Slide 1: Company Results Full Year 2017
COMPANY RESULTS FULL YEAR 2017 23 August 2017 Woolworths Limited ABN 88 000 014 675
Slide 2: Table of contents
Table of contents Key highlights, progress and outlook Brad Banducci Financial results David Marr Business update Brad Banducci/David Walker 2
Slide 3: Key highlights
Key highlights • Improved Customer, Team and Supplier Scores, especially in Australian Food • Strong sales momentum in Australian Food with FY17 comparable sales growth of 3.6% and Easter adjusted comparable sales growth in Q4’17 of 6.4% • WooliesX formed to accelerate growth in digital and national
Slide 4: Progress against our five key priorities
Progress against our 3 Evolving our Drinks business to provide even more value and convenience to customers FIVE KEY PRIORITIES • Continued sales momentum from Dan Murphy’s and BWS • Click & Collect rolled out to 1,240 BWS stores • Langton’s integrated into Dan Murphy’s 1 • Strong double digit growt
Slide 5: Woolworths Group FY18 priorities
Woolworths Group FY18 priorities 6 CUSTOMER 1ST TEAM AND CULTURE Create competitive advantage across CONNECTED, PERSONALISED AND CONVENIENT 5 Woolworths Group SHOPPING EXPERIENCES IN FOOD AND DRINKS Innovate differentiated TRANSFORM AUS EVOLVE OUR CREATE VALUE customer propositions 2 AND NZ FOOD 3 D
Slide 6: Outlook
Outlook • FY18 focus will continue to be on our five key priorities • Emphasis moving from fixing the basics to leveraging team work, digital and insights to improve customer and team experiences while sustainably reducing CODB • In H1, we have a particular focus on improved team scheduling (right t
Slide 7: Contents
Contents Key highlights, progress and outlook Brad Banducci Financial results David Marr Group financial results Key balance sheet metrics Cash flow summary Capital expenditure Capital management Business update Brad Banducci/David Walker 7
Slide 8: Financial Results
FINANCIAL RESULTS
Slide 9: Results – Full Year 2017
Results – Full Year 2017 Continuing Operations Total Group Sales $55.5 bn 3.7% $61.1 bn* 1.5% EBIT $2,326.0 m (4.9)% $2,642.9 m* n.m. NPAT $1,422.1 m (3.6)% $1,533.5 m n.m. Earnings per share 110.8¢ (5.1)% 119.4¢ n.m. Dividend per share 84¢ 9.1% Return on average funds employed 22.3% 61 bps 25.0% n.
Slide 10: Group EBIT
Group EBIT $m FY17 FY161 Change Continuing operations Australian Food 1,603.1 1,642.0 (2.4)% Endeavour Drinks Group 502.5 483.8 3.9% New Zealand Food (AUD) 292.3 284.4 2.8% New Zealand Food (NZD) 309.4 313.9 (1.4)% BIG W (150.5) (14.9) n.m. Hotels 232.9 208.5 11.7% Central overheads (154.3) (157.8)
Slide 11: Key balance sheet metrics
Key balance sheet metrics Average inventory days ROFE Days Percentage Group ex Home Improvement and Petrol Group ex Home Improvement and Petrol Group Group ex Home Improvement and Petrol – lease adjusted 41.3 22.3 40.8 21.7 40.4 39.9 39.3 39.0 38.3 38.0 13.3 13.1 36.6 36.4 FY13 FY14 FY15 FY16 FY17 F
Slide 12: Strong improvement in free cash flow
Strong improvement in free cash flow Cash flow summary $m FY17 FY16 Change Operating activities before interest and tax 4,024.1 3,495.3 15.1% Interest and tax (902.1) (1,137.8) (20.7)% Operating activities 3,122.0 2,357.5 32.4% Investing activities (1,431.4) (1,266.7) 13.0% Financing activities - 10
Slide 13: FY17 Capital expenditure in line with guidance
FY17 Capital expenditure in line with guidance $m FY17 FY16 Continuing operations Operating capex 1,583 1,391 Property development 258 407 Gross capex 1,841 1,798 Property sales (273) (678) Net capex 1,568 1,120 Discontinued operations – Home Improvement 23 108 Discontinued operations – Petrol 31 61
