Dave Chambers New Zealand Supermarkets Grant O'Brien General - - PowerPoint PPT Presentation

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Tjeerd Jegen Grant O'Brien Brad Banducci Dave Chambers Grant O'Brien Matt Tyson David Marr Grant O'Brien Australian Supermarkets and Petrol Group Performance and Strategic Priorities Woolworths Liquor Group New Zealand Supermarkets General Merchandise Home Improvement Group Financial Performance Outlook

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Total Group Continuing Operations Before Significant Items1

FY14 Change Change Normalised2 FY14 Change Change Normalised2 Sales $60.8b  2.7%  4.7% $60.8b  3.9%  5.9% EBIT $3,775.2m  4.7% $3,775.2m  3.3%  5.3% NPAT $2,451.7m  8.5% $2,451.7m  4.2%  6.1% EPS 196.5¢  7.6% 196.5¢  3.3%  5.2% DPS 137¢  3.0% ROFE 27.0%  101 bps  50 bps3

• 1. There were no significant items in FY14. Significant items in FY13 included
• One-off loss on the SCA Property Group transaction of $32.8m (before tax) and $28.5m (after tax)
• Gain on disposal of Consumer Electronics businesses of $9.9m (before tax) and $7.9m (after tax)
• Victorian transport fleet redundancies $25.8m (before tax) and $18.1m (after tax)
• US 144A bond redemption costs $82.3m (before tax) and $57.6m (after tax)
• 2. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13
• 3. Excluding the investment in our Home Improvement business, ROFE increased 57 bps on a normalised 52 week basis

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$ million FY14 FY13 Change Change Normalised1

Australian Food, Liquor and Petrol2 3,368.0 3,199.3 5.3% 7.2% New Zealand Supermarkets (NZD) 309.8 302.7 2.3% 4.2% New Zealand Supermarkets 271.4 236.2 14.9% 17.1% General Merchandise 152.9 191.3 (20.1)% (18.8)% Hotels 275.4 263.7 4.4% 6.5% Home Improvement (169.0) (138.9) 21.7% 24.1% Central Overheads (123.5) (98.4) 25.5% 28.0% Group EBIT – Continuing Operations 3,775.2 3,653.2 3.3% 5.3% Group EBIT – Discontinued Operations

• 2.5

n.c Total Group EBIT (before significant items) 3,775.2 3,655.7 3.3% Significant Items (before tax) One-off loss on SCA Property Group transaction

• (32.8)

n.c Gain on disposal of Consumer Electronics businesses

• 9.9

n.c Victorian transport fleet redundancies

• (25.8)

n.c Total Group EBIT (after significant items) 3,775.2 3,607.0 4.7%

• 1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13
• 2. Includes FY14 EBIT of $3,278.7m for Australian Food & Liquor (FY13: $3,061.6m) and $89.3m for Petrol (FY13: $137.7m). These FY13 and FY14 results are not comparable as the

cost of providing the Petrol discount which was previously included in Australian Food & Liquor has been recorded in the Petrol division from the beginning of H2’14. From FY15, a combined result for Australian Food, Liquor and Petrol will be provided

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• New range of fresh food initiatives to reinforce our Fresh leadership
• Embed price leadership through continued price investment and communication of our

value credentials

• Continue to enhance Dan Murphy’s and BWS customer sales and service capabilities
• Extend our leadership in online through innovation and stand-out execution
• Continue to lower prices in New Zealand for the benefit of our customers
• Improving comparable sales, EBIT growth and market share over the past

3 years

• Delivered excellent value with key Supermarkets promotional campaigns

providing more than $750m in savings to customers in FY14 and average price deflation of 3.1%

• Fresh market share growing faster than Grocery
• More convenient access across all channels with an average of 21.1m

customers per week in FY14

• 67 canopies and forecourts refreshed to expand the access to diesel,

premium fuels and fast flow fuel pumps

• Improved our merchandise offer (non-fuel) through new store formats

and ranges, which has delivered strong results

• Market leading store formats, online offer and range
• danmurphys.com.au is Australia's most visited liquor website
• Early stages of transforming Countdown delivering pleasing results
• Strong customer response to ‘Price Lockdown’ and ‘Price Drop’ campaigns
• countdown.co.nz is New Zealand's leading online food site

