTN programme was approved by the JSE on 17 March 2017 and is
guaranteed by Woolworths Proprietary Limited. It will be used to raise debt on an ongoing basis.
11. RELATED-PARTY TRANSACTIONS
The Group entered into related-party transactions, the substance of which is disclosed in the Group's 2018 Annual
Financial Statements. Intragroup adjustments relate to the sale of concession goods between segments and supply
chain distribution adjustments.
12. EVENTS SUBSEQUENT TO THE REPORTING DATE
No event material to the understanding of these preliminary Group Annual Financial Statements has occurred between
the end of the financial year and the date of approval.
13. APPROVAL OF PRELIMINARY GROUP ANNUAL FINANCIAL STATEMENTS
The preliminary Group Annual Financial Statements were approved by the Board of Directors on 22 August 2018.
14. AUDIT OPINION
These preliminary Group Annual Financial Statements have not been audited but have been extracted from the audited
Group Annual Financial Statements, upon which EY have issued an unqualified audit opinion. The auditor's report does
not necessarily report on all the information contained in this announcement. Shareholders are therefore advised that, in
order to obtain a full understanding of the nature of the auditor's engagement, they should obtain a copy of the auditor's
report, together with the accompanying financial information from the Company's registered office.
DIRECTORATE AND STATUTORY INFORMATION
NON-EXECUTIVE DIRECTORS
Simon Susman (Chairman), Patrick Allaway (Australian),
Zarina Bassa, Tom Boardman (Lead Independent Director),
Hubert Brody, Andrew Higginson (British),
Gail Kelly (Australian), Nombulelo Moholi,
Sizakele Mzimela
EXECUTIVE DIRECTORS
Ian Moir (Group Chief Executive Officer) (Australian),
Reeza Isaacs (Group Finance Director), Sam Ngumeni,
Zyda Rylands
GROUP COMPANY SECRETARY
Chantel Reddiar
SHARE CODE
WHL
BOND CODE
WHLI
SHARE ISIN
ZAE000063863
BOND ISIN
ZAG000147133
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
15 Biermann Avenue, Rosebank, 2196
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