Slide 1: Company Results Full Year ended 25 June 2006
Company Results Full Year ended 25 June 2006 Roger Corbett Chief Executive Officer Tom Pockett Finance Director Michael Luscombe Chief Operating Officer 21 August 2006
Slide 2: Overview Financial Year 2006
OVERVIEW FINANCIAL YEAR 2006 • Overall an excellent result with sales up 20.4% to $37.7b and net profit after tax up 24.3% to $1,014.6m which is at the top end of our earnings guidance. A landmark result with NPAT exceeding $1 billion for the first time. • It reflects solid underlying operating perf
Slide 3: Sales
SALES 2006 SALES UP 20.4% 40 37.7 35 31.4 30 27.9 20.4% 26.3 24.5 $ billions 25 20.9 19.0 20 17.5 15 10 5 0 Year 1999 2000 2001 2002 2003 2004 2005 2006 AIFRS AIFRS Increase +9.5% +8.6% +10.0% +17.0% (1) +7.6% + 6.1% +12.2% +20.4% 52 week basis +14.9% +9.6% SINCE 1998 SALES HAVE GROWN IN EXCESS OF 1
Slide 4: EBIT
EBIT 2006 EBIT FROM CONTINUING OPERATIONS WAS UP 32.3% WITH EBIT GROWING FASTER THAN SALES 1800 1,722 1600 32.3% 1400 1,302 $ millions 1200 1,065 1000 (1) 946 833 800 707 622 600 539 400 200 0 Year 1999 2000 2001 2002 2003 2004 2005 2006 AIFRS AIFRS Increase +4.5% +15.2% +13.7% + 17.8% + 13.6% + 12.
Slide 5: EBIT Margin
EBIT MARGIN EBIT MARGIN EXCLUDING HOTELS FOR 2006 IS 4.26%, AN INCREASE OF 22BPS UNDERPINNED BY SUPERMARKETS 4.56% 4.60% 4.40% 4.16% 4.20% Percentage 4.00% 3.81% 3.80% 3.59% 3.60% 3.38% 3.40% 3.40% 3.27% 3.20% 3.08% 3.00% Year 1999 2000 2001 2002 2003 2004 2005 2006 AIFRS AIFRS EBIT MARGIN HAS INCRE
Slide 6: Profit After Tax
PROFIT AFTER TAX PROFIT AFTER TAX UP 24% - TOP END OF EARNINGS GUIDANCE 1,100 1,014.6 1,000 900 816.2 +24.3% 800 687.8 700 +18.7% 609.5 $ Million 600 523.2 500 428.0 400 257.0 295.5 300 200 100 0 Year 1999 2000 2001 2002 2003 2004 2005 2006 AIFRS AIFRS Increase -8.0% + 15.0% + 44.8% +22.2% + 16.5% +
Slide 7: Earnings Per Share
(1) EARNINGS PER SHARE 100 90.9 90 79.2 80 +14.8% 70.1 70 60.7 Cents 60 52.5 50 41.0 40 32.9 27.7 30 20 10 Year 1999 2000 2001 2002 2003 2004 2005 2006 AIFRS AIFRS Increase + 2.6% + 18.7% + 24.6% + 28.0% + 15.6% + 15.5% + 13.0% + 14.8% (1) For the period 1999 to 2004 EPS shown is before goodwill amo
Slide 8: CODB / Sales
CODB / SALES (EXCLUDING WHOLESALE) 25% 24.38% COSTS = THE KEY ENABLER 24% 23.61% 23% 22.68% Percentage 22.32% 22% 21.66% 21.12% 21% 20.76% 20.48% 20% 19% Year 1999 2000 2001 2002 2003 2004 2005 2006 AIFRS AIFRS Reductions Base year + $141m + $343m + $486m + $707m + $906m + $1,130m + $1,466m = $5.2b
Slide 9: Gross Profit Margin
GROSS PROFIT MARGIN (EXCLUDING WHOLESALE) 28% 27.56% • COST REDUCTIONS REINVESTED IN PRICE – 75% • POLICY HAS BEEN AND CONTINUES TO BE TO REDUCE PRICES 26.99% • IMPROVED BUYING AND SHRINKAGE 27% • STRUCTURED CHANGE – DIRECT STORE DELIVERY REDUCTION 26.16% Percentage 26% 25.80% 25.29% 24.95% 25.06% 2
Slide 10: Days Stock on Hand
DAYS STOCK ON HAND INVENTORY REDUCED 1.3 DAYS AVERAGE INVENTORY DECLINED 1.7 DAYS 46 44.7 (EXCLUDING FAL AND TAVERNER) 44 42 Average 40.8 40.6 inventory 40 reduction of 1 day 38 37.3 Reduction Days of 0.6 days 36 34.1 34 32.1 32 30.4 29.8 30 28 1999 2000 2001 2002 2003 2004 2005 2006 AIFRS AIFRS 14.
