| Thu 26 Aug 2004, 17:21 | | Results for the year ended 30 June 2004 |
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Wooltru Limited - Audited group results for the year ended 30 June 2004
Wooltru Limited
(Registration number: 1936/008278/06)
Audited group results
for the year ended 30 June 2004
Share Code: WLO
ISIN Code: ZAE000007993
Share Code: WLN
ISIN Code: ZAE000008744
Share Code: WLOP
ISIN Code: ZAE000008009
Share Code: WLP1
ISIN Code: ZAE000008017
Unbundling
The primary objective of the Board is a voluntary liquidation of the group at
the earliest opportunity. The realisation of this objective will depend on the
finalisation of a number of outstanding issues. These consist of:
Pending litigation arising from the liquidation of CNA
Taxation queries raised by SARS
Collapsing of the corporate structure and deregistration of all companies
therein
1. Pending litigation arising from the liquidation of CNA
Since reporting our interim results on 8 March 2004, the liquidators of
Consolidated News Agencies (Pty) Ltd (`Consolidated`) have instituted three High
Court actions against the company. These are summarised as follows:
1.1 The liquidators are seeking to set aside Wooltru`s proven claim of R76,0
million against Consolidated. The claim is based upon a suretyship executed by
Consolidated in terms whereof it bound itself as surety and co-principal debtor
together with Gordon Kay & Associates (Pty) Ltd (`GKA`) for the purchase price
of the shares in Consolidated News Agencies Holdings (Pty) Ltd (`Holdings`)
(which was the holding company of Consolidated) which Wooltru sold to GKA. The
liquidators are contending that the suretyship constituted a disposition of
Consolidated`s assets, that Consolidated received no benefit or value by binding
itself as surety and the suretyship was detrimental to the interests of
Consolidated`s creditors, with the result that it ought to be set aside under
insolvency law. Wooltru has in prior years fully provided for its claim of R76,0
million. The resulting carrying value at 30 June 2004 is nil in the balance
sheet.
1.2 The liquidators are seeking an order declaring Wooltru and its former
financial director, Mr JD Newton, liable jointly and severally, the one paying
the other to be absolved, without any limitation for all the debts and/or
liabilities of Consolidated. The liquidators allege that arising out of the role
which Wooltru and Mr JD Newton played in the amendment of a retail agreement
between Consolidated and M-Tel (Pty), they are liable for the debts/liabilities
of Consolidated. Due to the complexities of the liquidation of Consolidated, the
Board is unable to express a view on the extent of this claim. This issue has
been reflected as a contingent liability in note 9 of these annual financial
results.
1.3 The liquidators are claiming that a subordination agreement between
Consolidated and Wooltru was mistakenly concluded in that the agreement should
have been between Holdings and Consolidated and accordingly seek an order
rectifying the mistake. Wooltru disagrees with this contention.
1.4 Johnnic Book Retail Ltd (`Johnnic`) (former CNA Gallo Ltd) has joined
Wooltru in a High Court action instituted against Johnnic by Mr IL Outram. Mr
Outram, a former employee of Central News Agencies Limited (`CNA`), is seeking
an order that Johnnic pay 75% of his monthly medical aid contributions,
calculated from 1 December 2002 until his death, by reason of an employment
agreement which he concluded with CNA. Johnnic contends that if it is liable,
such liability rests with Wooltru in terms of the agreement which was concluded
when National Bazaars Limited (a subsidiary of Wooltru Limited) acquired the CNA
business from CNA Gallo Limited. This claim appears to be a test case as other
former employees of CNA/Consolidated with claims totalling some R20,0 million
have made demands similar to the claim of Mr IL Outram but have to date not
taken steps against either Johnnic or Wooltru. This issue has been reflected as
a contingent liability in note 9 of these annual financial results.
All actions taken against Wooltru are being defended. In all instances Wooltru
has engaged both senior and junior counsel to represent the company. Wooltru`s
legal teams have expressed the view that the prospects of the Plaintiffs
succeeding in the actions are unlikely.