Slide 14: Capital management
Capital management 160 80 Dividend and DRP Payout (%) cents Interim Final Payout (RHS) 140 • Full year dividend of 84 cps - a payout of 120 72 75 70.7% of Group NPAT attributable to 100 shareholders of Woolworths Limited 80 70 60 33 50 • H2’17 NPAT includes $134m for Home 40 65 Improvement which wil
Slide 15: Contents
Contents Key highlights, progress and outlook Brad Banducci Financial results David Marr Business update Brad Banducci/David Walker 15
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Slide 17: Business Update
BUSINESS UPDATE
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Slide 19: Woolworths
Ee Woolworths The fresh food ns @
Slide 20: Australian Food
Australian Food FY17 FY161 Change Sales ($m) 36,371 34,798 4.5% EBITDA ($m) 2,164.7 2,165.6 (0.0)% EBIT ($m) 1,603.1 1,642.0 (2.4)% Gross margin (%) 28.07 27.37 70 bps Cost of doing business (%) 23.66 22.65 101 bps EBIT to sales (%) 4.41 4.72 (31) bps Sales per square metre ($) 16,213 16,000 1.3% RO
Slide 21: Our FY17 strategy was focused on having customers put us 1st
Our FY17 strategy was focused on having customers put us 1st 6 CUSTOMER 1ST TEAM AND CULTURE Create the future 5 STEP-CHANGE STORE RENEWAL PROGRAM Deliver on core 2 GOOD PRICES, 3 GREAT 4 BEST customer offer RIGHT RANGE SERVICE FRESH Fix the basics 1 SOLID AND EFFICIENT BUSINESS FOUNDATIONS 19
Slide 22: Progress highlights
Progress highlights • Our purpose ‘We bring a little good to everyone, every day’ embedded within our team Create the • Around 600 support office team members attended our ‘Welcome to Woolies’ store induction program future • Opened 19 new Australian Supermarkets, renewed 72 existing stores and comp
Slide 23: Success underpinned by improving customer and team experiences
Our success in FY17 has been underpinned by improving our customer and team experiences Overall Customer Satisfaction Voice of Team: sustainable engagement % customers satisfied, 6 or 7 out of 7 % favourable scores, 6 or 7 out of 7 90 90 +5 +3 82 78 77 75 0 0 Jun-16 Jun-17 Jun-16 Jun-17 Queue wait t
Slide 24: Sales momentum continues
Sales momentum continues, with growth in visits and more recently items per basket Australian Food sales Comp transaction growth (% year on year) (% year on year) 5.2 4.1 2.5 2.7 1.5 Q4 Q1 Q2 Q3* Q4* 7.2 FY16 FY17 5.6 4.0 Comp items per basket growth 1.7 (% year on year) 0.0 Q4 Q1 Q2 Q3* Q4* 0.8 0.6
Slide 25: Brand platform
Brand platform ● An integrated brand platform launched in July 2017 ● Resonating with customers ● Emotional and rational reasons to Pick Woolies ● Building recognition ● Constantly evolving in line with customers’ needs
Slide 26: Our FY18 strategy: From turnaround to transformation
Our FY18 strategy: From turnaround to transformation 6 CUSTOMER 1ST TEAM AND CULTURE Scale-up the future ACCELERATE RENEWAL AND EXTEND APPROACH TO 5 ONLINE AND METRO Extend core customer offer CONSISTENTLY PRICES I TRUST GREAT FAMOUS 2 ON PRODUCTS 3 4 SHOPPING FOR FRESH I WANT EXPERIENCE Excel on th
Slide 27: Our culture is key to our future
Our culture is key to our future 25
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Slide 29: Endeavour Drinks Group
WH, wey > Ss Z 5 MY, \ NI\W ENDEAVOUR DRINKS GROUP
Slide 30: Endeavour Drinks
Endeavour Drinks FY17 FY161 Change Sales ($m) 7,913 7,589 4.3% EBITDA ($m) 578.2 558.6 3.5% EBIT ($m) 502.5 483.8 3.9% Gross margin (%) 23.08 23.41 (33) bps Cost of doing business (%) 16.73 17.03 (30) bps EBIT to sales (%) 6.35 6.38 (3) bps Sales per square metre ($) 18,039 17,943 0.5% ROFE (%) 16.9
