WHLE - WOOLWORTHS HOLDINGS LIMITED - Summary of the audited group results for the 52 weeks ended 28 June 2020 [JSE Securities Exchange - SENS]
Summary of the audited group results for the 52 weeks ended 28 June 2020

Woolworths Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 1929/001986/06
LEI: 37890095421E07184E97
Share code: WHL
Share ISIN: ZAE000063863
Bond code: WHLI
('the Group', 'the Company' or 'WHL')


                                                             Post IFRS 16                          Pre IFRS 16
                                                              52:53 weeks                          52:52 weeks
Turnover                                                  -1.2% to R72.2 billion               +0.6% to R72.2 billion
Turnover and concession sales                             -1.9% to R78.3 billion               -0.1% to R78.3 billion
Profit before tax                               at R1.4 billion from -R1.8 billion   at R1.7 billion from -R1.8 billion
Adjusted profit before tax                               -54.5% to R2.2 billion               -46.0% to R2.5 billion
Earnings per share                                  at 58.2 cps from -113.4 cps          at 82.6 cps from -126.0 cps
Headline earnings per share                              -65.1% to 119.8 cps                  -64.8% to 116.2 cps
Adjusted diluted headline earnings per share             -54.3% to 168.4 cps                  -45.7% to 193.6 cps
Total dividend per share                                           -53.3% to 89.0 cps from 190.5 cps

This has been an exceptionally challenging year for the Group, characterised by two distinct halves,
with COVID-19 having a significant impact on the performance of the second half ('H2') of the year. First
half ('H1') adjusted profit before tax ('aPBT') was 12.3% below the prior year, at R2.4 billion. The onset
of COVID-19 caused significant disruption to our businesses, resulting in store closures, reduced footfall,
lost sales and margin dilution due to promotional and other initiatives to clear inventory. This had a
material impact on H2 aPBT and, as a result, our reported profit before tax for the full year was
R1.4 billion, and R1.7 billion on a comparable (pre IFRS 16) 52-week basis. Adjusted profit before tax,
on a comparable basis, was R2.5 billion, which was 46.0% below the prior year.

Our primary focus during COVID-19 has been the health and wellness of our people, the safety of our
customers, and the protection of jobs for our employees. We also undertook numerous initiatives that
were targeted at stabilising operations, protecting liquidity, and strengthening the Group's balance
sheet. Our focus on generating and preserving cash included tight working capital management, the
deferral of non-essential capex, cutting back on discretionary costs and securing relevant government
relief support for employees. This achieved the desired savings and improved liquidity and levels of net

The impact of COVID-19 on the trading environment and results necessitated an assessment of the
carrying values of assets, including the right-of-use assets relating to our store leases arising from the
implementation of IFRS 16. Consequently, the carrying value of certain store assets has been impaired,
which negatively impacted reported earnings per share ('EPS'). This impact is adjusted in calculating
headline earnings per share ('HEPS') and adjusted diluted HEPS ('adHEPS') for the year ended
28 June 2020 ('current year').

In addition, given the economic and trading uncertainty resulting from COVID-19, and the challenges
created in reliably forecasting the timing of future taxable earnings, the Group has elected not to
recognise certain deferred tax assets arising from assessed losses in relation to certain Group entities.
This resulted in an increased Group effective tax rate, thereby further impacting EPS and HEPS. The
impact thereof has been adjusted in calculating adHEPS.

Statutory results
Statutory results for this year include the first-time adoption of IFRS 16 on a modified retrospective basis,
with no restatement of the reported comparative 52-week pro forma prior year results ('pro forma prior
year'), and the 53-week reporting period for the year ended 30 June 2019 ('prior year'). The impact of
IFRS 16 results in a current year profit before tax of R1.4 billion, compared to a R1.8 billion loss in the
prior year, with EPS and HEPS at 58.2 cps and 119.8 cps, compared to -113.4 cps and 342.9 cps in the
prior year respectively.

