Slide 1: ASX cover letter: Half Year Results Presentation and Interim Dividend
WOOLWORTHS LIMITED A.B.N 88 000 014 675 28 February 2005 The Manager, Companies Australian Stock Exchange Limited Company Announcements Office Exchange Centre Level 6 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam, Re: Woolworths Limited Half Year Results Presentation and Interim Dividend Announcem
Slide 2: Results Presentation, Half Year ended 2 January 2005
WooLworTHs LIMITED Results Presentation Half Year ended 2 January 2005 Roger Corbett Chief Executive Officer Tom Pockett Chief Financial Officer 28 February 2005 4 Woolworths Limited
Slide 3: Half year highlights
ei i Ne il * Total sales for this half compared with last year up 9.2% to $16,441m on a 28 week comparable basis. * Earnings before Interest and Taxation (EBIT) $691.1m. * EBIT up 12.5% on a 28 week comparable basis. * Net operating profit after tax and servicing income notes $440.9m. ¢ Earnings per
Slide 4: Net profit after tax
i | | willl 450 5 420 5 390 | 360 - 330 5 300 | 270 5 240 + 210 | 180 150 $ Million HY 2001 HY 2002 HY 2003 HY 2004. HY2005 HY 2005 Statutory Statutory Proforma (28 weeks) (27 weeks) (28 weeks) 4) Represents a 27 week half and includes ALH results for the 2 months tc 2 January 2005. ‘2 Excludes ALH
Slide 5: Earnings per share
ay ) OTT fe) {2} 44.18 45.05 Cents HY 2001 HY 2002 HY 2003 HY 2004 HY2005 HY 2005 Statutory Statutory Proforma {28 weeks) (27 weeks) {28 weeks) 4) Represents a 27 week half and includes ALH results for the 2 months tc 2 January 2005. ‘2 Excludes ALH and adjusted to reflect a comparable 28 week half.
Slide 6: Group sales
i i 15.0 15.0 - 14.1 12.0 4 11.2 $ billions © oOo | bd So ! 3.0 HY 2001 HY2002 HY2003 HY2004 HY2005 HY 2005 Statutory Statutory Proforma Increase on (28 weeks) {27 weeks) (28 weeks) previous year +9.2% + 13.4% + 10.9% + 64% + 7.0% + 9.2% 4) Represents a 27 week half and includes ALH sales for the 2
Slide 7: Sales by division
| HY04 HY05 HY05 $ Millions Statutory Statutory Proforma™ Increase (28 weeks) (27 weeks) (28 weeks) (28 weeks) Supermarkets and Liquor 11,860 42,090” 12,447 4.9% Petrol 4,069 1,627 1,683 57.4% Total Supermarkets 12,929 13,717 14,130 9.3% BIG W General Merchandise® 1,559 1,670 1,670 7.1% Consumer Ele
Slide 8: Cost of doing business to sales
‘cop i 23% 5 i Bi a 22.36% 22% + 21.48% 21% 5 Percentage 20% + 20.85% th FEE CCL UCSC UC eu US Lou CCU uL cucu SLAG UM OCU L nGU A uCou enc Ci Down 347 pts in 5 half years | Down 92 pts \ in HYO5 ra (1) 20.24% @) 19.93% 19% HY 2001 HY 2002 HY 2003 HY 2004 HY 2005 HY 2005 3 Reduction ) $229m + $290m
Slide 9: Gross profit margin
| l I 27% 5 26.01% 26% | 25.91% 25.36% Down 286 pts in § half years 25% - 24.94% 24.44% Percentage 24% || 23% HY 2001 HY 2002 HY 2003 HY 2004 HY 2005 HY 2005 Statutory Statutory Proforma 8) (28 weeks) {27 weeks) (28 weeks) Reductions $220m + $264m + $371m + $464m + $635m = 1) Represents a 27 week ha
Slide 10: Group EBIT
2) 700.0 - 691.1 690.7 613.8 £ 500.0 5 2 399.6 € * 300.0 + 100.0 1 HY 2001 HY 2002 HY2003 HY 2004 HY 2005 HY 2005 Statutory Statutory Proforma (28 weeks) (27 weeks) (28 weeks) Increase + 11.5% + 18.9% + 13.5% + 13.7% +12.6% + 12.5% 4) Represents a 27 week half and includes ALH results for the 2 mont
Slide 11: EBIT to sales margin
; 7 Mm i MI ie 4.30% - 4.29%" ai iy 410% - 4.08% 3.90% | 3.81% 3.73% 3.70% 5 Percentage 3.55% 3.50% 5 3.30% + HY 2001 HY 2002 HY 2003 HY 2004 HY 2005 HY 2005 Statutory Statutory Proforma (28 weeks) (27 weeks) (28 weeks) “) Represents a 27 week half and includes ALH results for the 2 months to 2 Janu
Slide 12: EBIT by division
| | int i it 2004 EBIT ($million) Statutory Statutory Change"? {28 weeks) (27 weeks) (28 weeks} Before After Before After f _ Before After Goodwill Goodwill Goodwill Goodwil sdwill Goodwill Goodwill Food and Liquor 527.5 514.8 564.0 2 551.07 10.3% Petrol 10.5 10.5 22.2 22.2 118.1% Supermarkets Divis
Slide 13: Supermarkets division results
“) Excluding ALH and adjusted to reflect a comparable 28 week half. 2004 Statutory (28 weeks) Sales ($m) 12,929.0 Gross margin (%) 24.16 Cost of Doing Business (%) 20.10 EBIT to sales (%) 4.06 EBIT (after goodwill) ($ million) 625.3 EBIT (before goodwill) ($ million) 538.0 Funds Employed ($ million)
Slide 14: Food and Liquor comparable sales and costs
