Slide 1: 2007 Annual Results Briefing
For personal use only 2007 Annual Results Briefing 16 August 2007
Slide 2: Presentation Outline
Presentation Outline For personal use only Group Performance Highlights Richard Goyder Group Financial Results Gene Tilbrook Divisional Comments Home Improvement John Gillam Coal Stewart Butel Insurance Rob Scott Industrial & Safety Terry Bowen Chemicals & Fertilisers Keith Gordon Energy Tim Bult Ot
Slide 3: Group Performance Highlights
For personal use only Group Performance Highlights Richard Goyder Managing Director, Wesfarmers Limited
Slide 4: Group Performance Highlights
Group Performance Highlights For personal use only • Operating revenue up 10.1% • Group profit after tax of $786 million • Earnings per share of 210.5 cents per share • Operating cash flow up 25.2% • Return on Equity of 25.1% • Full year dividend increased to $2.25 per share, up 4.7% 4
Slide 5: Divisional Performance
Divisional Performance For personal use only 2007 2006 Year ended 30 June EBIT^ ROC ROC $m % % Home Improvement 528.4 28.1 22.9 Coal 338.0 38.8 78.3 Insurance 120.3 15.8 30.9 Industrial & Safety 114.6 15.6 12.6 Chemicals & Fertilisers* 100.6 16.7 15.1 Energy* 75.4 17.9 26.8 ^ 2007 EBIT is after amor
Slide 6: Group Financial Evaluation Process
Group Financial Evaluation Process For personal use only • Has remained unchanged • Applies to acquisitions and major capital expenditure projects • Based on long-term discounted cash flows – Generally 15-25 years, un-geared, after tax – Discounted at risk-adjusted WACC (Hurdle Rate) • Return on Cap
Slide 7: Group Financial Results
For personal use only Group Financial Results Gene Tilbrook Finance Director, Wesfarmers Limited
Slide 8: Group Performance Summary
Group Performance Summary For personal use only Year ended 30 June ($m) 2007 2006* % Operating revenue 9,753.7 8,858.8 10.1 EBITDA 1,650.0 1,649.5 0.0 EBIT 1,305.3 1,366.0 (4.4) Net profit after tax 786.3 869.4 (9.6) Operating cash flow 1,413.3 1,129.1 25.2 Earnings per share (ex. employee res. shar
Slide 9: Divisional EBIT
Divisional EBIT For personal use only Year ended 30 June ($m) 2007 2006* % Home Improvement 528.4 420.5 25.7 Coal 338.0 577.8 (41.5) Insurance 120.3 124.8 (3.6) Industrial & Safety 114.6 96.8 18.3 Chemicals & Fertilisers 100.6 81.4 23.6 Energy 75.4 49.4 52.6 Other 94.8 72.2 31.3 Divisional EBIT^ 1,3
Slide 10: Return on Shareholders' Funds
Return on Shareholders’ Funds For personal use only (rolling 12 months to 30 June) % 35 30 25 25.4 20 15 31.1 25.1 22.1 10 18.5 15.8 5 0 2003 2004 2005 2006 2007 AGAAP^ A-IFRS Target Excludes the sales of Girrah (2003), Landmark (2004) and ARG (2006) ^ Before goodwill amortisation 10
Slide 11: Earnings, Cash Flow & Dividend
Earnings, Cash Flow & Dividend For personal use only (per share) cents 400 350 300 250 200 150 100 50 0 2003 2004 2005 2006 2007 EPS^ Operating Cashflow* Dividend EPS and Cashflow excl. sale of Girrah (2003), Landmark (2004) and ARG (2006) * Based on weighted average number of ordinary shares incl.
