1
|
Basis of preparation
The interim financial statements comply with IAS 34 Interim Financial Reporting
and International Financial Reporting Standards (IFRS). These condensed consolidated financial statements do not contain all the information and disclosures required in the annual financial statements, and should be read in conjunction with the group consolidated annual financial statements as at 28 June 2009.
|
2
|
Significant accounting policies
The accounting policies applied are consistent with those followed in the preparation of the consolidated annual financial statements for the year ended 28 June 2009, except for the adoption of the following IFRS, IFRIC interpretations, amendments and circular that became effective during the current period and had no significant impact on the reported results other than giving rise to additional disclosures and a revision to the relevant accounting policies:
|
| |
– |
IFRS 8 Operating Segments
|
| |
– |
IAS 1 Revised – Presentation of Financial Statements
|
| |
– |
IFRS 7 Amendments – Financial Instruments Disclosure
|
| |
– |
IAS 23 Amendments – Borrowing Costs
|
| |
– |
IAS 27 Amendments – Consolidated and Separate Financial Statements
|
| |
– |
IFRS 3 Revised – Business Combinations
|
| |
– |
IFRS 2 Amendments – Share-based Payment: Vesting Conditions and Cancellation
|
| |
– |
IAS 38 Amendments – Intangible Assets: Expenditure on Advertising and Promotional Activities
|
| |
– |
IAS 39 Amendments – Eligible Hedged Items
|
| |
– |
IFRS 5 Amendments – Non-current Assets Held for Sale and Discontinued Operations
|
| |
– |
Circular 3/2009 – Headline Earnings
|
| |
The amendment to IFRS 8 Operating Segments has been early adopted and had no financial impact on the reported results.
|
| 3 |
Restatement of comparative figures and reclassifications |
| |
3.1 |
Restatements
An insurance cell-captive over which Woolworths has significant influence was equity accounted for the first time at June 2009.
The consolidation of this investment has resulted in a net increase in December 2008 profit of R7.6m and increase of R25.0m for years prior to 2008.
Profit before and after tax for the period to 28 December 2008 has been reduced by R21.6m (with a corresponding increase in the group tax liability) as a result of the reallocation of WFS income from the period before the disposal of the controlling interest, when the entity became an equity accounted joint venture. The reallocation relates to group timing differences identified during completion of the disposal, and the restatement aligns to the segmental profit for WFS as reported at
28 June 2009. There is no impact on the profit on disposal of the controlling interest as reported in the previous year.
In terms of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, the above adjustments have been accounted for retrospectively and the comparative financial statements have been restated.
|
| |
3.2 |
Reclassifications
Finance lease liabilities are separately disclosed from trade and other payables and are included in interest-bearing borrowings.
The Woolworths segment now includes certain South African premium brand products previously disclosed under the Country Road segment.
None of these reclassifications had an impact on reported results.
|
| 4 |
Comparability of interim turnover
No material variations in the turnover of the group are expected to occur between the first and second half of the financial year.
|
| 5 |
Tax
The effective tax rate of 29.9% (2008: 42.2%) is higher than the standard rate of normal tax mainly due to the non-deductible IFRS 2 charge arising from the group’s BEE employee share ownership and executive share incentive schemes.
|
| 6 |
Abnormal foreign exchange (profit)/loss
An unrealised loss of R79m (R56.9m after tax) on the marking-to-market of foreign exchange contracts was incurred at 28 June 2009. A subsequent gain of R57.7m (R41.6m after tax) is included in gross profit in the current period. It is expected that the balance will accrue in the second half of the year.
|
| 7 |
Earnings per share
The difference between earnings per share and diluted earnings per share is due to the impact of outstanding options under the group share incentive schemes and preference shares issued in terms of the BEE employee share ownership scheme.
|
| 8 |
Property, plant and equipment and intangible assets
During the twenty-six weeks
to 27 December 2009, the group acquired property, plant and equipment with a cost of R266.1m (2008: R249.5m) and acquired intangible assets with a cost of R49.5m (2008: R45.2m).
|
| 9 |
Issue and repurchase of shares
During the twenty-six weeks to 27 December 2009, 2 496 007 (2008: 3 134 401) ordinary shares were issued in terms of the group’s executive share incentive scheme.
11 878 892 (2008: 12 387 116) shares were repurchased from the market by E-Com (Proprietary) Limited and are held as treasury shares by the group.
29 497 604 (2008: nil) shares were issued to Woolworths (Proprietary) Limited and are held as treasury shares by the group.
In addition, a further 1 184 000 (2008: nil) shares were repurchased from the market by Woolworths (Proprietary) Limited and are held as treasury shares.
|
| 10 |
Contingent liabilities
Various group companies are parties to legal disputes and investigations which arise in the ordinary course of business, whilst the outcome of some of these matters cannot readily be foreseen, the directors believe that they will be disposed of without material effect.
|
| 11 |
Borrowing facilities
Unutilised committed banking facilities amount to R1 600m (2008: R1 500m). In terms of the Articles of Association, there is no limit on the group’s authority to raise interest-bearing debt.
|
| 12 |
Events subsequent to balance sheet date
No event material to the understanding of these financial statements has occurred between the end of the interim period and the date of approval.
|
| 13 |
Related party transactions
During the six months to 27 December 2009, group companies entered into various transactions. These transactions were entered into in the ordinary course of business and under terms that are no less favourable than those arranged with independent third parties. All such subsidiary-related intra-group related party transactions and outstanding balances are eliminated in preparation of the consolidated financial statements of the group. All transactions with joint ventures and the associate are concluded on an arm’s length basis.
|
| 14 |
Approval of interim financial statements
The interim financial statements were approved by the board of directors on 17 February 2010.
|
| 15 |
Unaudited results
These results have not been reviewed or audited. |