The prior year had 53 trading weeks, and therefore to facilitate comparison against the 52-week current
year, financial information for the prior year has been presented on a 52-week basis and excludes the
impact of IFRS 16.

Group sales for the current year on a 52-week comparable basis were 0.1% lower compared to the pro
forma prior year and declined by 1.1% in constant currency terms. The sales performance for H2 was
significantly impacted by the temporary closure of the majority of the GroupĀ“s non-food stores, coupled
with the decline in foot traffic and resultant loss of trade. The easing of restrictions from the beginning
of May 2020 in South Africa and Australia resulted in some recovery in the last nine weeks of the half.
Consequently, Group turnover and concession sales declined by 4.0% in H2. Loss of trade was partially
offset by significant growth in and contribution from online sales across all businesses during and post
the lockdown.

Southern Africa

Woolworths Food
The resilience of our Food business is underpinned by deep foundational capabilities. These, coupled
with customer confidence and trust in our brand, resulted in the Food business delivering an exemplary
performance for the year. Woolworths Food sales peaked in March and April, with above-market growth
continuing into May and June. Turnover and concession sales grew by 13.3% in H2, with full year growth
at 10.7%. This was achieved notwithstanding the constrained environment, restrictions on trade of our
hot food counters, wine alcoves and WCafe business, and the intermittent closure of specific stores with
COVID-19 incidents. Online food sales grew by 87.8% in H2 and by 57.2% for the year, notwithstanding
the need for further improvements to our fulfilment capability in this area.

Gross profit margin of 24.9% was marginally higher than the prior year, notwithstanding further price
investment, primarily due to supply chain efficiencies, lower waste and higher volume rebates. Expenses
grew by 8.1%, including additional COVID-related costs and payments to frontline store staff. Operating
profit increased by 19.0% to R2 716 million, returning an operating margin of 7.7%.

Woolworths Fashion, Beauty and Home ('FBH')
Following a disappointing H1 FBH performance, H2 was severely impacted by the closure of stores and
the restrictions on trade, including through our online channel for the duration of the lockdown period in
South Africa and the other Southern African markets in which we operate. Since the reopening of stores
in May, trade was focused on promotional and clearance activity to drive sales and reduce inventory
levels. Sales in H2 declined by 24.1%, ending the year 10.7% down on last year, while online sales 
grew by 41.3% in H2 and 35.4% for the year.

Gross profit margin for the full year decreased by 3.5% to 44.0%. Expenses were well controlled and
decreased by 2.8%. We made the decision to continue paying our staff during the lockdown period,
which was in part supported through the government-funded UIF TERS subsidy. Operating profit
decreased by 59.5% to R683 million, resulting in an operating margin of 5.5%.

Woolworths Financial Services
The Woolworths Financial Services ('WFS') book grew by 2.0% year-on-year and by 9.0% through
31 March 2020, highlighting the significant drop off in the fourth quarter. Book and revenue growth was
negatively impacted by the closure of stores, lower non-essential spend and lower prevailing interest
rates. The deterioration in customer collections, and a significant macro-economic adjustment in the
provisioning allowance resulted in the higher impairment charge for the year. The impairment rate for
the 12 months ended 28 June 2020 was 7.9%, compared to a rate of 4.2% for the nine months ended
31 March 2020 and 3.7% for the 12 months ended 30 June 2019.


David Jones
While David Jones ('DJ') was able to continue trading most of their stores during H2, there was a
significant decline in footfall, which was evidenced earlier in the half, as the impacts of the pandemic
affected Asian tourism during the Lunar New Year trading period. Turnover and concession sales
declined by 17.2% in H2, ending the year 6.4% below the prior year. The decline in store sales was
partly mitigated by the shift to online, which grew by 100.7% in H2, contributing 18.4% to sales. The
completion of the Elizabeth Street store redevelopment in April contributed positively to the uplift in 
sales in the latter part of the half, notwithstanding the effect of the pandemic on CBD locations.