2. Taxation queries
South African Revenue Service (`SARS`) has raised a revised assessment for
Wooltru Properties Holdings (Pty) Ltd for the 2001 year of assessment in terms
of which they have added back to taxable income for that year an amount of R50,9
million as a taxable recoupment in respect of leasehold improvements claimed as
a deduction by the taxpayer in terms of section 11(g) of the Income Tax Act and
lease premium deductions claimed by the taxpayer in terms of section 11(f) of
the Act. If SARS is successful it will result in additional tax of R15,3 million
for the year ended 2001, together with interest of R5,4 million to 30 June 2004.
Wooltru Property Holdings (Pty) Ltd is of the view that the revised assessment
is incorrect and has lodged an objection to the assessment. By agreement with
SARS payment has been stayed pending the outcome of this dispute. This issue has
been reflected as a contingent liability in note 9 of these annual financial
results.
Any further material queries that may arise, as part of the process of
liquidation of companies within the corporate structure, will be reported to
shareholders.
3. Collapsing of corporate structure and deregistration
The collapsing of the corporate structure and deregistration of Wooltru`s
companies are largely of a technical nature and will continue as soon as all
unresolved issues are finalised.
Group results
In the current period, Wooltru recorded an attributable profit of R19,8 million
compared to R15,9 million for the year ended 30 June 2003.
Cash balances
As at 31 July 2004, cash balances on hand amounted to R205,7 million. Estimated
cash balances on hand at 30 June 2005 are budgeted at R212,6 million.
The major components for which cash flows have been budgeted are as follows:
Rm
Property-related costs 0,4
Advisors` costs 3,9
Administration costs 4,4
Preference share redemption 1,5
Total expenses 10,2
These costs will be offset by interest estimated to amount to R17,1 million. The
net cash inflow for the period is therefore budgeted at R6,9 million.
Board composition
At the annual general meeting (`AGM`), held on 16 March 2004, Prof. LA Tager and
Mr DM Lubner retired from the Board. Mr JD Newton, who retired from executive
service on 31 January 2004, resigned from the Board on 16 March 2004.
Prof. LA Tager was a member of the Wooltru Board from August 1993 and led the
Board as chairman through the difficult unbundling period. Her contribution to
the company is greatly appreciated.
Mr DM Lubner served on the Board from August 1993 and his retailing expertise
and broad business experience have been invaluable during the years.
Mr JD Newton served in an executive capacity as finance director from February
1999. The company thanks Mr JD Newton for his contributions.
At the AGM held on 16 March 2004 Messrs M Kaplan, AM Louw and A Groll were
elected to the Wooltru Board. At a subsequent Board meeting held on 16 March
2004 Mr M Kaplan was elected chairman of the company.
On 1 April 2004 Mr JB Rabb retired from the group, but continues to serve on the
Board in a non-executive capacity.
Prospects
It is not possible to predict what impact the litigation surrounding the CNA
group will have on the proposed voluntary liquidation of Wooltru. Once certainty
has been reached, the Board will consider further dividends. In the intervening
period, the Board will strive to keep the operating costs to a minimum. Going
forward, the group expects to have a positive trading cash flow.
For and on behalf of the Board.