Slide 11: Sales Summary
SALES SUMMARY $ Millions FY05 FY06 Increase (1) (3) Supermarkets and Liquor 23,570 25,458 8.0% New Zealand Supermarkets - 2,605 - Petrol 3,308 4,390 32.7% Total Supermarkets 26,878 32,453 20.7% BIG W 2,909 3,119 7.2% Consumer Electronics 1,007 1,167 15.9% Total General Merchandise 3,916 4,286 9.4% (
Slide 12: Total Supermarkets
TOTAL SUPERMARKETS (INCLUDING LIQUOR, PETROL AND NEW ZEALAND) EXCELLENT RESULT IN A YEAR OF SIGNIFICANT CHANGE FY05 FY05 FY06 (1) Change (AGAAP) (AIFRS) (AIFRS) (AIFRS) Sales ($m) 26,878.0 26,878.0 32,453.4 +20.8% Gross margin (%) 23.30 23.30 22.93 -37.0%pts Cost of Doing Business (%) 19.15 19.11 18
Slide 13: Australian Supermarkets
AUSTRALIAN SUPERMARKETS (INCLUDING LIQUOR AND PETROL) • Australian Supermarket sales grew 11.0%. • Food and Liquor comparable store sales grew 3.7% during the year (FY05: 3.1%). • The level of inflation over the year just over 2%. • Costs reduced by 0.59% pts, with significant costs approximately $8
Slide 14: Liquor
LIQUOR ALL OUR EXISTING LIQUOR OPERATIONS (DAN MURPHY’S, BWS AND ATTACHED LIQUOR) RECORDED STRONG GROWTH IN SALES AND EARNINGS IN A COMPETITIVE MARKET • Comparable store sales in all our liquor businesses were strong. • Dan Murphy‘s continued to expand with 15 stores opened during the year bringing
Slide 15: Petrol
PETROL 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 of $4.4b, up 32.7% on last year. • EBIT increased 46.7% to $53.1 million on last year mainly due to higher volum
Slide 16: New Zealand Supermarkets
NEW ZEALAND SUPERMARKETS A SOLID RESULT WITH SYNERGIES TO FLOW IN FUTURE YEARS FY06(1) FY06 AIFRS AIFRS $AUD $NZD Sales 2,604.9 2,929.6 Gross Margin (%) 22.01 22.01 Cost of doing business (%) 17.83 17.83 EBIT to sales (%) 4.18 4.18 Trading EBIT ($ million) 117.4 132.0 Less intercompany charges ($ mi
Slide 17: New Zealand Supermarkets
NEW ZEALAND SUPERMARKETS A SOLID RESULT WITH SYNERGIES TO FLOW IN FUTURE YEARS • Comparable store sales increased 3.5% in Q3 and 3.8% in Q4. • Food inflation was between 1.5% and 2.0%. • 2 new supermarkets opened. • Trading EBIT was NZ$132m for the eight months since acquisition. • Significant oppor
Slide 18: BIG W
BIG W FY05 FY05 FY06 Change (AGAAP) (AIFRS) (AIFRS) (AIFRS) Sales ($ million) 2,908.7 2,908.7 3,119.1 +7.2% Gross margin (%) 29.79 29.79 29.95 +16%pts Cost of Doing Business (%) 25.73 25.72 26.00 +28%pts EBIT to sales (%) 4.06 4.07 3.95 -12%pts EBIT ($ million) 118.0 118.3 123.1 4.1% Funds Employed
Slide 19: BIG W
BIG W BIG W’S STRATEGY CONTINUES TO BE UNDERPINNED BY BIG W’S EVERYDAY LOW PRICE (EDLP) OFFERING • Sales for the year of $3.1b, an increase of 7.2% in a highly competitive market with a tightening in discretionary spending. • Comparable store sales growth was 1.4% for the year. • BIG W’s performance
Slide 20: Consumer Electronics
CONSUMER ELECTRONICS FY05 FY05 FY06 Change (AGAAP) (AIFRS) (AIFRS) (AIFRS) Sales ($ million) 1,007.5 1,007.5 1,167.1 +15.9% Gross margin (%) 30.38 30.38 29.39 -99%pts Cost of Doing Business (%) 25.24 24.97 23.91 -106%pts EBIT to sales (%) 5.14 5.41 5.48 +7%pts EBIT 51.8 54.5 64.0 +17.4% Funds Employ
Slide 21: Consumer Electronics
CONSUMER ELECTRONICS AN ALL-ROUND EXCELLENT RESULT ATTRACTIVE PRODUCT RANGES AT COMPETITIVE PRICES • Business progressing extremely well which is reflected by a 15.9% sales increase and a 17.4% increase in EBIT. • Double digit comparable (like for like) sales growth for the year of 10.6%(1). • Stron
