Slide 1: Company Results
Michael Luscombe Chief Executive Officer Tom Pockett Company Results Finance Director Full Year ended 27 June 2010
Slide 2: Highlights for Financial Year 2010
Highlights for Financial Year 2010 • A solid increase in net profit after tax of 10.1% • A good overall result in a challenging trading period • The strength in our business has allowed us to increase profits and invest significantly in reducing prices in a period of low or negative inflation • Wool
Slide 3: Highlights – Full Year 2010
Highlights – Full Year 2010 A good overall result in a challenging trading period FY10 $ Increase Growth Sales - Group $51.7b $2.1b 4.2% - ex Petrol $46.2b $2.1b 4.8% EBIT $3,082.1m $267m 9.5% NPAT $2,020.8m $185m 10.1% EPS 164¢ 13¢ 8.8% DPS 115¢ 11¢ 10.6% 3
Slide 4: Highlights for the year
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Slide 5: Woolworths – the Fresh Food People
Woolworths – the Fresh Food People • Focus on Fresh will continue to underpin our success • We are striving to have an unbeatable fresh offer for our customers • Our success in this area, to date, has seen a strong increase in volumes with increased basket penetration • We are focused on – Improving
Slide 6: Lower prices - a dividend for our customers
Lower prices - a dividend for our customers • Woolworths has continued to lead the market in driving down shelf prices • Customers now pay less with lower shelf prices on over 4,400 grocery products in addition to standard 2,000 weekly specials • Deliberate strategy to return value to customers — ac
Slide 7: Great additional value for our customers
Great additional value for our customers • 5.1m Everyday Rewards cards registered • Understanding our customers needs in a richer way • Providing customers with targeted special offers • 2.7m linked to QFF + 7
Slide 8: BIG W – quality brands at BIG W prices
BIG W – quality brands at BIG W prices • Customers win on value through "BIG W owns lowest low prices and quality price position" • The widest range of the latest products, trends and fashions • Brands customers know and trust • Destination departments have performed well (eg Footwear) • BIG W onlin
Slide 9: Continuously evolving customer focused formats
Continuously evolving customer focused formats "First 2015 Market Store • Strong customer response to all is now open" new formats • At present ~50% of Australian Supermarkets, 55% of BIG W and 42% of Australian Consumer Electronics stores are in their new formats • In New Zealand 68% of the stores
Slide 10: Quantum Project – benefits to emerge over next years
Quantum Project – benefits to emerge over next 5 years • Quantum will deliver reduced costs and improve efficiencies across all Woolworths businesses • One of our most senior executives has been appointed to lead the Quantum project • This project will focus on all aspects of our business including
Slide 11: Innovative customer offerings
Innovative customer offerings • Everyday Money Credit Card growing in popularity — won five industry awards • Launched the Everyday Money Prepaid MasterCard in June — results above expectations • Enhancing the offering with a reloadable Prepaid MasterCard to launch by end of year 11
Slide 12: Exclusive brands
Exclusive brands • Exclusive brand expansion has continued "All ranges continue to with performance reflecting the quality of our gain stronger endorsement offer and customer acceptance by our customers" • Growth in exclusive brands exceeds our overall performance • Our largest exclusive brand, Home