Food and Liquor comparable store sales grew 2.9%. Q1 was 2.8% strengthening in Q2 to 3.0%. Second quarter inflation declined about 0.5% on the first quarter to 1.0%. The market remains highly competitive, however with the passing of the anniversary of a competition fuel offer, we have seen a better
Slide 15: Liquor operations
@ All liquor operations (Dan Murphy's, BWS, First Estate and attached liquor) recorded strong growth in revenue and earnings in a competitive market + Dan Murphy's continued to expand with 9 stores opened in the half bringing total number of Dan Murphy stores to 35. In addition to this, we opened 5
Slide 16: Petrol division
Our petrol division, strengthened by our alliance with Caltex, continues to be a good supplemental offer with petrol sites conveniently located near our Supermarkets Petrol sales increased by 57.4% for the half. Strong volume growth in comparable sites continues to fractionalise costs. EBIT signific
Slide 17: BIG W results
| | BI 2004 2005 Statutory” — Statutory’” Change (27 weeks) (27 weeks) Sales ($ million) 1,559.0 1,669.9 +7.1% Gross margin (%) 29.39 29.34 -0.05%pts Cost of Doing Business (%) 23.37 23.31 -0.06%pts EBIT to sales (%) 6.02 6.03 +0.01%pts EBIT ($ million) 93.8 100.6 +7.2% Funds Employed ($ million) 27
Slide 18: BIG W commentary
Everyday Low Price (EDLP) offering built on ongoing cost reductions is a key driver of continuing growth in sales and earnings * Comparable store sales increased 2.4% despite the existence of weaker market trading conditions in November and through into December. + January and February comparable sa
Slide 19: Consumer Electronics results
2004 2005 2005 Statutory Statutory Proforma’ Change (28 weeks) (27 weeks) (28 weeks) (28 weeks) Sales ($ million) 487.0 545.8 565.1 +16.0% Gross margin (%) 31.46 29.67 29.59 -1.87%pts Cost of Doing Business (%) 26.35 24.28 24.30 = -2.05%pts EBIT to sales (%) 5.11 5.39 5.29 +0.18%pts EBIT (after good
Slide 20: Consumer Electronics commentary
i i 3 li Attractive product ranges at competitive prices drive double digit revenue and earnings growth. | Comparable store sales up 14% for the half year. Computers, Digital Cameras and Home Entertainment categories continue to achieve strong sales growth. Competitive pricing enabled by ongoing cos
Slide 21: ALH acquisition
i it . Acquisition Price $1.4bn (including ALH debt) . Forecast revenue FY05 $1bn AUSTRALIAN LEISURE . Unique asset which gives us & HOSPITALITY GROUP an additional 4% of the retail liquor market ° EPS and Value accretive ay Source ALH Target's Statement 12 August 2004 Woolworths Limited
Slide 22: ALH opportunities
ii ° ° ° Utilise expertise of Mathieson Group (hotels) and Woolworths (retail liquor) to improve on current offer: - Growth rates of MGW gaming significantly higher than for ALH Queensland pubs - Total on premise revenues on an annualised basis will exceed $750 million. (ALH/MGW/BMG). - Growth rates
Slide 23: Gaming growth and synergies
ii . Expect gaming growth rates to remain strong particularly in QLD — Smoking bans will have a one-off impact which was built into our acquisition economics Anticipated synergies will be probably bettered. We expect that the integration of ALH into WOW will take approximately 12 months, with acquis
Slide 24: Combined Bruandwo joint venture venues
uo ! NM fl NA J ( Woolworths l ae mul Loe 555 Bottleshops 116 Bottleshops 266 Boitleshops 14 Bottleshops 951 Bottleshops 32 Hotels 135 Hotels 36 Hotels & Clubs 203 Hotels & Clubs 1,197 EGM 5,981 EGM 2,206 EGM 9,384 EGM Bruandwo joint venture operating 396 bottleshops (in addition to Woolworths’ 555
Slide 25: Hotels and bottleshops by state
in Wi lac | en tint inn) TE EE Bottleshops 307 Hotels 86 Bottleshops 68 Gaming Machines 3,300 Hotels 10 Gaming Machines - Bottteshops 249 Hoteis B Gaming Machines 354 Bottieshops 93 » Bottleshops 223 Hotels 14 Hotets 80 Gaming Machines, 430 Gaming Machines 5,253 Tasmania... me Bottteshops 4 Hotets :
Slide 26: Hotels results
I Hotels 2005 2004 2005 Change (2months) (6 months) (6 months) (6 months) Sales ($ million) 97.5 261.5 274.8 +5.1% Gross margin (%) 82.33 82.08 82.29 +0.21%pts Cost of Doing Business (%) 67.05 68.43 68.07 = -0.36%pts EBIT to sales (%) 15.28 13.65 14.22 +0.57%pts EBIT (after goodwill) ($ million) 14.