Slide 31: Dan Murphy's maintained its leadership
Dan Murphy’s maintained its leadership through new stores and multi-channel innovations FY17 highlights FY18 focus 12 net new stores opened, My Dan Murphy’s Click & Collect integration bringing total fleet to 219 members now 2.4 million Launch of talk show ‘At the Launch of high-end concept Next sta
Slide 32: BWS investment in value and customer service
BWS investment in value and customer service is resulting in strong convenience differentiation FY17 highlights FY18 focus Substantial improvement in Store network increased to Customer-led Ranging Partnering with Supermarkets sales growth and comp sales 1,298 stores. Refurbished 173 and Woolworths
Slide 33: Countdown
countdown
Slide 34: New Zealand Food
New Zealand Food NZD FY17 FY161 Change Sales ($m) 6,232 6,101 2.1% EBITDA ($m) 426.8 429.9 (0.7)% EBIT ($m) 309.4 313.9 (1.4)% Gross margin (%) 24.00 23.58 42 bps Cost of doing business (%) 19.04 18.44 60 bps EBIT to sales (%) 4.96 5.14 (18) bps Sales per square metre ($) 15,137 15,178 (0.3)% ROFE (
Slide 35: New Zealand Food FY17 highlights and FY18 focus
New Zealand Food FY17 highlights and FY18 focus FY17 highlights FY18 focus Achieved new highs for Continued to deliver low Further enhance customer Continue focus on fresh food team engagement and prices every day service experience including team knowledge customer satisfaction and best practice St
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Slide 38: BIG W
PORTFOLIO BUSINESS BIG W FY17 FY161 Change Sales ($m) 3,598 3,820 (5.8)% (LBITDA)/ EBITDA ($m) (74.1) 68.2 n.m. LBIT ($m) (150.5) (14.9) n.m. Gross margin (%) 30.82 31.69 (87) bps Cost of doing business (%) 35.00 32.08 292 bps LBIT to sales (%) (4.18) (0.39) (379) bps Sales per square metre ($) 3,39
Slide 39: We have put our customers at the heart of our planning
PORTFOLIO BUSINESS We have put our customers at the heart of our planning process Surveyed 5,000 customers and 10,000 Developed a clear Formulated a plan team members on and simple to bring our CVP what customers want customer value to life for and how we can proposition (CVP) customers do things be
Slide 40: FY18 priorities: Building our team, regaining price trust
FY18 priorities: Building our team, regaining price trust PORTFOLIO BUSINESS CUSTOMERS AND TEAM COME FIRST Win back trust for the Our team and customers at the heart of everything we do future Listen to customers to refine what we do and shape our UNIVERSES ALIGNED TO CORE CUSTOMER NEEDS future Brin
Slide 41: Activate universes: Six universes aligned to customer needs
PORTFOLIO BUSINESS Activate universes: Six universes aligned to core customer needs Multi-category solutions built around shopping themes About About About About About About Kids Home Everyday Him Her Leisure The one-stop The essentials Low prices on Everyday Treat yourself For all your shop for you
Slide 42: Better Range: Revised brand strategy and range architecture
Better Range: Revised brand strategy and range architecture PORTFOLIO BUSINESS • Choice of brands and price points across all Best customer universes with good-better-best options where it matters most to customers NATIONAL • National and exclusive brands/ranges to BRANDS NATIONA feature prominently
Slide 43: We've started to make some changes