FY14 Progress More To Do

1.1% 2.7% 3.0% 3.8% 4.7%1 4.7%1 Comparable Total 5.3% 6.7%1 7.2%1

Australian Food & Liquor - Sales Growth (%) Australian Food, Liquor & Petrol - EBIT Growth

FY12 FY13 FY14 FY12 FY13 FY14

• 1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13
• 2. Represents the 53 week period

+$148m +$255m2 +$169m

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• Platform and operational enhancements to drive an increase in online traffic and sales
• Completing rapid roll out of Click & Collect in all divisions
• Focus on store roll out and range enhancements at Masters
• Continue recruitment of important Home Timber and Hardware customers
• Continue our consideration of domestic and international growth opportunities
• Online sales of over $1.2b for FY14, increasing by 50% on FY13
• Australia's market leading online Food and Liquor offers, with strong

growth in our Australasian Apparel business

• New Zealand's market leading online Food offer
• Our Online offers are continuing to exceed our expectations
• EziBuy now providing platform for GM online offer including BIG W
• Australia’s first full range dedicated online fulfilment grocery store
• pened in July 14
• 'Track My Order' GPS routing on Supermarket online orders
• Roll out of cross divisional Click & Collect underway
• Under new leadership of Matt Tyson who brings extensive international

and business development experience

• Focused on moving Masters from a start-up to a scalable, material profit

contributor for the Group

More To Do Online Sales Growth ($b) / Sales Growth (%) Masters Sales ($m) / Store Numbers

$146 $529 $752 15 31 49 Sales ($m) Store Numbers

FY14 Progress

95% 42% 50% FY12 FY13 FY14 FY12 FY13 FY14 $0.6b $0.8b $1.2b

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• Move to a new phase of business transformation through our end-to-end

supply chain and replenishment projects

• Continue to leverage customer data to drive sales growth and loyalty across

the business

• Productivity improvement programs to continue relentless focus on costs
• Continue to make new appointments to complement our team, sourced

internally, domestically and internationally as appropriate

More To Do

• Continued to invest in technology to enable our online growth
• Building on our world class supply chain to drive the next

generation of capability via Mercury II

• Will provide a new way of working across replenishment logistics,

store operations and vendor relationships, to deliver a more efficient end-to-end network

• We are leveraging the work performed by Quantium to provide

customer insights, enabling us to better understand our customers’ needs in – Pricing and promotion – Ranging – Store layout

• Everyday Rewards loyalty membership up over 10% to 7.9m and

Onecard members up to 1.9m

• Continued focus on blending the best local and international talent

during the year, including – Matt Tyson, MD Home Improvement – Alistair McGeorge, MD BIG W – David Marr, CFO – Clive Whincup, CIO – Emma Gray, Chief Loyalty and Data Officer

FY14 Progress

• 5.9m Everyday Reward cardholders at beginning of year
• Opened BIG W state of the art DC in Hoxton Park NSW and

National DC in South Auckland New Zealand

• Appointment of Tjeerd Jegen, Brad Banducci and Penny Winn
• Commenced the implementation of our group wide

merchandising system (Galaxy)

• Acquired 50% stake in the Quantium Group - delivering improved

customer insights

• Opened Home Improvement DC in Hoxton Park NSW and

consolidated Christchurch Regional DC in New Zealand

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General Merchandise

• Roll out next wave of space and layout reconfiguration across BIG W stores
• Develop and implement new supply chain and replenishment systems to

transform our speed and efficiency to market

• Leverage EziBuy to drive online ambitions

Hotels

• Further development of our bar, food and entertainment offer
• Complete voluntary pre-commitment implementation prior to legislative

requirements

• Further targeted hotel acquisitions to provide a pipeline for Dan Murphy’s

and BWS store openings

• Industry leading hotel and gaming charter underpinning our

commitment to responsible service of gaming and liquor

• Commenced the roll out of electronic gaming machine (EGM)

voluntary pre-commitment functionality

• Ongoing growth in our hotel network also enabled us to open an

additional 16 BWS and 2 Dan Murphy’s (net)

