2010/02/18
WHL - Woolworths Holdings - Unaudited Condensed Group Results For The 26 Weeks [JSE Securities Exchange - SENS]
 
WOWOW                                                                           
WHL - Woolworths Holdings - Unaudited Condensed Group Results For The 26 Weeks  
    To 27 December 2009 And Cash Distribution Declaration By Way Of Capital     
    Reduction                                                                   
WOOLWORTHS HOLDINGS LIMITED                                                     
(Incorporated in the Republic of South Africa)                                  
Registration number: 1929/001986/06                                             
Share code: WHL                                                                 
ISIN: ZAE000063863                                                              
("Woolworths" or "the group" or "the Company")                                  
UNAUDITED CONDENSED GROUP RESULTS FOR THE 26 WEEKS TO 27 DECEMBER 2009 AND CASH 
DISTRIBUTION DECLARATION BY WAY OF CAPITAL REDUCTION                            
financial highlights                                                            
- turnover up 9.3%                                                              
- SA Retail operating profit margin of 7.5% from 6.7%                           
- SA Retail profit before tax up 20.1%                                          
- adjusted headline earnings per share up 13.8%                                 
- cash distribution of 38.0 cents                                               
- strong balance sheet                                                          
commentary                                                                      
Group results                                                                   
The results are not comparable due to the sale of a controlling interest of the 
Woolworths Financial Services business on 1 October 2008.                       
Group retail turnover grew by 9.3% for the twenty-six weeks to                  
27 December 2009. Comparable store sales growth for the same period was 4.4%.   
With better sourcing and good cost control operating margin in Woolworths has   
improved.                                                                       
Adjusted headline earnings per share, which excludes the post-tax foreign       
exchange impact of R41.6m and the R75m STC charge on the special dividend paid  
in December 2008, increased by 13.8% to 80.1 cents per share.                   
A distribution of 38.0 cents per share (2008: 31.5) has been declared.          
Our strong balance sheet has allowed us to continue to repurchase shares, with  
a further R220m purchased during the period.                                    
operating review                                                                
SA Retail                                                                       
Economic conditions have remained tough in the period. Our segmented, more      
innovative merchandise offer and improved values has attracted more customers   
into our Woolworths stores.                                                     
Improved product margin and good cost control has increased the operating       
profit margin from 6.7% to 7.5%.                                                
Total footage grew by 5.7%, with a year on year increase of 5.2% in clothing    
and general merchandise and 6.9% in food at the end of December 2009. We        
anticipate the level of new store rollouts to be more modest with a focus on    
larger food stores and full-line stores.                                        
Clothing and general merchandise                                                
Clothing and general merchandise sales increased by 9.7% with market share      
gains made for the last nine months. Comparable store sales have increased by   
6.2%.                                                                           
Operating profit margin has increased from 12.0% to 13.1% as a result of the    
targeted and focused sourcing programme and good cost control. Price movement   
at 11.8% is mainly due to the impact of a weaker rand when this summer          
merchandise was procured.                                                       
Food                                                                            
Food sales increased by 8.9%, with a gain in market share in the last two       
months of trade. Comparable store sales have increased by 4.7%.                 
Operating profit margin has increased to 3.8% from 3.4%, driven by our          
repositioned prices and value offering. Price movement has declined from 8.2%   
at June 2009 to 6.3% at the end of December 2009, and is expected to decline    
further.                                                                        
Country Road                                                                    
The trading conditions in Australia have been tough. The government's fiscal    
stimulus packages of the previous year have not been repeated again this year   
and there have been three interest rate increases in the last six months.       
Sales for the period were 12.6% up on last year with comparable store sales of  
4.7% (in Australian dollar terms). Market share continues to improve. Customer  
reaction to the launch of the new brand, Trenery, in both Australia and South   
Africa has been positive.                                                       
The operating profit margin of 6.7% (December 2008: 8.4%) has been negatively   
impacted by the start-up costs of the Trenery brand.                            
Woolworths Financial Services (WFS)                                             
The results of WFS segment are not comparable with last year. For the period    
ended December 2009 they are equity accounted as a joint venture for the full   
period, whilst for the period to December 2008 they were accounted as a         
subsidiary for the first quarter and equity accounted for the second quarter.   
Consumers continue to manage their use of credit. They are not taking on        
significant amounts of additional credit and are continuing to extend their     
credit terms.                                                                   
The closing debtors' books have increased by 1.2% year on year at the end of    
December 2009. Bad debts have been well controlled with the impairment rate for 
the period at 6.2% down from December 2008 of 7.6% and June 2009 of 7.5%.       
Outlook                                                                         
Conditions in South Africa and Australia will remain challenging. In South      
Africa, the upper income consumer is more confident.                            
