Slide 1: 2020 Full Year Results Presentation cover letter to ASX
18 August 2020 The Manager Company Announcements Office Australian Securities Exchange Dear Sir or Madam Coles Group Limited – 2020 Full Year Results Presentation Please find attached for immediate release to the market the 2020 Full Year Results Presentation for Coles Group Limited. This announceme
Slide 2: 2020 Full Year Results Presentation
SecondBite CEO Jim Mullan accepts donations from Coles during the COVID-19 pandemic. By the end of FY20, Coles had donated the equivalent of 116 million meals to SecondBite since 2011 and the equivalent of 32 million meals to Foodbank since 2003. This is the equivalent of 148 million meals to people
Slide 3: Disclaimer
Disclaimer This presentation contains summary information about Coles Group Limited (ACN 004 089 936) and its related bodies corporate (together, Coles) and Coles’ activities as at the date of this presentation. It is information given in summary form only and does not purport to be complete. It sho
Slide 4: FY20 summary
Coles 2020 graduates in February at the Store Support Centre in Melbourne (pre-social distancing). Coles was named the Most Popular Retail and FMCG Employer in the Top100 Graduate Employers 2020 Awards. FY20 summary
Slide 5: FY20 financial highlights
FY20 financial highlights First year strategy delivered whilst supporting team members, suppliers and community through droughts, bushfires and COVID-19 Total sales revenue EBIT Supers comp sales growth of 5.9%2 $37.4bn $1,387m 51 quarters of 6.9% vs. pcp1 4.7% vs. pcp1 consecutive growth Smarter Se
Slide 6: Winning in our second century
Winning in our second century Coles Group Values launched in second half building on the existing Look ahead, Energise everyone and Deliver with pride (LEaD) behaviours framework We value… Enabled by our behaviours… look ahead energise everyone deliver with pride know your stuff ∙ have a plan ∙ buil
Slide 7: Strengthened leadership team with five new executives
Strengthened leadership team with five new executives Steven Cain Chief Executive Officer Leah Weckert Greg Davis Matt Swindells Darren Blackhurst Ben Hassing Thinus Keevé George Saoud Chief Financial Officer Chief Executive Chief Operations Officer Chief Executive Liquor Chief Executive Chief Susta
Slide 8: Progress against strategy: Inspire Customers
Progress against strategy: Inspire Customers Improvement in customer satisfaction across Supermarkets, Liquor and Express in Q4 ▪ Data driven ranging tools enable one of the largest tailored range change across stores in many years with >1,600 new SKUs ▪ Delivered trusted value through the “Helping
Slide 9: Progress against strategy: Smarter Selling
Progress against strategy: Smarter Selling Achieved cost savings >$250m as Coles pivots to greater use of technology to drive efficiencies ▪ Streamlined SSC with removal of 450 roles and implementation of new systems across Finance and Procurement ▪ Establishment of transport hubs in Victoria and NS
Slide 10: Progress against strategy: Win Together
Progress against strategy: Win Together Improvements in team member engagement (+7pp) and safety scores (TRIFR reduction of 18.3%) ▪ Almost $1 million raised for SecondBite Winter Appeal in just 2 weeks ▪ $5.2 million raised for FightMND to support research into finding effective treatments and a cu
Slide 11: Progress against strategy: Win Together
Progress against strategy: Win Together Continued to play a significant role to support community and team members through COVID-19 ▪ Provided a safe in-store environment for team members and customers through additional sanitiser, cleaning, safety screens, store signage to assist physical distancin
Slide 12: Coles' strategy tracker
Coles’ strategy tracker KPIs Progress Reduced safety TRIFR ▪ 18.3% reduction in TRIFR compared to FY19 Increased team member ▪ Improved mysay team engagement score by 7pp engagement Improved customer ▪ Customer satisfaction1 improved to 88.2% (Q3: 83.4%) satisfaction Sales growth at least in ▪ Super
Slide 13: Refreshed Liquor strategy
The expanded gin and spirits range at the new Liquorland trial concept store in Oakleigh, Victoria. Refreshed Liquor strategy
Slide 14: We have reviewed our business through lenses
We have reviewed our business through 4 lenses... Our Customers Our Suppliers ▪ Ensure stores are easy to shop, with clear navigation ▪ Simplify the way we work and less clutter ▪ Provide clear strategic direction and framework for ▪ Focus on friendliness and team member availability growth and serv
Slide 15: We have now set a strategic framework for growth
We have now set a strategic framework for growth Our “Be a simpler, accessible, Vision locally relevant drinks specialist” Smarter Inspire Win Selling Customers Together 6 • Simplify the • Differentiate our • Build capability Priorities operating model offer & serve our • Engage safely, • Refocus th
Slide 16: Our priorities
Our 6 priorities… Smarter Selling Inspire Customers Win Together Simplify the operating Differentiate our offer & Build Capability model serve our customers better 1Refocus the business Be more relevant and accessible Engage safely, responsibly and sustainably1 Wine Source Buy Move Sell region 1Imag
Slide 17: Group financial overview
Coles has partnered with Stephanie Alexander’s Kitchen Garden Foundation giving thousands of children across Australia access to a food education program that helps them develop a healthy relationship with food, self-confidence and life skills. Group financial overview