More To Do

• Acquired 12 Compass Group hotels
• Dick Smith strategic review complete
• Acquired 29 hotels from Laundy Group
• Divestment of Consumer Electronics business
• Disposal of $1.4b property assets to the SCA Property Group
• Acquired 50% stake in the Quantium Group

FY14 Progress

• Divested freehold properties as market opportunities arise
• We are currently considering the divestment of a portfolio of

freehold Hotel sites, which would add to the $1.4b of property divested through the creation of the SCA Property Group in FY13

• New leadership team who will further develop the strategy and

bring additional focus on execution and operational excellence

• Completed phase 1 of category and space changes
• Commenced the transformation of our customer offer,

replenishment systems and supply chain capabilities

• Evolving our offer to align with customers’ needs, including

Toys and Footwear

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Sales – Food & Liquor ($m) 41,171 40,031 2.8% 4.7% – Petrol ($m) 7,065 6,794 4.0% 6.0% – Total ($m) 48,236 46,825 3.0% 4.9% EBIT – Food & Liquor ($m)2 3,278.7 3,061.6 7.1% 9.1% – Petrol ($m)2 89.3 137.7 (35.1)% (33.9)% – Total ($m)2 3,368.0 3,199.3 5.3% 7.2% Funds Employed ($m) 4,576.9 4,326.4 5.8% Gross margin (%) 25.19 25.10 9 bps CODB (%) 18.21 18.27 (6) bps EBIT to sales (%) 6.98 6.83 15 bps ROFE (%) 75.7 76.7 (101) bps 39 bps

• Food & Liquor FY14 comparable sales growth was 3.0% with

growth stronger than FY13 as customers have responded to increased value and our improved offer

• Increases in market share, customer numbers, basket size, items

sold and sales per average square metre

• We served on average 21.1m customers per week, 3.7% up on FY13
• Continued to deliver excellent value, with average price deflation of

3.1% for the year (including the effects of promotions and volumes)

• Gross margin increase reflects improvements in buying, favourable

shifts in sales mix and growth in exclusive brands. We continued to reinvest much of these benefits into lower prices for our customers

• CODB % decreased on the prior year - a good result given the large

number of new stores yet to reach mature trading levels and

• ngoing investment in delivering increased value for our customers

as well as in our Online business

• EBIT growth of 7.2%1 is pleasing - growing faster than sales -

reflecting improved margins and sustainable cost control

• ROFE increase of 39 bps1 reflects EBIT growing ahead of our

investment in new stores and inventory

Trading Performance

• 1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13
• 2. FY13 and FY14 results are not comparable as the cost of providing the Petrol discount which was previously included in Food & Liquor has been recorded in the Petrol division from the beginning
• f H2’14. From FY15, a combined result for Food, Liquor and Petrol will be provided

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• Fresh market share grew faster than Grocery, in line with our strategy
• Improved supply chain capabilities, delivering fresher produce and

reducing waste

• Continued to support Australian producers and sourced 97% of produce

locally, with new contracts in place with Simplot and SPC Ardmona

• Our local milk range ‘Farmers’ Own', from the Manning Valley now

ranged in 261 NSW supermarkets

• Launched 27 new ‘Created with Jamie’ fresh products
• Sushi bars, 'Food to Go' and barista coffee are providing convenience

shoppers further choice

• Key promotional campaigns generated savings of $750m for customers
• Deflation in average prices of 3.1% for the year
• Everyday Rewards members benefited from in-store savings and our

seasonal 'Cash For' campaigns

• 1. First choice for fresh food
• 2. Unbeatable value

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• 3. Online retailing
• Woolworths Online continues to lead the way in the retail grocery and alcohol category
• Online sales growth of more than 40% in FY14 with over 3m items delivered to customers each week
• Australia’s first full range dedicated online fulfilment grocery store opened in July 2014
• Expanded Click & Collect network to 202 stores offering same day collection service,

including 17 drive-thrus at FY14

• New digital features to make shopping easier for customers introduced such as ‘Track My Order’

GPS functionality

Online fulfilment grocery store

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• 4. Customer insights transforming our business
• 5. Innovative offers
• We are using data to refine our store layouts and ranges to

meet customers' evolving needs

• Everyday Rewards members increased to 7.9m, up over 10%
• n FY13
• We are increasingly using data to identify new sites and provide

greater access for our customers via 34 (net) new store openings, bringing total stores to 931

