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Wednesday 23 March 2005 |
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Woolworths Group plc:
Preliminary Results Announcement 2005 |
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Notes to the Accounts |
back to contents |
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1. Segmental Analysis |
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The Group’s business is divided into Retail and Entertainment Wholesale and Publishing
segments. Woolworths, MVC, Streets Online and Flogistics are included within the Retail
segment with Entertainment UK, VCI and 2entertain making up Entertainment Wholesale and
Publishing. |
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Turnover |
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Group Turnover arises in the UK only and represents retail and wholesale distribution sales
and other services. Turnover excludes Value Added Tax. The analysis of turnover by
destination is not materially different to the analysis of turnover by origin. |
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2004 |
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2005 |
Restated |
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£m |
£m |
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| (a) Turnover by origin |
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| Retail |
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| Group |
2,262.3 |
2,284.9 |
| Joint venture |
12.1 |
20.4 |
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2,274.4 |
2,305.3 |
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| Entertainment Wholesale and publishing |
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| Group |
1,216.3 |
1,165.2 |
| Joint venture |
29.8 |
– |
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1,246.1 |
1,165.2 |
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| Intergroup* |
(623.4) |
(675.4) |
| Turnover - Group and share of joint ventures |
2,897.1 |
2,795.1 |
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| *Intergroup relates to trading between Group segments |
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Group share of joint venture turnover has been restated to reflect third-party sales only.
On 26 September 2004 the Group acquired the remaining shareholding in Flogistics Limited.
As a result Flogistics has been included as a subsidiary from that date. |
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The Group entered into a joint venture with BBC Worldwide on 27 September 2004 to form
2entertain Limited. As a result a number of trading subsidiaries were transferred into
2entertain Limited in which the Group holds a 40 per cent share. These businesses reported
sales up to 27 September 2004 of £49.1 million (2004: £95.0 million). |
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2005 |
2004 |
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Before
exceptional
items |
Operating
exceptional
items |
Total |
Total |
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£m |
£m |
£m |
£m |
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(b) Profit on ordinary
activities
before taxation |
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| Retail |
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| Group |
40.7 |
(60.9) |
(20.2) |
45.0 |
| Joint venture |
– |
– |
– |
1.2 |
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40.7 |
(60.9) |
(20.2) |
46.2 |
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Entertainment Wholesale
and Publishing |
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| Group |
38.2 |
– |
38.2 |
42.2 |
| Joint venture |
10.2 |
– |
10.2 |
– |
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48.4 |
– |
48.4 |
42.2 |
| Common costs |
(10.1) |
– |
(10.1) |
(11.5) |
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| Total operating profit |
79.0 |
(60.9) |
18.1 |
76.9 |
| Net interest payable |
(8.8) |
– |
(8.8) |
(10.2) |
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Profit on ordinary activities
before taxation |
70.2 |
(60.9) |
9.3 |
66.7 |
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Common costs before exceptional items relate to the Group’s Corporate Centre, amortisation
of acquisition goodwill on subsidiaries of £2.0 million (2003: £3.1 million) and other
consolidation adjustments. |
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2005 |
Restated
2004 |
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£m |
£m |
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| (c) Net assets |
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| Retail |
445.7 |
447.7 |
| Entertainment Wholesale and Publishing* |
196.0 |
170.2 |
| Woolworths Group |
(176.9) |
(160.6) |
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| Total Group |
464.8 |
457.3 |
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| *The only net assets relating to joint ventures (£56.9 million) are shown within the
Entertainment Wholesale and Publishing segment (2004: £Nil) |
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2. Operating Exceptional Items |
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2005 |
2004 |
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£m |
£m |
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| Stock disposals and store clearance |
(17.3) |
– |
| Disposal of leases and reconfiguration of the out-of-town estate |
(37.6) |
– |
| Other |
(6.0) |
– |
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| Total operating exceptional items |
(60.9) |
– |
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In March 2004, the Group announced that Woolworths big W as traded from its existing
portfolio did not represent a secure source of long-term profitability. As a result a number of
stores have been disposed of and in others excess space has been vacated, cut down or are
in the process of being sold and/or vacated. |
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Stock disposals and store clearance costs relate to the write-down of stock to net realisable
value. |
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Disposal of leases and reconfiguration of the out-of-town estate includes provision for any
void periods, surrender costs, asset impairments and other transaction costs net of proceeds
on disposal. |
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Other includes redundancy and refurbishment costs associated with the out-of-town stores. |
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The tax effect of these operating exceptional costs in aggregate is a £14.4 million credit
