Wesfarmers Limited · ASX:WES
Wesfarmers — JPMorgan Investor Conferences, New York and Edinburgh 2007
115 slides from Wesfarmers's conference presentation, Sep 24, 2007
Slide 1: ASX cover letter: presentation to JPMorgan investor conferences
For personal use only 24 September 2007 The Manager Company Announcements Office Australian Securities Exchange Limited Level 4 20 Bridge Street SYDNEY NSW 2000 Dear Sir, PRESENTATION TO BE GIVEN AT JPMORGAN INVESTOR CONFERENCES – NEW YORK AND EDINBURGH Following is a presentation that is to be give
Slide 2: Philosophy, Performance and Direction
For personal use only Philosophy, Performance and Direction JPMorgan Investor Conferences New York & Edinburgh 24 – 28 September 2007
Slide 3: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Wesfarmers Limited. The information contained in this presentation is for information purposes only and does not constitute an offer to issue or arrange to issue, securities or other financial products, nor is it intended to con
Slide 4: Philosophy Based On A Single Focus
For personal use only Philosophy Based On A Single Focus Satisfactory Returns To Shareholders
Slide 5: Long-term, consistent strategies
Long-term, consistent strategies For personal use only 4
Slide 6: Strong key attributes
Strong key attributes For personal use only Strong cash flows through the cycle Pursuing growth opportunities Investing in high quality assets Achieving improved earnings Strong internal processes 5
Slide 7: Strong key attributes: cash flows
Strong key attributes For personal use only Cash flows Growth Quality Assets Earnings Processes $m cents 1400 250 1200 200 1000 800 150 600 100 400 50 200 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Operating Cash flow Dividends Paid Dividend per share [RHS] 6
Slide 8: Strong key attributes: growth
Strong key attributes For personal use only Cash flows Growth Quality Assets Earnings Processes Home Improvement • Continued rollout of warehouse stores at 10 -14 pa • Rollout of new range concepts; lighting, kitchens & flooring Coal • $360m Curragh North development • Bengalla, Curragh feasibility
Slide 9: Strong key attributes: quality assets
Strong key attributes For personal use only Cash flows Growth Quality Assets Earnings Processes Home Improvement • National store network (Aust. & NZ) • Leading retailer in home and garden improvement Coal • Annual production capacity of >6.5mtpa of metallurgical coal; >7.5mpta steaming coal • Consi
Slide 10: Strong key attributes: earnings
Strong key attributes For personal use only Cash flows Growth Quality Assets Earnings Processes Home Improvement • Store on store cash sales growth of 10.4% in FY07 • 5 year EBITA CAGR of 12.6% pa Coal • Maintaining lowest quartile cash cost production for export coal Insurance • 5 year EBITA CAGR o
Slide 11: Strong key attributes: processes
Strong key attributes For personal use only Cash flows Growth Quality Assets Earnings Processes • Lean corporate office • Divisional autonomy, responsibility and accountability • Flexibility to manage portfolio 10
Slide 12: Sustainability
Sustainability For personal use only • Financial performance • Safe and rewarding workplaces • Good value products and services • Respect for customers and suppliers • Environmental responsibility • Ethical dealings • Community contribution 11
Slide 13: Sustainability
Sustainability For personal use only Sustainability reporting Social Responsibility Report since 1998/99 Three divisions are members of Greenhouse Challenge Plus, a voluntary emissions reduction programme Wesfarmers took part in the 2006 Carbon Disclosure Project Climate Change (www.cdproject.net) C
Slide 14: Coles update
For personal use only Coles update
Slide 15: A unique opportunity