Slide 13: Supply Chain has, and will continue to, deliver substantial financial benefits
Supply Chain has, and will continue to, deliver substantial financial benefits "DC strategy in New • Next Generation Replenishment solution will Zealand — re-development reduce inventory days as well as save costs of the Wiri DC (Auckland) to in stores, DC’s and Transport be completed in FY11" • Suc
Slide 14: New Zealand Supermarkets
New Zealand Supermarkets • Significant EBIT1 improvement up 19.1% "68% of stores now on the year (NZD) • Underpinned by successful business rebranded to Countdown" transformation • Comparable store sales growth of 4.0% and inflation positive at 0.9% (last year 5.8%), reflecting volume and market sha
Slide 15: Home Improvement
Home Improvement • Completed the acquisition of Danks "On track to open our first Holdings Ltd — integration progressing well store in 2011" • Acquired Gunns Retail Division and Becks Timber and Hardware in Tasmania • On track to achieve target of 150 sites secured within five years. The sites are p
Slide 16: Online shopping
Online shopping • Online shopping is an increasingly important part of customer expectations • Continuing development of divisional websites to enhance customer useability • BIG W online site launched in May • Total online sales up 59% for the full year, with solid performances in Dick Smith Austral
Slide 17: Corporate responsibilities
Corporate responsibilities • Continued reduction of carbon emissions through investment in low carbon technologies • Progression on implementation of our Ethical Sourcing Policy • Strong community support with four key focus areas: Sustainability and Environment, Health and Wellbeing, Education and
Slide 18: Financial results
CELI] SHLIOMIOOM, Financial results
Slide 19: Report Card
Report Card In comparison with our regularly expressed goals 2008 2009 Percentage 20021 20031 2004 2005 2006 2007 Stat 20081 Stat 20091 2010 Sales will grow in the upper single digits 14.9 9.6 6.1 12.2 20.4 12.6 10.7 8.7 5.4 7.5 4.2 assisted by bolt-on acquisitions Excluding Petrol 13.7 7.4 4.6 9.0
Slide 20: EBIT – up 9.5%
EBIT – up 9.5% EBIT growth underpinned by strong growth in Australian Food and Liquor $m Total 9.5% Group 3,000 11.3% 13.4% EBIT 19.8% 17.6% 2,500 22.6% 12.9% Australian 2,000 15.1% 17.4% Food and 32.3% 19.8% 17.5% Liquor 1,500 EBIT 24.2% 17.8% 1,000 500 0 FY06 FY07 FY08 FY08¹ FY09 FY0
Slide 21: Profit after tax – up 10.1%
Profit after tax – up 10.1% $m 2,020.8 2,000 1,835.7 1,835.7 10.1.% 1,626.8 1,598.0 12.8% 14.9% 25.7% 23.5% 1,500 2 1,294.0 1 27.5% 1,014.6 1,000 24.3.% 500 0 3 3 2006 2007 2008 2008 2009 2009 2010 Stat Stat 1. Includes Progressive (NZ) business and 20 Australian ex-FAL store results from 2 N
Slide 22: CODB / Sales
CODB / Sales Our targeted CODB reduction of 20 basis points was achieved when the distorting impact of Petrol, Hotels and other significant items are excluded Percentage Over $400m 21 bps reduction reduction 22.00% 20.89% 20.73% 20.68% 19.98% 19.95% 19.95% 20.00% 18.00% 2005 2010 2009 2010 Excludes
Slide 23: Gross Profit Margin
Gross Profit Margin As expected Gross Profit Margin has improved reflecting improved buying, reduced shrinkage, the success of our exclusive brand offering, the change in sales mix and offset by significant price reinvestment activity Percentage Total GP 25.91% 26.00% Margin 25.66% 25.32% 25.30% 25.
