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Woolworths Holdings announces strong results

Woolworths Holdings Ltd (WHL) announces results for the year ended 28 June 2015, including David Jones for the first time. 

Group sales (including concession sales) increased by 54.9%, and by 12.0% excluding David Jones. This was a strong result with good market share gains in both South Africa and Australia. Adjusted profit before tax increased by 20.5% and adjusted headline earnings increased by 24.3%. Adjusted headline earnings per share grew by 10.4%. 

Commenting on the results, WHL Group CEO Ian Moir said: “This year has been transformational for our Group with the acquisition of David Jones and the full ownership of Country Road Group enabling us to make a step change in the scale of our operations: transforming it into a quality retailer with significant scale across sub-Saharan Africa and Australasia.”

“This is a strong set of results, particularly considering the amount of change the Group has undergone due to our new investment in Australia and the tough trading conditions that prevailed in both our major markets.”

Woolworths Clothing and General Merchandise sales grew 9.6% and 4.0% in comparable stores (including Country Road Group sales in South Africa). Sales were impacted by a late winter, but importantly we saw an improvement in our kidswear and women’s footwear and accessories divisions that had underperformed earlier in the year. Total Clothing and General Merchandise sales grew 8.6% (excluding Country Road Group sales in South Africa).

Woolworths Food sales grew by 13.5%, with price movement of 7.7%. Sales in comparable stores grew by 6.6%. The Food business, which is differentiated on quality, freshness and innovation, delivered a strong performance well ahead of the market, and continued to gain market share through a strategy of building larger format stores and extending the catalogue to offer a complete shop at competitive prices.

Woolworths Financial Services grew net interest income by 15.5% resulting in a 21.9% increase in profit before tax.  The debtor’s book grew 10.7% and the impairment rate was kept at an industry-leading level of 5.4%.

This year also saw the Woolworths BEE Employee Share Ownership Scheme create R2.4 billion in value for over 7500 participants. The scheme has also paid out R332 million in dividends since 2007.

The transformation and integration of David Jones is progressing ahead of expectations. Whilst the Australian consumer has remained under pressure,  David Jones had an exceptional second half of the year with double-digit sales growth of 10.7% and materially outperformed the department store sector.

Sales of A$1,885 million were 6.4% ahead of the same period prior to our acquisition and ahead of both the department store segment and the overall Australian clothing market.  Operating profit of A$161 million was 28.8% higher than in the comparative 11-month prior period.

Over 300 Country Road, Trenery, Witchery and Mimco merchandise pads have been rolled out across David Jones’ 38 department stores and the South African fashion brands Studio.W, RE:, JTOne and Distraction have also recently been introduced into a number of stores.

During the year WHL acquired the remaining 12% interest in Country Road Group (CRG).  Full ownership was a logical step towards unlocking regional synergy opportunities between David Jones and CRG. In Australasia, sales grew by 11.5% and by 4.7% in comparable stores, trading well ahead of the Australian market.

Looking forward, Moir concluded:  “We believe that economic conditions in South Africa and Australia will remain constrained, although the upper income segments in which we operate continue to show some resilience. We continue to trade ahead of the market and trading for the first eight weeks of the new financial year have been positive.”

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

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