As we move out of recession, the group is better positioned to take advantage   
of any upliftment in consumer spending.                                         
DA Hawton             SN Susman                                                 
Chairman              Chief Executive Officer                                   
Cape Town, 17 February 2010                                                     
notice of distribution                                                          
Notice is hereby given that the directors have resolved to make a capital       
reduction out of share premium of 38.0 cents per ordinary share in lieu of the  
interim dividend for the twenty-six weeks to 27 December 2009 ("cash            
distribution"). The cash distribution will be made out of the Company's share   
premium account if shareholders in general meeting pass the requisite           
resolution contained in the circular posted to shareholders on                  
29 January 2010, authorising the directors to allot and issue ordinary shares   
for cash to the Company's wholly-owned subsidiary, Woolworths (Proprietary)     
Limited. Shareholders are referred to the announcement released on SENS on      
20 January 2010 in this regard.                                                 
If however, such authority is not obtained from the shareholders, an interim    
dividend of 38.0 cents per ordinary share for the twenty-six weeks to           
27 December 2009 will be paid.                                                  
In terms of paragraph 11.31(d) of the JSE Listings Requirements the Company is  
required to disclose the financial effects of the cash distribution.            
The table below sets out the unaudited pro forma financial effects of the cash  
distribution on net asset value ("NAV") and net tangible asset value ("NTAV")   
per share based on the published unaudited results of the Company for the       
twenty-six weeks to 27 December 2009.                                           
The unaudited pro forma financial effects are the responsibility of the         
directors and have been prepared for illustrative purposes only and, because    
of their nature, may not provide a fair reflection of the Company's financial   
position after the implementation of the cash distribution.                     
Shareholders are advised that, as the cash distribution is being made in lieu   
of an interim cash dividend, there will be no additional or abnormal reduction  
in the cash and cash equivalents and equity attributable to shareholders of the 
Company.                                                                        
                  Unaudited unadjusted                   Pro forma              
                       results for the             results for the              
                   twenty-six weeks to         twenty-six weeks to              
                      27 December 2009            27 December 2009         %    
             before the distribution(1)   after the distribution(2)    change   
NAV per                                                                         
share                             407.7                       369.7      (9.3)  
TNAV per                                                                        
share                             359.7                       321.7     (10.6)  
Notes:                                                                          
1. As per the published unaudited results of Woolworths for the twenty-six      
weeks to 27 December 2009.                                                      
2. Adjustments to NAV per share and TNAV per share were made on the             
assumptions that:                                                               
- the cash distribution to shareholders was paid on 27 December 2009; and       
- the cash distribution is paid from cash resources and accordingly cash and    
cash equivalents and share premium are reduced by R290.4 million.               
The salient dates for the distribution or dividend will be as follows:          
                                                                      2010      
Last day to lodge proxy forms (by no later                                      
than 11h00) for the general meeting on                 Tuesday, 23 February     
General meeting held at 11h00 on                      Thursday, 25 February     
Results of general meeting announcement                                         
published on SENS                                     Thursday, 25 February     
Results of general meeting announcement                                         
published in the press on                               Friday, 26 February     
Finalisation announcement released on SENS                 Friday, 12 March     
Last day to trade to be eligible to receive                                     
the cash distribution or dividend                        Thursday, 25 March     
Shares trade "ex" the cash distribution                                         
or dividend                                                Friday, 26 March     
Record date for the cash distribution                                           
or dividend                                               Thursday, 1 April     
Cash distribution or dividend paid to                                           
certificated ordinary shareholders on                      Tuesday, 6 April     
Cash distribution or dividend credited to                                       
accounts of dematerialised ordinary                                             
shareholders held by their CSDP or broker on               Tuesday, 6 April     
Notes:                                                                          
1. Any change to the above dates and times will, subject to approval of the     
JSE, be communicated to shareholders by notification on SENS and in the press.  
2. All times indicated above are South African local times.                     
3. Share certificates may not be dematerialised or rematerialised between       
Friday, 26 March 2010 and Thursday, 1 April 2010, both days inclusive.          
In accordance with the Company's Articles of Association a distribution of      
dividend amounting to less than R5.00 due to any one holder of the Company's    
ordinary shares held in certificated form will not be paid, unless otherwise    
requested in writing, but will be aggregated with other such amounts and will   
be donated to a charity nominated by the directors.                             
An interim cash dividend of 8.7 cents per preference share for the twenty-six   
weeks to 27 December 2009 will be paid to the beneficiaries of the Woolworths   
Employee Share Ownership Scheme on Tuesday, 6 April 2010.                       
