2002/02/21
Woolworths - Unaudited group results [JSE Securities Exchange - SENS]
 
Woolworths Holdings Limited
  Company Registration Number 1929/001986/06
  JSE Share code: WHL
  ISIN ZAE000028288
Unaudited group results for the six months ended 31 December 2001
* From continuing operations:
  - Revenue up 19.1%
  - Profit before exceptional item up 33.6%
  - Headline earnings per share up 32.3%
* Interim dividend per share up 15.4% to 7.5c
* Woolworths net profit before exceptional item up 26.9%
* Country Road exits the US
income statement
Year ended
30 June                                         Six months ended
2001                                            31 December
(audited)                                       2001      2000    %
Rm                                      Note    Rm        Rm      Change
7 411.1 Revenue                                 4 385.3   3 670.7 19.5
7 173.1 Continuing operations                   4 190.2   3 517.7 19.1
238.0   Discontinued operations                 195.1     153.0   27.5
6 994.5 Expenses                                4 098.5   3 440.2 19.1
6 746.1 Continuing operations                   3 888.7   3 293.1 18.1
4 511.7 Cost of merchandise                     2 654.2   2 223.8 19.4
201.3   Depreciation                            99.9      100.0   (0.1)
383.4   Occupancy cost                          221.2     196.9   12.3
1 050.9 Employment cost                         586.8     499.3   17.5
562.7   Other operating cost                    303.1     248.6   21.9
36.1    Interest paid                           23.5      24.5    (4.1)
248.4   Discontinued operations                 209.8     147.1   42.6
        Share of loss from joint venture        -
1.7     continuing operations                   1.4       -
        Net profit/(loss) before
414.9   exceptional items                       285.4     230.5   23.8
425.3   Continuing operations                   300.1     224.6   33.6
(10.4)  Discontinued operations                 (14.7)    5.9
-       Exceptional items                       133.1     -
-       Provision for discontinuance    2       (120.3)   -
-       Restructuring costs                     (8.0)     -
-       Write-down of listed investment         (4.8)     -
414.9   Net profit before tax                   152.3     230.5   (33.9)
425.3   Continuing operations                   295.3     224.6   31.5
(10.4)  Discontinued operations                 (143.0)   5.9
147.2   Tax                             3       100.5     80.7    24.5
267.7   Net profit after tax                    51.8      149.8   (65.4)
3.6     Outside shareholders' interest          15.9      (0.3)
        Net profit attributable to
271.3   ordinary shareholders                   67.7      149.5   (54.7)
        Headline earnings per share (cents) 4
30.5    - All operations                        18.7      16.4    14.0
31.5    - Continuing operations                 20.9      15.8    32.3
        Earnings per share (cents)
30.1    - All operations                        7.4       16.7    (55.7)
31.1    - Continuing operations                 21.2      16.2    30.9
29.9    Diluted earnings per share (cents) 5    7.3       16.4    (55.5)
15.0    Dividend per share (cents)              7.5       6.5     15.4
2.0     Dividend cover
         (based on headline earnings)           2.5       2.5
908.1   Number of shares issued (millions)      907.0     900.1   0.8
        Weighted average number of
899.8   shares in issue (millions)              912.0     895.5   1.8
GROUP ANALYSIS
Revenue
7 069.3 Turnover                                4 199.5   3 525.7 19.1
5 955.4 Woolworths                              3 499.5   2 957.9 18.3
3 258.9  - Textiles                             1 863.5   1 654.3 12.6
2 566.0  - Foods                                1 547.8   1 244.6 24.4
130.5    - Other                        6       88.2      59.0    49.5
1 113.9 Country Road                            700.0     567.8   23.3
875.9   Continuing operations                   504.9     414.8   21.7
238.0   Discontinued operations                 195.1     153.0   27.5
294.6   Interest                                164.6     137.1   20.1
47.2    Other revenue                           21.2      7.9     168.4
7 411.1                                         4 385.3   3 670.7 19.5
        Net profit/(loss) before tax and
        exceptional items
446.4   Woolworths                              289.8     228.3   26.9
(31.5)  Country Road                            (4.4)     2.2
(21.1)  Continuing operations                   10.3      (3.7)
(10.4)  Discontinued operations                 (14.7)    5.9
414.9                                           285.4     230.5   23.8
statement of changes in ordinary shareholders' interest
Year ended
30 June                                                 Six months ended
2001                                                    31 December
(audited)                                               2001      2000