Slide 24: Dividends per share
Dividends per share FINAL DIVIDEND 2010: 62¢ Cents INTERIM DIVIDEND 2010: 53¢ 125 115 104 10.6% 100 92 13.0% 24.3% 74 75 25.4% 59 15.7% 50 25 2006 2007 2008 2009 2010 Dividend pay-out ratio of 70.4% is slightly up on last year 24
Slide 25: Australian Supermarket Division
Australian Supermarket Division Australian Food & Liquor FY091 FY10 Change Comparable Sales – up 3.3% (2009: up 7.4%) Sales ($m) 38,460 40,156 4.4% Percentage Food & Liquor 32,978 34,675 5.1% 10 8.8 7.1 7.9 Petrol 5,482 5,481 - 8 6.0 5.8 Gross margin (%) 24.05 24.51 46bps 6 3.8 4 1.6 1.8 CODB (%) 18
Slide 26: Petrol
Petrol "Strong customer • Sales of $5.5 billion in line with recognition and acceptance last year of our offer" • Comparable volumes increased 0.7% reflecting strength of our offer • Comparable sales dollars decreased by 1.7% reflecting lower pump petrol prices than last year • EBIT increased 13.7%
Slide 27: Liquor
Liquor "We continue to expand our • Group Liquor sales for the year range of exclusive brands were $5.6 billion up 7.7% on prior and control labels" year (FY09: $5.2 billion) with solid market growth • The Liquor Group exceeded its targeted profit despite changes to WET and an increased competitive
Slide 28: New Zealand Supermarkets
New Zealand Supermarkets NZ$ FY09 FY10 Change Comparable Sales – up 4.0% (2009: up 3.6%) Sales ($m) 4,957 5,185 4.6% Percentage Gross margin (%) 21.90 22.27 37bps 8 CODB (%) 17.70 17.56 (14)bps 5.5 4.5 3.9 4.1 4 3.0 3.0 3.2 3.6 EBIT to sales (%) 4.20 4.71 51bps Trading EBIT ($m) 208.1 244.1 17.3% 0
Slide 29: BIG W
BIG W FY09 FY10 Change Comparable Sales – down 3.2% (2009: up 7.1%) Sales ($m) 4,267 4,193 (1.7)% Percentage Gross margin (%) 29.59 30.20 61bps 11.5 12 6.4 6.7 CODB (%) 24.90 25.43 53bps 4.4 3.9 6 EBIT to sales (%) 4.69 4.77 8bps 0 (6) (2.1) EBIT ($m) 200.2 200.0 (0.1)% (5.8) (12) (10.2) Funds Emplo
Slide 30: Consumer Electronics – Australia & NZ
Consumer Electronics – Australia & NZ FY09 FY10 Change Comparable Sales – down 0.9% (2009: up 6.3%) Sales ($m) 1,537 1,530 (0.5)% Percentage Gross margin (%) 26.32 26.23 (9)bps Revised basis1 27.72 (149)bps 10 6.5 8.2 4.9 4.1 5.6 CODB (%) 22.73 24.26 153bps 5 Revised basis1 24.13 13bps 0 EBIT to sal
Slide 31: Consumer Electronics – India
Consumer Electronics – India • The wholesale operations are meeting our expectations and recorded sales of $252m during the year (FY09: $187m) and EBIT of $1.3m (FY09: $4.3m loss) Mumbai • Our business venture with TATA has grown from 33 retail stores to 50 this financial year • As part of this vent
Slide 32: Hotels
Hotels FY09 FY10 Change Comparable Sales – down 3.0% (2009: up 0.7%) Sales ($m) 1,110 1,102 (0.7)% Percentage Gross margin (%) 83.04 82.42 (62)bps 6 2.3 3 0.9 0.6 CODB (%) 63.41 66.39 298bps 0 (3) (0.8) (1.2) (2.7) (6) (4.0) (4.7) EBIT to sales (%) 19.63 16.03 (360)bps Q1 Q2 Q3 Q4 EBIT ($m) 218.0 17
Slide 33: Balance Sheet
Balance Sheet • Inventory growth of 4.4% compared to sales increase of 4.8% (FY09 9.4%), which reflects $m FY09 FY10 tight inventory control Inventory 3,292.6 3,438.8 Trade Payables (4,055.1) (4,211.2) • Trade creditors increased in line with general business growth Net investment in inventory (762.