(2004: £Nil). |
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The cash effect of the operating exceptional items is a £3.1 million outflow in this period
(2004: £Nil). |
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3. Profit on Ordinary Activities
Before Taxation |
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2005 |
2004 |
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£m |
£m |
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| Profit on ordinary activities before taxation is
stated after charging/(crediting): |
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| Operating leases: |
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| Land and buildings |
149.9 |
147.4 |
| Plant and equipment |
5.5 |
5.6 |
| Depreciation of tangible fixed assets: |
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| Owned assets |
54.4 |
56.4 |
| Loss on the disposal of fixed assets |
3.3 |
2.1 |
| Net income from property portfolio transactions |
(4.0) |
(6.9) |
| Amortisation of acquisition goodwill – subsidiary |
2.0 |
3.1 |
| Amortisation of acquisition goodwill – joint venture |
0.9 |
– |
| Amortisation of other intangible assets |
0.8 |
1.9 |
| Auditors' remuneration for audit: |
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| To PricewaterhouseCoopers LLP |
0.3 |
0.4 |
| Auditors' remuneration for non-audit
services |
0.1 |
0.1 |
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These numbers exclude the operating exceptional items which are disclosed in
note 2. |
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4. Taxation on profit on ordinary
activities |
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(a) Analysis of charge in the year |
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2005 |
2004 |
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£m |
£m |
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| UK Corporation tax |
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| Current tax |
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| UK corporation tax charge on profits for the year |
(6.3) |
(22.7) |
| Share of joint venture's tax charge |
(3.7) |
(0.5) |
| Adjustments in respect of prior periods |
1.8 |
3.6 |
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(10.2) |
(19.6) |
| Foreign tax charge on profits/(losses) for the year |
(0.6) |
(0.5) |
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| Total current tax |
(10.8) |
(20.1) |
| Current year deferred tax movement |
3.7 |
(0.5) |
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| Total taxation |
(7.1) |
(20.6) |
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(b) Factors affecting tax charge for the year |
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The tax assessed for the year is higher (2004: higher) than the standard rate of corporation
tax in the UK (30 per cent). The differences are explained below: |
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2005 |
2004 |
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£m |
£m |
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| Profit on ordinary activities before tax |
9.3 |
66.7 |
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| Profit on ordinary activities multiplied by standard
rate of corporation tax in the UK of 30 per cent (2004: 30 per cent)
to give expected charge |
(2.8) |
(2.0) |
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| Effects of: |
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| Expenses not deductible for tax purposes |
(6.9) |
(3.1) |
| Capital allowances in excess of depreciation and
other timing differences |
(3.1) |
(1.1) |
| Utilisation of tax losses |
0.2 |
0.5 |
| Adjustment to tax charge in respect of previous periods |
1.8 |
3.6 |
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| Current tax charge for the year |
(10.8) |
(20.1) |
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5. Dividends |
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2005 |
2004 |
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£m |
£m |
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| Interim paid – 0.39 pence per ordinary share (2004: 0.36 pence) |
5.4 |
5.1 |
| Final proposed – Nil pence per ordinary share (2004: 1.14 pence) |
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16.1 |
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| Total dividends |
5.4 |
21.2 |
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| Received/receivable by ESOP Trust* |
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0.2 |
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In light of the proposal from Apax, the Directors are not recommending a dividend. In the
event that an offer is not forthcoming, the Directors then expect to recommend a dividend. |
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*The right to receive dividends on these shares has been waived. |
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6. Earnings per Share |
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2005 |
2004
Restated
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Earnings |
Weighted average number
of shares |
Per share amount
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Earnings |
Weighted average number
of shares |
Per share amount |
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£m |
m |
pence |
£m |
m |
pence |
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| Basic earnings per share |
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| Earnings attributable to ordinary shareholders |
2.0 |
1,406.1 |
0.1 |
46.0 |
1,396.7 |
3.3 |
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| Effect of dilutive share options |
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19.3 |
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15.2 |
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| Diluted earnings per share |
2.0 |
1,425.4 |
0.1 |
46.0 |
1,411.9 |
3.3 |
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| Supplementary earnings per share |
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| Basic earnings per share |
2.0 |
1,406.1 |
0.1 |
46.0 |
1,396.7 |
3.3 |
| Effect of exceptional items |
60.9 |
– |
4.3 |
– |
– |
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| Tax impact arising on exceptional items |
(14.4) |
– |
(1.0) |
– |
– |
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| Basic earnings per share before exceptional
items |
48.5 |
1,406.1 |
3.4 |
46.0 |
1,396.7 |
3.3 |
| Amortisation of acquisition goodwill |
2.9 |
– |
0.2 |
3.1 |
– |
0.2 |
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| Basic - adjusted earnings per share |
