WHL - Woolworths Holdings - Notification of impact of rand strength on year end
WOOLWORTHS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1929/001986/06)
Share code: WHL ISIN: ZAE000063863
("Woolworths Holdings" or "the Company")
NOTIFICATION OF IMPACT OF RAND STRENGTH ON YEAR END RESULTS
In line with its stated treasury policy, the group takes out forward exchange
contracts ("FEC's") to cover imported merchandise commitments. FEC's with a
value of $50m covering imports for the summer season remained open as at 30 June
The group uses the pool method to manage these commitments and to provide an
effective economic hedge. However due to the complexity in documenting the
relationship between hedging instruments and hedged items required in terms of
IAS 39, the group does not apply hedge accounting to these transactions. The
FEC's were taken out at an average spot rate 15% higher than the year end rate
and consequently, a non-cash, unrealised foreign exchange loss of R79m will be
recognised in the income statement for the year ended 30 June 2009.
As the selling price of the merchandise for which the cover was taken out as an
economic hedge will be based on the forward contract rate, the group expects the
impact of the foreign exchange loss to reverse during the financial year ended
30 June 2010.
In future, the group will communicate similar material unrealised foreign
exchange gains and losses to investors at reporting period ends.
1 July 2009
Merchant bank and sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 01/07/2009 16:38:01 Produced by the JSE SENS Department.
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