2001/02/15
15/02/2001 - Woolworths - Unaudited Group Results [JSE Securities Exchange - SENS]
 
###15/02/2001 - Woolworths - Unaudited Group Results###

15/02/2001 - 20:04:34

Woolworths Holdings Limited
Unaudited group results for the six months ended 31 December 2000
* Net profit before tax up 17.2%
* Improved performance by the Woolworths chain
* Headline earnings up 8.1%
* Strong balance sheet
* Dividend maintained
Income statement Year ended
30 June                                         Six months ended
2000                                              31 December
(audited)                                        2000      1999      %
Rm                                         Note  Rm        Rm        Change
6 678.6   Revenue                                3 670.7   3 386.9
6 369.6   Turnover                               3 500.5   3 234.1   8.2
267.0     Interest                               137.1     130.8     4.8
42.0      Other revenue                          33.1      22.0      50.5
6 285.3   Expenses                               3 431.2   3 182.6   7.8
4 128.1   Cost of merchandise                    2 291.7   2 134.8
195.8     Depreciation                           100.7     95.7
382.0     Occupancy cost                         230.7     191.0
1 002.1   Employment cost                        525.2     495.0
529.6     Other operating cost                   257.7     244.2
47.7      Interest paid                          25.2      21.9
393.3     Net profit before exceptional items    239.5     204.3     17.2
42.6      Exceptional items                      -         -
350.7     Net profit before tax                  239.5     204.3     17.2
114.4     Tax                                 2  82.2      65.4      25.7
236.3     Net profit after tax                   157.3     138.9     13.2
1.8       Outside shareholders' interest         0.3       0.5
          Net profit attributable to
234.5     ordinary shareholders                  157.0     138.4     13.4
890.6     Number of shares issued (millions)     900.1     880.6     2.2
          Weighted average number of shares
878.9     in issue (millions)                    895.5     872.9     2.6
26.7      Earnings per share (cents)             17.5      15.9      10.1
26.3      Diluted earnings per share (cents)  3  17.4      15.6      12.1
27.0      Headline earnings per share (cents) 4  17.3      16.0      8.1
          Headline earnings, excluding
30.5      restructuring costs, per share (cents) 17.3      16.0      8.1
14.0      Dividend per share (cents)             6.5       6.5
2.2       Dividend cover                         2.7       2.5
GROUP ANALYSIS
6 369.6   Turnover                               3 500.5   3 234.1   8.2
5 286.4   Woolworths                             2 934.4   2 687.1   9.2
3 031.1   Textiles                               1 637.2   1 572.4   4.1
2 206.5   Foods                                  1 242.7   1 090.2   14.0
48.8      Other                                  54.5      24.5      122.4
1 083.2   Country Road                           566.1     547.0     3.5
          Net profit before tax and
393.3     exceptional items                      239.5     204.3     17.2
378.7     Woolworths                             237.3     199.9     18.7
14.6      Country Road                           2.2       4.4       -50.0
Balance sheet
Year ended
30 June                                                  Six months ended
2000                                                         31 December
(audited)                                                  2000      1999
Rm                                                   Note  Rm        Rm
ASSETS
1 458.4   Long-term assets                                 1 506.6   1 483.3
1 028.3   Property, plant and equipment                    1 042.7   1 043.0
20.9      Investments                                   5  21.3      28.4
67.2      Loans to customers                               110.9     60.6
252.7     Participation loans to export partnerships       241.6     264.3
89.3      Other loans                                      90.1      87.0
2 036.7   Current assets                                   2 139.3   2 058.7
485.5     Inventories                                      511.9     596.5
1 242.2   Debtors                                          1 453.7   1 213.7
74.4      Loans to customers                               81.9      24.9
234.6     Bank balances and cash                           91.8      223.6
3 495.1   Total assets                                     3 645.9   3 542.0
EQUITY AND LIABILITIES
2 136.7   Capital and reserves                             2 260.9   2 049.4
2 103.9   Ordinary shareholders' interest                  2 225.9   2 019.4
32.8      Outside shareholders' interest                   35.0      30.0
298.8     Long-term liabilities                            277.5     308.5
11.1      Interest bearing borrowings                      0.6       31.0
287.7     Deferred tax                                     276.9     277.5
1 059.6   Current liabilities                              1 107.5   1 184.1
684.4     Creditors and provisions                         749.5     740.6
39.3      Tax                                              82.9      49.7
335.9     Interest bearing borrowings                      275.1     393.8
3 495.1   Total equity and liabilities                     3 645.9   3 542.0
236.2     Net asset book value - per share (cents)         247.3     229.3
8.0%      Debt: equity ratio                               8.7%      10.3%
GROUP ANALYSIS
3 495.1   Total assets                                     3 645.9   3 542.0
3 125.2   Woolworths                                       3 247.1   3 169.0
369.9     Country Road                                     398.8     373.0
485.5     Inventories                                      511.9     596.5
318.3     Woolworths                                       331.9     412.4
