incomedirectors’ report
nature of business
Woolworths Holdings Limited is an investment holding company listed on the JSE Limited operating mainly through the following subsidiaries, Woolworths (Proprietary) Limited, Woolworths Financial Services (Proprietary) Limited and Country Road Limited. Woolworths (Proprietary) Limited is a retail chain of stores offering a selected range of clothing, homeware and food under its own brand name. Woolworths has 309 corporate and franchise stores throughout South Africa, Africa and the Middle East. Woolworths Financial Services offers a variety of financial products to the Woolworths customers. Country Road Limited offers apparel and homeware in its own retail stores, a major department store and is listed on the Australian Stock Exchange. Country Road has 52 stores and operates in Australia, New Zealand and South East Asia.
The nature of the business of the subsidiaries held directly and indirectly is set out here.
review of financial results and activities
Reviews of the financial results and the activities of the group are contained in the statement the Chairman, the report of the Chief executive officer, the Finance director’s report, reviews operations and the annual financial statements.
share capital
The authorised share capital of the company remained unchanged during the year.
changes to issued share capital
The following ordinary shares were issued during the year under review:
| 2006 | 2005 | |||
| Shares in issue at the beginning of the year | 874 075 014 | 950 714 967 | ||
| Share purchase scheme | 14 539 120 | 14 817 091 | ||
| Shares repurchased and cancelled | (4 523 045) | (91 457 044) | ||
| Shares in issue at the end of the year | 884 091 089 | 874 075 014 |
Details of the authorised and issued share capital are included in the notes to the financial statements of this report.
repurchase of shares
In terms of the articles of association and the general authority granted by the shareholders on 2 November 2005, the company and its subsidiaries were authorised until the next annual general meeting to repurchase the issued share capital of the company, provided that the aggregate of such repurchases should not exceed 20% of any class of the issued share capital in any one financial year, and subject to the requirements of the Companies Act, (61 of 1973), as amended. During the year 4 523 045 shares were repurchased on the open market. These shares were subsequently cancelled.
treasury shares
There are 86 871 694 treasury shares held by E-Com Investments 16 (Proprietary) Limited, a subsidiary of the company.
directorate and group secretary
The composition of the board and the details of the directors and the Group secretary in office at the date of this report are reflected here.
new appointments
Subsequent to the year end Peter Bacon was appointed as a non-executive director and Zyda Rylands, the People director of Woolworths (Proprietary) Limited, was appointed as an executive director with effect from 22 August 2006.
In accordance with the articles of association the company, one third of the board is required to retire by rotation at each annual general meeting. Retiring directors are those who have been appointed between annual general meetings and those who have been in office the longest since their last re-election.
In terms of the articles of association of the company, Peter Bacon and Zyda Rylands who are required to retire at the annual general meeting following their appointment and being eligible offer themselves for re-election. Mair Barnes and Brian Frost are due to retire rotation at the next annual general meeting and being eligible offer themselves for re-election.
Abridged curricula vitae of the directors seeking re-election are contained in the notice of the annual general meeting.
Directors seeking re-election do not have service contracts with the company with notice periods in excess of one year.
resignation
Nolitha Fakude resigned from the board with effect from 25 November 2005.
directors’ interests in shares
As at the date of this report, the directors held directly and indirectly, interests in the company’s ordinary issued share capital as reflected in the table below:
| 2006 | 2005 | |||||||
| Beneficial | Non-beneficial | Beneficial | Non-beneficial | |||||
| Direct | Indirect | Direct | Indirect | Direct | Indirect | Direct | Indirect | |
| Executive directors | ||||||||
| Simon Susman | 15 | 11 121 356 | - | 17 200 | 15 | 10 708 659 | - | - |
| Richard Inskip | - | 2 681 333 | - | - | - | 2 165 551 | - | - |
| Zyda Rylands | 888 714 | - | - | - | n/a | n/a | n/a | n/a |
| Norman Thomson | 2 620 | 3 093 468 | - | - | 1 226 785 | 606 124 | - | - |
| Non-executive directors | ||||||||
| Buddy Hawton | - | - | - | - | - | - | - | - |
| Peter Bacon | - | - | - | - | n/a | n/a | n/a | n/a |
| Mair Barnes | - | - | - | - | - | - | - | - |
| Nigel Colne | - | - | - | - | - | - | - | 3 633 |
| Brian Frost | - | 260 000 | - | - | - | 382 270 | - | - |
| Mike Leeming | - | 10 000 | - | - | - | - | - | - |
| Chris Nissen | - | - | - | - | - | - | - | - |
| Sindi Zilwa | - | - | - | - | - | - | - | - |
| 891 349 | 17 166 157 | - | 17 200 | 1 226 800 | 13 862 604 | - | 3 633 | |
During the course of the year, no director had a material interest in any contract of significance with the company or any of its subsidiaries that could have given rise to a conflict of interest.
