Wesfarmers Limited · ASX:WES
Wesfarmers — H1 2006/07 Earnings Presentation
43 slides from Wesfarmers's earnings presentation, Feb 15, 2007
Slide 1: i ay
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Slide 2: Presentation Outline
Presentation Outline Group Performance Highlights Richard Goyder Group Financial Results Gene Tilbrook John Gillam Stewart Butel Bob Buckley Terry Bowen Keith Gordon Tim Bult Other Businesses Gene Tilbrook Outlook Richard Goyder
Slide 3: Group Performance Highlights
Group Performance Highlights _ Richard Goyder Managing Director, Wesfarmers Limited A 4 Westarmers
Slide 4: Group Performance Highlights
Group Performance Highlights * Operating revenue of $4.7 billion, up 6.1% * Group profit after tax of $392 million, down 12.3% ¢ Earnings per share of 105.8 cents*, 12.7% below pcp * Operating cash flow up 9.7% * ROE of 27.7%, down from 30.2% « Interim dividend increased to 85 cents per share, up 20
Slide 5: Divisional Performance
Divisional Performance TCU _ a Vy oD LL ZL 7 7 iy Ly a id 3 40 Ue y, _ Home Improvement Coal Insurance Industrial & Safety Chemicals & Fertilisers Energy 7 iy py oo yy ye no oy pe im le on 0 oo i) i 7s es _ joy a Ly _ ey bs a a So ypeaonepeyy ae) i yyy Pood = gy 7 ge ha ATE * Rolling 12 months to 31
Slide 6: Group Financial Results
iy i Group Financial Results Gene Tilbrook Finance Director, Wesfarmers Limited A 4 Westarmers
Slide 7: Group Performance Summary
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Slide 8: Divisional EBIT
Divisional EBIT IRIE nes ee emmmuumny on) Vy Wi ay We yy Wye Vy y oo oo Lg Li _ Lo Ws 7 _ a. 7 iy ON 1 | g ine 0 <4 40 i soa LO GA LC a0 a oS ; ear EOC a) A Gey er Oo my ee a My) La UL a . Pa | al (eat aged #1 Vee erpe Le LLL > Vy Le os yy Home Improvement 269.7 Coal 168.1 Insurance 60.1 industrial
Slide 9: Return on Shareholders' Funds
Return on Shareholders’ Funds (rolling 12 months to 31 December*) % 35 5 30 25 20 15 10 y Wy, iy . — | _ - 7 ye - a _ ies 7 . 7 J “yy Ly i 30. 2 L Ve ae Wik ye 77 yy ee . a # 2003 AGAAP* 2004 wa, A-IFRS 2002 woes Target *Based on average monthly equity balances (previously based on average opening a
Slide 10: Cash Flow & Dividend (Half Year to Dec)
Cash Flow & Dividend (Half Year to 31 Dec) © (earnings, operating cash flow and dividend per share) cents per share 140 ; 120 100 80 60 40 20 0 2002 2003* 2004 2005 2006 @ Operating Cashflow* ¥ Dividend # EPS and Cash flow exclude sale of Landmark * Based on WANOS including employee reserved shares
Slide 11: Capital Management
Capital Management * Net Debt / Equity of 84.2% at 31 December 2006 * Cash Interest Cover Ratio (rolling 12 months) of 13.9 times * Capital expenditure of $317.1 million, was lower than budget due to timing delays * Dividend Investment Plan reinstated — 100% underwritten for interim dividend a
Slide 12: Home Improvement
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Slide 13: Home Improvement Performance Summary
Home Improvement Performance Summary Half Year ended 31 December ($m) Revenue EBIT “ROC (R12 %). Trading Revenue* ($m) 2,198.6 11.3 | Trading EBIT / Trading Revenue (%) * Excludes property and other non-trading items 13
Slide 14: Home Improvement Highlights
Home Improvement Highlights *« 14.1% cash sales growth — store on store cash sales growth of 10.3% * 3.0% lift in trade sales * 5 warehouse and 3 small format store openings — 17 store upgrades * Good traction on key merchandising and operational strategies * Solid business effectiveness and efficie
Slide 15: Home Improvement Outlook
Home Improvement Outlook * Continued cash sales growth — Improved retail conditions, some volatility concerns remain * Steadily improving trade performance *« Ongoing network development — 12-14 warehouse store openings likely for 2006/07 * Focus on progressing strategic agenda 4 18
Slide 16: Wesfarmers Coal
i _ iy, i ay - — y _ ey CCU a 0 7 iy Lo _ DL yo - oo . 7 LC Ly Y . yy) yy Zo yy Lo Le 7 Li a Ly 7 | Le We yy _ | Ly | | Stewart Butel : Managing Director, Wesfarmers. Coal Westarmers
Slide 17: Coal Performance Summary
Coal Performance Summary Half Year ended 31 December ($m) Revenue EBITDA Depreciation & Amortisation* EBIT* R oc (R12. %) # Coal Production (‘000 tonnes) * Includes Stanwell rebate amortisation of $68.2m in 2006 and $20m in 2005 # Based on preliminary allocation of overheads * Curragh and Premier 7
Slide 18: Coal Highlights
Coal Highlights + Increased metallurgical sales * Curragh North Materials Handling Project commissioning « Premier Char Demonstration Plant construction completed * Bengalla Modified Development Consent approval 18
Slide 19: Coal Outlook
Coal Outlook ¢ Infrastructure constraints continue in 2006/07 — Blackwater to Bluff rail track duplication (July 2007) — Newcastle Coai Chain *« Curragh North Development completion « Premier Char Demonstration Plant operation + Input cost and availability pressures to continue * Curragh metallurgic
Slide 20: Insurance
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Slide 21: Insurance Performance Summary