167.2     Country Road                                     180.0     184.1
233.9     Approved commitments for capital expenditure     93.5      92.9
201.7     Woolworths                                       1.7       76.2
32.2      Country Road                                     11.8      16.7
Cash flow statement
Year ended
30 June                                                   Six months ended
2000                                                         31 December
(audited)                                                  2000      1999
Rm                                                         Rm        Rm
          Cash flow from operating activities
350.4     Cash inflow from trading                         204.2     206.5
(27.6)    Working capital movements                        (154.8)   (75.9)
322.8     Cash generated by operating activities           49.4      130.6
267.4     Interest received and investment income          137.3     131.1
(47.7)    Interest paid                                    (25.2)    (21.9)
(94.9)    Tax paid                                         (45.5)    (44.1)
447.6     Cash generated by operations                     116.0     195.7
(62.8)    Dividends paid                                   (44.6)    (32.6)
384.8     Net cash inflow from operating activities        71.4      163.1
          Cash flow from investing activities
          Investment in property, plant and equipment to
(90.0)    maintain operations                              (42.0)    (50.0)
          Investment in property, plant and equipment to
(115.0)   expand operations                                (83.6)    (58.6)
23.2      Proceeds on disposal of property,
          plant and equipment                              19.7      6.8
(36.0)    Investments                                      (0.4)     (28.4)
-         Investment in subsidiaries                       -         (1.8)
(124.5)   Loans to customers                               (51.2)    (68.4)
          Participation loans to export partnerships
(61.4)    repaid/(advanced)                                11.1      (66.0)
(11.0)    Loans advanced to directors and employees        (2.3)     (10.7)
(414.7)   Net cash outflow from investing activities       (148.7)   (277.1)
          Cash flow from financing activities
21.3      Shares issued                                    6.8       16.8
(11.7)    Long-term liabilities repaid                     (10.5)    9.6
9.6       Net cash (outflow)/inflow
          from financing activities                        (3.7)     26.4
(20.3)    Increase in net overdrafts                       (81.0)    (87.6)
(81.9)    Net overdrafts at the beginning of the period    (101.3)   (81.9)
0.9       Effect of foreign exchange rate changes          (1.0)     (0.7)
(101.3)   Net overdrafts at the end of the period          (183.3)   (170.2)
GROUP ANALYSIS
542.5     Cash generated by operations - before tax        161.4     239.8
478.6     Woolworths                                       125.9     224.5
63.9      Country Road                                     35.5      15.3
          Gross expenditure on property, plant and
205.0     equipment                                        125.6     108.6
161.8     Woolworths                                       106.3     96.6
43.2      Country Road                                     19.3      12.0
Notes: 1. The interim financial statements comply with South African Statements
of Generally Accepted Accounting Practice. Accounting policies used are
consistent with those applicable for the 30 June 2000 financial statements,
except as follows. The Group's policy for providing for dividends and the
related STC are now recorded in the period in which they are paid, rather than
in the period for which the dividend is recommended. The change has the effect
of marginally decreasing the reported profits after tax. Comparative figures
have been restated to give effect to this change and have been adjusted where
expense and income classifications have been changed in the current year. 2.
The effective tax rate has increased through the incidence of STC and tax on
the foreign earnings. 3. The difference between the earnings per share and
diluted earnings per share result from outstanding options in terms of the
share purchase scheme. 4. Headline earnings per share is based on net profit
attributable to the ordinary shareholders adjusted by the net profit on the
sale of property, plant and equipment of R1.2m (1999: R1.1m loss). 5.
Investments consist of listed shares with a market value of R15.7m. The
directors consider the shortfall against carrying value to be of a temporary
nature. 6. Contingent liabilities at the end of the period amount to R3m (1999:
R1.1m). 7. Unutilised banking facilities amount to R983m (1999: R897m), with no
limit on the group's interest bearing debt. 8. Sales occur approximately evenly
during the first and second six months. Monthly sales fluctuate with the
occurrence of Christmas, Eid and other similar events. Other turnover is
derived from the supply chain.
Statement of changes in ordinary shareholders' interest
Year ended
30 June                                                    Six months ended
2000                                                         31 December
(audited)                                                  2000      1999
Rm                                                         Rm        Rm
          Ordinary shareholders' interest at the
1 909.5   beginning of the period                          2 103.9   1 909.5
1 886.2   As previously reported                           2 071.3   1 886.2
          Prior year adjustment to opening balance arising from
23.3      the change in accounting policy for
          dividends paid                                   32.6      23.3
          Movements for the period:
          Share premium arising from shares issued
21.3      under share purchase scheme                      6.7       16.8
