| Thu 21 Aug 2003, 9:13 | | AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE |
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WOOLWORTHS HOLDINGS LIMITED -
Woolworths Holdings Limited
Company registration number 1929/001986/06
Share code WHL ISIN ZAE000028288
Audited group results for the year ended 30 June 2003
Income statement
Year ended 30 June
2003 2002 %
Note Rm Rm Change
Revenue 10 094.8 9 020.7 11.9
Continuing operations 10 094.8 8 825.6 14.4
Discontinued operations - 195.1
Continuing operations
Turnover 9 500.3 8 421.4 12.8
Cost of merchandise 6 358.6 5 571.8 14.1
Gross profit 3 141.7 2 849.6 10.3
Other revenue 594.5 404.2 47.1
Expenses 2 848.2 2 568.6 10.9
Depreciation 227.1 213.5 6.4
Occupancy cost 512.4 503.4 1.8
Employment cost 1 276.5 1 158.2 10.2
Other operating cost 832.2 693.5 20.0
Operating profit 888.0 685.2 29.6
Interest paid 87.4 44.5 96.4
Net profit before exceptional items 800.6 640.7 25.0
Exceptional items 2 (23.7) (41.5)
Net profit before tax 776.9 599.2 29.7
Tax 3 227.4 203.6 11.7
Net profit after tax 549.5 395.6 38.9
Outside shareholders" interest (1.2) (2.1)
Net profit from continuing operations 548.3 393.5 39.3
Discontinued operations
Operating loss - (14.0)
Interest paid - (0.7)
Loss from discontinued operations - (14.7)
Exceptional items 2 1.5 (139.6)
Outside shareholders" interest (0.2) 18.8
Net profit/(loss) from discontinued
operations 1.3 (135.5)
Total group
Net profit attributable to ordinary
shareholders 549.6 258.0 113.0
Reconciliation of headline earnings
Attributable earnings - all operations 549.6 258.0 113.0
Goodwill amortisation 10.0 12.1
Loss/(profit) on disposal of property,
plant and equipment net of outside
shareholders" interest 4.9 (8.8)
(Profit)/loss on discontinuance,
net of outside shareholders" interest (1.3) 115.6
Loss on disposal of listed investment - 4.8
Impairment of property - 17.2
Headline earnings 563.2 398.9 41.2
Net loss from discontinued operations
net of outside shareholders" interest - 19.9
Headline earnings from continuing
operations 563.2 418.8 34.5
Headline earnings per share (cents)
- All operations 64.8 44.0 47.3
- Continuing operations 64.8 46.2 40.3
Earnings per share (cents)
- All operations 63.3 28.5 122.1
- Continuing operations 63.1 43.4 45.4
Diluted earnings per share (cents) 4 61.9 28.0 121.1
Distributions per share (cents) 5 29.0 20.0 45.0
Distribution cover (based on
headline earnings from continuing
operations) 2.2 2.3
Number of shares in issue (millions) 853.1 889.7 -4.1
Weighted average number of shares
in issue (millions) 868.5 905.7 -4.1
group analysis
Revenue
Turnover 9 500.3 8 421.4 12.8
Woolworths 8 430.0 7 302.0 15.4
- Clothing and home 4 280.4 3 834.1 11.6
- Foods 3 980.8 3 302.1 20.6
- Logistics services and other 168.8 165.8 1.8
Country Road - continuing operations 1 070.3 1 119.4 -4.4
Interest 522.3 355.5 46.9
Other revenue 72.2 48.7 48.3
Continuing operations 10 094.8 8 825.6 14.4
Discontinued operations - 195.1
10 094.8 9 020.7 11.9
Operating profit
Woolworths 870.7 663.1 31.3
Country Road 17.3 22.1 -21.7
Continuing operations 888.0 685.2 29.6
Discontinued operations - (14.0)
888.0 671.2 32.3
Cash flow statement
Year ended 30 June
2003 2002
Rm Rm
Cash flow from operating activities
Cash inflow from trading 657.6 581.7
Working capital movements (209.7) (262.1)
Cash generated by operating activities 447.9 319.6
Interest received 519.5 355.5
Interest paid (87.4) (45.2)
Tax paid (191.7) (284.5)
Cash generated by operations 688.3 345.4
Distributions to shareholders (201.3) (145.8)
Net cash inflow from operating activities 487.0 199.6
Continuing operations 487.0 187.3
Discontinued operations - 12.3
Cash outflow from investing activities (445.6) (405.0)
Cash flow from financing activities