A unique opportunity For personal use only 1. Leading positions in a highly attractive industry structure Coles is a 2. Unique retail platform with an irreplaceable store network very attractive 3. Wesfarmers’ retail sector know-how acquisition for 4. Substantial opportunity to create value from the
Slide 16: Attractive Industry Structure
1. Attractive Industry Structure For personal use only • Food and liquor retailers are extremely resilient, with profit margins remaining steady throughout economic cycles Change in Consumer EBITDA Confidence Index Margin Per cent Per cent 25% 10% 20% 8% 15% 6% 10% 4% 5% 2% 0% 0% -5% -2% -10% -4% -1
Slide 17: Unique Platform and Asset Base
2. Unique Platform and Asset Base For personal use only • Coles is one of two national leaders in supermarkets Coles Packaged Grocery Market Share Food and Liquor by State National Market Share National: 34.1% Woolw orths 30% QLD: 33.1% Specialty / WA: 33.1% Others 47% SA: 36.1% NSW: 32.2% VIC: Cole
Slide 18: Unique Platform and Asset Base
2. Unique Platform and Asset Base For personal use only Discount DS Market Shares Fuel Market Shares Coles Target 24% Caltex Kmart 27% 23% 34% Others 11% Woolw orths 17% Exxon Other BigW 10% BP 13% 26% 15% Source: Bain & Company Source: CGJ, IBIS World 2005 and 2006 Office Products Market Shares Off
Slide 19: Wesfarmers' Presence in the Retail Sector
3. Wesfarmers’ Presence in the Retail Sector For personal use only Australia’s Leading Retailers, based on FY06 Sales $b 40.0 35.0 Bunnings 30.0 Coles 25.0 20.0 15.0 10.0 5.0 0.0 Bunnings/ Coles (1) Woolworths (2) Metcash (3) Harvey Norman (4) Myer David Jones (1) Coles Australian sales (excluding M
Slide 20: Potential for Growth
4. Potential for Growth For personal use only • Ability to generate value and restore Coles' profit and growth potential Food and Liquor Comparable Store Sales Growth Per Cent 8.0 7.0 6.2 6.0 5.1 5.0 4.5 4.0 4.0 3.1 3.3 3.0 2.8 3.0 2.5 2.1 1.7 1.5 2.0 1.1 0.9 0.8 1.0 0.0 1Q04 2Q04 3Q04 4Q04 1Q05 2Q0
Slide 21: Creating Value - Three-Part Plan
5. Creating Value - Three-Part Plan For personal use only • Wesfarmers has a three-part plan to deliver significantly improved returns from the Coles businesses Management Financial Outcomes: Create value Business and enhance Value Creation Specific returns Opportunities Initiatives 20
Slide 22: Management and Business Restructure
5. Management and Business Restructure For personal use only • Wesfarmers will restructure the Coles businesses into the following reporting structure Wesfarmers Board Managing Director: Richard Goyder Finance Director: Gene Tilbrook Food, Liquor and Kmart Big Box Retailing Target Convenience Other
Slide 23: Value Creation Opportunities
5. Value Creation Opportunities For personal use only • Substantial value creation opportunities are readily identifiable Opportunity Initiatives Potential Financial Outcomes1 Overhead Reduction Ensuring overhead reduction savings $385m2 pa cost savings by FY09 are sustainable Supply Chain Driving t
Slide 24: Plans for the Businesses
5. Plans for the Businesses For personal use only Medium Term Value Creation – NPV Positive Value Accretive from Date of Acquisition Food, Liquor and Convenience Target • Stabilise the business • Focus on retail basics • Continuation of strong performance • Deliver supply chain cost savings and • Su
Slide 25: Key Offer Terms
Key Offer Terms For personal use only • Wesfarmers’ proposal gives Coles shareholders the flexibility of three forms of consideration Wesfarmers Offer • 0.14215 Wesfarmers Ordinary Shares Base Offer • 0.14215 Wesfarmers Price Protected Shares (“WPPS”) • $4 cash • Maximum proportion of scrip availabl
Slide 26: Scheme Implementation
Scheme Implementation For personal use only • Wesfarmers is expecting to complete the acquisition of Coles late November Indicative Timetable Scheme book lodged with ASIC 14 September 2007 Scheme book available to Coles Shareholders early October 2007 Coles Shareholder Meeting early November 2007 Im