Slide 22: Hotels
HOTELS A NEW GROWTH BUSINESS (1) 2005 2006 Change (AIFRS) (AIFRS) (AIFRS) Sales ($ million) 416 850 +104.3% Gross margin (%) 82.69 82.56 -13%pts Cost of Doing Business (%) 69.99 64.78 -521%pts EBIT to sales (%) 12.70 17.78 +508%pts EBIT ($ million) 52.8 151.1 186.2% (1) Represents ALH Hotel results
Slide 23: Hotels
HOTELS A NEW GROWTH BUSINESS • Hotel sales were $850m reflecting good growth in our existing business plus the inclusion of BMG and Taverner. • Comparable sales were 3.4% underpinned by comparable gaming growth of 3.1%. • Buying margins have shown signs of improvement and will continue to improve as
Slide 24: Dividends Per Share
DIVIDENDS PER SHARE FINAL DIVIDEND 2006: 31c 59 INTERIM DIVIDEND 2006: 28c 55 51 +15.7% 45 45 +13.3% 39 Cents 35 33 27 25 23 18 15 5 1999 2000 2001 2002 2003 2004 2005 2006 DIVIDEND PAY-OUT RATIO OF 68.2% MARGINALLY UP ON PREVIOUS YEARS 24 Woolworths Limited
Slide 25: Balance Sheet
BALANCE SHEET FY05 FY05 FY06 (AGAAP) (AIFRS) (AIFRS) $million $million $million Inventory up $346.5 million but days inventory down 0.6 days to 29.8 days. Inventory 1,977.3 1,969.6 2,316.1 Trade Payables (2,335.6) (2,339.8) (2,778.5) Increase in creditors over last year due to acquisition of FAL and
Slide 26: Cash Flow
CASH FLOW FY05 FY06 (AIFRS) (AIFRS) $m $m EBITDA 1,718.1 2,244.4 +30% Net interest paid (161.5) (253.2) Taxation paid (398.3) (475.3) 1,158.3 1,515.9 (1) Working capital and other items 56.1 189.2 Total cash provided by operating activities 1,214.4 1,705.1 +40% Payments for the purchase of businesse
Slide 27: Capital Management
CAPITAL MANAGEMENT • Woolworths currently sets its capital structure with the objectives of minimising its weighted average cost of capital whilst retaining a flexibility to pursue growth and capital management opportunities. • During a period of significant acquisition activity Woolworths made the
Slide 28: Capital Management
CAPITAL MANAGEMENT • This years final dividend will be the last dividend covered under the DRP underwriting agreement. • During the year Woolworths also issued 81.6 million shares in respect of the acquisition of the Foodland New Zealand businesses and 20 ex-FAL Australian stores and 2 development s
Slide 29: Shareholder Payouts
SHAREHOLDER PAYOUTS Franking credits given to Total $4,753m shareholders at applicable tax rates total $2,631m Share buy-backs and other capital management will 1000 resume once the integration of 941 Progressive is further Buy-Back progressed. 791 534 800 Buy-Back 693 548 633 604 Dividend $ million
Slide 30: Return on Funds Employed
RETURN ON FUNDS EMPLOYED(1) 60% 49.3% 50% 42.8% 42.6% 40% 38.1% 35.0% Percentage 28.6% 30% 24.7% 20.5% 20% 10% 0% 1999 2000 2001 2002 2003 2004 2005 2006 AIFRS AIFRS ROFE REFLECTS IMPACT OF SIGNIFICANT ACQUISITIONS DURING THE YEAR WITH FOODLAND AND TAVERNER CONTRIBUTING PROFITS FOR ONLY PART OF THE
Slide 31: Return on Equity
RETURN ON EQUITY(1) 60% 49.3% 51.0% 50.9% 50% 48.1% 43.2% 40% Percentage 33.8% 28.9% 30% 21.9% 20% 10% 0% 1999 2000 2001 2002 2003 2004 2005 2006 AVERAGE ROE DOWN DUE TO THE DRP UNDERWRITING, OPTIONS BEING EXERCISED AND SHARES ISSUED RE FOODLAND ACQUISITION (1) Based on average of opening and closin
Slide 32: Four Year Report Card