173.1     Recognised gains and losses                      115.3     93.1
163.2     Distributable reserves                           113.8     95.4
234.5     Net profit attributable to ordinary shareholders 157.0     138.4
(62.8)    Distributions to ordinary shareholders           (44.6)    (32.6)
(2.3)     Net unrealised gain/(loss) on
          hedging instruments                              1.4       1.1
          Premium on acquisition of subsidiaries and
(6.2)     intangible assets written off                    -         (11.5)
          Non-distributable reserves
          Exchange differences on translation of
9.9       foreign entities                                 1.5       (2.3)
          Ordinary shareholders' interest at the end
2 103.9   of the period                                    2 225.9   2 019.4
COMMENTARY
Group Results
Trading conditions in South Africa and Australia continue to be difficult as a
result of low consumer confidence and changing consumer spending patterns.
Under the circumstances, the group has delivered satisfactory attributable
profits of R157m, which reflects a 13.4% increase compared to the same period
of the previous year. Headline earnings per share have increased by 8.1%.
Woolworths
The improvement in Woolworths' performance, which commenced in the second half
of the last financial year, has continued. Profit before tax for the 6 months
to December 2000 rose by 18.7% over that of the same period of the previous
year to R237.3m.
Woolworths' market share of the clothing and footwear trade as measured by the
Retail Liaison Committee has improved to 14.5% (1999 - 14.2%). The textile
business continues to be tough and the increase in volumes of textiles sold has
been largely negated by the deflation in retail clothing prices.
The offering in our stores has improved through the benefits of the merchandise
replenishment systems and through the continued efforts to improve range
selection to meet our customers' needs. Overhead costs have been favourably
impacted by the restructuring program implemented in the prior financial year.
Seven more stores have been franchised and opportunities to expand our
franchise business are being pursued.
Food sales are up 14% on the same period of the previous year. The new store
format and their convenient locations have been well received by our customers
and market share has increased marginally to 6,2%. Availability of product on
our shelves has improved significantly as a result of the enhanced supply chain
The financial services division has traded successfully during the period,
despite the lower level of interest rates. Besides administering the debtors
arising from Woolworths card sales, the division now has loans to customers of
R193m, a local unit trust and an international unit trust, and it is shortly to
launch a Woolworths Visa credit card.
Debtors and loans continue to be well managed and net bad debts are within
budgeted levels.
Country Road
In Australia the introduction of GST and a post-Olympics decline in the levels
of consumer spending have resulted in the sales increase (in AU$) being limited
to 0.6%.
Country Road's profit before tax for the 6 months is R2.2m (1999 - R4.4m). A
profit was achieved in the USA and New Zealand whilst a loss was returned in
Australia.
The current apparel retail trading environment is a difficult one in both
Australasia and the USA. Consistent with most retailers we do not foresee an
improvement in consumer demand or market conditions over the next six months.
Management is committed to bringing about efficiencies and economies that will
result in lower costs across the business.
Group Prospects
Management is encouraged by the group results at a time when many retailers,
particularly clothing retailers, are struggling to maintain profitability. It
is expected that the current trend of a modest improvement in profitability
will continue into the second half of the year.
Dividend
Notice is hereby given that an interim dividend of 6.5 cents per share was
declared on 15 February 2001 in respect of the six months ended 31 December
2000, payable to ordinary shareholders registered in the books of the company
at the close of business on Friday, 2 March 2001. Where electronic transfer
instructions are in place, dividends will be credited to shareholders' bank
accounts on or about 11 April 2001. In the absence of such mandates, dividend
cheques will be posted to shareholders on the same date. The dividend is
declared payable in the currency of the Republic of South Africa.
Strate
In order to assist shareholders and to facilitate an orderly transition ahead
of the company's entry to STRATE scheduled for October 2001, the directors have
considered it prudent to implement STAR, a service offered by Mercantile Bank
to assist issuers and shareholders to validate and dematerialise their listed
shares prior to their admission to STRATE.
Documentation setting out the details of the programme and the action required
will be posted to shareholders on Monday, 19 February 2001.
On behalf of the Board of Directors.
C A Hall                                S N Susman
Chairman                                CEO
Cape Town
16 February 2001
Directorate Chairman C A Hall           Executive director S N Susman (CEO)
Non-executive directors M Barnes (British), N L Colne (British), B J Frost, I N
Thomson  Company Secretary C L Lowe
Woolworths Holdings Limited Company Registration Number 1929/001986/06
Registered Office Woolworths House, 93 Longmarket Street, Cape Town 8001
Transfer Secretaries Mercantile Registrars Limited, 10th Floor, 11 Diagonal
Street, Johannesburg 2001
This information is also available on the Internet: www.edata.co.za/woolworths
or www.woolworths.co.za
PRODUCED BY: MALANGO KAUNDA 15-02-2001 08:30 SENS

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Source: JSE Securities Exchange - SENS
 
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