CL Lowe                                                                         
Group secretary                                                                 
Cape Town, 17 February 2010                                                     
unaudited condensed group results for the 26 Weeks to 27 december 2009          
consolidated statement of comprehensive income                                  
                                                52 weeks to                     
                                                    28 June                     
                                                       2009                     
                                                         Rm          Notes      
Revenue                                             21 922.3                    
Turnover                                            21 175.0                    
Cost of sales                                       14 501.1                    
Gross profit                                         6 673.9                    
Other revenue                                          747.3                    
Expenses                                             5 783.7                    
Store costs                                          3 481.9                    
Net bad debt and bad debt provision                    134.2                    
Other operating costs                                2 167.6                    
Operating profit                                     1 637.5                    
Finance costs                                          281.2                    
Earnings from joint ventures                            58.1                    
Earnings from associate                                 11.7                    
Profit before exceptional item                       1 426.1                    
Profit on disposal of controlling interest                                      
in subsidiary                                          380.0                    
Profit before tax                                    1 806.1                    
Tax                                                    546.3              5     
Profit after tax                                     1 259.8                    
Other comprehensive income:                                                     
Net fair value adjustments on financial                                         
instruments                                           (53.9)                    
Exchange differences on translation of                                          
foreign subsidiaries                                  (81.0)                    
Other comprehensive income for the period,                                      
net of tax                                           (134.9)                    
Total comprehensive income for the period            1 124.9                    
Profit attributable to:                              1 259.8                    
Shareholders of the parent                           1 247.7                    
Non-controlling interest                                12.1                    
Total comprehensive income attributable to:          1 124.9                    
Shareholders of the parent                           1 124.2                    
Non-controlling interest                                 0.7                    
Reconciliation of headline earnings                                             
Earnings attributable to shareholders of                                        
the parent                                           1 247.7                    
BEE preference dividend paid                             8.6                    
Basic earnings                                       1 239.1                    
Profit on disposal of controlling interest                                      
in subsidiary                                        (380.0)                    
Loss/(profit) on disposal of property,                                          
plant and equipment                                      3.5                    
Tax impact of adjustments                              (1.0)                    
Headline earnings                                      861.6                    
Abnormal foreign exchange (profit)/loss                 56.9              6     
STC on special dividend                                 75.0                    
Adjusted headline earnings                             993.5                    
Headline earnings per share (cents)                    109.3                    
Earnings per share (cents)                             157.2              7     
Adjusted headline earnings per share                                            
(cents)                                                126.0                    
Diluted headline earnings per share (cents)            107.5                    
Diluted earnings per share (cents)                     154.0              7     
Adjusted diluted headline earnings per                                          
share (cents)                                          123.7                    
Number of shares in issue (millions)                   774.7                    
Weighted average number of shares in issue                                      
(millions)                                             788.3                    
                                                      Restated                  
                                   26 weeks to     26 weeks to                  
                                   27 December     28 December                  
                                          2009            2008           %      
                                            Rm              Rm      change      
Revenue                                11 696.0        11 147.1         4.9     
Turnover                               11 549.8        10 562.9         9.3     
Cost of sales                           7 705.5         7 274.1         5.9     
Gross profit                            3 844.3         3 288.8        16.9     
Other revenue                             146.2           584.2      (75.0)     
Expenses                                2 989.6         2 847.3         5.0     
Store costs                             1 945.3         1 721.1        13.0     
Net bad debt and bad debt                                                       
provision                                     -           134.2     (100.0)     
Other operating costs                   1 044.3           992.0         5.3     
Operating profit                        1 000.9         1 025.7       (2.4)     
Finance costs                              75.0           195.2      (61.6)     
Earnings from joint ventures               26.9            27.4       (1.8)     
Earnings from associate                     3.1             7.6      (59.2)     
Profit before exceptional item            955.9           865.5        10.4     
Profit on disposal of                                                           
controlling interest in                                                         
subsidiary                                    -           380.0     (100.0)     
Profit before tax                         955.9         1 245.5      (23.3)     
Tax                                       285.8           365.5      (21.8)     
Profit after tax                          670.1           880.0      (23.9)     
Other comprehensive income:                                                     
Net fair value adjustments on                                                   
financial instruments                     (2.7)            62.6     (104.3)     
Exchange differences on                                                         
translation of foreign                                                          
subsidiaries                               17.0            16.2         4.9     
Other comprehensive income                                                      
for the period, net of tax                 14.3            78.8      (81.9)     
Total comprehensive income                                                      
for the period                            684.4           958.8      (28.6)     
Profit attributable to:                   670.1           880.0      (23.9)     
Shareholders of the parent                662.4           872.1      (24.0)     
Non-controlling interest                    7.7             7.9       (2.5)     
Total comprehensive income                                                      
attributable to:                          684.4           958.8      (28.6)     
Shareholders of the parent                674.5           960.7      (29.8)     
Non-controlling interest                    9.9           (1.9)     (621.1)     
Reconciliation of headline                                                      
earnings                                                                        