Slide 12: Capital Management
Capital Management For personal use only • Balance sheet includes $2.1 billion debt relating to Coles shareholding – $33.4 million of related interest expense included in results • Net Debt / Equity of 143.6% at 30 June 2007 – 84.3% excluding Coles debt • Cash Interest Cover Ratio to 30 June 2007 of
Slide 13: Capital Expenditure Programme
Capital Expenditure Programme For personal use only Budget Actual Actual 30 June ($m) 2008 2007 2006 Home Improvement 269.4 196.3 220.3 Coal 241.1 163.7 232.6 Insurance 24.1 14.9 19.6 Industrial & Safety 13.5 25.8 16.3 Chemicals & Fertiliser 136.3 198.7 71.9 Energy 132.3 78.1 50.8 Other 8.2 2.3 3.3
Slide 14: Capital Expenditure History
Capital Expenditure History For personal use only $m 800 680 615 600 466 400 258 218 200 0 2003 2004 2005 2006 2007 14
Slide 15: Home Improvement
For personal use only Home Improvement John Gillam Managing Director, Home Improvement
Slide 16: Home Improvement Performance Summary
Home Improvement For personal use only Performance Summary Year ended 30 June ($m) 2007 2006 % Revenue 4,938.9 4,275.5 15.5 EBIT 528.4 420.5 25.7 ROC (R12 %) 28.1 22.9 5.2 pt Trading Revenue* ($m) 4,689.8 4,193.0 11.9 Net property contribution ($m) 53.7 5.3 907.1 Trading EBIT* 485.3 417.9 16.1 Tradi
Slide 17: Home Improvement Highlights
Home Improvement Highlights For personal use only • 13.8% cash sales growth and 3.2% lift in trade sales – store on store cash sales growth of 10.4% • 13 warehouse and 3 small format store openings – 31 store upgrades, NZ re-branding largely complete • Good progress on merchandising and operational
Slide 18: Home Improvement Outlook
Home Improvement Outlook For personal use only • Continued cash sales growth – Positive retail conditions, some concerns on the horizon • Improving trade performance • Continued network development • Maintaining strong focus on core retail drivers • Reducing the cost of doing business • Strong focus
Slide 19: Coal
For personal use only Coal Stewart Butel Managing Director, Wesfarmers Coal
Slide 20: Coal Performance Summary
Coal Performance Summary For personal use only Year ended 30 June ($m) 2007 2006 % Revenue 1,133.7 1,304.2 (13.1) EBITDA 519.5 720.8 (27.9) Depreciation & Amortisation* (181.5) (143.1) (26.9) EBIT# 338.0 577.8 (41.5) ROC (R12 %) 38.8 78.3 (39.5 pt) Coal Production (‘000 tonnes) 13,754 14,959 (8.1) S
Slide 21: Coal Highlights
Coal Highlights For personal use only • Continued increase in metallurgical coal sales • Completion of Curragh North Materials Handling project • Curragh North Project completed on budget at $360 million • Gladstone Port expansion • Bengalla Modified Development Consent approved • Feasibility study
Slide 22: Coal Outlook
Coal Outlook For personal use only • Strong market fundamentals and customer demand • Appreciating Australian dollar • Constrained export coal chains • Ongoing industry cost pressure • Continued increase in metallurgical coal sales – 6.5mt to 6.9mt in 2007/08 • Lower Stanwell Rebate • Bengalla expan
Slide 23: Insurance
For personal use only Insurance Rob Scott Managing Director, Wesfarmers Insurance 23
Slide 24: Insurance Performance Summary
Insurance Performance Summary For personal use only Year ended 30 June ($m) 2007* 2006 % Gross Written Premium Underwritten 1,191.0 1,025.9 16.1 EBITA Underwriting 96.7 121.6 (20.5) EBITA Broking 32.2 -- -- EBITA Other 1.1 1.2 (8.3) EBITA Insurance Division 130.0 124.8 4.2 EBIT Insurance Division^ 1
Slide 25: Highlights/Overview
Highlights/Overview For personal use only • A difficult year in a soft insurance market with intense competition • Higher claims incidence in Lumley Australia/NZ • Significant events (Hunter and Victorian storms) • Reduced reinsurance levels in line with strategy to retain more risk • Record earning
Slide 26: Insurance Outlook
Insurance Outlook For personal use only • Underwriting performance constrained by competitive pressures • Full year contribution from recent acquisitions • Efficiency gains from integration of recent acquisitions • Maintain business focus in selected market segments • Improved Crop outlook due to fa
Slide 27: Industrial & Safety
For personal use only Industrial & Safety Terry Bowen Managing Director, Industrial & Safety
Slide 28: Industrial & Safety Performance Summary
Industrial & Safety Performance Summary For personal use only Year ended 30 June ($m) 2007 2006 % Revenue^ 1,208.0 1,163.5 3.8 EBITDA 128.2 111.0 15.6 Depreciation & Amortisation of PPE (13.7) (14.2) 3.4 EBIT 114.6 96.8 18.3 EBIT / Revenue (%) 9.5 8.3 1.2 pt ROC (R12 %) 15.6 12.6 3.0 pt Safety (R12
Slide 29: Industrial & Safety Highlights
Industrial & Safety Highlights For personal use only • Operating Revenue up 3.8% at $1,208m – Sales growth of 8.7% in the second half (inclusion of Bullivants from January) – Growth in Blackwoods and generally stronger performance from all businesses • Earnings increased by 18.3% to $114.6m – Strong
Slide 30: Industrial & Safety Outlook
Industrial & Safety Outlook For personal use only • Mixed market conditions • Stronger platform allowing WIS to meet competition • Each business firmly focused on profitable growth • Ongoing review of acquisition opportunities to complement organic growth 30
Slide 31: Chemicals & Fertilisers
For personal use only Chemicals & Fertilisers Keith Gordon Managing Director, Chemicals & Fertilisers 31
Slide 32: Chemicals & Fertilisers Performance Summary
Chemicals & Fertilisers For personal use only Performance Summary Year ended 30 June ($m) 2007 2006 % Revenue Chemicals 247.6 252.1 (1.8) Fertilisers 344.5 343.1 0.4 592.1 595.2 (0.5) EBITDA 137.6 123.1 11.8 Depreciation & Amortisation of PPE (37.0) (41.7) 11.3 EBIT 100.6 81.4 23.6 Sales Volume (‘00
Slide 33: Chemicals & Fertilisers Highlights
Chemicals & Fertilisers Highlights For personal use only • Continued safety improvement • Chemicals contribution in line with last year – Improved contribution from ammonium nitrate and QNP • Fertiliser contribution higher than prior year – Continued focus on working capital management and expenses
Slide 34: Chemicals & Fertilisers Outlook
Chemicals & Fertilisers Outlook For personal use only • Chemicals – Positive outlook for demand – Improved performance from ammonia plant – Commissioning of Kwinana ammonium nitrate project – Expansion of sodium cyanide capacity • Fertilisers – Second poor season in northern agricultural areas – Vol
Slide 35: Energy
For personal use only Energy Tim Bult Managing Director, Wesfarmers Energy 35
Slide 36: Energy Performance Summary
Energy Performance Summary For personal use only Year ended 30 June ($m) 2007 2006 % Revenue 463.0 371.9 24.5 EBITDA 104.1 74.1 40.4 Depreciation & Amortisation (28.7) (24.7) (16.0) EBIT* 75.4 49.4 52.6 ROC (R12 %) 17.9 26.8 (8.9pt) LPG production (kt) 185.9 157.6 17.9 Safety (R12 LTIFR) 2.0 1.6 * A
Slide 37: Energy Highlights
Energy Highlights For personal use only • Completed $500 million acquisition of Coregas - national producer and distributor of industrial and medical gases • Higher LPG production and export sales • LNG Project – announced commitment to a $138 million LNG project – construction has commenced and is
Slide 38: Energy Outlook
Energy Outlook For personal use only • Higher contributions from industrial and medical gases: – a full year from Coregas – completion of new supply projects – growth opportunities in oil and gas sector • LPG earnings dependent on: – Saudi contract prices – export and production volumes • Commission
Slide 39: Other Businesses
For personal use only Other Businesses Gene Tilbrook Finance Director, Wesfarmers Limited 39
Slide 40: Other Business Performance Summary
Other Business Performance Summary For personal use only Share of net profit of associates included in EBIT Holding 2007 2006* Year ended 30 June ($m) % Associates: ARG 0 - 16.5 Gresham Private Equity - Fund 1 50 0.3 11.7 Gresham Private Equity - Fund 2 67 12.5 (1.6) Gresham Partners 50 3.9 2.7 Wesp
Slide 41: Gresham Private Equity
Gresham Private Equity For personal use only GPE Fund 1 • Current investment of $30.2m • Raywood exited in 06/07; Norcros in July 07; and Riviera likely within 2 years GPE Fund 2 • Wesfarmers’ commitment of $161m; capital invested $90.1m • GEON expanding with acquisition of Promentum • Acquisition o
Slide 42: Outlook
For personal use only Outlook Richard Goyder Managing Director, Wesfarmers Limited
Slide 43: Outlook
Outlook For personal use only • Growth initiatives in each business • Generally strong economic conditions • Positive coal price outlook • Coles acquisition 43
Slide 44: Questions
For personal use only Questions
Slide 45: For all the latest news visit www.wesfarmers.com.au
For personal use only For all the latest news visit www.wesfarmers.com.au 45