Slide 27: Payout to shareholders over 5 years
s Total $3,566m Share buy-backs and 1000 - other capital management will resume following the 800 - integration of ALH into WOW e 3 600 + E 400 4 wn 200 - 0-4 FY 2001 FY2002 FY2003 FY2004 HY 2005 PROFIT GROWTH, COUPLED WITH BALANCE SHEET MANAGEMENT, DELIVERED $3,566m PAYOUT TO SHAREHOLDERS OVER 5% Y
Slide 28: Dividends per share
DIVE ni! 24 24 - 20 + 16 5 Cents HY 2001 HY 2002 HY 2003 HY 2004 HY2005 oolworths Limited
Slide 29: Balance sheet
Inventory Trade Payables Net investment in inventory Receivables Other creditors Working Capital Fixed assets and investments Intangibles Total Funds Employed Net Tax Balances Net Assets Employed Borrowings current Borrowings non current Cash and Deposits Net Debt Net Assets Shareholders Equity Mino
Slide 30: Fair value of net assets of Bruandwo
Summary of the fair value of net assets of Bruandwo, which includes Australian Leisure & Hospitality Group Pty Limited and MGW Hotels Pty Limited, at the date of acquisition: $m Current assets Cash 64.1 Receivables 18.3 Inventories 63.6 Total current assets 154.2 Non-current assets Property, plant a
Slide 31: Balance sheet strength and capital management
‘o || @ a age i i iio OOHt1WW.!wWtTHt’§!#! 0 0OwXwtwvOOiiTiiniiititiaiitiiciictiitin + Maintain strength of balance sheet: — Funding program of approximately $1.8bn comprising acquisition cost of ALH ($1.25 billion) and debt within ALH/MGW/BMG ($550 million) well underway. — Preserve our Balance She
Slide 32: Cash flow
EBITDA 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 the purchase & refit of Franklins stores Payments for other acquisitions Payments for normal capex Pro
Slide 33: Days inventory
i 42.9 Increase | 38.2 of 0.9 days ) Days 36.3 35.4 HY 2001 HY 2002 HY 2003 HY 2004 HY 2005 Proforma (28 weeks) 8.3 days reduction over past 5 half years equals $527m cash flow benefit oolworths Limited
Slide 34: Return on shareholders equity
uy Y i 40% 5 29.60% 30% - 26.60% . @) 24.41% 25.20% (2) 20.00% 21.50% 20% - Percentage 10% - 0 % T T T HY 2001 HY 2002 HY 2003 HY 2004 HY 2005 HY 2005 Statutory Statutory Proforma {28 weeks) (27 weeks) (28 weeks) ‘) Based on closing Shareholders funds. 2) Decline in ROE in HY03 due to the effect of
Slide 35: Return on funds employed
i 30% + 24.59% 24.43% 24% | n0.10% 240% 21.40% . 'O > ° {2) G 18% 4 17.00% < 8 5 12% - a 6% + 0% T T T T T T HY 2001 HY 2002 HY2003 HY 2004 HY2005 HY 2005 Statutory Statutory Proforma (28 weeks) (27 weeks) (28 weeks) ‘) This measures the pre-tax retum on funds employed regardiess of how they are fin
Slide 36: Long term objectives
ii I ‘os | eC Ne NAAM AAMMA AMMAN HY01 HY02 HY03 HY04 Sales will grow in the upper single digits supported by bolt on acquisitions 9.2% 13.4% 10.9% 6.4% EBIT will outperform sales growth driven by cost savings 11.5% 18.9% 13.5% 13.7% EPS will outperform EBIT growth assisted by capital management ' 2
Slide 37: Focus areas
Focus Areas Continuing Growth — Upper single digit sales growth Improved customer offer Lower prices Bolt-on acquisitions Cost Reductions Project Refresh | conti (The Enabler) roject Refresh | continues Project Refresh II delivers Double ; Digit EPS Capital & Balance Efficient Balance Sheet Growth S
Slide 38: Continuing opportunity to grow market share
Continuing opportunity to grow market share Market share of Food, Liquor & Grocery (FLG) remains below 30% and still low by world standards. Independent grocers and speciality food stores hold just under 50%. Defined plans to continue space roll out Adding 15-25 new supermarkets each year and expand
Slide 39: Opportunities for ongoing growth