Earnings attributable to                                                        
shareholders of the parent                662.4           872.1      (24.0)     
BEE preference dividend paid                6.8             5.2                 
Basic earnings                            655.6           866.9                 
Profit on disposal of                                                           
controlling interest in                                                         
subsidiary                                    -         (380.0)                 
Loss/(profit) on disposal of                                                    
property, plant and equipment               7.5           (1.4)                 
Tax impact of adjustments                 (2.1)             0.4                 
Headline earnings                         661.0           485.9        36.0     
Abnormal foreign exchange                                                       
(profit)/loss                            (41.6)               -                 
STC on special dividend                       -            75.0                 
Adjusted headline earnings                619.4           560.9        10.4     
Headline earnings per                                                           
share (cents)                              85.4            61.0        40.0     
Earnings per share (cents)                 84.7           108.8      (22.2)     
Adjusted headline earnings per                                                  
share (cents)                              80.1            70.4        13.8     
Diluted headline earnings per                                                   
share (cents)                              83.4            60.3        38.3     
Diluted earnings per                                                            
share (cents)                              82.7           107.1      (22.8)     
Adjusted diluted headline                                                       
earnings per share (cents)                 78.2            69.5        12.5     
Number of shares in issue                                                       
(millions)                                764.2           786.3       (2.8)     
Weighted average number of                                                      
shares in issue (millions)                773.6           796.6       (2.9)     
consolidated statement of financial position                                    
                                                            At                  
                                                       28 June                  
                                                          2009                  
                                                            Rm       Notes      
ASSETS                                                                          
Non-current assets                                      3 436.4                 
Property, plant and equipment                           1 936.9           8     
Investment property                                       120.8                 
Intangible assets                                         350.5           8     
Investment in associate                                    35.5                 
Investment in joint ventures                              534.1                 
Prepaid employment costs                                   37.0                 
Participation in export partnerships                       65.4                 
Other loans                                               126.2                 
Derivative financial instruments                              -                 
Deferred tax                                              230.0                 
Current assets                                          4 868.7                 
Inventories                                             1 722.7                 
Trade and other receivables                               745.2                 
Derivative financial instruments                            5.8                 
Tax                                                         3.9                 
Cash                                                    2 391.1                 
Total assets                                            8 305.1                 
EQUITY AND LIABILITIES                                                          
Capital and reserves                                    3 071.9                 
Interest of shareholders of the parent                  3 024.7                 
Non-controlling interest                                   47.2                 
Non-current liabilities                                 2 341.5                 
Interest-bearing borrowings                             1 531.6                 
Operating lease accrual                                   456.8                 
Derivative financial instruments                           15.7                 
Post-retirement medical aid liability                     272.1                 
Deferred tax                                               65.3                 
Current liabilities                                     2 891.7                 
Trade and other payables                                2 372.8                 
Provisions                                                250.4                 
Derivative financial instruments                          141.6                 
Tax                                                       111.7                 
Interest-bearing borrowings                                15.2                 
Total equity and liabilities                            8 305.1                 
Net asset book value - per share (cents)                  390.4                 
GROUP ANALYSIS                                                                  
Total assets                                            8 305.1                 
Woolworths                                              7 468.5                 
Country  Road                                             836.6                 
Inventories                                             1 722.7                 
Woolworths                                              1 474.0                 
Country Road                                              248.7                 
Approved commitment for capital expenditure               623.8                 
Woolworths                                                473.1                 
Country Road                                              150.7                 
                                                        At     Restated at      
                                               27 December     28 December      
                                                      2009            2008      
                                                        Rm              Rm      
ASSETS                                                                          
Non-current assets                                  3 532.2         3 309.7     
Property, plant and equipment                       1 988.7         1 928.2     
Investment property                                   120.8           120.8     
Intangible assets                                     366.8           249.2     
Investment in associate                                37.5            32.6     
Investment in joint ventures                          541.0           503.3     
Prepaid employment costs                               33.0            41.0     
Participation in export partnerships                   65.0            65.7     
Other loans                                           125.3           143.0     
Derivative financial instruments                          -             0.7     
Deferred tax                                          254.1           225.2     
Current assets                                      5 301.2         5 613.3     
Inventories                                         1 813.9         1 551.8     
Trade and other receivables                           910.4           943.1     
Derivative financial instruments                        3.4           130.5     
Tax                                                     0.9            74.7     
Cash                                                2 572.6         2 913.2     
Total assets                                        8 833.4         8 923.0     
EQUITY AND LIABILITIES                                                          
Capital and reserves                                3 168.4         3 255.3     
Interest of shareholders of the parent              3 115.9         3 215.9     
Non-controlling interest                               52.5            39.4     
Non-current liabilities                             1 339.9         2 356.2     
Interest-bearing borrowings                           528.0         1 515.0     
Operating lease accrual                               464.8           449.4     