Slide 27: Management Team
Management Team For personal use only Managing Director & CEO Richard Goyder Finance Director Gene Tilbrook Divisional Managing Directors Home Improvement John Gillam Coal Stewart Butel Insurance Rob Scott Industrial & Safety Terry Bowen * Chemicals & Fertilisers Keith Gordon* Energy Tim Bult * Ian
Slide 28: Group results
For personal use only Group results
Slide 29: Group Performance Summary
Group Performance Summary For personal use only Year ended 30 June ($m) 2007 2006* % 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 1,300.6 1,129.1 15.2 Earnings per share (ex. employee res. shares) 210.5
Slide 30: 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 31: 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 32: Divisional ROC & Capital Employed
Divisional ROC & Capital Employed For personal use only 2007 2006 Year ended 30 June R12 Capital EBIT ^ ROC ROC Employed $m $m % % Home Improvement 528.4 1,878.5 28.1 22.9 Coal 338.0 870.1 38.8 78.3 Insurance 120.3 763.6 15.8 30.9 Industrial & Safety 114.6 734.4 15.6 12.6 Chemicals & Fertilisers* 10
Slide 33: Return on Shareholders' Funds
Return on Shareholders’ Funds For personal use only (rolling 12 months to 30 June) % 35 30 25 25.4 20 15 31.1 25.1 22.1 10 18.5 15.8 5 0 2003 2004 2005 2006 2007 AGAAP^ A-IFRS Target Excludes the sales of Girrah (2003), Landmark (2004) and ARG (2006) ^ Before goodwill amortisation 32
Slide 34: Home Improvement
Home Improvement For personal use only WIDEST RANGE LOWEST PRICES BEST SERVICE 33
Slide 35: Bunnings' Store Network
Bunnings’ Store Network For personal use only at June 2007 155 Warehouse stores 2 65 Small format stores 3 HouseWorks Stores 28 5 19 10 3 5 3 47 18 11 25 39 3 2 2 1 Excludes Trade operational sites 34
Slide 36: Home Improvement Financial Performance
Home Improvement Financial Performance For personal use only EBIT ROC A$m % 600 30 EBIT CONTRIBUTION (FY07) 500 25 39% 400 20 300 15 155 warehouse stores 200 10 65 smaller format stores 100 5 100,000+ product lines 24,000+ employees 31% 0 0 2002 2003 2004 2005 2006 2007 EBITA (AGAAP) EBIT (AIFRS) Re
Slide 37: Home Improvement Strategies
Home Improvement Strategies For personal use only Strategies Strong focus on “driving the basics” – Price, Range & Service Rollout of new range concepts; lighting, kitchens & flooring Profitable sales growth Warehouse store rollout continues – 10 to 14 warehouse store pa 2 distinct trade market segm
Slide 38: Coal
i Coal F UWURRAGSF 404 Premier Coal BENGALLA
Slide 39: Coal Financial Performance
Coal Financial Performance For personal use only EBIT ROC A$m % 800 80 EBIT CONTRIBUTION 700 70 (FY07) 600 60 25% 500 50 400 40 300 30 660 employees 200 20 3 coal mines 100 10 24 coal customers 0 0 2003 2004 2005 2006 2007 EBITA (AGAAP) EBIT (AIFRS) Return on Capital * Excludes profit on sale of Gir
Slide 40: Coal Strategies
Coal Strategies For personal use only Opportunities / Challenges 2006/07 Strategic initiatives Maximise export sales Long-term export contracts in place Strong export customer demand Optimise sales mix Export price relativity Cost pressures Cost reduction programmes Closely monitor and capture oppor
Slide 41: Insurance
For personal use only Insurance 40
Slide 42: Insurance Financial Performance
Insurance Financial Performance For personal use only EBITA ROC A$m % 160 70 EBIT CONTRIBUTION 10% (FY07) 140 60 9% 120 50 100 40 80 30 60 20 3,000 employees 40 146 locations 20 10 0 0 2003 2004* 2005 2006 2007 EBITA (AGAAP) EBITA (AIFRS) Return on Capital 41
Slide 43: Insurance Strategies
Insurance Strategies For personal use only Opportunities / Initiatives Details Maintain Maintaintechnical technicalrates rates Creation Creationofoftailored tailoredproducts productsandandservices services Target Target Profitable Profitable growth growth Maintain Maintainkey keyalliances alliancesa