Rm                                                      Rm        Rm
        Ordinary shareholders' interest at the
2 023.5 beginning of the period                         2 238.4   2 023.5
2 103.9 As previously reported                          2 334.5   2 103.9
        Prior year adjustment to opening balance arising
        from the change in accounting policy for:
(28.0)  Depreciation on owner-occupied property         (36.2)    (28.0)
(52.4)  Post-retirement medical benefits                (59.9)    (52.4)
        Movements for the period:
        Share premium arising from shares issued
28.0    under share purchase scheme                     25.5      6.8
-       Shares repurchased by subsidiary                (38.5)    -
186.9   Recognised gains                                116.4     107.8
169.8   Distributable reserves                          38.1      106.3
271.3   Net profit attributable to
        ordinary shareholders                           67.7      149.5
(103.4) Distributions to ordinary shareholders          (77.9)    (44.6)
1.9     Net unrealised gain on hedging instruments      48.3      1.4
        Non-distributable reserves
17.1    Exchange differences on translation of
        foreign entities                                78.3      1.5
2 238.4 Ordinary shareholders' interest at the end of
        the period                                      2 341.8   2 138.1
balance sheet
Year ended
30 June                                                 Six months ended
2001                                                    31 December
(audited)                                               2001      2000
Rm                                              Note    Rm        Rm
        ASSETS
1 458.3 Non-current assets                              1 518.8   1 475.0
980.4   Property, plant and equipment                   895.3     1 011.1
24.7    Investments                             7       63.4      21.3
115.6   Loans to customers                              179.0     110.9
229.0   Participation in export partnerships            219.0     241.6
-       Premium on acquisition of subsidiary            27.1      -
102.8   Other loans                                     130.2     86.2
5.8     Deferred tax                                    4.8       3.9
2 272.2 Current assets                                  2 780.3   2 139.3
503.9   Inventories                                     636.0     511.9
1 148.5 Woolworths card debtors                         1 222.8   1 072.0
327.4   Accounts receivable                             464.5     381.7
171.6   Loans to customers                              178.2     81.9
120.8   Cash and cash equivalents                       278.8     91.8
3 730.5 Total assets                                    4 299.1   3 614.3
        EQUITY AND LIABILITIES
2 270.1 Capital and reserves                            2 371.2   2 173.1
2 238.4 Ordinary shareholders' interest                 2 341.8   2 138.1
31.7    Outside shareholders' interest                  29.4      35.0
335.5   Non-current liabilities                         319.1     339.7
0.5     Interest-bearing borrowings                     0.4       0.6
94.5    Post-retirement medical-aid liability           102.8     86.2
240.5   Deferred tax                                    215.9     252.9
1 124.9 Current liabilities                             1 608.8   1 101.5
756.6   Accounts payable                                998.9     676.1
66.7    Provisions                                      86.2      67.4
116.8   Tax                                             88.1      82.9
184.8   Interest-bearing borrowings                     435.6     275.1
3 730.5 Total equity and liabilities                    4 299.1   3 614.3
246.5   Net asset book value - per share (cents)        258.2     237.5
        Interest-bearing debt
        (net of interest earning cash):
3.7%    equity ratio                                    9.4%      9.1%
GROUP ANALYSIS
3 730.5 Total assets                                    4 299.1   3 614.3
3 347.1 Woolworths                                      3 835.5   3 215.5
383.4   Country Road                                    463.6     398.8
503.9   Inventories                                     636.0     511.9
324.8   Woolworths                                      416.0     331.9
179.1   Country Road                                    220.0     180.0
cash flow statement
Year ended
30 June                                                 Six months ended
2001                                                    31 December
(audited)                                               2001      2000
Rm                                                      Rm        Rm
        Cash flow from operating activities
392.3   Cash inflow from trading                        274.5     198.2
(106.8) Working capital movements                       (92.4)    (148.9)
285.5   Cash generated by operating activities          182.1     49.3