Slide 34: Cash Flow
Cash Flow $m FY09 FY10 Change EBITDA 3,544.9 3,879.8 9.4% Net (decrease) / increase in creditors 169.9 82.9 Net decrease / (increase) in inventory (273.1) (94.2) Net change in other working capital and non cash1 192.2 101.8 3,633.9 3,970.3 9.3% (Increase) / decrease in uncollected receivables 4.8 (4
Slide 35: Group Cash Flow – Five Years
Group Cash Flow – Five Years Cumulative CAGR FY06 FY07 FY08 FY09 FY10 5 years (FY06-10) EBITDA (a) 2,244.4 2,700.6 3,178.9 3,544.9 3,879.8 15,548.6 14.7% Increase on prior year 30.6% 20.3% 17.7% 11.5% 9.4% Net (decrease) / Increase in Creditors 169.0 467.3 644.8 169.9 82.9 Net decrease / (Increase)
Slide 36: Inventory Days
Inventory Days Inventory levels over the last 3 years have been impacted by increased imported inventory and the incremental inventory associated with our new Liquor DC's Average Days 35 33 33 32 33 33 30 25 20 15 10 5 0 2006 2007 2008 2009 2010 Based on closing inventory days, stock reduced 1.2 day
Slide 37: Shareholder Payouts
Shareholder Payouts Franking credits available for distribution (after the final dividend) = $1,327m $m 1,749 1,800 Dividend Buy-Back 325 1,280 1,424 1,200 1,121 941 894 693 534 604 538 600 141 346 463 407 0 2002 2003 2004 2005 2006 2007 2008 2009 20101 Profit growth, coupled with balance sheet mana
Slide 38: Capital Management
Capital Management • Woolworths currently sets its capital structure with the objective of enhancing shareholder value through optimising its weighted average cost of capital whilst retaining flexibility to pursue growth and capital management opportunities • The combination of the on-market share b
Slide 39: Buy-Back Features
Buy-Back Features • Up to $700 million representing 2.4% of Woolworths’ ordinary shares 1 is targeted to be bought back through an off-market Buy-Back tender (Buy-Back) Buy-Back Size • Woolworths may vary the size of the Buy-Back depending on a number of factors including shareholder demand, market
Slide 40: Buy-Back Timetable
Buy-Back Timetable1 Last day that shares can be acquired to be eligible for Buy-Back Thursday, 26 August August franking entitlements 2010 Buy-Back ex-entitlement date: Shares acquired on the ASX on or after Tuesday, 31 August this date will not confer an entitlement to participate in the Buy-Back B
Slide 41: Return on funds employed
1 Return on funds employed Percentage 45.0% 31.4% 31.9% 31.0% 2 30.0% 28.6% 27.1% 15.0% 0.0% 2006 2007 2008 2009 2010 1. Based on average of opening and closing funds employed 2. Reflects impact of significant acquisitions during the year with Foodland and Taverner contributing profits for only part
Slide 42: Return On Equity
1 Return On Equity Percentage 40.0% 33.8%² 28.9% 28.7% 28.1% 30.0% 27.8% 20.0% 10.0% 0.0% 2006 2007 2008 2009 2010 1. Based on average of opening and closing Shareholders Funds 2. Average ROE down due to the DRP underwriting in 2006 and options being exercised 42
Slide 43: Strategy and Growth
CELI] SHLIOMIOOM, Strategy and Growth
Slide 44: Strategy and growth
Strategy and growth Consistent and clear strategies that leverage our core strengths Woolworths targets the following key areas of performance measurement in the long term, namely • Sales (excluding Petrol) to grow in the upper single digits Clearly stated assisted by bolt on acquisitions long term
Slide 45: Key growth initiatives
Key growth initiatives Continuing to Continuing to re-invigorate our offer drive our core through investment business focusing in price, range, on our customers merchandise and quality Leveraging our Expansion of Expansion of supply chain Global Sourcing exclusive brands capabilities activities Enha