Insurance Performance Summary Half Year ended 31 December ($m) Gross Written Premium Net Earned Premium Insurance Trading Result EBIT pre Amortisation and Non-Trading Items 62.7 61.8 1.5 EBIT 60.1 63.5 (5.4) * Includes 2 months of OAMPS’ results * Amortisation of intangibles in 2006 of $2.6m, NTI ga
Slide 22: Insurance Highlights
Insurance Highlights « Half year result was below expectations * Deterioration in underwriting results for Lumley in Aust. & NZ * WEI reported an excellent result « Acquisition of OAMPS Ltd effective 1 November 2006 — Integration of corporate functions — Merger of AIIL with Lumley (Aust.) — Broking
Slide 23: Insurance Outlook
Insurance Outlook *« Continued pressure on margin * Achieve modest synergies from OAMPS integration * Complete Crombie Lockwood acquisition by end of February *« Continue to evaluate growth opportunities Op 23
Slide 24: Industrial & Safety
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Slide 25: Industrial & Safety Performance Summary
Industrial & Safety Performance Summary Half Year ended 31 December ($m) Revenue EBITDA Depreciation & Amortisation of PPE EBIT 50.9 EBIT / Revenue (%) ROC (R12 %) Safety (R12 LT
Slide 26: Industrial & Safety Highlights
Industrial & Safety Highlights * Operating Revenue flat at $580m (allowing for translation differences) — Overall growth in Blackwoods, Protector Alsafe offset by decline in NZ based businesses * Earnings increased by 10.7% to $50.9m — Reflects restructuring and business improvement initiatives * R1
Slide 27: Industrial & Safety Outlook
Industrial & Safety Outlook * Ongoing mixed conditions — Growth in Australia, while New Zealand performance is expected to remain subdued * Bullivants contribution to 2°¢ half results * Ongoing strong focus on business improvement initiatives « Review acquisition opportunities to complement organic
Slide 28: Chemicals & Fertilisers
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Slide 29: Chemicals & Fertilisers Performance Summary
Chemicals & Fertilisers Performance Summary Half Year ended 31 December ($m) Revenue Chemicals Fertilisers EBITDA 46.1 48.5 (5.0) Depreciation & Amortisation of PPE (18.3) (21.8) 16.1 EBIT 27.8 26.7 4.0 Sales Volume (‘000t Chemicals ROC (R12 %) Safety (R12 LTIFR 2g
Slide 30: Chemicals & Fertilisers Highlights
Chemicals & Fertilisers Highlights Ammonia plant shutdown completed within budget — Plant performance uplift due to firm gas transmission capacity « Significantly improved contribution from QNP — Steady plant performance (maintenance shutdown in pcp) — Lower than budgeted imports * Incremental impro
Slide 31: Chemicals & Fertilisers Outlook
Chemicals & Fertilisers Outlook *« Demand for mining chemicals remains strong * Commission Kwinana AN2 in first half FY08 ¢ Seasonal break critical for fertiliser sales — Lower sales during back-loading period — Pasture and cropping products affected — Purchases likely to be delayed until needed — C
Slide 32: Energy
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Slide 33: Energy Performance Summary
Energy Performance Summary Half Year ended 31 December ($m) Revenue EBITDA 50.6 37.4 35.2 Depreciation & Amortisation of PPE (12.5) (12.0) (4.8) ‘Safety (R12 LTIFR) _ * Based on preliminary allocation of overheads 33
Slide 34: Energy Highlights
Energy Highlights * Growth of newly formed division * Entered agreement to acquire Linde Gas Pty Ltd — renamed Coregas following completion 1 February 2007 * Project works commenced on new $138 million LNG project at Kwinana * Construction of five new remote community power stations underway * WLPG
Slide 35: Energy Outlook
Energy Outlook *« Energy businesses performing well — Half year earnings above last year — Outlook dependent on Saudi CP, LPG content and LPG export volumes « Positive part year contribution from Coregas « Implement/develop current growth opportunities — $138 million LNG project — Remote Power Stati
Slide 36: Other Businesses
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Slide 37: Share of net profit of associates
we Cy We y 7 iy Le Share of net profit of associates included in EBIT ding — 4 08 05 sae La y ee — & 06 Half Year ended 31 December ($m) no . a . Associates: ARG 0) - 9.4 Gresham Private Equity - Fund 1 50 0.0 9.4 Gresham Private Equity - Fund 2 67 (1.5) (0.9) Gresham Partners 50 2.2 1.3 Wespine 50
Slide 38: Breakdown of reported result
7 LD Lo i y, oo | Le a _. Breakdown of reported result Wy 1 7 Fe Contribution to reported profit before tax a 2006; A , Half Year ended 31 December ($m) | Divisional EBIT Profit from associates 26.4 275 Other EBIT 6.9 9.0 Corporate overheads (35.7) Consolidation n adjustment 0.5 ge 7, yl a hLhLhLULD
Slide 39: Current investment A$28.1m
* Current investment A$28.1m « Exits expected over next several years * Wesfarmers’ commitment A$150m; capital invested A$63.9m * Witchery acquired in July 2006 Af 39
Slide 40: Outlook
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Slide 41: Outlook
Outlook * Positive outlook due to — Improvements in operating performance across the group — Investment in growth — OAMPS, $700m — Coregas, $500m — Capital expenditure, ~$800m — Crombie Lockwood * But — Cost pressures and focus — Commodity price movements Af 4
Slide 42: Questions
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