We've started to make some changes… PORTFOLIO BUSINESS What we will do over the What we have done so far next 6 months ü New BIG W leadership team in place Continue to reduce prices ü Clear and simple plan agreed and shared Improve our online experience – range, fulfilment ü Prices taken down on mor
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Slide 45: Thank you
<— | —_ Fhankyou 2 ~~
Slide 46: Notes
Notes 1. Significant items in FY16 represent costs of $4,013.7m (before tax) or 2,627.8m (after tax and non controlling interests) resulting from the write down of the Home Improvement business and certain significant expenses incurred outside the ordinary course of our trading operations resulting
Slide 47: Disclaimer
Disclaimer This presentation contains summary information about Woolworths Limited (Woolworths) and its activities current as at the date of this presentation. It should be read in conjunction with Woolworths’ other periodic and continuous disclosure announcements filed with the Australian Securitie
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Slide 49: Final Profit and Dividend Announcement
WOooLworTHs GROUP 23 August 2017 FINAL PROFIT AND DIVIDEND ANNOUNCEMENT FOR THE 52 WEEKS ENDED 25 JUNE 2017 Moving from turnaround to transformation NPAT from continuing operations of $1,422.1 million, down 3.6% Basic EPS from continuing operations of 110.8c, down 5.1% Group NPAT of $1,533.5 million
Slide 50: CEO commentary
WOooLworTHs GROUP Brad Banducci, Woolworths Group CEO, said: “FY17 was a year of rebuilding the foundations of our business and we are pleased with our progress over the last 12 months, particularly in the second half. Encouragingly, we still see many opportunities to improve our business going forw
Slide 51: Transformation and outlook commentary
WOooLworTHs GROUP n summary, we are pleased with the progress we made in FY17 and are excited about our ability to turther improve our business and customer and team experiences in FY18, We are moving from a turnaround phase, focused on fixing our susiness foundations, to a transformation phase, foc
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Slide 53: Group profit or loss
WOOLWORTHS GROUP GROUP PROFIT OR LOSS FOR THE 52 WEEKS ENDED 25 JUNE 2017 ry Frie S$ MILLION (52 WEEKS) (52 WEEKS) CHANGE Continuing operations - before significant items' Earnings before interest, tax, depreciation, amortisation and rent (EBITDAR) 5,397.9 5,395.2 0.1% Rent (2,034.3) (1,963.9) 3.6%
Slide 54: Sales summary FY17
WOOLWORTHS GROUP SALES SUMMARY - FY17 ry Frie S MILLION (52 WEEKS) (52 WEEKS) CHANGE Continuing operations Australian Food* 36,371 34,798 4.5% Endeavour Drinks Group 7,913 7,589 43% New Zealand Food (AUD) 5,887 5,592 53% New Zealand Food (NZD) 6,232 6101 21% BIG W 3,598 3.820 (5.8)% Hotels 1,553 151
Slide 55: Group trading performance
WOooLworTHs GROUP GROUP TRADING PERFORMANCE Sales from continuing operations were $55.5 billion, an increase of 3.7% in FY17, Growth of 4.5% and 4.3% in Australian Food and Endeavour Drinks respectively drove the majority of the growth but was somewhat offset by the sales reduction in BIG W. FY17 sa
Slide 56: Australian Food
WOooLworTHs GROUP AUSTRALIAN FOOD? 2017 2016 S MILLION (52 WEEKS) (52 WEEKS) CHANGE Before significant items! Sales 36,371 34,798 4.5% EBITDA 2,164.7 2,165.6 (0.0)% Depreciation and amortisation (D&A) (561.6) (523.6) 7.3% EBIT 1,603.1 1,642.0 (2A)% Gross margin (%) 28.07 27.37 70 bps Cost of doing b
Slide 57: Australian Food trading commentary
