Slide 1: Woolworths Limited Results Presentation Half Year ended January 2004
WOOLWORTHS LIMITED Results Presentation Half Year ended 11 January 2004 Roger Corbett Chief Executive Officer Tom Pockett Chief Financial Officer 23 February 2004
Slide 2: Profit After Tax (After WINS)
Slide 3: Earnings Per Share Before Goodwill
Slide 4: Sales
Slide 5: Group Sales by Division
Supermarkets and Liquor Petrol Total Supermarkets BIG W Consumer Electronics Total General Merchandise Continuing operations Wholesale Group Sales 5 Woolworths Limited HY03 HY04 $m $m Inc 11,217 11,860 5.7% 834 1,069 28.2% 12,051 12,929 7.3% 1,437 1,559 8.5% 435 487 12.0% 1,872 2,046 9.3% 13,923 14,
Slide 6: Cost of doing business reduction
| op MALTA AAA TE TTT et poten Down Down 7 328 pts in 22.87% 49 pts in} 5 half 23 - HYO4 y ears 21.91% 22 - 21.62% % 21.31% 4 4 20.82% 20 - 19 + 2000 2001 2002 2003 2004 ' t t t t Cost 4.23% x $10.3 b 2.19% x $11.2 b 2.48% x $12.8 b 2.79% x 14.1 b 3.28% x 15.0 b Reduction $127 m $245 m $317 m $393 m
Slide 7: 25.35% | 24.90% i 2000 2001 2002 2003 2004 +
25.35% 4 | 24.90% i 2000 2001 2002 2003 2004 24 + Woolworths Limited
Slide 8: Cost reduction
90 22.36% 22.10 % 21.48 % % 21 5 20 - 19 - 2000 2001 2002 2003 2004 ' t t t t Cost 1.06% x$9.9b 2.10%x $10.9b 2.36%x$12.3b 2.98%x13.9b 3.61% x 15.0 b Reduction $105 m $229 m $290 m $414m $542m |= $1,580m 8 Woolworths Limited
Slide 9: Margin reduction
| i ATALANTA TTT Nt Margin 1.02% x $9.9b 2.02% x$10.9b 2.12% x$12.3b 2.67% x$13.9b 3.09% x $15.0b Reduction $101 m $220 m $261 m $371 m $464m = |$1,417m 28 - | _ | Down 42pts | 27.01 % \. in HY¥04 / 27 + . | { 309 } % 26 26.01% 25.91% v L\ pts in Sha halt) () 7 1 | 25.36% ¥ yy 0 25 - 24.94% 24 - 200
Slide 10: EBIT
Slide 11: 4.08 % 2000 2001 2002 2003 2004
4.08 % 2000 2001 2002 2003 2004 Woolworths Limited
Slide 12: EBIT by Division
J M. Mit TUT UDULILII MT LULL MUS SUILUIUUUT TS ULLLILIT TT ULLUILIT | Jan-03 _ Jan04 Change Before After Before —_—s After Before After Goodwill Goodwill Goodwill _ Goodwill Goodwill Goodwill $M $M MM Food and Liquor 464.3 451.5 627.5 - 6148 | 13.6% 14.0% Petrol 11.9 11.9 05 toe 118% -11.8% Total S
Slide 13: Supermarkets Results Summary
l nit 7 i | JO | : lin nei fini TUT hu TTT UAT HY03 HY04 CHANGE Sales ($mil) 12,051.0 12,929.0 7.3 % Gross Margin (%) 24.47 24.16 -0.31 %pts Cost of Doing Business (%) 20.62 20.10 -0.52 %pts EBIT to Sales (%) 3.85 4.06 0.21 %pts EBIT (after goodwill) ($mil) 463.4 525.3 13.4 % EBIT (before goodwill)
Slide 14: Strong profit growth built on solid sales growth and cost reductions
NU Strong profit growth built on solid sales growth and significant cost reductions Supermarket sales grew 7.3% (5.7% excluding Petrol) for the half Comparable store sales grew 3.3%. Q1 was 2.8% strengthening in Q2 to 3.8% Second quarter inflation was up about 0.5% on the first quarter The half refl
Slide 15: Liquor operations recorded strong growth
cA All liquor operations (Dan Murphy’s, BWS, First Estate and attached liquor) recorded strong growth in revenue and earnings in a competitive market *« Dan Murphy‘s continued to expand with 2 stores opened in NSW (total of 8 stores in NSW/ACT), its first store opened in Queensland and 1 store opene
Slide 16: Petrol division and Caltex alliance
IAC \ E An Our petrol division, strengthened by our alliance with Caltex, continues to be a good supplemental offer with petrol sites conveniently located near our Supermarkets + Petrol sales increased by 28.2% for the half + Strong volume growth in comparable sites continues to fractionalise costs
Slide 17: BIG W Results Summary
Tl HY03 HY04 CHANGE Sales ($mil) 1,437.0 1,559.0 8.5 % Gross Margin (%) 30.31 29.39 -0.92 %pts Cost of Doing Business (%) 24.33 23.37 -0.96 %pts EBIT to Sales (%) 5.98 6.02 0.04 %pts EBIT (after goodwill) ($mil) 86.0 93.8 9.1 % EBIT (before goodwill) ($mil) 86.0 93.8 9.1 % Funds employed ($mil) 288.