Slide 44: Industrial & Safety Portfolio
Industrial & Safety Portfolio For personal use only Australian market leader in distribution of Maintenance, Repair and Operating supplies (MRO) National Specialist Businesses Australia New Zealand 43
Slide 45: Industrial & Safety Financial Performance
Industrial & Safety Financial Performance For personal use only EBIT ROC A$m % 140 18 EBIT CONTRIBUTION (FY07) 16 120 14 100 8% 12 80 10 60 8 3,200 employees 6 40 240 locations 4 100,000+ customers 20 2 190,000 product lines 0 0 2003 2004 2005 2006 2007 EBITA (AGAAP) EBIT (AIFRS) Return on Capital 4
Slide 46: Industrial & Safety Strategies
Industrial & Safety Strategies For personal use only Opportunities Strategic Initiatives Networks expansion Target higher growth New product ranges and services sectors Acquisitions complementing organic growth Ongoing focus on customer service and delivery performance Increase sales to • technical
Slide 47: Chemicals & Fertilisers
Chemicals & Fertilisers For personal use only 46
Slide 48: Chemicals & Fertilisers Financial Performance
Chemicals & Fertilisers Financial Performance For personal use only EBIT ROC EBIT CONTRIBUTION A$m % (FY07) 7% 120 20 18 100 16 14 80 618 employees 12 170 chemical customers 60 10 2 major fertiliser 8 distributors servicing over 5,000 fertiliser 40 6 customers 4 11 chemical 20 manufacturing plants 2
Slide 49: Chemical & Fertilisers Strategies
Chemical & Fertilisers Strategies For personal use only Opportunities / Challenges Strategies Chemicals Maintain and grow business Kwinana AN expansion: ¾ Duplication of capacity to 470,000 tpa ¾ Completion expected second half CY2007 Improve performance of sodium Sodium cyanide volume growth cyanid
Slide 50: Energy
For personal use only Energy 49
Slide 51: Energy Financial Performance
Energy Financial Performance For personal use only EBIT ROC A$m % EBIT CONTRIBUTION 80 50 (FY07) 5% 70 40 60 50 30 40 900 employees 30 20 274,000 gas customers 20 remote power stations 20 10 3 air separation units 10 1 hydrogen plant 0 0 2003 2004 2005 2006 2007 EBITA (AGAAP) EBIT (AIFRS) Return on
Slide 52: Energy Strategies
Energy Strategies For personal use only Strategies LPG distribution: • controllable costs; and • customer focus Industrial gas growth in; Improve – Existing Businesses • eastern states sales; and • oil and gas sector Maximise production facilities Seek new power generation projects LNG – WA Project:
Slide 53: Other Businesses
Other Businesses For personal use only Gresham: 50% interest in Gresham Partners, an independent investment (A$m) 2006 2007 bank focused on financial advisory services, private equity investment and property investment funds. Wesfarmers also Profit before tax: holds significant investments in Gresha
Slide 54: Gresham Private Equity
Gresham Private Equity For personal use only Gresham Private Equity – Fund 1 Gresham Private Equity – Fund 2 • Current investment of $30.2m • Wesfarmers’ commitment of $161m; capital invested $90.1m • Raywood exited in 06/07; Norcros in July 07; and • GEON expanding with acquisition of Promentum Riv
Slide 55: Capital Management
For personal use only Capital Management
Slide 56: Capital Expenditure
Capital Expenditure For personal use only 2007/08 Capital Expenditure Budget Total: A$825m $8m $132m $269m $136m $14m $24m $241m Home Improvement Coal Insurance Industrial & Safety Fertilisers & Chemicals Energy Other 55
Slide 57: Capital Management
Capital Management For personal use only • Balance sheet includes $2.1 billion debt Interest Cover Ratio (cash basis) – as at 30 June times relating to Coles shareholding 20 – $33.4 million of related interest 15 included in results 10 • Net Debt / Equity of 143.6% (84.3% excl. 10.6 15.8 14.3 Coles