WOooLworTHs GROUP Average prices declined by 2.1% in FY17 as we continued to lower prices for our customers. Detlation eased in the fourth quarter to 1.2%, as we experienced inflation in Fruit & Vegetables, with deflation ex- Tobacco and Fruit & Vegetables in the fourth quarter of 3.3%. Customer pri
Slide 58: Endeavour Drinks
WOooLworTHs GROUP ENDEAVOUR DRINKS 2017 2016 S MILLION (52 WEEKS) (52 WEEKS) CHANGE Before significant items! Sales 7,913 7,589 4.3% EBITDA 578.2 558.6 3.5% Depreciation ard amortisation (75.7) (74.8) 12% EBIT 502.5 483.8 3.9% Gross margin (%) 23.08 23.41 (33) bps Cost of doing business (%) 16.73 17
Slide 59: New Zealand Food
WOooLworTHs GROUP NEW ZEALAND FOOD * 2017 2016 NZ$ MILLION (52 WEEKS) (52 WEEKS) CHANGE Before significant items! Sales 6,232 6,101 2.1% EBITDA 426.8 429.9 (0.7)% Depreciation ard amortisation 7.4) (116.0) 12% EBIT 309.4 313.9 (1.4)% Gross margin (%) 2400 23.58 42 bps Cost of doing business (%) 19.0
Slide 60: New Zealand Food commentary
WOooLworTHs GROUP Gross margin increased 42 bps on the previous year due to reduced stock loss through store security and ranging initiatives, changes in fuel discount promotions and fewer low-margin bulk gift card sales. CODB as a percentage of sales increased €0 kpson the previous year driven by i
Slide 61: Portfolio Businesses - BIG W
WOooLworTHs GROUP PORTFOLIO BUSINESSES - BIG W 2017 2016 5 MILLION (52 WEEKS) (52 WEEKS) CHANGE Before significant items! Sales 3,598 3,820 6.8)% (LBITDA)/ EBITDA (74.1) 68.2 nm, Depreciation and amortisation (76.4) (83.1) (8.1% LBIT (150.5) (14.9) nm. Gross margin (%) 30.82 31.69 (87) bps Cost of d
Slide 62: BIG W turnaround
WOooLworTHs GROUP The BIG W turnaround will be a multi-year journey and while we hope to stabilise sales in FY18, we do not expect an improvement in trading performance due to the investment required to regain customer trust on price, improve our product offering and enhance the customer shopping ex
Slide 63: Portfolio Businesses - Hotels
WOooLworTHs GROUP PORTFOLIO BUSINESSES - HOTELS 2017 2016 $ MILLION (52 WEEKS) (52 WEEKS) CHANGE Before significant items! Sales 553 1,512 2.7% EBIT 232.9 208.5 TLI% Gross margin (%) 8310 82.85 25 bps Cost of doing business (%) 68.10 69.06 (96) bps EBIT to sales (%) 15.00 13,79 121 bps ‘TRADING PERF
Slide 64: Discontinued operations
WOooLworTHs GROUP DISCONTINUED OPERATIONS 2007 2016 S MILLION (52 WEEKS) (52 WEEKS) CHANGE Before significant items! Sales Home Improvement 903 2,100 (57.0)% Petrol 4,682 4,612 15% EBIT/ (LBIT) Home Improvement 159.0 (218.8) nm Petrol 157.9 17.8 34.0% ‘TRADING PERFORMANCE Home Improvement Home Impro
Slide 65: Overheads, balance sheet and cash flow
WOooLworTHs GROUP OVERHEADS, BALANCE SHEET AND CASH FLOW CENTRAL OVERHEADS INCLUDING EZIBUY Central overheads before significant items including EziBuy were $154.3 million for the year. Excluding EziBuy, central overheads were $151.8 million and increased $9.2 million on the prior year partly driven
Slide 66: Balance sheet commentary
WOooLworTHs GROUP ixed assets and investments of $8,555.7 million increased by $184 million. Excluding the transfer of Petrol and other Group properties to ‘net assets held for sale’, fixed assets and investments increased by $695 million. This was driven by net capital expenditure of $1,754 million
Slide 67: Group cash flow
WOooLworTHs GROUP GROUP CASH FLOW FOR THE 52 WEEKS ENDED 25 JUNE 2017 Fv? FvI6 S MILLION (52 WEEKS) (52 WEEKS) CHANGE EBITDA before significant items’ - continuing operations 3,363.6 3,431.3 EBITDA before significant items! - discontinued operations 340.2 (10.4) EBITDA before s! 3,703.8 3,420.9 8.3%