Slide 46: Outlook
Outlook We expect Net Profit After Tax for FY11 to grow between 8% and 11% The above guidance is subject to the extent of the following • Customer confidence levels • Inflation • Interest rates • Global economic conditions 46
Slide 47: Company Results
Michael Luscombe Chief Executive Officer Tom Pockett Company Results Finance Director Full Year ended 27 June 2010
Slide 48: Sales of $51.7b – up 4.2% - excluding Petrol – up 4.8%
Sales of $51.7b – up 4.2% - excluding Petrol – up 4.8% Statutory Full Year $m FY09 FY10 Increase Comp Sales Australian Food and Liquor1 32,978 34,675 5.1% 3.3% New Zealand Supermarkets (NZD) 4,957 5,185 4.6% 4.0% New Zealand Supermarkets 4,034 4,131 2.4% Petrol (dollars) 5,482 5,481 (0.0)% (1.7)% Pe
Slide 49: EBIT – up 9.5% growing faster than sales
EBIT – up 9.5% growing faster than sales $m FY09 FY10 Change Australian Food and Liquor1 2,206.9 2,492.5 12.9% New Zealand Supermarkets (NZD) 194.9 232.2 19.1% New Zealand Supermarkets (AUD) 153.9 190.4 23.7% Petrol 87.5 99.5 13.7% Supermarkets Division 2,448.3 2,782.4 13.6% BIG W 200.2 200.0 (0.1)%
Slide 50: Earnings per share – up 8.8%
Earnings per share – up 8.8% Cents 170.0 164.0 150.7 8.8% 134.9 11.7% 130.0 24.0% 108.8 19.7% 90.9 90.0 14.8% 50.0 2006 2007 2008 2009 2010 Reflects strengthening of our balance sheet during a period of major acquisitions, integration and business change 50
Slide 51: Capital Expenditure – Full Year
Capital Expenditure – Full Year 2010 Previous $m – Full Year 2008 2009 2010 2011 $m - 2009 Actual Fcst Diff Actual Actual Actual Fcst New Stores 225 254 (29) New Stores 262 254 225 231 Refurbishments 622 627 (5) Refurbishments 643 652 622 666 Growth Capex 847 881 (34) Growth Capex 905 906 847 897 St
Slide 52: Capital Expenditure – Notes
Capital Expenditure – Notes New Stores • Reflects the continued rollout of new stores across all our brands • Reflects the continuation of refurbishment activity across our brands. Refurbishment Increase in refurbishment dollars relates to increased number of refurbishments in Hotels and New Zealand
Slide 53: Health ratios
Health ratios FY09 FY10 Fixed Charges Cover X 3.0 3.1 Days inventory (average)1 Days 33.3 33.3 Days creditors (to sales) Days 46.9 46.9 Return on Funds Employed (ROFE) % 31.9 31.0 Return on Total Equity % 28.0 27.4 Return on Shareholders Equity % 28.7 28.1 Net working capital $m (2,436.0) (2,298.2)
Slide 54: Fixed charges cover
Fixed charges cover 2006 2007 2008 2009 2010 EBIT 1,722.2 2,111.3 2,528.8 2,815.5 3,082.1 D&A 522.2 589.3 650.1 729.4 797.7 EBITDAR 3,314.5 3,906.9 4,494.8 4,954.6 5,357.7 Interest 246.3 230.5 214.0 239.6 257.4 Rent – base 972.4 1,121.1 1,223.3 1,313.5 1,390.8 Rent – turnover contingent 97.7 85.2 92
Slide 55: Defined plans for space growth
Defined plans for space growth We have defined plans for space growth, with minimal cannibalisation expected • Adding 15-25 new supermarkets each year in Australia and expanding existing stores (greater than 3% space rollout pa) • Adding 3-5 new supermarkets each year in New Zealand • Targeting 200+
Slide 56: Company Results
Michael Luscombe Chief Executive Officer Tom Pockett Company Results Finance Director Full Year ended 27 June 2010
Slide 57: Disclaimer
Disclaimer • This presentation is not and does not form part of any offer, invitation or recommendation in respect of securities. It is for your general information only. Invitations under the off-market buy- back ("Buy-Back") referred to in this presentation will only be made in the Buy-Back bookle