Shares issued 39.5 41.3
Shares repurchased by subsidiary (235.1) (134.7)
Net cash outflow from financing activities (195.6) (93.4)
Decrease in cash and cash equivalents (154.2) (298.8)
Cash and cash equivalents at the beginning of the year (361.7) (64.0)
Cash acquired on acquisition of subsidiary 10.2 0.2
Effect of foreign exchange rate changes (8.0) 0.9
Cash and cash equivalents at the end of the year (513.7) (361.7)
group analysis
Cash generated by operations - before tax 880.0 629.9
Woolworths 820.9 579.1
Country Road 59.1 50.8
Balance sheet
Year ended 30 June
2003 2002
Rm Rm
assets
Non-current assets 1 556.8 1 535.2
Property, plant and equipment 1 037.6 916.1
Investments 12.4 81.4
Loans to customers 182.3 180.2
Participation in export partnerships 183.2 210.0
Goodwill 10.1 20.1
Other loans 114.3 112.6
Deferred tax 16.9 14.8
Current assets 3 235.3 2 528.6
Inventories 564.4 511.2
Woolworths card debtors 1 669.3 1 348.7
Credit card receivables 105.9 -
Accounts receivable 382.2 347.1
Loans to customers 273.1 201.5
Tax 24.4 1.6
Cash and cash equivalents 216.0 118.5
Total assets 4 792.1 4 063.8
equity and liabilities
Capital and reserves 2 433.4 2 375.8
Ordinary shareholders" interest 2 411.2 2 350.2
Outside shareholders" interest 22.2 25.6
Non-current liabilities 285.1 300.8
Post-retirement medical aid liability 130.8 111.0
Deferred tax 154.3 189.8
Current liabilities 2 073.6 1 387.2
Accounts payable 1 038.1 713.3
Provisions 111.5 97.3
Tax 194.3 96.4
Interest bearing borrowings 729.7 480.2
Total equity and liabilities 4 792.1 4 063.8
Net asset book value - per share (cents) 282.6 264.2
group analysis
Total assets 4 792.1 4 063.8
Woolworths 4 428.2 3 658.0
Country Road 363.9 405.8
Inventories 564.4 511.2
Woolworths 433.3 339.1
Country Road 131.1 172.1
Approved commitments for capital expenditure
for the next financial year 189.2 237.9
Woolworths 152.6 196.7
Country Road 36.6 41.2
Statement of changes in
ordinary shareholders" interest
Year ended 30 June
2003 2002
Rm Rm
Ordinary shareholders" interest at the beginning
of the year 2 336.1 2 238.4
As previously reported 2 350.2 2 238.4
Adjustment to opening balance arising from the
change in accounting policy for:
Revaluation of listed investment to fair value 2.1
Unearned finance income from export partnerships (16.2)
Movements for the year:
Share premium arising from shares issued under share
purchase scheme 39.5 41.3
Shares repurchased by subsidiary (235.1) (134.7)
Recognised gains and losses 270.7 205.2
Distributable reserves 306.1 125.1
Net profit attributable to ordinary shareholders 549.6 258.0
Distributions to shareholders (201.3) (145.8)
Net fair value adjustment on financial instruments (42.2) 12.9
Non-distributable reserves
Exchange differences on translation of foreign entities (35.4) 87.4
Realisation of translation reserve on closure of
discontinued operations - (7.3)
Ordinary shareholders" interest at the end of the year 2 411.2 2 350.2
notes
1. The financial statements comply with South African Statements of Generally
Accepted Accounting Practice. Accounting policies used are consistent with
those applicable for the June 2002 financial statements, except as follows:
Following the introduction of AC133 - Financial instruments: recognition and
measurement, gains and losses on certain qualifying financial instruments taken
out as cash flow hedges for future transactions and fair value adjustments on
available-for-sale financial assets are carried in equity. In addition, loans
originated by the group are now reflected at amortised cost. These changes have
had the effect of increasing reported profit after tax by R0.8m. In accordance
with the provisions of AC133, comparative figures have not been restated.