294.8   Interest received and investment income         165.2     137.3
(37.0)  Interest paid                                   (24.2)    (25.2)
(97.5)  Tax paid                                        (160.0)   (45.5)
445.8   Cash generated by operations                    163.1     115.9
(103.4) Dividends paid                                  (77.9)    (44.6)
342.4   Net cash inflow from operating activities       85.2      71.3
347.0   Continuing operations                           88.9      67.3
(4.6)   Discontinued operations                         (3.7)     4.0
        Cash flow from investing activities
        Investment in property, plant and equipment to
(103.3) maintain operations                             (45.1)    (42.0)
        Investment in property, plant and equipment to
(149.6) expand operations                               (130.3)   (83.6)
55.3    Proceeds on disposal of property,
        plant and equipment                             152.9     19.7
-       Investment in subsidiary                        (25.7)    -
(5.1)   Investment in joint venture                     (46.6)    -
(0.3)   Investments                                      -        (0.4)
(145.6) Loans to customers                              (70.0)    (51.2)
23.7    Participation in export partnerships            10.0      11.1
(15.9)  Other loans advanced                            (27.0)    (2.3)
(340.8) Net cash outflow from investing activities      (181.8)   (148.7)
(333.2) Continuing operations                           (180.1)   (142.6)
(7.6)   Discontinued operations                         (1.7)     (6.1)
        Cash flow from financing activities
         - continuing operations
28.0    Shares issued                                   25.5      6.8
-       Shares repurchased by subsidiary                (38.5)    -
(11.4)  Non-current liabilities repaid                  -         (10.5)
16.6    Net cash (outflow)/inflow from
        financing activities                            (13.0)    (3.7)
18.2    (Increase)/decrease in net overdrafts           (109.6)   (81.1)
        Cash and cash equivalents at the beginning
(101.3) of the period                                   (64.0)    (101.3)
19.1    Effect of foreign exchange rate changes         16.8      (1.0)
(64.0)  Cash and cash equivalents
        at the end of the period                        (156.8)   (183.4)
(60.4)  Continuing operations                           (156.8)   (186.0)
(3.6)   Discontinued operations                         -         2.6
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 June 2001 financial  statements,
except  as  follows:  The group's policy for providing  for  post-retirement
medical-aid  benefits  of  retired  employees  has  changed  following   the
introduction of AC116, Employment Benefits. Consequently the actuarial gains
and  losses are accounted for in the income statement during the  period  in
which  they arise. This change has the effect of decreasing reported  profit
after  tax  by  R5.8m  (2000: R3.8m). Following the introduction  of  AC134,
Investment  properties,  depreciation  is  now  provided  on  owner-occupied
property   in  accordance with AC123, Property, Plant  and  Equipment.  This
change  has  the  effect of decreasing reported profit after  tax  by  R4.1m
(2000:  R3.7m). Comparative figures have been restated. In addition  certain
other  comparative  figures have been changed to bring  them  in  line  with
classifications used in the current period.
2. On 17 January 2002, Country Road's US operation was placed into Chapter 7
liquidation. Due to the uncertainty of the amounts receivable in respect  of
the  groups' claims against Country Road's US operation, the net assets have
been written off in full as at 31 December 2001, resulting in an exceptional
charge, after outside shareholders' interest, of R105.7m. In due course, any
amounts received will be set off against this write-off. There is no  effect
on taxation as the US operation was in an assessed loss position.
3.  The  effective tax rate of 35.2% before exceptional items is due to  the
incidence of STC, the effect of the losses of certain subsidiaries  and  the
amortisation of goodwill.
4.  Headline earnings per share is based on net profit attributable  to  the
ordinary  shareholders  adjusted  by the  provision  for  discontinuance  of
Country  Road's  US  operation  of  R105,7m,  the  write-down  of  a  listed
investment of R4.8m goodwill amortisation of R3.0m, and the net pro  fit  on
sale of property, plant and equipment of R10.2m.
5.  The difference between earnings per share and diluted earnings per share
results from outstanding options in terms of the share purchase scheme.
6.  Other  turnover is derived mainly from logistics services.  Sales  occur
approximately evenly during the first and second six months.
7.  Investments  include listed securities with a carrying value  of  R15.9m
(2000: R20.2m) and a market value of R16.8m (2000: R15.7m).