Derivative financial instruments                       17.0             9.2     
Post-retirement medical aid liability                 283.0           259.7     
Deferred tax                                           47.1           122.9     
Current liabilities                                 4 325.1         3 311.5     
Trade and other payables                            2 753.2         2 828.1     
Provisions                                            219.2           218.0     
Derivative financial instruments                       26.0            13.3     
Tax                                                   320.5           243.5     
Interest-bearing borrowings                         1 006.2             8.6     
Total equity and liabilities                        8 833.4         8 923.0     
Net asset book value - per share (cents)              407.7           409.0     
GROUP ANALYSIS                                                                  
Total assets                                        8 833.4         8 923.0     
Woolworths                                          7 919.7         8 016.7     
Country Road                                          913.7           906.3     
Inventories                                         1 813.9         1 551.8     
Woolworths                                          1 533.0         1 323.8     
Country Road                                          280.9           228.0     
Approved commitment for capital expenditure           400.2           574.2     
Woolworths                                            397.2           553.4     
Country Road                                            3.0            20.8     
consolidated statement of cash flows                                            
                                                                  52 weeks      
                                                                to 28 June      
                                                                      2009      
                                                                        Rm      
Cash flow from operating activities                                             
Cash inflow from trading                                            1 650.6     
Working capital movements                                              67.3     
Cash applied to financial services assets                              20.6     
Cash generated by operating activities                              1 738.5     
Interest received                                                     549.5     
Finance costs paid                                                  (312.0)     
Tax paid                                                            (370.3)     
Cash generated by operations                                        1 605.7     
Dividends received from associate                                       1.2     
Dividends received from WFS                                               -     
Distributions to shareholders                                       (654.8)     
Net cash inflow from operating activities                             952.1     
Cash outflow from investing activities                                          
Net investment in PPE                                               (614.2)     
Proceeds on disposal of controlling interest in subsidiary            875.0     
Replacement of WFS debt funding by joint venture partner            2 908.8     
Cash disposed of on sale of controlling interest in subsidiary      (535.1)     
Costs incurred on disposal of controlling interest in subsidiary     (48.1)     
Other                                                                  38.5     
Net cash (outflow)/inflow from investing activities                 2 624.9     
Cash flow from financing activities                                             
Shares issued                                                          25.6     
Repurchase of treasury shares                                       (316.6)     
Special dividend to shareholders                                    (750.0)     
Share repurchase costs                                                (5.0)     
Payment of finance lease liabilities                                  (9.1)     
Net cash outflow from financing activities                        (1 055.1)     
Increase in cash and cash equivalents                               2 521.9     
Cash and cash equivalents at the beginning of the period             (90.7)     
Effect of foreign exchange rate changes                              (40.1)     
Cash and cash equivalents at the end of the period                  2 391.1     
GROUP ANALYSIS                                                                  
Cash inflow from trading                                            1 650.6     
Woolworths                                                          1 448.4     
Country Road                                                          202.2     
Gross capital expenditure                                             753.0     
Woolworths                                                            610.5     
Country Road                                                          142.5     
                                                                  Restated      
                                               26 weeks to     26 weeks to      
                                               27 December     28 December      
                                                      2009            2008      
                                                        Rm              Rm      
Cash flow from operating activities                                             
Cash inflow from trading                            1 061.6           785.5     
Working capital movements                             107.7           495.5     
Cash applied to financial services assets                 -            20.6     
Cash generated by operating activities              1 169.3         1 301.6     
Interest received                                      82.5           454.4     
Finance costs paid                                   (80.3)         (225.2)     
Tax paid                                            (111.4)         (102.4)     
Cash generated by operations                        1 060.1         1 428.4     
Dividends received from associate                       1.1               -     
Dividends received from WFS                            20.0               -     
Distributions to shareholders                       (426.7)         (410.3)     
Net cash inflow from operating activities             654.5         1 018.1     
Cash outflow from investing activities                                          
Net investment in PPE                               (309.1)         (268.0)     
Proceeds on disposal of controlling interest in                                 
subsidiary                                                -           875.0     
Replacement of WFS debt funding by joint                                        
venture partner                                           -         2 822.2     
Cash disposed of on sale of controlling                                         
interest in subsidiary                                    -         (535.1)     
Costs incurred on disposal of controlling                                       
interest in subsidiary                                    -          (48.1)     
Other                                                   4.5            15.1     
Net cash (outflow)/inflow from investing                                        
activities                                          (304.6)         2 861.1     
Cash flow from financing activities                                             
Shares issued                                          17.9            15.7     
Repurchase of treasury shares                       (220.0)         (152.5)     
Special dividend to shareholders                          -         (750.0)     
Share repurchase costs                                (0.7)           (3.4)     
Payment of finance lease liabilities                  (6.0)           (1.4)     
Net cash outflow from financing activities          (208.8)         (891.6)     
Increase in cash and cash equivalents                 141.1         2 987.6     
Cash and cash equivalents at the beginning of                                   
the period                                          2 391.1          (90.7)     
Effect of foreign exchange rate changes                40.4            16.3     
Cash and cash equivalents at the end of the                                     
period                                              2 572.6         2 913.2     
GROUP ANALYSIS                                                                  
Cash inflow from trading                            1 061.6           785.5     