Certain other comparative figures have been changed to bring them in line with
classifications used in the current period.
2003 2002
2. Exceptional items Rm Rm
Continuing operations
Goodwill amortisation 10.0 12.1
Provision for onerous lease commitment 13.7 7.4
Loss on disposal of listed investment - 4.8
Impairment of property - 17.2
23.7 41.5
Discontinued operations
(Profit)/loss on discontinuance (1.5) 131.6
Restructuring costs - 8.0
(1.5) 139.6
22.2 181.1
There is no tax effect arising from the exceptional items, other than in
respect of the onerous lease provision of R4.1m (2002: R2.2m).
3. The effective tax rate of 29.3% (2002: 34.0%) on continuing operations is
mainly due to the STC charge, offset by tax adjustments of R31.5m relating to
previous years, and the efffect of the utilisation of tax losses.
4. The difference between earnings per share and diluted earnings per share
results from outstanding options in terms of the share purchase scheme.
5. Distributions comprise the interim dividend of 10.5c per share, paid on 17
March 2003 and the proposed final distribution from share premium of 18.5c per
share on 20 August 2003.
6. Gross capital expenditure on property,
plant and equipment 2003 2002
Rm Rm
Woolworths 377.9 273.7
Country Road 36.2 61.3
414.1 335.0
7. Unutilised banking facilities amount to R1 266.8m (2002: R1 549.3m). In terms
of the Articles of Association, the borrowing powers of the group are unlimited.
8. The group"s annual financial statements have been audited by the group"s
auditors, Ernst & Young, and a copy of their unqualified report is available for
inspection at the company"s registered office.
A year of continued growth
Revenue 14.4%
Operating profit 29.6%
HEPS 40.3%
Proposed total distribution
of 29 cents per share 45.0%
3 year compound annual growth
Revenue 14.7%
HEPS 36.6%
Distribution per share 27.5%
ROE 11.3% in 2000 to 23.7% in 2003
commentary
group results
The directors are pleased to report a significant increase of 34.5% in headline
earnings from continuing operations and 40.3% in headline earnings per share
from continuing operations for the financial year ended 30 June 2003. Operating
profit was up 29.6% to R888,0m off an increased total revenue of R10,1bn. This
result continues our consistent growth trend over the past 3 years.
trading results
WOOLWORTHS
The strong consumer demand experienced in late 2002 was countered by a softening
in 2003 caused by continuing high prices together with high interest rates and
the late arrival of winter.
Against this background Woolworths sales increased by 15.4% in the 52-week
period compared to a 53-week period last year. The impact on sales of the
additional week in the previous year was approximately 1.9%. Improved market
share in clothing and in foods were key factors in the sales achievement. High
inflation relative to the prior year also contributed to increased turnover.
The store expansion programme delivered an additional 33 stores in South Africa
and internationally. Locally, the bulk of our new food stores opened in the last
quarter and are expected to contribute more significantly to next year"s sales
growth.
Operating profit increased by 31.3% and was assisted by the high interest rates
on the debtors books, tight cost control and the close attention to primary
buying margins. The overall gross profit margin was slightly lower than last
year reflecting the increase in foods and franchise sales contribution.
The Clothing and Home division grew sales by 11.6% against the 53 weeks last
year and 10.2% within comparable South African stores. Womanswear, menswear and
footwear continued to perform well and grew market share while childrenswear and
homeware performed below expectations. Childrenswear will focus on better
segmentation of age groups and increased fashionability. Improvements have been
made to the buying division structure of homeware and a new innovative range
will be launched. A store refurbishment programme aimed at modernising the
presentation of our offer will commence over the next year.
Overall the market is responding well to our merchandise strategy of
consistently offering our customers beautiful products of exceptional quality
and value in a modern exciting shopping experience. We expect this to continue.