Slide 18: FY20 results – Group
FY20 results – Group Group EBIT (pre-AASB 16 and significant items) growth for the first time in four years Retail basis $m FY20 FY191 Change Sales revenue 37,408 35,0012 6.9% EBIT (post-AASB 16, pre-significant items)3 1,762 N/A N/M EBIT (pre-AASB 16, pre-significant items)3 1,387 1,325 4.7% EBIT m
Slide 19: FY20 results – segment financials
FY20 results – segment financials Sales revenue growth across all segments and strong EBIT growth in Supermarkets Retail basis $m FY20 FY19 Change Sales revenue Supermarkets 32,993 30,890 6.8% Liquor 3,308 3,063 8.0% Express 1,107 1,048 5.6% Group sales revenue 37,408 35,001 6.9% Statutory AASB 16 R
Slide 20: Normalised cash flow
Normalised cash flow Cash realisation of 111% (pre-AASB 16) driven by strong trading performance Normalised cash flow¹ Comments FY20 ▪ Working capital impacted by increased inventories $m FY20 pre-AASB 16 FY19 offset by an uplift in trade and other payables to support heightened trading activity dur
Slide 21: Capital expenditure
Capital expenditure Investment in-line with guidance despite COVID-19 impacts Capital expenditure breakdown Key capital expenditure initiatives Statutory Store renewals ▪ Store resets across $m FY20 FY19 Supermarkets store fleet (70) ▪ Liquor Market conversions (30) Store renewals 161 146 Growth ini
Slide 22: Balance sheet
Balance sheet Investment grade credit metrics with flexibility for future growth Balance sheet summary Comments Statutory ▪ Recognition of a net lease liability of $1,423 million 28 June 2020 following the adoption of AASB 16 which also $m post-AASB 16 30 Jun 2019 largely drove the movement in net t
Slide 23: Capital management
Capital management Attractive fully-franked dividend and lengthened debt maturity profile at favourable rates Debt facility maturity profile ($m) Dividend ▪ Fully-franked FY20 final dividend of 27.5 cents per share ▪ Total FY20 dividends of 57.5 cents per share 500 1,005 Funding and liquidity ▪ Weig
Slide 24: Supermarkets
The recently opened Coles Local in Hawthorn, Victoria. Supermarkets
Slide 25: Supermarkets key metrics
Supermarkets key metrics 51 consecutive quarters of comparable sales growth Total sales revenue Comp sales growth1 Sales per sqm $33.0bn 5.9% $17,547 +6.8% vs. pcp vs. pcp +5.0% vs. pcp Own Brand sales Coles Online sales Customer satisfaction +9.7% +18.1% 88.2% (4Q20) vs. pcp vs. pcp +4.8pp on 3Q20
Slide 26: Supermarkets FY20 results
Supermarkets FY20 results Second half of improving profitability FY20 results Key commentary Retail basis ▪ Sales trajectory improving prior to Christmas and in the early part of Q3, prior to COVID-19 $m FY20 FY19 Change Key P&L items ▪ In addition to the sales uplift from COVID-19, comparable sales
Slide 27: Liquor
A selection of local Mornington Peninsula wines at Liquorland, Oakleigh. Liquor
Slide 28: Liquor key metrics
Liquor key metrics Sales growth driven by strong performance across all three banners Total sales revenue Comp sales growth¹ Online sales $3.3bn 7.3% +40.3% +8.0% vs. pcp vs. pcp vs. pcp Award winning FCLM renewals Number of stores quality 61% 910 372 No change of the fleet ELB medals and renewed vs
Slide 29: Liquor FY20 results
Liquor FY20 results EBIT in-line with last year with higher sales volume offset by margin pressure from mix and ongoing clearance activity associated with range changes FY20 results Key commentary Retail basis ▪ The new leadership team have completed a $m FY20 FY19 Change review of operations and re
Slide 30: Express
Coles Express supporting the Rural Fire Service fuel replenishment during the Summer bushfires in Moss Vale, New South Wales. Express
Slide 31: Express key metrics
Express key metrics C-store sales growth driven by pantry stocking and strong basket size growth in the latter part of the year. EBIT impacted by lower fuel volumes Total sales revenue1 C-store comp sales EBIT growth2 ($16)m $1,107m 4.6% following material +5.6% vs. pcp vs. pcp decline in fuel volum
Slide 32: Express FY20 results
Express FY20 results Average weekly fuel volumes showed an improving trajectory throughout the fourth quarter FY20 results Key commentary Retail basis ▪ Comparable c-store sales growth of 4.6% $m FY20 FY19 Change driven by COVID-19 related pantry stocking Key P&L items and strong basket size growth
Slide 33: Outlook
The first Coles Local store outside Victoria was recently opened in Rose Bay, New South Wales. Outlook
Slide 34: Outlook for FY21
Outlook for FY21 ▪ In the first 6 weeks of 1QFY21, Supermarkets comparable sales remain broadly in-line with the levels achieved in the second half. In Online, following the significant increase of capacity in the second half, sales are up approximately 60% in the first 6 weeks of FY21, driven by Vi
Slide 35: Q&A
The Hemphill family dairy farm in Kyabram, Victoria supplies milk to Coles under our direct milk sourcing model. Coles is bui lding long-term relationships with dairy farmers by extending the model to SA and WA following the successful roll out in VIC, Southern and Central NSW. Q&A
Slide 36: APPENDIX: Impact of AASB 16
APPENDIX: Impact of AASB 16 Impact of new lease accounting standard AASB 16 Balance Sheet 1-Jul-19 28-Jun-20 Income Statement (FY20 impact) Right-of-use assets ↑ $7.5bn $7.7bn EBITDA ↑ $1,236m Lease liabilities ↑ $8.9bn $9.1bn Depreciation ↑ $861m Provisions1 ↓ $188m - EBIT ↑ $375m Deferred tax asse