Slide 18: BIG W Everyday Low Price offering
UA Everyday Low Price (EDLP) offering built on ongoing cost reductions is a key driver of continuing strong growth in sales and earnings High single digit sales growth (+8.5%) in a competitive market Comparable store sales increased 4.2% in line with FY03 growth (Q1: 5.0%; Q2: 3.6%) In Q2, October a
Slide 19: Consumer Electronics Results Summary
19 NO Sales ($mil) Gross Margin (%) Cost of Doing Business (%) EBIT to Sales (%) EBIT (after goodwill) ($mil) EBIT (before goodwill) ($mil) Funds employed ($mil) ROFE (%) HY03 435.0 33.59 28.94 4.65 20.3 22.5 251.9 8.10 | mn aan Ic CTC HY04 487.0 31.46 26.35 5.11 24.9 27.1 240.9 10.30 CHANGE 12.0 %
Slide 20: Consumer Electronics double digit growth
OULU AMT Attractive product ranges at competitive prices drive double digit revenue and earnings growth * Continued solid progress rebuilding this business in line with plan « Sales grew 12.0%, with comparable store sales up 10.0% for the half year * Digital Cameras and Home Entertainment including
Slide 21: Payout to shareholders
$ millions Hl linn EN Total $3,064m 940 Share buy-backs and other capital management initiatives remain under continual review 354 FY2000 FY2001 FY2002 FY2003 HY 2004 PROFIT GROWTH, COUPLED WITH BALANCE SHEET MANAGEMENT, DELIVERED $3,064m PAYOUT TO SHAREHOLDERS OVER 4% YEARS 21 Woolworths Limited
Slide 22: TT IN
TT IN
Slide 23: Balance sheet
CC 2003 2004 $million $million Inventory 2,064.1 2,042.7 Down $21m on last year despite 7.6% increase in sales Trade Payables (1,919.2) (2,032.4 from continuing operations Net investment in inventory 144.9 10.3 Receivables 486.1 490.0 Days creditors remained unchanged at 42 days Other creditors qi ,
Slide 24: Capital Management
CAPITAL MANAGEMENT 24 Prudent capital management continues to be an important strategy for Woolworths « Approximately 12.7 million shares were repurchased on market during the half year, returning approximately $140 million to shareholders S&P rating has remained unchanged at A- Fixed charge cover r
Slide 25: Cash flow
Th SC TT bh 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
Slide 26: Inventory days reduction
mi 46> 446 Reduction | of 2.8 days / Days wo bo] = 2000 2001 2002 2003 2004 9 days reduction over past 4 half years equals $515m cash flow benefit Woolworths Limited
Slide 27: ROE increases due to share buy-backs and growth
29.6 2000 2001 2002 2003 2004 ROE INCREASES 8.1%PTS DUE TO SHARE BUY-BACKS AND GROWTH IN EARNINGS (1) Based on closing Shareholders funds (2) Decline in ROE in HY03 due to the effect of changes in Australian Accounting Standards. 27 Woolworths Limited
Slide 28: - i) (|) (|) a
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Slide 29: Sales will grow in the upper single digits
Sales will grow in the upper single digits supported by bolt on acquisitions EBIT will outperform sales growth driven by cost savings EPS will outperform EBIT growth assisted by capital management (1) Sales from continuing operations grew 7.6% 29 HY00 9.5% 10.2% 12.1% HY01 9.2% 11.5% 21.6% HY02 13.4
Slide 30: Caltex alliance petrol structure
Woolworths’ existing petrol canopies (298 at 11 January 2004) remain outside the alliance with no change in reporting. Woolworths can expand these as required with no restrictions Approximately 130 plus Caltex sites to be converted to co-branded alliance sites with 36 sites already converted Minimal
Slide 31: Focus