FOUR YEAR REPORT CARD (1) In comparison with our FY03 FY03 FY04 FY05 FY06 regularly expressed goals Normalised (AIFRS) Sales will grow in the upper single digits assisted by bolt-on +7.6% +9.6% +6.1% +12.2% +20.4% acquisitions EBIT will outperform sales growth assisted by cost +13.6% +15.6% +12.6% +
Slide 33: Growth
GROWTH Key messages • Woolworths strategy is deeply entrenched in the Board and Management. • The strategies that have driven our growth to date will continue. The strategies are clear and management is focused. • The skills and commitment of our experienced retail team will drive our continued succ
Slide 34: Growth
GROWTH Project Refresh – Lower costs a key enabler Stage 1: underpinned cost savings to date, pre-requisite for stage 2. Stage 2: our new logistics program provides us with a significant strategic advantage which will underpin our ability to reduce costs over the next 5 years (minimum 20 bps pa) ben
Slide 35: Growth
GROWTH Defined plans to continue space roll out Supported by • Adding 15-25 new supermarkets each year and expanding existing detailed plans for stores (greater than 3% p.a.). the next three to • Adding 6-10 BIG W stores each year (6% to 8% space rollout p.a.). five years • Adding up to 15 Dan Murph
Slide 36: Growth
GROWTH Continued focus on improved in-store execution and service • Woolworths will continue to focus on improving in-store execution, ranging, stock availability and customer service. Grow new international initiatives • India consumer electronics. • Hong Kong (and India) buying offices. Leverage W
Slide 37: Project Refresh
PROJECT REFRESH Cumulative savings $9.3 billion over 9 years Level III - Development 24.5% Level II - Logistics 24.10% 18.75% Level14.10% I - Reorganisation 2.68% / line items 99 00 01 02 03 04 05 06 07 08 09 37 Woolworths Limited
Slide 38: Project Refresh cumulative savings
PROJECT REFRESH 9 year cumulative savings = $9.3b 2,400 Cumulative savings to date = $5.3billion 2073 2,000 4.51% of sales using 1999 as the base year 1858 PA Savings $ millions Level II 1663 1,600 Increasingly logistics driven 1197 1,200 796 800 632 Level I 517 Mainly line 362 items and 400 reorgan
Slide 39: Refresh Level II
“REFRESH” LEVEL II • Significant progress has been made to date as we move toward the completion phase. • The technology required to support our new supply chain is critical to its success and was complex in its design. The technology and systems we have developed, such as Stocksmart (DC forecast ba
Slide 40: Refresh Level II
“REFRESH” LEVEL II • Supermarket distribution centres will be reduced from 31 to 11. • Rollout of our new DC network is well underway with 4 new RDCs being operational this financial year: - Perth, Adelaide, Wyong, Wodonga and Townsville are now fully operational. - Construction is well advanced on
Slide 41: Current Trading and Guidance FY07
CURRENT TRADING AND GUIDANCE FY07 Current Trading • Food and liquor sales remain solid, however general merchandise sales continue to be constrained. Sales • For FY07 we expect sales growth to be in the range of 8% to 12%. Earnings • For FY07 we anticipate that Net Profit after Tax (NPAT) will incre
Slide 42: Company Results Full Year ended June 2006
Company Results Full Year ended 25 June 2006 Roger Corbett Chief Executive Officer Tom Pockett Finance Director Michael Luscombe Chief Operating Officer 21 August 2006