8.  Unutilised banking facilities amount to R1 215m (2000: R983m),  with  no
limit on the group's ability to raise interest bearing debts.
9.  Approved capital commitments for capital expenditure amount  to  R133.7m
(2000: R93.5m).
Commentary
group results
    The  group achieved an increase of 32.3% in headline earnings per  share
from continuing operations during the period under review. Profit before tax
and exceptional items from continuing operations was R300.1m (2000: R224.6),
an increase of 33.6%.
    Country  Road's exit from the US market resulted in a write-off  of  net
assets  amounting to A$18.9m and other costs and provisions of A$5m (R112.8m
after  minority  interests). The loss in discontinued US operations  limited
the  increase  in  headline earnings from all operations to  14.0%  for  the
period  under  review  and net profit before tax and  exceptional  items  to
23.8%.
    A  dividend  of  7.5 cents has been declared, a 15.4%  increase  on  the
previous period.
woolworths
    Trading in all divisions of Woolworths was encouraging and profit before
tax for the six months to December 2001 rose by 26.9% to R289.8m.
    The  textiles business concentrated on better styled, classic and modern
merchandise of superior quality and improved availability. This resulted  in
a  rise  in  sales of 12.6% and a growth in market share on a  twelve  month
moving  average to 16.7% (2000 - 15.9%). Like on like turnover  improved  by
7.1%.
    Foods  sales  increased by 24.4% and market share rose to 6.3%  (2000  -
5.8%) for the period. This was attributable to the positive response of  our
customers to improved innovation and the increased number of locations where
Woolworths  quality food is to be found. Like on like turnover  improved  by
13.9%.
    Woolworths Financial Services continued to grow the Woolworths card  and
the  personal loan books. The books are in a low risk part of the market and
management remains vigilant. Net bad debts were within budgeted levels.
country road
   Having exited the US market, Country Road in Australasia returned a small
profit  of  A$0.3m (2000: A$1.2m loss) mainly due to tight expense  control.
The  R10.3m profit resulted from second quarter profits being translated  at
an  exchange rate significantly weaker than the rate at which first  quarter
losses were sustained.
    Country Road is now able to concentrate on the core Australasian  market
and  markets with similar climates. The production of one range will  result
in significant cost savings and importantly will ensure greater focus on the
design and delivery of that range.
directorate
    The  board was strengthened by the appointment of Sindi Zilwa as a  non-
executive  director  with effect from 1 January 2002. Sindi  brings  to  the
board  a wealth of financial expertise and business acumen, and will  enrich
board deliberations.
prospects
    If the current performance in both South Africa and Australia continues,
we expect a positive second half.
dividends
    Notice  is hereby given that an interim dividend of 7.5 cents per  share
has  been  declared in respect of dividend no 9 for the six months ended  31
December 2001.
    Shareholders are advised that the last day of trade ("cum" the dividend)
in  order  to participate in the dividend will be Friday, 8 March 2002.  The
shares will trade "ex" the dividend from commencement of business on Monday,
11  March  2002  and  the record date will be Friday,  15  March  2002.  The
dividend will be payable on Monday, 18 March 2002.
    Share  certificates may not be dematerialised or re-materialised between
Monday, 4 March 2002 and Friday, 15 March 2002, both days inclusive.
On behalf of the Board of Directors.
  CA Hall                         SN Susman
  Chairman                        Chief executive officer
Cape Town
21 February 2002
Directorate
Non-executive directors
  CA Hall (Chairman), M Barnes (British), NL Colne (British), BJ Frost,
  IN Thomson (British), SV Zilwa
Executive directors
  SN Susman (CEO), MR Canning, GP de Kock, RJD Inskip, NW Thomson
Company Secretary
  C L Lowe
Woolworths Holdings Limited Company
  Registration Number 1929/001986/06
  JSE Share code: WHL   ISIN: ZAE000028288
Sponsor
  HSBC Investment Services (Africa) (Pty) Ltd
Registered Office
  Woolworths House, 93 Longmarket Street, Cape Town 8001
Transfer Secretaries
  Mercantile Registrars Limited, 10th Floor,
  11 Diagonal Street, Johannesburg 2001
Date: 21/02/2002 07:30:00 AM Produced by the JSE SENS Department
Source: JSE Securities Exchange - SENS
 
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