I 31 Focus ae Continuing Growth Cost Reductions (The Enabler) Capital & Balance Sheet Management Result Upper single digit sales growth Upper Improved customer offer Single . Digit Lower prices 7 Sales Bolt-on acquisitions Growth Project Refresh | continues ~s Project Refresh II delivers Low Double
Slide 32: Opportunities for ongoing growth
Des MANU Considerable opportunities for ongoing growth in both revenues and earnings Continuing opportunity to grow market share + Market share of Food, Liquor & Grocery (FLG) remains below 30% and still low by world standards Defined plans to continue space roll out + Adding 15 - 25 new supermarket
Slide 33: Opportunities for ongoing growth in revenues and earnings
| INIA LUNN Considerable opportunities for ongoing growth in both revenues sand earnings New range and formats « New format rollouts (eg. smaller BIG Ws in country towns) * New categories across supermarkets and general merchandise eg. pharmacy Continued focus on improved in-store execution and serv
Slide 34: Project Refresh overview
34 Overview * “Refresh” level 1” initiatives over the past 4 years (to the end of FY03) underpin a reduction in CODB of 2.40% of sales, giving cumulative savings of $1.76 billion. + Savings over the next five years expected to be no less than 1% of annual sales ie 20+ bp’s per annum. *« Savings will
Slide 35: ” d o = c © & < © 5) = ° d ~
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Slide 36: Increasingly logistics driven reorganisation
1025 03-5176 OI 740 my i in Ii |s tn Mi my it 00 01 O02 O03 04 05 O06 O7 O08 increasingly logistics driven reorganisation Woolworths Limited
Slide 37: Replenishment systems: StockSmart and AutoStockR
li tl oft a ei Replenishment e Integration of StockSmart and AutoStockR to provide end- to-end replenishment functionality StockSMART System development & implementation complete (DC forecast based DC stock level KPI targets achieved inventory e Store service level KPI targets achieved replenishment
Slide 38: Roll cages, distribution centres and transport
| Wi Ee AIO =e One Touch Roll e Roll Cages are being successfully introduced into stores across Cages WA e Rollout across Australia over the next 18 to 24 months Distribution Centres —_e_- Plan to consolidate 31 Supermarket DC’s to 9 Regional and 2 National DC sites e Purchased land for Perth, Wyong
Slide 39: Current trading
WTC Post Christmas: « Food and Liquor sales trends reported in the second quarter continue. * Trading in General Merchandise very strong. 39 Woolworths Limited
Slide 40: Guidance
_GUIDANC Sales + Full year sales growth in upper single digits Earnings + Bottom end of range increased by 1c at first half sales announcement + Anticipate earnings per share before goodwill will be in a range between 68 cps and 70 cps, a growth rate between 12% and 15% *« EPS after goodwill is expe
Slide 41: Appendices
Appendices
Slide 42: Key financial ratios
Fixed charges cover Days inventory (to cost of sales) Days creditors (to sales) T iin X Days Days 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 0 TN HY03 2.95 38.2 42.0 21.4 16.8 3.9
Slide 43: Capital expenditure forecast
HY04 F04 FO5 FO6 F07 F08 Actual Forecast Forecast Forecast Forecast Forecast New Stores / acquisitions 62 126 140 135 138 140 Store Refurbs/Extensions 112 219 238 235 240 240 Stay in Business 49 89 61 65 68 68 IT - Other 19 78 64 71 75 80 IT - Supply chain Level II 15 26 4 53 42 8 - Supply Chain - l