Slide 58: Outlook
Outlook For personal use only • Complete CSBP and LNG major capital projects • Continue Bunnings and Industrial & Safety directions • Insurance to focus on growing broking and improving efficiency • Coal – Focus on costs – Expansion feasibility studies – Encouraging price outlook • Coles scheme and
Slide 59: For all the latest news visit www.wesfarmers.com.au
For personal use only For all the latest news visit www.wesfarmers.com.au 58
Slide 60: Philosophy, Performance and Direction: Discussion Pack
For personal use only Philosophy, Performance and Direction JPMorgan Investor Conferences New York & Edinburgh 24 – 28 September 2007 Discussion Pack 1
Slide 61: Index
Index 1 Philosophy, Performance and Direction 3 For personal use only 2 Sustainability 12 3 Group Overview 16 4 2007 Full Year Results 20 Operating Divisions 30 Home Improvement 31 Coal 34 Insurance 38 5 Industrial & Safety 42 Chemicals & Fertilisers 45 Energy 48 Other Businesses 52 6 Capital Manage
Slide 62: Philosophy, Performance and Direction
For personal use only Philosophy, Performance and Direction
Slide 63: Long-term, consistent strategies
Long-term, consistent strategies For personal use only 4
Slide 64: Strong key attributes
Strong key attributes For personal use only Strong cash flows through the cycle Pursuing growth opportunities Investing in high quality assets Achieving improved earnings Strong internal processes 5
Slide 65: Strong key attributes: cash flows
Strong key attributes For personal use only Cash flows Growth Quality Assets Earnings Processes $m cents 1400 250 1200 200 1000 800 150 600 100 400 50 200 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Operating Cash flow Dividends Paid Dividend per share [RHS] 6
Slide 66: Strong key attributes: growth
Strong key attributes For personal use only Cash flows Growth Quality Assets Earnings Processes Home Improvement • Continued rollout of warehouse stores at 10 -14 pa • Rollout of new range concepts; lighting, kitchens & flooring Coal • $360m Curragh North development • Bengalla, Curragh feasibility
Slide 67: Strong key attributes: quality assets
Strong key attributes For personal use only Cash flows Growth Quality Assets Earnings Processes Home Improvement • National store network (Aust. & NZ) • Leading retailer in home and garden improvement Coal • Annual production capacity of >6.5mtpa of metallurgical coal; >7.5mpta steaming coal • Consi
Slide 68: Strong key attributes: earnings
Strong key attributes For personal use only Cash flows Growth Quality Assets Earnings Processes Home Improvement • Store on store cash sales growth of 10.4% in FY07 • 5 year EBITA CAGR of 12.6% pa Coal • Maintaining lowest quartile cash cost production for export coal Insurance • 5 year EBITA CAGR o
Slide 69: Strong key attributes: processes
Strong key attributes For personal use only Cash flows Growth Quality Assets Earnings Processes • Lean corporate office • Divisional autonomy, responsibility and accountability • Flexibility to manage portfolio 10
Slide 70: Resulting in increasing returns
Resulting in increasing returns For personal use only EPS Share (cents) Price(A$)* 350 45.00 35.00 250 25.00 150 15.00 50 5.00 -50 -5.00 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 EPS (AGAAP) Girrah EPS Landmark EPS EPS (AIFRS) ARG EPS Wesfarmers Share Price * Adjusted for cap
Slide 71: Sustainability
For personal use only Sustainability
Slide 72: Sustainability
Sustainability For personal use only Financial performance • All our actions are directed towards satisfying our corporate objective of providing a satisfactory return to shareholders. To be sustainable, Wesfarmers must continue to achieve high standards of financial performance thereby allowing us
Slide 73: Sustainability