M Kaplan
Chairman
Cape Town
19 August 2004
Balance sheet
Audited
Year ended 30 June
Restated
2004 2003
Rm Rm
Assets
Non-current assets 4,4 5,5
Property, plant and equipment - 5,3
Deferred tax 4,4 -
Loans - 0,2
Current assets 209,0 196,3
Inventories - 0,5
Trade and other receivables 3,0 4,7
Taxation 1,5 0,6
Bank balances and cash equivalents 204,5 190,5
Total assets 213,4 201,8
Equity and liabilities
Capital and reserves 210,1 190,3
Ordinary share capital 9,9 9,9
Share premium 620,1 620,1
Non-distributable reserves 8,1 8,1
Accumulated loss (428,0) (447,8)
Total equity 210,1 190,3
Non-current liabilities
Preference share capital 1,5 1,5
Current liabilities 1,8 10,0
Trade and other payables 1,8 9,1
Taxation - 0,9
Total equity and liabilities 213,4 201,8
Net asset value per share 44,6c 40,4c
Income statement
Audited
Year ended 30 June
Restated
2004 2003
Notes Rm Rm
Revenue 3 20,4 42,1
Cost of sales (0,5) (16,7)
Gross profit 19,9 25,4
Depreciation and amortisation (0,1) (0,2)
Occupancy costs (0,3) (0,3)
Employment costs (2,5) (7,9)
Other operating costs (5,4) (4,3)
Profit before exceptional items 11,6 12,7
Exceptional items 5 4,7 9,0
Profit from operations 16,3 21,7
Finance costs (0,2) (0,6)
Net profit before taxation 16,1 21,1
Taxation 3,7 (5,2)
Net profit attributable to ordinary
shareholders 19,8 15,9
Earnings per share (cents) 4,2 3,4
Diluted earnings per share (cents) 4,2 3,4
Headline earnings per share (cents) 6 3,2 1,2
Dividend per share (cents) - -
Cash flow statement
Audited
Year ended 30 June
Restated
2004 2003
Rm Rm
Cash flow from operating activities
Cash flow from trading (2,2) (15,0)
Working capital movements (5,3) (29,8)
Cash utilised in operating activities (7,5) (44,8)
Interest received 18,4 21,5
Interest paid (0,2) (0,6)
Income from investments - 0,7
Taxation paid (2,5) (15,7)
Cash generated by/(utilised in) operations 8,2 (38,9)
Dividends paid - -
Net cash inflow/(outflow) from operations 8,2 (38,9)
Cash flow from investing activities
Investment to maintain operations - (32,4)
Proceeds on sale of property, plant and equipment 5,6 24,9
Loans and other investments 0,2 -
Proceeds on sale of investments - 69,9
Net cash inflow from investing activities 5,8 62,4
Cash flow from financing activities
Treasury shares purchased - (0,5)
Treasury shares sold - 4,1
Net cash inflow from financing activities - 3,6
Net increase in cash and cash equivalents 14,0 27,1
Cash and cash equivalents at beginning of period 190,5 163,4
Cash and cash equivalents at end of period 204,5 190,5
Statement of changes in ordinary shareholders` interest
Audited
Year ended 30 June
Restated
2004 2003
Notes Rm Rm
Ordinary shareholders` interest at beginning of
period 190,3 170,8
Balance at beginning of period as previously
reported 188,0 168,9
Restated shareholders` interest due
to consolidation of share purchase trust
- Retained income 4 2,3 2,7
- Share capital and share premium - (0,8)
Movements for the period:
Share capital and share premium - (0,5)
Treasury shares acquired - (0,5)
Recognised gains and losses
Accumulated profit 19,8 20,0
Net profit attributable to ordinary shareholders 19,8 15,9
Premium on sale of shares by share purchase
trust - 4,1
Ordinary shareholders` interest at end of period 210,1 190,3
Notes
1. The basis of preparation of the financial information complies with South
African Statements of Generally Accepted Accounting Practice and the accounting
policies used are consistent with those applicable for the 30 June 2003
financial statements except for the change reflected in note 4 relating to the
consolidation of The Wooltru 1982 Executive Share Purchase Trust.
2. The annual financial statements continue to be prepared on the going concern
basis as the directors consider this to be the most appropriate basis, although
it is the stated intention to wind up the company in due course.
2004 2003
3. Revenue Rm Rm
Sales 1,7 -
Property rentals - 2,2
Dividends received - 0,7
Interest income 18,4 22,6
Property development - 16,5
Other 0,3 0,1
20,4 42,1
4. Change in accounting policy
As recommended by the JSE Securities Exchange South Africa, The Wooltru 1982
Executive Share Purchase Trust has been consolidated retrospectively and
comparative figures have been restated. The share purchase trust was dissolved
before 30 June 2004.