The Food division exceeded our expectations and sales increased by 20.6% against
the 53 weeks last year and 14.7% within comparable South African stores. The
growth in this period was bolstered by the opening of new smaller stores. Sales
slowed somewhat as inflation figures came off their December highs, further
exacerbated by the plastic bag charging which was introduced in May this year.
Customers are responding positively to our strategy to provide safe, nutritious
and delicious food conveniently at good value across a comprehensive range and
are increasingly choosing Woolworths to do their main shop. An uplift in product
volumes in categories where inflation is lowest and the opening of approximately
20 stores, should provide this division with real growth in the years ahead.
Woolworths Financial Services achieved substantial growth in retail, credit card
and personal loan books of 23.9%. Performance was bolstered by high interest
rates experienced throughout the year. Bad debts were well managed and the net
bad debt experience for the period improved. A clearer understanding of our
mainly female customers, together with the introduction of a loyalty programme
linked to our Visa card, rewarding customers with Woolworths Points, is expected
to show positive results in the future.
Franchise stores achieved retail sales in excess of R1bn for the first time
during the period through 110 stores; 53 located in South Africa, 47 elsewhere
in Africa and 10 in the Gulf. African stores traded above expectations while the
Gulf region was depressed due to the tensions of war. The international business
has been affected by the strong rand which remains a concern. A greater focus on
delivering product which meets the customers" needs in each market through the
introduction of a revised supply chain process should provide a solid foundation
for the future growth of the franchise division.
COUNTRY ROAD (from continuing operations)
Despite positive economic conditions in Australia, the clothing retail
environment was tough. The decrease in consumer spend was exacerbated by strong
competition which saw the major department stores discounting heavily.
Sales during the period in Australian dollar terms remained at similar levels to
the previous year. The profit for this period of A$2.4m (2002 A$1.1m) was
achieved against a background of significant change in the business and further
sustainable cost reductions. The transformation of the supply chain processes
and systems was completed and is now contributing to improved availability.
An important step has been taken with the decision to adopt a more retail-
focused business model by reducing the wholesale-based component which should
lead to a less complex and more efficient business.
financial
Over the last 3 years we have concentrated on improving our use of shareholder
funds. ROE has grown steadily from 11.3% in June 2000 to 23.7% in the current
year. The effect of our share buy-back programme has increased our HEPS by 5.8%
in the current period.
buy-back of shares
During the year E-Com Investments 16 (Pty) Limited, a subsidiary of the company,
repurchased 49 277 007 shares of the company"s issued share capital at a cost of
R235.1 million bringing the total buy-back to date to 82 415 720 (8.8%) shares
at a cost of R369.8 million.
cash distribution
Notice is hereby given that the board of directors has proposed a cash
distribution of 18.5 cents per share, in lieu of an ordinary final dividend, by
way of a reduction of the share premium account, for the year ended 30 June
2003, subject to approval by shareholders. A circular, incorporating the details
of the capital reduction and the cash distribution and notice of a general
meeting of shareholders, will be posted to shareholders on 28 August 2003.
prospects
In the last three months of this reporting year trading conditions were tough
and we expect this to continue through the first half of the new financial year.
However we believe that in South Africa the ongoing impact of reducing interest
rates should, together with real easing of inflation, lead to an increase in our
customers" disposable income and confidence by the second half of the financial
year.
This, together with our organic growth strategies, leads the Board to be
confident about continuing to deliver further growth for the year ahead.
On behalf of the Board of Directors.
DA Hawton SN Susman
Chairman Chief executive officer
Cape Town
21 August 2003
directorate
Non-executive directors DA Hawton (Chairman), M Barnes (British), NL Colne
(British), BJ Frost, SV Zilwa
Executive directors SN Susman (CEO), MR Canning, GP de Kock, RJD Inskip, NW
Thomson
Company Secretary CL Lowe
Auditors Ernst & Young
Sponsor HSBC Investment Services (Africa) (Pty) Ltd
Registered Office Woolworths House, 93 Longmarket Street, Cape Town 8001
Transfer Secretaries Computershare Limited, 70 Marshall Street, Johannesburg
2001
visit our investor relations site:
www.woolworthsholdings.co.za
Date: 21/08/2003 07:50:16 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