Gross profit margin was 2.7% lower than the prior year, due to the increased clearance activity in the
last quarter to generate cash and reduce inventory levels. Costs reduced by 4.6%, as non-essential
expenditure was curtailed to mitigate the impact of the loss of trade.

Country Road Group
Country Road Group ('CRG') stores were closed for eight weeks during the fourth quarter. A phased
re-opening of stores commenced from 21 May 2020; however, the performance of CBD and airport
stores remained subdued. The exit of the CRG brands from Myer, effectively in August 2019, also
impacted comparable performance. As a result, sales in the second half declined by 25.6% and ended
the year down 14.3% on the prior year. During the period, online sales remained strong, growing by
28.1% in H2, and contributing 33.5% of total sales.

Gross profit margin declined by 3.1% to 58.6% due to heightened promotions to clear excess inventory.
Expenses for the year, including costs incurred on the Myer exit, reduced by 11.3%. Operating profit
decreased by 60.0% to A$40 million, resulting in an operating margin of 4.3%.

Group earnings and dividends
EPS was 82.6 cps compared to -126.0 cps for the pro forma prior year, while HEPS and adjusted diluted
HEPS decreased by 64.8% and 45.7% to 116.2 and 193.6 cps respectively, on a 52-week comparable basis.

As previously advised the Board has not declared a final dividend for the 2020 financial year, with the
interim dividend of 89.0 cps therefore being the total dividend for the year. Future dividends will be
considered in the context of the conditions prevailing at the time.

Update on strategic initiatives
Management are making steady progress on a number of initiatives across the Group:

1.  We have successfully secured the requisite suspension of covenant testing from our lenders and
    bondholders in Australia. Also, our lenders in South Africa have amended covenants, for the June
    and December 2020 measurement dates.
2.  The review of the capital structure of the Australasian entities is progressing well. Priority focus has
    been given to the options relating to our property portfolio:
    -   The sale of the Bourke Street Menswear building has been successfully concluded post 
    year-end, with the proceeds of A$121 million used to reduce debt.
    -   We have also distributed information memoranda, invited and received several non-binding
        offers for the potential sale and leaseback of our remaining David Jones properties, which we
        are in the process of evaluating.
3.  Discussions with the Australasian landlords on rent abatements, an accelerated restructure of the
    DJ store portfolio and reduction in floor space, are also progressing.
4.  While the provision of the funding support of A$75 million by WHL to the Australasian businesses in
    the form of a loan secured by a second lien remains in place, there has, to date, been no necessity
    to call on this funding. The improved liquidity position has been achieved primarily as a result of
    management's successful execution of cash generation and preservation initiatives.
5.  Fixing and repositioning our FBH business is of high priority and a holistic review of its strategy 
    and execution is well underway.

The trading environment in both Southern Africa and Australasia remains challenging and uncertain and
is expected to remain so for the foreseeable future. The full economic impact of the pandemic is still
unfolding and we expect consumer spending to remain constrained. Heightened competition and
promotional activity is likely to persist, notwithstanding some consolidation in the industry. Post
year-end, the Australian State of Victoria imposed an initial stage 4 lockdown in the metropolitan areas
for a period of six weeks. This was extended for a possible further six weeks and has resulted in store
closures during the period. The decline in trade in Victoria, CBD areas across the country and airport
locations has, in part, been offset by the marked shift to online channels.

The Group's intention is to ensure that we not only endure the impacts of the pandemic but that we can
learn from it and emerge both strategically and tactically stronger as a result. To this end, the Board and
management team remain resolutely focused on optimising the Group's financial position, liquidity and
capital structure, and on repositioning the Group for sustainable longer term growth.

Any reference to future financial performance included in this statement has not been reviewed or
reported on by the Group's external auditors and does not constitute an earnings forecast.