yu MM Inn sli | i aan Considerable opportunities for ongoing growth in both revenues and earnings Premium Label . Currently under development. : At least equal to or better quality than existing category leader but at a lower price. ° Launch during 2005 calendar year. New range and formats . New for
Slide 40: Project Refresh overview
it ‘Von @ Ah Overview + “Refresh” level 1” initiatives since 2000 underpin a reduction in CODB of 4.03% of sales, giving cumulative savings of $3.2 billion to 2 January 2005 (based on our 1999 cost structure). * Targeting further “Refresh” savings to underpin a cost reduction of 20bpts per annum ove
Slide 41: Refresh Level I savings
ni ‘go (o HTT Level | - Reorganisation / line items 99 00 01 O02 O03 04 05 O06 O7 O08 O9 Woolworths Limited
Slide 42: Refresh savings by year
a oo am A AM es. E oo Se Wn i- | é WU E00) 46 WM ll i. FY00 FY01 FY02 FY03 FY04 FYOS. FY06 FY07 FY08 Woolworths Limited
Slide 43: Supply chain and IT rollout progress
ANAM AON AN « Continued solid progress and on target + Have now passed the higher risk stage of our IT rollout — AutoStockR fully implemented in all stores across Australia — Stocksmart (DC forecast based replenishment) is fully operational in our DC’s resulting in reduced stock levels and improved
Slide 44: Warehouse and freight systems
* New Warehouse Management System successfully implemented into Perth RDC with higher than forecast operational efficiencies. CE CELA * Now over 100 vendors on Primary Freight with significant improvement in in- bound service levels. « Anew Secondary Freight system being implemented which will ensur
Slide 45: Post Christmas trading
| ll T ! Post Christmas: * Food and Liquor sales trends have continued along similar lines to those reported during the second quarter with comparable growth continuing to strengthen. * BIG W sales have improved and for January and February comparable store sales are in excess of 3.5%. * Consumer El
Slide 46: Outlook and guidance
We anticipate: Sales * Full year sales growth in low double digits after taking into account Bruandwo. Earnings + NPAT (including Bruandwo) will be in 12-15% range. + EPS will be impacted by shares issued under the Woolworths Executive Option Plan. After goodwill, EPS will be in the low double digit
Slide 47: Appendices
Appendices
Slide 48: Key financial ratios
Fixed charges cover Days inventory (to cost of sales) Days creditors (to sales) Return on Funds Employed (pre tax) ROFE Return on Total Equity Return to Noteholders (pre tax) Return on Shareholders Equity (post tax) Net working capital Xx Days Days % % % % $M HY04 HY05 Statutory Proforma (28 weeks)
Slide 49: Capital expenditure forecast
NI 0 I NO ITI cwwCw_—_ inn | / FOS FOG Fo? Fos Foo Forecast Forecast Forecast Forecast Forecast New Stores/Acquisitions (excludes ALHIMGW) 164 451 442 140 145 Store Refurbs/Extensions 291 245 230 235 240 Stay in Business 85 75 78 81 83 IT - Other 86 72 85 100 105 IT - Supply Chain 36 55 17 15 40 Sup
Slide 50: Gross profit margin reductions
| i ANA | aT digi aut 26% + u 25.46% 25.35% Z Down 223 pts 25% 4 in 5 half years. % (2} 24.12% 24% 5 23% T T T T T HY 2001 HY 2002 HY 2003 HY 2004 HY 2005 HY 2005 Statutory Statutory Proforma (28 weeks) (27 weeks) {28 weeks) Reductions” $235m + $283m + $344m + §$399m + $554m = () Represents a 27 wee
Slide 51: Cost of doing business reductions
My ; 23% 4 22y, | 21.91% f 21.62% \ pts in HYOS 21.31% , %*QW1U% 20.82% o) 20.22% , (2) 20% 4 19.92% 19% T T T T T HY 2001 HY 2002 HY 2003 HY 2004 HY 2005 HY2005 Statutory Statutory Proforma (28 weeks} (27 weeks) (28 weeks) Reductions” $245m + $317m + $393m + $492m + $673 m= 4) Represents a 27 week