WOOLWORTHS HOLDINGS LIMITED - Audited Group results for the 52 weeks ended 24 June 2018, Cash dividend declaration and Changes to the Board

Release Date: 23/08/2018 07:05
Code(s): WHL WHL01
 
Wrap Text
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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