Sustainability For personal use only Environmental responsibility • Our diverse range of businesses expose us to a number of challenging or Wesfarmers is a potentially challenging environmental issues, including waste disposal, contamination and greenhouse gas emissions. We set legal compliance as a
Slide 74: Sustainability
Sustainability For personal use only Sustainability reporting • Voluntarily publicly reporting on sustainability issues since 1998/99. The stand-alone Social Responsibility Report is published to coincide with the company's Annual General Meeting. The 2006 report ran to 100 pages of very detailed in
Slide 75: Group Overview
For personal use only Group Overview
Slide 76: Financial Summary
Financial Summary For personal use only FY05 FY06* FY07 % Change pcp Operating Results Operating revenue A$m 8,159 8,859 9,754 10.1 EBITDA A$m 1,260 1,650 1,650 0.0 Earnings before interest and tax A$m 1,071 1,366 1,305 4.4 Net profit after tax A$m 702 869 786 9.6 Financial Position Total assets A$m
Slide 77: Financial Summary
Financial Summary For personal use only FY2007 FY2007^ FY2007 ^ FY2007 Activities Revenue EBIT EBIT Capital Employed (A$m) (A$m) Contribution (A$m) Australasia's leading supplier of home and garden Home Improvement improvement products and building materials 4,939 528 39% 1,879 Mining of metallurgic
Slide 78: Cashflow and Dividends per share
Cashflow and Dividends per share cents For personal use only 350 300 strong growth in cashflows and dividends… 250 200 150 100 50 0 95 96 97 98 99 00 01 02 03 04 05 06 07 Operating cash flow per share Dividend per share % 35 30 …from consistent above market returns on 25 shareholders’ funds 20 15 10
Slide 79: 2007 Annual Results
For personal use only 2007 Annual Results
Slide 80: 2007 Full Year Results Performance Highlights
2007 Full Year Results Performance Highlights For personal use only Group Performance Highlights Year ended 30 June ($m) 2007 2006* % Operating revenue 9,753.7 8,858.8 10.1 • Operating revenue up 10.1% EBITDA 1,650.0 1,649.5 0.0 EBIT 1,305.3 1,366.0 (4.4) • Group profit after tax of $786 Net profit
Slide 81: 2007 Full Year Results Performance Highlights
2007 Full Year Results Performance Highlights For personal use only Divisional Performance Overview Year ended 30 June ($m) 2007 2006* % Home Improvement 528.4 420.5 25.7 • Improved performance from most divisions Coal 338.0 577.8 (41.5) • Significant increase in earnings from Home Insurance 120.3 1
Slide 82: Home Improvement – 2007 Full Year Performance
Home Improvement – 2007 Full Year Performance For personal use only Highlights Financial Performance • 13.8% cash sales growth and 3.2% lift in trade sales Year ended 30 June ($m) 2007 2006 % Revenue 4,938.9 4,275.5 15.5 – store on store cash sales growth of 10.4% EBIT 528.4 420.5 25.7 • 13 warehous
Slide 83: Coal – 2007 Full Year Performance
Coal – 2007 Full Year Performance For personal use only Highlights Financial Performance • Continued increase in metallurgical coal sales Year ended 30 June ($m) 2007 2006 % • Completion of Curragh North Materials Handling project Revenue 1,133.7 1,304.2 (13.1) EBITDA 519.5 720.8 (27.9) • Curragh No
Slide 84: Insurance – 2007 Full Year Performance
Insurance – 2007 Full Year Performance For personal use only Highlights Financial Performance • A difficult year in a soft insurance market with intense competition Year ended 30 June ($m) 2007* 2006 % • Higher claims incidence in Lumley Australia/NZ Gross Written Premium Underwritten 1,191.0 1,025.
Slide 85: Industrial & Safety – 2007 Full Year Performance
Industrial & Safety – 2007 Full Year Performance For personal use only Highlights Financial Performance • Operating Revenue up 3.8% at $1,208m Year ended 30 June ($m) 2007 2006 % – Sales growth of 8.7% in the second half (inclusion of Bullivants Revenue^ 1,208.0 1,163.5 3.8 from January) EBITDA 128.