Woolworths                                            938.2           660.1     
Country Road                                          123.4           125.4     
Gross capital expenditure                             315.6           294.7     
Woolworths                                            224.5           251.5     
Country Road                                           91.1            43.2     
consolidated statement of changes in equity                                     
                                                             Shareholders'      
                                                                  interest      
                                 52 weeks to                   before non-      
                                     28 June                   controlling      
                                        2009                      interest      
                                          Rm         Notes              Rm      
Shareholders' interest at the                                                   
beginning of the period               3 577.8                       3 024.7     
Movements for the period:                                                       
Issue of shares                          25.6             9            17.9     
Shares repurchased                    (316.6)             9         (220.0)     
Share repurchase costs                  (5.0)                         (0.7)     
Distributions to shareholders       (1 404.8)                       (422.1)     
Share-based payments                     70.0                          41.6     
Total comprehensive                                                             
income for the year                   1 124.9                         674.5     
Shareholders' interest at                                                       
the end of the period                 3 071.9                       3 115.9     
Distribution per ordinary                                                       
share (cents)                                                                   
- ordinary                               85.0                                   
- special                                94.0                                   
Distribution cover (based on                                                    
headline earnings per share                                                     
excluding special dividend)               1.3                                   
Distribution per preference                                                     
share (cents)                            17.3                                   
                                                                  Restated      
                                                     Total           Total      
                                      Non-     26 weeks to     26 weeks to      
                               controlling     27 December     28 December      
                                  interest            2009            2008      
                                        Rm              Rm              Rm      
Shareholders' interest at                                                       
the beginning of the period            47.2         3 071.9         3 577.8     
Movements for the period:                                                       
Issue of shares                           -            17.9            15.7     
Shares repurchased                        -         (220.0)         (152.5)     
Share repurchase costs                    -           (0.7)           (3.4)     
Distributions to shareholders         (4.6)         (426.7)       (1 160.3)     
Share-based payments                      -            41.6            19.2     
Total comprehensive income for                                                  
the year                                9.9           684.4           958.8     
Shareholders' interest at the                                                   
end of the period                      52.5         3 168.4         3 255.3     
Distribution per ordinary                                                       
share (cents)                                                                   
- ordinary                                             38.0            31.5     
- special                                                 -            94.0     
Distribution cover (based on                                                    
headline earnings per share                                                     
excluding special dividend)                             2.2             1.9     
Distribution per preference                                                     
share (cents)                                           8.7             5.0     
segmental analysis                                                              
The group has adopted IFRS 8 Operating Segments with effect from 1 July 2009.   
IFRS 8 requires operating segments to be identified on the basis of internal    
reporting about components of the group that are regularly reviewed by the      
chief operating decision-maker (CODM) to allocate resources to the segments and 
to assess their performance. The CODM has been identified as the executive      
directors. Management has determined the operating segments based on the        
internal reports. The group has identified five reportable segments as          
follows:                                                                        
- The Clothing and General Merchandise (C&GM) segment supplies clothing,        
homeware, beauty and other lifestyle products.                                  
- The Foods segment offers a wide variety of food products ranging from         
ready-cooked meals to fresh produce, bakery, meat and other consumables.        
- The Country Road segment operates in Australasia, trading in upmarket         
fashion apparel for men, women and children.                                    
- The Woolworths Financial Services (WFS) segment offers financial products     
and services.                                                                   
- The Treasury segment generates net interest as a result of cash management    
activities of the group.                                                        
The executive directors evaluate the segment performance based on operating     
profit or loss before tax and exceptional items.                                
To increase transparency and comparability of revenue, the group has included   
additional voluntary disclosure of revenue from logistics services.             
The new segments are different from the segments previously disclosed as        
Woolworths Retail has been subdivided into Foods and Clothing and General       
Merchandise. Woolworths Financial Services remains a segment accounted for on   
equity basis subsequent to the disposal of the controlling interest on          
1 October 2008.                                                                 
The following is an analysis of the group's revenue and operating results by    
reportable segment:                                                             
                                               52 weeks to     26 weeks to      
                                                   28 June     27 December      
                                                      2009            2009      
                                                        Rm              Rm      
Revenue                                                                         
Turnover                                           21 175.0        11 549.8     
SA Retail                                          18 936.5        10 242.8     
Clothing and General Merchandise                    7 422.9         4 104.1     
Foods                                              11 126.1         5 937.4     
Logistics                                             387.5           201.3     
Country Road                                        2 234.5         1 307.0     
Financial Services (to 30 September 2008)               4.0               -     
Other revenue                                         747.3           146.2     
SA Retail                                              96.3            55.0     
Clothing and General  Merchandise                      37.8            18.9     
Foods                                                  58.5            36.1     
Country Road                                           17.3            31.5     
Financial Services (to 30 September 2008)             469.7               -     
Treasury                                              184.4            85.6     
Intra-group                                          (20.4)          (25.9)     
Total group                                        21 922.3        11 696.0     
Gross profit                                                                    