• Completed 23 refurbishments in FY14
• Family engagement and customer loyalty created through our

Collectables campaigns

–

‘Aussie Animals’

–

‘DreamWorks Heroes’

– ‘Jamie's Garden’

• Strong customer uptake of 'Created with Jamie', 'Free From' and

permanent 'Gold' own brands

• Continued to expand the ‘Macro’ range now with over 400 healthy

products available in stores

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• Sales increased by 6.0%1 driven by

higher average fuel sell prices and pleasing growth in merchandise sales

• Petrol volumes decreased 1.4%1 in

FY14 impacted by reduced fuel discount activity following the undertaking to the Australian Competition and Consumer Commission (ACCC) which limited fuel discounts available to customers

• Woolworths’ customers continue to

be rewarded through discounts at

• ur Petrol sites as well as enhanced

Supermarket offers

• Merchandise sales increased 10.7%1,

reflecting improved ranging and more effective promotional activity

• 1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13
• 1. Provide customers with a compelling fuel offer
• Continued investment in forecourt improvements, providing

customers with better access to diesel, premium fuels and fast flow fuel pumps

• During FY14, signage was rebranded at 85 sites and 67

canopies and forecourts refreshed

• Our new App allows customers to compare fuel prices,

view fuel discounts available to them and access merchandise offers

• 2. Accelerate merchandise sales
• New categories and products are adding incremental sales as

part of our strong focus on improving our convenience offer

• Customers are enjoying our new food service offer which

includes coffee, bakery products, hot food and sandwiches - currently available in our new stores and further roll outs planned

• 3. Increase our network profile
• Opened 20 (net) sites during FY14
• Total network 633, comprising 502 Woolworths owned sites

and 131 Woolworths / Caltex alliance sites Progress Against Objectives Trading Performance

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$ billion

7.21 6.6 5.9 5.6 7.4 FY14 FY13 FY12 FY11 FY10

Comments

• Strong result for the year across

all three formats – Dan Murphy’s (Destination) – BWS (Convenience) – The Wine Quarter (Online and Direct)

• Improved access through growing

store network and continued

• nline innovation

Note: includes ALH Group on premise liquor sales

• 1. Represents the 53 week period
• 2. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13

6.8% 5.5% 12.1% 7.0%2 4.6%2

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• 1. Continuing to evolve Dan Murphy’s
• 2. Developing the BWS brand and convenience offer
• We continued to grow BWS, Australia’s largest liquor retailer, now with

1,216 stores including 36 (net) new stores opened in FY14

• Launch of the 'Today's Special’ marketing campaign and sponsorship of

‘The Ashes’ and ‘Summer of Cricket’ successful in strengthening the brand

• Continued progress in tailoring our ranges around shopper occasions
• Continued to expand our footprint as Australia’s premier liquor

destination, now with 186 stores including 11 new stores opened in FY14

• New merchandising concepts rolled out, including in our new Double

Bay store, opened in June

• New ‘customer centric’ store operating model with more customer

facing staff, while still early days, is delivering positive results

Customised merchandising concepts Dedicated in-store tasting panel

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• danmurphys.com.au further embedded its position as the premier

Australian online liquor destination – Most visited liquor website in Australia – Sales increased more than 55% – New features added including enhanced delivery options and new customer recommendation functionality

• Langton's launched a new customer centric web platform and released

its 6th Classification of Australian Wine

• Refreshed the Cellarmasters brand and website
• We are investing in our home delivery business (Nexday) via the

implementation of Track and Trace and increased delivery options

• 3. Maintaining leadership in Online and Direct via The

Wine Quarter

• 4. Increasing own and exclusive brand penetration through

Pinnacle Drinks

• Providing customers with enhanced ranges as we continue to build our
• wn and exclusive brand portfolio
• We launched new and innovative products including

– ‘Minchinbury’ Sparkling Wine – ‘Lovers Not Toreadors’ Spanish Tempranillo – ‘Hogs 3’ Bourbon and Cola