Slide 86: Chemicals & Fertilisers – 2007 Full Year Performance
Chemicals & Fertilisers – 2007 Full Year Performance For personal use only Highlights Financial Performance % • Continued safety improvement Year ended 30 June ($m) 2007 2006 Revenue Chemicals 247.6 252.1 (1.8) • Chemicals contribution in line with last year Fertilisers 344.5 343.1 0.4 – Improved co
Slide 87: Energy – 2007 Full Year Performance
Energy – 2007 Full Year Performance For personal use only Highlights Financial Performance • Completed $500 million acquisition of Coregas - national producer Year ended 30 June ($m) 2007 2006 % and distributor of industrial and medical gases Revenue 463.0 371.9 24.5 • Higher LPG production and expo
Slide 88: Other Businesses – 2007 Full Year Performance
Other Businesses – 2007 Full Year Performance For personal use only Highlights Financial Performance Share of net profit of associates included in EBIT Holding 2007 2006* Year ended 30 June ($m) % Gresham Private Equity – Fund 1 Associates: ARG 0 - 16.5 • Current investment of $30.2m Gresham Private
Slide 89: Operating Divisions
For personal use only Operating Divisions
Slide 90: Home Improvement
Home Improvement For personal use only WIDEST RANGE LOWEST PRICES BEST SERVICE 31
Slide 91: Bunnings' Store Network
Bunnings’ Store Network at June 2007 For personal use only EBIT CONTRIBUTION 2 (FY07) 39% 28 5 19 10 3 5 3 47 18 155 warehouse stores 11 25 65 smaller format stores 39 3 100,000+ product lines 155 Warehouse stores 2 24,000+31% employees 31% 2 1 44% 65 Small format stores 3 HouseWorks stores Excludes
Slide 92: Home Improvement - Performance
Home Improvement - Performance For personal use only Growth Strategies EBIT ROC Strategies A$m % 600 30 Strong focus on “driving the basics” – Price, Range & Service Rollout of new range concepts; lighting, kitchens & flooring Profitable sales growth Warehouse store rollout continues – 10 to 14 ware
Slide 93: Coal
Coal om Sa ( UWURRAGSGF 40 Premier Coal BENGALLA
Slide 94: Coal - Locations
Coal - Locations For personal use only EBIT CONTRIBUTION (FY07) 25% 660 employees 3 coal mines Coal 24 coal customers Premier Coal Curragh 27% Bengalla (40%) 35
Slide 95: Coal - Performance
Coal - Performance For personal use only Growth Strategies EBIT ROC A$m % Opportunities / Challenges 2006/07 Strategic initiatives 800 80 Maximise export sales Long-term export contracts in place 700 70 Strong export customer demand Optimise sales mix Export price relativity 600 60 500 50 Cost press
Slide 96: Coal - Sales
Coal - Sales For personal use only Coal Sales Volumes by Mine (2007) Coal Prices Japanese Fiscal Year Mine Domestic Export Export US$/Tonne (Nominal) FOB Australia Total 140 (mtpa) Steaming Steaming Metallurgical 120 100 Curragh, QLD 2.2 6.5 8.7 80 Premier, WA 3.0 3.0 60 Bengalla*, NSW 1.0 4.5 5.5 4
Slide 97: Insurance
For personal use only Insurance 38
Slide 98: Insurance - Locations
Insurance - Locations For personal use only 2 1 EBIT CONTRIBUTION 4 (FY07) 2 4 13 9% 20 1 2 1 1 3 12 8 18 9 5 18 6 1 3,000 employees 5 146 10% locations Lumley General Australia 10 3 4 1 Lumley General New Zealand 9 2 Wesfarmers Federation Insurance 84 OAMPS 29 Crombie Lockwood 14 39
Slide 99: Insurance - Performance
Insurance - Performance For personal use only EBITA ROC Growth Strategies A$m % Opportunities / Initiatives Details 160 70 Maintain technical rates 140 60 Creation of tailored products and services Target Profitable growth 120 Maintain key alliances and client relationships 50 Business focus on spec
Slide 100: Insurance – Underwriting Performance
Insurance – Underwriting Performance For personal use only Reduced reinsurance levels: strategy to retain more risk 2007 Gross Written Premium by Class of Business % Total: $1,191m 40 Liability 18% Marine 4% 30 Engineering 7% Personal 18% 20 AMO 4% Crop 1% 10 0 2004 2005 2006 2007 Commercial 22% Com
Slide 101: Industrial & Safety
Industrial & Safety For personal use only Australian market leader in distribution of Maintenance, Repair and Operating supplies (MRO) National Specialist Businesses Australia New Zealand 42
Slide 102: Industrial & Safety – Distribution Network