Slide 68: Capital management
WOooLworTHs GROUP CAPITAL MANAGEMENT Woolworths Group manages its capital structure with the objective of enhancing long-term shareholder value through optimising its weighted average cost of capital while retaining financial flexibility to invest in its business in a manner consistent with its key
Slide 69: New store rollout plans and outlook
WOooLworTHs GROUP NEW STORE ROLLOUT PLANS FROM CONTINUING OPERATIONS Space rollout is supported by detailed plans for the next three to five years identifying specific sites. FVT7 NET STORE OPENINGS (INCL. ACQUISITIONS) MEDIUM TERM TARGET (NET) Woolworths Supermarkets 3 10 - 20 new full range superm
Slide 70: Appendix One: Non-IFRS financial information
WOooLworTHs GROUP APPENDIX ONE: ASIC REGULATORY GUIDE 230 DISCLOSING NON-IFRS FINANCIAL INFORMATION This Annual Report contains certain non-IFRS financial measures of historical financial performance, balance sheet or cash flows. Non-lFRS financial measures are financial measures other than those de
Slide 71: Appendix One: Non-IFRS reconciliation (continued)
WOooLworTHs GROUP APPENDIX ONE: ASIC REGULATORY GUIDE 230 DISCLOSING NON-IFRS FINANCIAL INFORMATION (CONTINUED) The following table provides a reconciliation of EBIT, NPAT, NLAT, EPS and LPS betore signiticant items to the statutory statement. of profit or loss Fv7 Fri S MILLION (52 WEEKS) (52 WEEKS
Slide 72: Appendix Two: Discontinued operations analysis
WOOLWORTHS GROUP APPENDIX TWO: ANALYSIS OF PROFIT/(LOSS) FOR THE PERIOD FROM DISCONTINUED OPERATIONS The profit/(loss) for the Home Improvement and Petrol businesses for the reporting period are set out below, including comparative formation 2017 2016 HOME IMPROVEMENT $M $M Revenue from the sale of
Slide 73: Appendix Three: Significant items
WOooLworTHs GROUP APPENDIX THREE: SIGNIFICANT ITEMS FY17 There are no significant items from continuing operations in FY17. FY16 Continuing operations Included in FY16 Consolidated Statement of Profit or Loss were significant expenses before tax of $951.1 million incurred outside the ordinary course
Slide 74: Appendix Four: Quarterly sales summary
WOooLworTHs GROUP APPENDIX FOUR: QUARTERLY SALES SUMMARY Group sales - fourth quarter ay ee S MILLION (12 WEEKS) (12 WEEKS) CHANGE Continuing operations Australian Food? 8,382 7,776 78% Endeavour Drinks Group 719 1,605 TAM New Zealand Food (AUD) 1,326 1,266 AT% New Zealand Food (NZD) 1,416 1,368 3.5
Slide 75: Appendix Five: Five year store and trading area analysis
WOooLworTHs GROUP APPENDIX FIVE: FIVE YEAR STORE AND TRADING AREA ANALYSIS 2017 2016 2015 2014 2013 FULL YEAR ENDED 25 JUNE 2017 FULL FULL FULL FULL FULL STORES (NUMRER) YEAR YEAR YEAR YEAR YEAR Continuing operations NSW & ACT 312 303 292 282 271 QiD 234 237 230 225 209 VIC 244 242 234 224 221 SA &N
Slide 76: Appendix Six: New stores and refurbishments
WOOLWORTHS GROUP APPENDIX SIX: NEW STORES AND REFURBISHMENTS GROSS NEW STORES NET NEW STORES FULL YEAR (INCL, ACQUISITIONS) (INCL. ACQUISITIONS) REFURBISHMENTS Continuing operations Australian Supermarkets (including Metro) 25 3 72 Thomas Dux - (2) - Endeavour Drinks Group (incl. attached) 50 31 43
Slide 77: Endnotes
WOooLworTHs GROUP ENDNOTES nic. Not comparable num, Not meaningful ‘There were no significant items recognised in FY17 In FY16, total significant items of $4,013.7 million before tax ($2,627.8 million after tax attributable to equity holders of the parent entity) were recognised. Details of these co
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