SA Retail                                           5 310.0         3 024.6     
Clothing and General Merchandise                    2 731.3         1 618.1     
Foods                                               2 509.8         1 372.8     
Intra-group                                            68.9            33.7     
Country Road                                        1 359.9           762.0     
Financial Services (to 30 September 2008)               4.0               -     
Abnormal foreign exchange profit                          -            57.7     
Total group                                         6 673.9         3 844.3     
Profit before tax and exceptional item                                          
SA Retail                                           1 185.5           769.1     
Clothing and General Merchandise                      821.4           541.8     
Foods                                                 364.1           227.3     
Country Road                                          140.5            90.3     
Financial Services (to 30 September 2008)              71.8               -     
Share of earnings from WFS (from 1 October 2008)       57.4            26.8     
Treasury                                               49.9            12.0     
Abnormal foreign exchange profit/(loss)              (79.0)            57.7     
Total group                                         1 426.1           955.9     
                                                  Restated                      
                                               26 weeks to                      
                                               28 December                      
                                                      2008               %      
                                                        Rm          change      
Revenue                                                                         
Turnover                                           10 562.9             9.3     
SA Retail                                           9 388.9             9.1     
Clothing and General Merchandise                    3 742.3             9.7     
Foods                                               5 449.8             8.9     
Logistics                                             196.8             2.3     
Country Road                                        1 170.0            11.7     
Financial Services (to 30 September 2008)               4.0         (100.0)     
Other revenue                                         584.2          (75.0)     
SA Retail                                              46.9            17.3     
Clothing and General Merchandise                       20.2           (6.4)     
Foods                                                  26.7            35.2     
Country Road                                            6.6           377.3     
Financial Services (to 30 September 2008)             469.7         (100.0)     
Treasury                                               81.4             5.2     
Intra-group                                          (20.4)            27.0     
Total group                                        11 147.1             4.9     
Gross profit                                                                    
SA Retail                                           2 564.6            17.9     
Clothing and General Merchandise                    1 325.6            22.1     
Foods                                               1 204.5            14.0     
Intra-group                                            34.5           (2.3)     
Country Road                                          720.2             5.8     
Financial Services (to 30 September 2008)               4.0         (100.0)     
Abnormal foreign exchange profit                          -           100.0     
Total group                                         3 288.8            16.9     
Profit before tax and exceptional item                                          
SA Retail                                             640.4            20.1     
Clothing and General Merchandise                      452.7            19.7     
Foods                                                 187.7            21.1     
Country Road                                           93.5           (3.4)     
Financial Services (to 30 September 2008)              71.8         (100.0)     
Share of earnings from WFS (from 1 October 2008)       27.4           (2.2)     
Treasury                                               32.4          (63.0)     
Abnormal foreign exchange profit/(loss)                   -           100.0     
Total group                                           865.5            10.4     
notes                                                                           
1 Basis of preparation                                                          
The interim financial statements comply with IAS 34 Interim Financial Reporting 
and International Financial Reporting Standards (IFRS). These condensed         
consolidated financial statements do not contain all the information and        
disclosures required in the annual financial statements, and should be read in  
conjunction with the group consolidated annual financial statements as at       
28 June 2009.                                                                   
2 Significant accounting policies                                               
The accounting policies applied are consistent with those followed in the       
preparation of the consolidated annual financial statements for the year ended  
28 June 2009, except for the adoption of the following IFRS, IFRIC              
interpretations, amendments and circular that became effective                  
during the current period and had no significant impact on the reported results 
other than giving rise to additional disclosures and a revision to the relevant 
accounting policies:                                                            
- IFRS 8 Operating Segments                                                     
- IAS 1 Revised - Presentation of Financial Statements                          
- IFRS 7 Amendments - Financial Instruments Disclosure                          
- IAS 23 Amendments - Borrowing Costs                                           
- IAS 27 Amendments - Consolidated and Separate Financial Statements            
- IFRS 3 Revised - Business Combinations                                        
- IFRS 2 Amendments - Share-based Payment: Vesting Conditions and Cancellation  
- IAS 38 Amendments - Intangible Assets: Expenditure on Advertising and         
Promotional Activities                                                          
- IAS 39 Amendments - Eligible Hedged Items                                     
- IFRS 5 Amendments - Non-current Assets Held for Sale and Discontinued         
Operations                                                                      
- Circular 3/2009 - Headline Earnings                                           
The amendment to IFRS 8 Operating Segments has been early adopted and had no    
financial impact on the reported results.                                       
3 Restatement of comparative figures and reclassifications                      
3.1 Restatements                                                                
An insurance cell-captive over which Woolworths has significant influence was   
equity accounted for the first time at June 2009.                               
The consolidation of this investment has resulted in a net increase in          
December 2008 profit of R7.6m and increase of R25.0m for years prior to 2008.   
Profit before and after tax for the period to 28 December 2008 has been reduced 
by R21.6m (with a corresponding increase in the group tax liability) as a result
of the reallocation of WFS income from the period before the disposal of the    
controlling interest, when the entity became an equity accounted joint venture. 
The reallocation relates to group timing differences identified during          
completion of the disposal, and the restatement aligns to the segmental profit  
for WFS as reported at 28 June 2009. There is no impact on the profit on        
disposal of the controlling interest as reported in the previous year.          
In terms of IAS 8 Accounting Policies, Changes in Accounting Estimates and      
Errors, the above adjustments have been accounted for retrospectively and the   
comparative financial statements have been restated.                            
3.2 Reclassifications                                                           
Finance lease liabilities are separately disclosed from trade and other         
payables and are included in interest-bearing borrowings.                       
The Woolworths segment now includes certain South African premium brand         
products previously disclosed under the Country Road segment.                   