Slide 43: Appendices
Appendices 43 Woolworths Limited
Slide 44: Health Ratios
HEALTH RATIOS FY05 FY06 Fixed charges cover X 2.48 2.50 Days inventory (to cost of sales) Days 30.4 29.1 (excluding FAL and Taverner) Days inventory (to cost of sales) Days 30.4 29.8 (including FAL and Taverner) Days creditors (to sales) Days 44.4 44.5 Return on Funds Employed ROFE % 42.6 28.6 Retur
Slide 45: Fixed Charges Cover
FIXED CHARGES COVER 2002 2003 2004 2005 2005 2006 (AGAAP) (AIFRS) (AIFRS) EBIT 832.7 945.7 1,065.1 1,283.0 1,302.1 1,722.2 D&A 351.0 398.3 407.6 461.0 416.0 522.2 EBITDAR 1,888.7 2,102.7 2,282.5 2,648.9 2,618.3 3,314.5 Interest 57.6 41.2 52.8 161.4 157.8 246.3 WINs contingent coupon 39.8 41.1 42.9 -
Slide 46: Capital Expenditure
CAPITAL EXPENDITURE 2005 2006 2007 2008 2009 2010 $ Millions Pre-Existing Businesses New Stores 159 202 (a) 241 (a) 200 (a) 206 (a) 172 Stay in Business 185 245 (c) 300 (c) 207 172 175 Refurbishments 260 (b) 182 225 240 247 256 Supply Chain - Mercury 85 155 92 (d) 56 (d) 11 (d) - 689 784 858 703 636
Slide 47: CODB / Sales
CODB / SALES 23.95% 24% COSTS = THE KEY ENABLER 23.09% 23% Down 348pts since 1999 Percentage 22.22% Down 26pts 21.84% Cumulative 22% in FY06 Reductions 21.55% $4.8bn 21.10% 21% 20.80% 20.73% 20.47% 20% 1999 2000 2001 2002 2003 2004 2005 2005 2006 AGAAP AIFRS AIFRS Reductions Base year + $163m + $362
Slide 48: Gross Profit Margin
GROSS PROFIT MARGIN 28% 71% OF COST REDUCTION TO CUSTOMERS IN LOWER PRICES 27.03% 27% Cumulative Reductions Percentage $3.4bn 26.36% Up 14pts in Down 200pts 26% FY06 since 1999 25.60% 25.24% 25.14% 25.03% 25% 24.91% 24.89% 24.89% 24% 1999 2000 2001 2002 2003 2004 2005 2005 2006 AGAAP AIFRS AIFRS Red
Slide 49: Five Year Analysis
FIVE YEAR ANALYSIS A-IFRS A-IFRS A-GAAP A-GAAP A-GAAP A-GAAP PROFIT AND LOSS 2006 2005 2005 2004 2003 2002 Weeks 52 52 52 52 52 53 SALES ($m) (1) Food and Liquor 28,063.0 23,569.6 23,569.6 21,997.6 21,039.0 19,595.0 Petrol 4,390.4 3,308.4 3,308.4 2,194.9 1,710.5 1,119.3 Total Supermarkets 32,453.4 2
Slide 50: Five Year Analysis
FIVE YEAR ANALYSIS A-IFRS A-IFRS A-GAAP A-GAAP A-GAAP A-GAAP BALANCE SHEET ($M) 2006 2005 2005 2004 2003 2002 Weeks 52 52 52 52 52 53 FUNDS EMPLOYED Inventory 2,316.1 1,969.6 1,977.3 1,847.0 1,843.1 1,838.4 Accounts Payable (2,778.5) (2,339.8) (2,335.6) (2,176.3) (2,078.9) (2,000.6) Net investment i
Slide 51: Five Year Analysis
FIVE YEAR ANALYSIS A-IFRS A-IFRS A-GAAP A-GAAP A-GAAP A-GAAP SHAREHOLDER VALUE 2006 2005 2005 2004 2003 2002 Weeks 52 52 52 52 52 53 ROFE (Pre-tax return on funds employed) (%) (6) Normal 28.62 42.64 38.73 49.32 42.81 38.07 DU PONT ANALYSIS (abnormals excluded) (%) EBIT to sales 4.56 4.16 4.09 3.81
Slide 52: Five Year Analysis
FIVE YEAR ANALYSIS PRODUCTIVITY 2006 2005 2005 2004 2003 2002 STORES (Number) Supermarkets NSW & ACT 238 233 233 234 228 227 Queensland 161 147 147 143 141 130 Victoria 182 183 183 179 175 171 South Australia & Northern Territory 69 69 69 63 63 60 Western Australia 79 64 64 60 58 59 Tasmania 27 27 2
Slide 53: Five Year Analysis Notes to Statistics
FIVE YEAR ANALYSIS NOTES TO STATISTICS 1 Includes FAL results since 2nd November 2005 and Taverner retail sales from 6 February 2006. 2 Unallocated expense represents corporate costs relating to the Woolworths Group as a whole, and profits derived by the Group’s corporate property division including