51.4 |
1,406.1 |
3.6 |
49.1 |
1,396.7 |
3.5 |
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| Diluted earnings per share |
2.0 |
1,425.4 |
0.1 |
46.0 |
1,411.9 |
3.3 |
| Effect of exceptional items |
60.9 |
– |
4.3 |
– |
– |
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| Tax impact arising on exceptional items |
(14.4) |
– |
(1.0) |
– |
– |
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| Diluted earnings per share before exceptional
items |
48.5 |
1,425.4 |
3.4 |
46.0 |
1,411.9 |
3.3 |
| Amortisation of acquisition goodwill |
2.9 |
– |
0.2 |
3.1 |
– |
0.2 |
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| Diluted - adjusted earnings per share |
51.4 |
1,425.4 |
3.6 |
49.1 |
1,411.9 |
3.5 |
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The calculation of diluted earnings per share uses the weighted average number of ordinary
shares in issue adjusted by the effect of all dilutive potential ordinary shares. The dilutive
effect is calculated on the full exercise of all share options where the exercise price is higher
than the average daily share price over the year. The calculation compares the difference
between the exercise price of exercisable share options, weighted for the period over which
they were outstanding, with the average daily share price over the period. The prior year
numbers have been restated to reflect this calculation. |
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7. Consolidated Cash Flow |
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a) Reconciliation of Operating Profit to Net
Cash Flow from Operating Activities |
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2005 |
2004 |
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£m |
£m |
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| Group operating profit |
7.9 |
75.7 |
| Depreciation, amortisation and impairment |
82.6 |
61.8 |
| Increase in stocks |
(9.4) |
(5.9) |
| Increase in debtors |
(6.0) |
(19.2) |
| Increase/(decrease) in creditors |
83.8 |
(1.5) |
| Loss on disposal of fixed assets |
3.3 |
2.1 |
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| Net cash inflow from operating activities |
162.2 |
113.0 |
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b) Analysis of Changes in Net Funds |
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At
31 January
2004 |
Cash flow |
Non cash
items |
At
29 January
2005
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£m |
£m |
£m |
£m |
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| Cash and current bank accounts |
153.8 |
53.9 |
– |
207.7 |
| Bank overdraft |
(3.8) |
3.8 |
– |
– |
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| Cash and current bank accounts (net of overdraft) |
150.0 |
57.7 |
– |
207.7 |
| Deposit with banks |
1.4 |
(0.7) |
– |
0.7 |
| Finance leases due within one year |
– |
– |
(0.1) |
(0.1) |
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| Cashflow before use of liquid resources and financing |
151.4 |
57.0 |
(0.1) |
208.3 |
| Finance leases due after more than one year |
– |
– |
(0.5) |
(0.5) |
| Senior Notes |
(98.5) |
– |
(0.6) |
(99.1) |
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| Net funds at the end of the year |
52.9 |
57.0 |
(1.2) |
108.7 |
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c) Reconciliation of Net Cash Flow to Movement
in Net Funds |
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2005 |
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£m |
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| Increase in cash in the year |
57.7 |
| Movement in deposits with banks |
(0.7) |
| Movement in finance lease obligations |
(0.6) |
| Senior Notes |
(0.6) |
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| Change in net funds in the year |
55.8 |
| Net funds at the start of the year |
52.9 |
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| Net funds at the end of the year |
108.7 |
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8. Reconciliation of Movement in
Shareholders’ Funds |
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2005 |
2004 |
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£m |
£m |
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| Profit for the financial year |
2.0 |
46.0 |
| Dividends |
(5.4) |
(21.2) |
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| Loss)/retained profit for the financial year |
(3.4) |
24.8 |
| Issue of share capital |
6.8 |
1.6 |
| Unrealised gain arising on formation of joint venture |
4.1 |
– |
| Net movement of own shares |
0.2 |
(0.1) |
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| Opening equity shareholders’ funds as previously reported |
461.4 |
435.0 |
| Prior year adjustment |
(4.3) |
(4.2) |
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| Opening equity shareholders’ funds as restated |
457.1 |
430.8 |
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| Closing equity shareholders' funds |
464.8 |
457.1 |
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This news release contains forward-looking statements based on current assumptions and forecasts made by
Woolworths Group plc management. Various known and unknown risks, uncertainties and other factors could lead to
substantial differences between the actual future results, financial situation, development or performance of the
Group and the estimates given here. The Group accepts no obligation to continue to report or update these forward-looking
statements or adjust them to future events or developments. Further copies of this announcement can be
obtained from the Corporate Affairs department on 020 7706 5689 or downloaded from the Group website www.woolworthsgroupplc.com |
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The enclosed financial information is derived from the full Group Financial Statements for the 52 weeks ended 31
January 2004 and does not constitute the full statutory statements of Woolworths Group plc within the meaning of
section 240 of the Companies Act 1985 (as amended). The Group Financial Statements, on which the independent
auditors have given an unqualified report, which does not contain a statement under section 237 (2) or (3) of the
Companies Act 1985, will be delivered to the Registrar of Companies in due course and posted to shareholders in
April 2004. Following this posting, copies will be available from the Company Secretary, Woolworths Group plc,
Woolworth House, 242-246 Marylebone Road, London NW1 6JL and will be available on the Group website www.woolworthsgroupplc.com |
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