None of these reclassifications had an impact on reported results.              
4 Comparability of interim turnover                                             
No material variations in the turnover of the group are expected to occur       
between the first and second half of the financial year.                        
5 Tax                                                                           
The effective tax rate of 29.9% (2008: 42.2%) is higher than the standard rate  
of normal tax mainly due to the non-deductible IFRS 2 charge arising from the   
group's BEE employee share ownership and executive share incentive schemes.     
6 Abnormal foreign exchange (profit)/loss                                       
An unrealised loss of R79m (R56.9m after tax) on the marking-to-market of       
foreign exchange contracts was incurred at 28 June 2009. A subsequent gain of   
R57.7m (R41.6m after tax) is included in gross profit in the current period. It 
is expected that the balance will accrue in the second half of the year.        
7 Earnings per share                                                            
The difference between earnings per share and diluted earnings per share is due 
to the impact of outstanding options under the group share incentive schemes    
and preference shares issued in terms of the BEE employee share ownership       
scheme.                                                                         
8 Property, plant and equipment and intangible assets                           
During the twenty-six weeks to 27 December 2009, the group acquired property,   
plant and equipment with a cost of R266.1m (2008: R249.5m) and acquired         
intangible assets with a cost of R49.5m (2008: R45.2m).                         
9 Issue and repurchase of shares                                                
During the twenty-six weeks to 27 December 2009, 2 496 007 (2008: 3 134 401)    
ordinary shares were issued in terms of the group's executive share incentive   
scheme.                                                                         
11 878 892 (2008: 12 387 116) shares were repurchased from the market by E-Com  
(Proprietary) Limited and are held as treasury shares by the group.             
29 497 604 (2008: nil) shares were issued to Woolworths (Proprietary) Limited   
and are held as treasury shares by the group.                                   
In addition, a further 1 184 000 (2008: nil) shares were repurchased from the   
market by Woolworths (Proprietary) Limited and are held as treasury shares.     
10 Contingent liabilities                                                       
Various group companies are parties to legal disputes and investigations which  
arise in the ordinary course of business, whilst the outcome of some of these   
matters cannot readily be foreseen, the directors believe that they will be     
disposed of without material effect.                                            
11 Borrowing facilities                                                         
Unutilised committed banking facilities amount to R1 600m (2008:                
R1 500m). In terms of the Articles of Association, there is no limit on the     
group's authority to raise interest-bearing debt.                               
12 Events subsequent to balance sheet date                                      
No event material to the understanding of these financial statements has        
occurred between the end of the interim period and the date of approval.        
13 Related party transactions                                                   
During the six months to 27 December 2009, group companies entered into various 
transactions. These transactions were entered into in the ordinary course of    
business and under terms that are no less favourable than those arranged with   
independent third parties. All such subsidiary-related intra-group related      
party transactions and outstanding balances are eliminated in preparation of    
the consolidated financial statements of the group. All transactions with joint 
ventures and the associate are concluded on an arm's length basis.              
14 Approval of interim financial statements                                     
The interim financial statements were approved by the board of directors on     
17 February 2010.                                                               
15 Unaudited results                                                            
These results have not been reviewed or audited.                                
These results are available on: www.woolworthsholdings.co.za                    
directorate and statutory information                                           
Non-executive directors:                                                        
Buddy Hawton (Chairman), Peter Bacon (British), Lindiwe Bakoro,                 
Nigel Colne (British), Brian Frost, Mike Leeming, Chris Nissen,                 
Thina Siwendu, Sindi Zilwa                                                      
Executive directors:                                                            
Simon Susman (CEO), Ian Moir (Australian), Zyda Rylands, Norman Thomson         
Group secretary:                                                                
Cherrie Lowe                                                                    
Share code: WHL                                                                 
ISIN: ZAE000063863                                                              
Registration address (postal and physical):                                     
PO Box 680, Cape Town 8000                                                      
Woolworths House, 93 Longmarket Street, Cape Town 8001                          
Registration number:                                                            
1929/001986/06                                                                  
Auditors:                                                                       
Ernst & Young Inc and SAB & T Inc                                               
Bankers:                                                                        
The Standard Bank of South Africa Limited                                       
JSE sponsor:                                                                    
RAND MERCHANT BANK (A division of FirstRand Bank Limited)                       
Transfer secretaries:                                                           
Computershare Investor Services (Pty) Limited                                   
70 Marshall Street, Johannesburg 2001                                           
Date: 18/02/2010 08:00:12 Produced by the JSE SENS Department.                  
The SENS service is an information dissemination service administered by the    
JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or            
implicitly, represent, warrant or in any way guarantee the truth, accuracy or   
completeness of the information published on SENS. The JSE, their officers,     
employees and agents accept no liability for (or in respect of) any direct,     
indirect, incidental or consequential loss or damage of any kind or nature,     
howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.                                          
Source: JSE Securities Exchange - SENS
 
DISCLAIMER: http://www.mcgbfa.com/disclaimer.htm
 
Email
 
Print