Industrial & Safety – Distribution Network For personal use only EBIT CONTRIBUTION (FY07) 2 1 1 18 12 4 4 8% 23 10 6 1 1 65 5 19 6 3 5 1 1 4 1 11 7 3,200 employees 24 22 AUSTRALIAN BUSINESSES No. 1 1 1 240 locations 10 20 Blackwoods 84 100,000+ customers Protector Alsafe 44 5 3 Motion 1 190,000 prod
Slide 103: Industrial & Safety - Performance
Industrial & Safety - Performance For personal use only Growth Strategies EBIT ROC Opportunities Strategic Initiatives A$m % 140 18 Networks expansion Target higher growth 16 New product ranges and services 120 sectors Acquisitions complementing organic growth 14 100 Ongoing focus on customer servic
Slide 104: Chemicals & Fertilisers
Chemicals & Fertilisers For personal use only 45
Slide 105: Chemicals & Fertilisers - Locations
Chemicals & Fertilisers - Locations For personal use only EBIT CONTRIBUTION (FY07) 7% 4 5 7 618 employees 170 chemical customers 2 major fertiliser ■ CSBP fertilisers distributors servicing Manufacturing plant 5 over 5,000 fertiliser Import and distribution centres 5 customers Depots 6 11 chemical R
Slide 106: Chemicals & Fertilisers – Performance
Chemicals & Fertilisers – Performance For personal use only Growth Strategies EBIT ROC Opportunities / Challenges Strategies A$m % 120 20 Chemicals Maintain and grow business Kwinana AN expansion: ¾ Duplication of capacity to 470,000 tpa 18 100 ¾ Completion expected second half CY2007 16 Improve per
Slide 107: Energy
For personal use only Energy 48
Slide 108: Energy - Locations
Energy - Locations For personal use only EBIT CONTRIBUTION (FY07) 5% 900 employees 274,000 gas customers 20 remote power stations Gas and Power Kleenheat Gas 3 air separation units Wesfarmers LPG 1 hydrogen plant Coregas enGen 28% Air Liquide WA 49
Slide 109: Energy - Performance
Energy - Performance For personal use only Growth Strategies EBIT ROC A$m % Strategies 80 50 LPG distribution: • controllable costs; and 70 • customer focus 40 60 Industrial gas growth in; Improve – Existing Businesses • eastern states sales; and 50 30 • oil and gas sector Maximise production facili
Slide 110: Energy - Businesses
Energy - Businesses For personal use only Activities Activities Activities distributor and marketer of liquefied design, construction, operatation and Production, distribution and marketing of petroleum gas (LPG) and gas appliances to a maintenance of both company-owned and industrial and medical ga
Slide 111: Other Businesses
Other Businesses For personal use only Gresham: 50% interest in Gresham Partners, an independent investment (A$m) 2006 2007 bank focused on financial advisory services, private equity investment and property investment funds. Wesfarmers also Profit before tax: holds significant investments in Gresha
Slide 112: Gresham Private Equity
Gresham Private Equity For personal use only Gresham Private Equity – Fund 1 Gresham Private Equity – Fund 2 • Wesfarmers’ commitment of $161m; capital invested • Current investment of $30.2m $90.1m • Raywood exited in 06/07; Norcros in July 07; and • GEON expanding with acquisition of Promentum Riv
Slide 113: Capital Management
Capital Management For personal use only • Balance sheet includes $2.1 billion debt relating to Coles 2007/08 Capital Expenditure Budget shareholding – $33.4 million of related interest included in results Total: A$825m • Net Debt / Equity of 143.6% (84.3% excl. Coles) • Cash Interest Cover Ratio of
Slide 114: Outlook
Outlook For personal use only • Complete CSBP and LNG major capital projects • Continue Bunnings and Industrial & Safety directions • Insurance to focus on growing broking and improving efficiency • Coal – Focus on costs – Expansion feasibility studies – Encouraging price outlook • Coles scheme and
Slide 115: Investor Relations Contact
Investor Relations Contact For personal use only Wesfarmer’s Public Affairs and Investor Relations For further information on Wesfarmers including: Keith Kessell 61 8 9327 4251 Annual reports kkessell@wesfarmers.com.au Financial results announcements Tanya Rybarczyk 61 8 9327 4323 Presentations and
Wesfarmers — JPMorgan Investor Conferences, New York and Edinburgh 2007 on 6ix