Exclusive brands

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Sales ($m) 1,472 1,469 0.2% 2.2% EBIT ($m) 275.4 263.7 4.4% 6.5% Gross margin (%) 82.82 82.55 27 bps CODB (%) 64.11 64.60 (49) bps EBIT to sales (%) 18.71 17.95 76 bps

• FY14 comparable sales increased 1.0% impacted by

– Subdued trading conditions in Victoria and Queensland where the majority of hotels are located – Change to tax rates in Victoria applying to EGM revenue from 1 May 2014 – The impact during part of H2'14 of a legislative change limiting ATM withdrawals in gaming venues nationally

• Gross margin increase was assisted by ongoing focus on improving
• ur Food and Bar offerings and the Victorian gaming regulatory

changes which came into effect in FY13 (cycled in August 2013) and provided an uplift to sales and profitability

• CODB % result in FY13 impacted by costs relating to the acquisition
• f the Laundy Hotel Group
• CODB % result in FY14 impacted by additional rental costs (net of

depreciation savings) following property disposals in FY13 and leased sites acquired

• EBIT result was pleasing in light of subdued trading conditions and

the impact of regulatory changes

• It is expected that the changes to tax rates in Victoria applying to

revenues from EGMs will adversely impact FY15 EBIT by approximately $18 – $20m

• 1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13

Trading Performance

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• Industry leading hotel and gaming charter

underpinning our commitment to responsible service

• Commenced a program to introduce

voluntary pre-commitment functionality

• n all gaming machines ahead of any

planned state legislation

• Continued to promote the message of

responsible gambling

• 1. To be Australia’s most responsible
• perator of local pubs
• Utilised opportunities to develop our

business with enhanced food, bars and gaming offers

• Continued to grow our hotel network

through targeted acquisitions

• 4 hotels opened during FY14 (3 net),

total venues 329, which supported an additional 16 BWS and 2 Dan Murphy’s (net)

• 2. Grow our network
• Expanding the depth of our bar ranges to

cater for more premium products and selectively adding branded food operations

• Food offers are being complemented by the

addition of children’s play areas and other family friendly activities

• Improvements made to our online presence

including mobile enabled venue websites

• 3. Evolve our offer to meet customer needs

Family friendly activities at The Ettamogah, Kellyville Ridge, NSW Honeysuckle Hotel, Newcastle, NSW

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• 1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13
• 2. Significant items include the one-off loss associated with SCA Property Group transaction in FY13
• FY14 comparable sales growth was 0.3% which reflects ongoing

subdued grocery market conditions and price deflation across a number of key categories

• We have continued to improve our competitiveness in the market

and lowered prices on everyday product lines to deliver increased value to our customers

• Result underpinned by improving price perception as we progress

with the transformation and extend our leadership in online, where sales increased more than 20%

• Inflation for FY14 low at 0.7%, and was limited by price deflation

across a number of key categories and the impact of our ‘Price Lockdown’ and ‘Price Drop’ campaigns

• Gross margin increase reflects improvements in buying, more

effective promotional activity and changes in sales mix

• CODB % result impacted by lower sales growth and additional

rental expense

• Excluding the additional rental expense (net of depreciation savings)

following the sale of properties to the SCA Property Group in FY13 and before significant items2 – CODB % increased approximately 12 bps – EBIT increased approximately 6.2%

Before Significant Items2 Sales ($m) 5,737 5,749 (0.2)% 1.6% EBIT ($m) 309.8 302.7 2.3% 4.2% Funds Employed ($m) 3,052.9 3,221.4 (5.2)% Gross margin (%) 23.67 23.30 37 bps CODB (%) 18.27 18.03 24 bps EBIT to sales (%) 5.40 5.27 13 bps ROFE (%) 9.9 9.4 48 bps 64 bps

Trading Performance

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• Providing increased value to customers via our ‘Price Lockdown’

campaign with its range of everyday lower price products, including being the first supermarket with $1 bread

• Our ‘Price Lockdown’ campaign has resonated strongly with

customers and delivered strong basket penetration

• Our ‘Price Drop’ campaign was launched in H2’14 with reduced

shelf prices, generating strong basket growth

• 'Alessi' cutlery and 'DreamWorks Heroes' programs resonated

strongly with customers

• Continued to expand new customer offers, including Bulk Foods,

Apparel, