Slide 1: Results Presentation Year Ended 29 June 2003
VWWOOLWORTHS LIMITED Results Presentation Year Ended 29 June 2003 ROGER CORBETT Chief Executive Officer TOM POCKETT Chief Financial Officer 25 AUGUST 2003
Slide 2: 2003 sales from continuing operations were up 12.2%
2000 2001 2002 2003 SALES FROM CONTINUING OPERATIONS WERE UP 12.2% ON A 52 WEEK COMPARABLE BASIS 0.1% on a 52 week basis icludes extra week
Slide 3: Sales by business FY02 vs FY03
FY02 FY03 Change Normalised $m $m % % (2) Supermarkets and Liquor 19,595 21,039 TA% 9.4% -etrol 1,119 1,711 52.9% 55.8% Total Supermarkets 20,714 22,750 9.8% 11.9% IG W 2,281 2,500 9.6% 11.3% >onsumer Electronics 659 791 20.0% 22.5% fotal General Merchandise 2,940 3,291 11.9% 13.8% >ontinuing Operat
Slide 4: Costs = the key enabler
21: 55 ( Reduction \ $1,674 21 20 19 - 1999” 2000° 2001 2002 2003 [ost Base year 0.86% x $19.0b 1.73% x$20.9b 2.11% x$24.5b 2.40% x $26.3 b Reduction $163m + $362m + $517m + $632m = $1 67417 COSTS = THE KEY ENABLER Adjusted to exclude WST
Slide 5: Costs = the key enabler (comparable basis)
se 25 Down 66pts \ f / in FY03 Down yoy umulative eduction: \. $1,677 m 225 21-5 20- 1999 * 2000* 2001 2002 2003 Cost —_—- Base year 0.77% xX$18.3b 1.7% x$20.2b 2.06% x $23.6b 2.72% x $26.0b Reduction $141 m + $343 m + $486 m + $707 m 491,677) Adjusted to exclude WST COSTS = THE KEY ENABLER
Slide 6: Lowering the cost of living increase
Yo 25 5 24 + 23 51 1999* Margin Base year Reduction Adjusted to exclude WST [ 489pts in \. 4 years ie Cumulativ Reduction Ae’. $1,361 m ed 2000*# 2001 2002 2003 0.67%Xx $19.0 b 1.43%x $20.9b 1.79%x $24.5b 1.89%x $26.3 b $127 m + $299 m + $438 m + $497m =| $1,361 | LOWERING THE COST OF LIVING INCREAS
Slide 7: Lowering the cost of living increase (comparable basis)
25> 244 1999 * Margin Base year Reduction Adjusted to exclude WST NN in FY03 sso \ OTT Cumulativ Reductio1 $1,392 m a 2000 * 2001 2002 2003 0.87% x$18.3b 1.4% x$20.2b 1.76% x$23.6b 2.27% x $26.0 b $104 m + $283 m + $415m + $590 m = $1,392: LOWERING THE COST OF LIVING INCREASE
Slide 8: 2003 EBIT from continuing operations were up 14.6%
2003 EBIT FROM CONTINUING OPERATIONS WERE UP 14.6% ncludes extra week
Slide 9: EBIT margins have thickened over the 2003 year by 19 pts
| SN HUTT ve 4.00 - Hi H2 Yr H1 H2 Yr H1 H2 Yr H1 H2 Yr Hi H2 Yr 3.75 + 3.50 - 3.25 7 3.00 | 2.75 + 2.50 + 2.25 | 2.00 ‘BIT Margin H1 3.46% 3.48% 3.55% 3.73% 3.81% H2 2.64% 3.03% 3.16% 3.05% 3.33% Year 3.08% 3.27% 3.38% 3.40% 3.59% EBIT MARGINS HAVE THICKENED OVER THE 2003 YEAR BY 19 pts includes ex
Slide 10: EBIT of all trading units grew double digits
Food & Liquor Petrol Total Supermarkets BIG W Consumer Electronics Total General Merchandise Total Trading Result Property Central overheads Continuing operations Wholesale Group EBIT Previous ** Current * Before After Before After Before After Goodwill Goodwill Goodwill Goodwill Goodwill Goodwill $
Slide 11: Total Supermarkets results
FY02 Sales ($ mil) 20,714.3 Gross Margin (%) 24.84 Cost of Doing Business (%) 21.23 EBIT to Sales (%) 3.61 EBIT before goodwill ($ mil) 767.4 EBIT after goodwill ($ mil) 747.4 Funds Employed ($ mil) 1,495.5 AVE ROFE (%) 53.2 )41.9% increase on a comparable 52 week basis FY03 22,749.5 24.39 20.63 3.7
Slide 12: Supermarkets commentary
LN NNN LINNEA) like for like) ch « Food and liquor sales growth (ex petrol) was strong. Comparable sales of 5.4%. (5.1% first half and 5.8% second half). anet * Sales result reflects customer acceptance of total offer of range, freshness, quality, competitive pricing, convenience and in-store servic
Slide 13: Market share and health and beauty range
Market share of Food, Liquor and Groceries increased by 0.5% in the year. Intend to significantly increase our health and beauty range with plans to open our first in store pharmacy in calendar 2004. Plus 100 non pharmacist units by end of FY04.
Slide 14: Liquor business
Woolworths has brought significantly greater price competition to this sector with customers benefiting from lower prices. Despite this our Liquor profitability rate exceeds that of our Supermarkets business * Expansion of Dan Murphy's with 5 new stores in NSW / ACT and 3 new stores in Victoria * Da
Slide 15: Petrol business
Petrol continues to be a good supplemental offer to our Supermarkets with 210 out of 287 canopies either in the car park or adjacent to the store ¢ Petrol sales increased by 55.8% on a 52 week comparable basis ¢ Strong volume growth has helped fractionalise fixed costs ¢ EBIT growth on last year exc
Slide 16: Petrol joint venture with Caltex
eg ONTVENTURE 50 / 50 joint venture company (JVC) to lease all of Woolworths petrol canopies (around 290). « Approximately 120 selected Caltex stations added (mainly in metro areas), with another 40 selected Caltex stations available. * Woolworths/Safeway/Big W shoppers to get discount fuel at up to
Slide 17: WM
WM
Slide 18: BIG W results
on hh Sales ($ mil) 2,280.5 Gross Margin (%) 31.30 Cost of Doing Business (%) 27.20 EBIT to Sales (%) 4.10 EBIT * ($ mil) 93.5 Funds Employed ($ mil) 299.2 AVE ROFE (%) 32.6 No puri onas ed goodwill in BIG W ) 11. 11.3% on a comparable 52 week basis FY03 CHG 2,500.3 +9.6%"” 30.88 -0.42%pts 26.73 -0.
Slide 19: BIG W commentary
on hh * BIG W comparable (like for like) sales were a strong and consistent 4.2% (first half 4.2%, second half 4.3%) in a very competitive market. Total sales reached $2.5b. ¢ EBIT exceeds $100m. « Customer EDLP acceptance strong. * Solid growth across all categories, particularly in small appliance
Slide 20: Consumer Electronics results
i NI NN FY02 FY03 CH( Sales ($ mil) 659.0 791.2 +20.0 Gross Margin (%) 37.16 33.59 -3.57%pi Cost of Doing Business (%) 32.91 28.91 -4.00%pi EBIT to Sales (%) 4.25 4.68 +0.43%pi EBIT before goodwill ($ mil) 31.3 41.2 +31.6° EBIT after goodwill ($ mil) 28.0 37.0 +32.1' Funds Employed ($ mil) 253.0 245
Slide 21: Consumer Electronics commentary
« Business progressing extremely well and is reflected by a 32.1% increase in EBIT after goodwill. * Strong double digit comparable (like for like) sales growth achieved 18.1% (first half 15.5%, second half 21.1%). ¢ Strong growth achieved in communications category, particularly mobile phones and i
Slide 22: PAT from continuing operations increased 17.5%
609.5 $ millions 1999 2000 2001 2002* 2003 PAT FROM CONTINUING OPERATIONS (EXCL. WHOLESALE) INCREASED 17.5' 53 weeks
Slide 23: EBIT grows faster than sales; EPS grows faster than EBIT
60.7 Cents 1999 2000 2001 2002 2003 EBIT GROWS FASTER THAN SALES - ASSISTED BY COST REDUCTIONS >S GROWS FASTER THAN EBIT - ASSISTED BY INVENTORY AND CAPITAL MANAGEMEN
Slide 24: $2,710m payout to shareholders over 4 years
Total $2,710m _ Franking credits given to 1 000 shareholders at applicable tax 940 rates 8 0 0 791 Total $988m 633 $ millions nd) 2000 2001 2002 2003 PROFIT GROWTH, COUPLED WITH BALANCE SHEET MANAGEMENT, DELIVERED $2,710M PAYOUT TO SHAREHOLDERS OVER 4 YEARS
Slide 25: Dividend pay-out ratio of 66%
Cents 1999 2000 2001 2002 2003 IVIDEND PAY-OUT RATIO OF 66% CONSISTENT WITH THE PREVIOUS 4 YEARS
Slide 26: Balance sheet
A LTC 2002 2003 $MIL $MIL Inventory 1,838.4 1,843.1 Trade Payables (2,000.6) (2,078.9) Net investment in inventory (162.2) (235.8) Receivables 496.6 543.1 Other creditors (989.6) (1,186.1) Working Capital (655.2) (878.8) Fixed assets & other non current assets 2,911.8 3,040.3 Total Funds Employed 2,
Slide 27: Balance sheet remains strong and conservative
ear Balance Sheet remains strong and conservative after latest share buy-back forking capital Effective reduction in inventory underpinned $224 million (34%) increase in negative working capital — Inventory increasing only $4.7 million (<1%) despite sales growth of 9.6% (comparable 5: week basis). R
Slide 28: Balance sheet remains strong after share buy-back
i Balance Sheet remains ; strong and conservative after share buy-back Net debt * Net repayable debt increased by only $122 million to $360 million despite the share buy-bacl undertaken in April 03 at a cost of $534 million. Due to strong cash flows underpinned by strong profit growth and a reductio
Slide 29: 3.2 days reduction in inventory
N al 45 - 44.7 40 “] Tandy & Liberty Q Liquor | © a) 35 + ——_———e———— ———————Ei 1999 2000 2001 2002 2003 3.9 0.2 3.3 3.2 Days Reduction 3.2 DAYS REDUCTION IN INVENTORY RESULTED IN A $170 MILLION NCREASE IN CASHFLOW FOR THE YEAR = 10.6 days equals $570m cash flow benefit
Slide 30: Cash flow
oa EBITDA Net interest paid {including cost of Income notes) Taxation paid Net reduction (increase) in working capital Other operating cashflows Total cash provided by operating activities Payments for refurbishment of ex Franklins stores Payments for the purchase of businesses - Franklins - Other P
Slide 31: Off market share buy-back April FY03
vn mi i iM NA Strong balance sheet and cash flows provided opportunity to undertake a significant share buy-back without impacting ability to consider acquisitions or other growth pportunities. ff market share buy-back April FY03 Repurchased 46.7 m shares, 4.4% of issued capital as at 14 April 2003
Slide 32: Funds employed down $95 million in FY03
cn 2400 = 2359.4 2300 - 2200 - 2100 - %S millions 2000 - 1900 - 1800 - 1999 2000 2001 2002 2003 -UNDS EMPLOYED DOWN $95 MILLION IN FY03 MAINLY DUE TO A REDUCTIOI IN NET INVESTMENT IN INVENTORY OVER FOUR YEARS FUNDS EMPLOYED DECREASED 8% ON SALES UP 50%
Slide 33: ROFE increased from 38.1% to 42.8%
1999 2000 2001 2002 2003 ROFE INCREASED FROM 38.1% LAST YEAR TO 42.8% DUE TO THE DECLINE I FUNDS EMPLOYED AND STRONG EBIT GROWTH OF 13.6% ON LAST YEAR (15.6% ON A COMPARABLE 52 WEEK BASIS) ) Based on average of opening and closing funds employed
Slide 34: Average ROE increased to 49.3%
1999 2000 2001 2002 2003 2003 AVERAGE ROE HAS INCREASED ONLY 1.2% TO 49.3% DUE TO THE EFFECT OF CHANGES IN AUSTRALIAN ACCOUNTING STANDARDS” Based on average of opening and closing Shareholders funds # Average ROE adjusting for the non compara No provision for final dividend being raised partly offse
Slide 35: Performance against guidance
In comparison with our FYoo 3s FYOt.~—sFO2”s Fo?” «= FvOBSsCéFVB Sales wil grow in the upper single digits assisted by bolt 483% +101% +170% +149% +76% +9.6% v on acquisitions EBIT wil outperform sales growth assisted by cost 152% +137% +178% +157% +136% +15.6% v savings EPS wil outperform EBIT grow
Slide 36: Focus areas
| | Focus Areas Continuing Growth Cost Reductions (The Enabler) Capital & Balance Sheet Management __CONTINUED BAL High single digit sales growth Improved customer offer Lower prices Bolt-on acquisitions Project Refresh | continues ~ Project Refresh II deliveries Efficient Balance Sheet Continue to
Slide 37: Opportunities for ongoing growth in revenues and earnings
Considerable opportunities for ongoing growth in both revenues and earnings Continuing opportunity to grow market share + Market share of Food, Liquor & Grocery (FLG) remains below 30% and still low by world standards ee Defined plans to continue space roll out * Adding 15 - 25 new supermarkets each
Slide 38: Opportunities for ongoing growth (continued)
a Considerable opportunities for ongoing growth in both revenues and earnings New range and formats ¢ New format rollouts (eg. smaller BIG Ws to country towns) - New categories across supermarkets and general merchandise eg. pharmacy Continued focus on improved in-store execution and service + Provi
Slide 39: Project Refresh overview
Overview . “Refresh” level 1” initiatives over the past 4 years underpin a reduction in CODB of 2.40% of sales, giving cumulative savings of $1.67b. Additional savings over the next five years will be earned mainly from Refresh level 2 (supply chain improvement program). “Refresh” savings over the n
Slide 40: Level I reorganisation / line items
Level | - Reorganisation / line items 99 00 01 02 03 04 O85 O06 O7 08
Slide 41: Cost savings by year
1 ,500 _ 3.40% of sales 5 1,200 1025 5 900 —s?| | | jo g Wl il - I||B = 300 } 163 WA em ; WA 00 01 O02 O03 04 O05 O06 O7 O08
Slide 42: Supermarket supply chain strategy
ii Supermarket Supply Chain strategy developed by evaluating logistics features of leading global retailers and determining optimum solution for Woolworths « Leading retailers were studied to identify best practice * Creation of key design considerations: — Store Supply Chain costs — Distribution Ce
Slide 43: Supply chain replenishment and systems progress
i it INT) | | HNN i Bg Replenishment ¢ Integration of StockSmart and AutoStockR to provide end- to-end replenishment functionality StockSMART System development completed - on time and on budget (DC forecast based = *_ Stock levels in DC reduced inventory ¢ Store service levels improved replenishmen
Slide 44: Supply chain distribution centres and transport
vn | l | Ki One Touch Roll ¢ Successfully trialed in 22 stores during FY03 Cages e NSW and WA leading the roll-out from FY04 Distribution Centres ¢ Plan to consolidate 31 Supermarket DCs to 9 Regional and 2 National DC sites of significantly larger size and scale e 3new RDC sites secured — Perth (Ca
Slide 45: First six weeks trading
The first six weeks show: * Overall sales growth in upper single digits - over 9% * Total food liquor and grocery market slowed slightly since year end, with lower inflation a contributing factor, however; « Our market share has grown in all categories - Food and Liquor, General Merchandise, Petrol
Slide 46: FY04 guidance
Sales * As previously advised the more precise $ sales guidance provided for FY03 was a one off situation given unique circumstance including: FY02 being a 53 week period, impact of Franklins acquisition and exiting AlW business * For FY04 we revert to our normal policy and limit sales guidance to e
Slide 47: Appendices
—_ = a) a Se — SS ——— ——— —= —= —= SS ——— SS Appendices
Slide 48: Annual change and future guidance
A Annual change From To 1999 2003 2000 2001 2002 2003 |Average| Future Guidance $175bil | $26.3 bil |Sales % Chg +8.6% — +10.0% +14.9% +9.6% +10.8%| Upper single digit growth 559 694 | Supermarket stores # +26 +18 +73 +18 +34) 15-25 pa to over 800 85 104 |BIG W stores # +2 +3 +6 +8 +5) 6-10 pa to ov
Slide 49: Key financial ratios
FY02 FY03 Fixed charges cover Xx 2.35 2.50 (Covenant ore Days inventory (to cost of sales) Days 37.3 34.1 Days creditors (to sales) Days 45.3 45.2 Return on Funds Employed (pre tax) ROFE % 38.1 42.8 Return on Total Equity % 31.3 33.4% Return to Noteholders (pre tax) % 6.7 6.9 Return on Shareholders
Slide 50: Fixed charges cover
1999 2000 2001 EBIT 539.4 621.6 706.6 832.7 945.7 D&A 269.9 288.8 309.8 351.0 398.3 EBITDAR 1,337.0 1,457.1 1,616.4 1,888.7 2,102.7 Interest 53.7 33.6 25.0 57.6 41.2 WINs contingent coupon - 26.1 47.7 39.8 41.1 Rent - base 455.1 439.4 497.3 569.9 620.2 Rent - turnover contingent 72.6 107.3 76.9 79.4
Slide 51: Capital expenditure forecast
Fo3 F04 FO5 F06 F07 F08 Actual Forecast Forecast Forecast Forecast Forecast New Stores 131 138 140 135 138 140 Store Refurbs/Extensions 231 236 238 235 240 240 Business acquisitions 39 - - - - - Stay in Business 80 67 61 65 68 68 IT - Other 38 77 64 71 75 80 IT - Supply chain Level Il 13 39 53 42 8
Slide 52: Supply chain process map
i Po DSD Ti t hysical Stores < — ranspor Vendors rocess. ‘ ; - Receiving Vero owe Distribution Centres Serer Order / ¢ 5 / Planning S toe E Secondary € Receiving Primary Vv EB Transport Fa Transport 2 . 5 & Val al +, Production = g — 2 = Cross Distributed Stock v ase : 2 \ = Dock Movement Pick 2 2 S