Transactions defined as related party transactions in terms of the international financial reporting standards between the company or its subsidiaries and the directors or their associates are disclosed here.
The emoluments of directors of the company are set out here.
woolworths holdings share trust ("the trust")
Woolworths Holdings Limited operates share option and share purchase schemes under the Trust. The schemes are intended as incentives to employees to promote the continued growth of the company and to align their interests to those of the shareholders. The Trust deed provides that scheme shares and options may not exceed 15% of the company’s issued share capital.
Participation is open to employees at the discretion of the directors and in accordance with established guidelines. The remuneration committee approves issues of shares which are an exception to the guidelines. In terms of the current rules of the schemes, the offer shares and options are releasable to beneficiaries on the basis of 20% becoming available on the first anniversary of the date of the offer and 20% each year thereafter. Shares have been granted to participants at the weighted average value per share determined over five trading days immediately preceding the offer date. Shares are not granted in closed periods. Information on options and shares granted to executive directors under the Trust is given in the remuneration report here.
share options
In terms of the trust deed, employees have been granted a total of 30 849 431 (2005: 38 005 008) share options ranging from R2.60 to R16.56 (2005: R2.60 to R10.64), which are exercisable between July 2006 and May 2016.
share purchases
Shares held by the Trust on behalf of beneficiaries totalled 29 294 842 (2005: 26 538 683). In previous years this figure included shares to be delivered and paid for in a subsequent year. Delivery and payment of 3 096 412 shares was taken in the current year (2005: 1 769 841).
The number of shares and options available for utilisation by the Trust as at 30 June 2006 was as follows:
| 2006 | 2005 | ||||
| Number of shares and options available for utilisation | |||||
| Balance at the beginning of the year | 53 691 762 | 41 764 726 | |||
| Shares and options acquired from employees | 4 809 211 | 4 751 316 | |||
| Offers made to employees during the year | (7 690 250) | (7 620 848) | |||
| Additional shares granted to the Trust as approved | |||||
| by the shareholders | - | 26 292 561 | |||
| Decrease in share capital due to the share repurchase | (678 457) | (13 718 557) | |||
| Increase in issued share capital | 2 180 868 | 2 222 564 | |||
| Balance at the end of the year | 52 313 134 | 53 691 762 | |||
distribution to shareholders
On 16 February 2006 an interim dividend of 24 cents per share was declared and paid to shareholders on 13 March 2006 (2005: cash distribution from share premium of 18.5 cents per share). A final dividend of 39 cents per share in respect of the year ended 30 June 2006 was declared payable on 18 September 2006 (2005: cash distribution from share premium of 20 cents per share and a dividend of 15.5 cents).
directors’ responsibility for annual financial statements
The directors are responsible for preparing the annual financial statements and other information presented in the annual report in a manner that fairly presents the financial position and the results of the operations of the company and the group for the year ended 30 June 2006.
The external auditors are responsible for carrying out an independent examination of the annual financial statements in accordance with International Standards on Auditing in the manner required by the South African Companies Act, (61 of 1973), as amended, and for reporting their findings thereon. The auditors' report is set out here.
The 
annual financial statements set out here,
have been prepared in
accordance with International Financial Reporting Standards and are based on appropriate accounting policies which have
been consistently applied in all material respects, and are supported by reasonable and prudent
estimates where appropriate. Adequate accounting records have been maintained throughout the period under review.
going concern
The directors have reviewed the group's budget and cash flow forecast for the year to 30 June 2007. On the basis of this review, and in the light of the current financial position and existing borrowing facilities, the directors are satisfied that the group is a going concern and have continued to adopt the going concern basis in preparing the financial statements.
borrowing powers
In terms of the articles of association, the borrowing powers of the company are unlimited, however all borrowings by the group are subject to board approval as required by the board delegation of authority. The details of borrowings appear in note 22 of the annual financial statements.
subsidiary companies
An annexure containing full particulars of the subsidiary companies appears here.
events subsequent to balance sheet date
No event material to the understanding of this report has occurred between the end of the financial period and the date of this report.
special resolutions
The following special resolution was passed during the course of the year.
| Woolworths Holdings Limited | |
| Effective date | Summary of resolution |
| 2 November 2005 | Renewed the general authority authorising the company and its subsidiaries to purchase shares in the issued share capital of the company. |
| No special resolutions were passed by the subsidiaries of the company during the course of the year. | |
