The transition towards common systems across the chain is the key element of our infrastructure development. During the year, investment in Woolworths’ IT [Information Technology] systems totalled £14.7 million.

Investment in systems for buying and replenishing is nearing completion, with a majority of the purchase orders and store deliveries now controlled by the new systems.

This contributed to a 1.7 per cent improvement in single sku (stock keeping unit) in-store availability over the year.

The rollout of the Kingstore till system continues and is now installed in 320 stores, accounting for 63 per cent of Woolworths’ retail space. Faster transaction times reduce store costs and improve customer service and the item specific information provided by Kingstore supports improvements to on-shelf availability and shrinkage rates. As a result, we have decided to accelerate the rollout of Kingstore to all remaining Woolworths’ stores by Christmas 2004. This will require a capital investment of £19 million, advancing £9 million planned for 2005/06.

Discussion points
1 What are the benefits expected from the capital expenditure on new IT and new cash registers?
2 What items of cash flow would you include in a capital investment appraisal of the expenditure on IT and cash registers?