As previously advised on the JSE Stock Exchange News Service, the following changes to the Board
of Directors were effected during the year under review:

-   Ms Belinda Earl and Mr Christopher Colfer were appointed to the Board as Non-executive Directors
    on 1 July 2019.
-   Mr Clive Thomson was appointed to the Board as a Non-executive Director on 19 August 2019 and
    as Chairman of the Audit Committee on 27 November 2019.
-   Messrs Simon Susman and Tom Boardman stepped down from the Board with effect from the
    conclusion of the 2019 WHL Annual General Meeting.
-   Mr Hubert Brody and Ms Zarina Bassa were appointed as Chairman of the Board and Lead
    Independent Director respectively with effect from the conclusion of the 2019 WHL 
    Annual General Meeting.
-   Mr Ian Moir resigned as WHL Group Chief Executive Officer ('CEO') and as an Executive Director
    with effect from 16 February 2020.
-   Mr Roy Bagattini was appointed as WHL CEO and as an Executive Director with effect from
    17 February 2020.
-   Mr Andrew Higginson resigned from the Board on 31 March 2020.

The Board expresses its appreciation to the directors who have left the Board.

H Brody                              R Bagattini
Chairman                             Group Chief Executive Officer
Cape Town, 15 September 2020

As advised in the SENS announcement on 27 May 2020, the Board believes that it is in the best interest
of the Group to suspend distributions to shareholders until such time as the situation arising from
COVID-19 stabilises, and has decided not to declare a final dividend for the 2020 financial year.

CA Reddiar
Group Company Secretary
Cape Town, 15 September 2020

Statement and availability 
This short form announcement is the responsibility of the directors and is only a summary of the
information in the full announcement. The provisional audited Group Annual Financial Statements were
approved by the Board of Directors on 15 September 2020, and the information in this announcement
has been correctly extracted from the audited Group Annual Financial Statements, upon which EY have
issued an unqualified report. The auditors' report does not necessarily report on all the information
contained in this announcement. Shareholders and bondholders are therefore advised that, in order to
obtain a full understanding of the nature of the auditors' engagement, they should obtain a copy of the
auditors' report, including Key audit matters, together with the accompanying Annual Financial
Statements from the Company's registered office, or on the Company's website: 
Any investment decisions by investors and/or shareholders and/or bondholders should be based on 
consideration of the full announcement, published and available at: 
https://senspdf.jse.co.za/documents/2020/JSE/ISSE/WHLE/WHLFY20.pdf and on the
Company's website: https://www.woolworthsholdings.co.za/wp-content/uploads/2020/09/whlfy20.pdf.
The full announcement is also available at our registered office, Woolworths House, 93 Longmarket
Street, Cape Town 8001, for inspection, at no charge, during normal business hours from 17 September 2020 
to 25 November 2020. Investors and/or shareholders and/or bondholders may request copies of
the full announcement from the Group Company Secretary at Governance@woolworths.co.za. The Final Analyst 
Presentation is also available on the Company's website.

Non-executive Directors
Hubert Brody (Chairman), Zarina Bassa (Lead Independent Director), Christopher Colfer (Canadian),
Belinda Earl (British), David Kneale (British), Nombulelo Moholi, Thembisa Skweyiya, Clive Thomson

Executive Directors
Roy Bagattini (Group Chief Executive Officer), Reeza Isaacs (Group Finance Director),
Sam Ngumeni, Zyda Rylands

Group Company Secretary
Chantel Reddiar
Registration number

Share code

Share ISIN

Bond code

Registered address
Woolworths House, 93 Longmarket Street
Cape Town 8001, South Africa
PO Box 680, Cape Town 8000, South Africa

Tax number

JSE sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)

Transfer secretaries
Computershare Investor Services Proprietary Limited
15 Biermann Avenue, Rosebank 2196, South Africa

17 September 2020

Date: 17-09-2020 07:05:00
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