The effect on closing accumulated loss and net profit is shown below.
Effect on closing accumulated loss: 2002 2,7
2003 2,3
2004 -
Effect on net profit: 2003 (4,5)
2004 (2,3)
5. The exceptional items relate to:
Profit on sale of property, plant and
equipment 0,4 8,4
Unbundling expenses - (4,6)
Sale of investment - 1,3
Loss on sale of subsidiary - Tiradeprops (0,2) -
Property developments impairment - (0,5)
Recovery of onerous contract costs 4,5 -
Revaluation of property - 2,6
Reversal of impairment of assets - 1,8
Subtotal 4,7 9,0
Taxation - 0,7
Total 4,7 9,7
2004 2003
Rm Rm
6. Headline earnings per share are
calculated as follows:
Net profit attributable to ordinary
shareholders 19,8 15,9
Net exceptional items (note 5) (4,7) (9,7)
Reversal of property development
impairment in exceptional items - (0,5)
Headline earnings 15,1 5,7
Headline earnings per share (cents) 3,2 1,2
7. The group has no banking facilities,
although there is no limit on the
group`s authority to raise interest-
bearing debt.
8. At the period end, the group`s future
minimum operating lease commitments were
as follows:
Expiring within one year 0,1 0,1
Expiring between two and five years - 0,1
9. Contingent liabilities
Guarantees in respect of liabilities of
subsidiary companies* - 0,6
CNA post-retirement medical aid 20,0 20,0
liability**
SARS tax re-assessment on leasehold
improvements recoupment*** 15,3 -
SARS interest on above recoupment - 2001
assessment*** 5,4 -
Three proposed High Court actions
against the company by the liquidators
of CNA.
Wooltru is defending all actions. unknown -
* The guarantees related to the City of Johannesburg in respect of
the Kensington development.
** Approaches have been made to Wooltru claiming a liability exists
on Wooltru`s part for the post-retirement medical aid contributions
of former employees of CNA. A best estimate of these liabilities is
shown. This claim is disputed.
*** SARS raised an assessment for the 2001 year adding back an
amount as a taxable recoupment with interest. This claim is
disputed.
10. Ordinary share capital Number of shares
Issued
Ordinary shares 194 767 260 194 767 260
`N` ordinary shares 276 092 675 276 092 675
Ernst & Young has provided an unqualified audit opinion which is
available for inspection at the company`s registered office on the
June 2004 annual financial statements, which have been summarised
for the purposes of this report.
Withdrawal of cautionary announcement
Shareholders are referred to the previous cautionary announcement, relating to
the liquidation of Consolidated News Agencies (Pty) Limited (`CNA`) and other
related matters. In this regard, as all available information regarding the
pending litigation arising from the liquidation of CNA has been disclosed to
shareholders, shareholders are no longer required to exercise caution when
dealing in their Wooltru ordinary and `N` ordinary shares. As soon as further
information comes to light in this matter, shareholders will be immediately
notified.
Directorate and administration
Wooltru Limited (Registration number: 1936/008278/06)
Chairman
M Kaplan*
Directors
A Groll*, AM Louw*, JB Rabb*, JC van der Horst*
* Non-executive
Secretary
Credit Management Solutions Group (Pty) Ltd
Domicile and registered office
5 Corporation Street,
Cape Town 8001, South Africa
Postal address
PO Box 671, Cape Town 8000, South Africa
Telephone number
021 464 1900
Fax number
021 465 6891
Website
http://www.wooltru.co.za
Transfer secretaries
South Africa
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg 2001, South Africa
Namibia
Transfer Secretaries (Pty) Limited
Shop 8, Kaiserkrone Centre, Post Street Mall, Windhoek, Namibia
Principal bankers
The Standard Bank of South Africa Limited
Auditors
Ernst & Young
Legal advisors
Mallinicks Attorneys, Edward Nathan and
Friedland (Pty) Limited
Sponsor
Bridge Capital Services (Pty) Limited
These results are also available on our website:
www.wooltru.co.za
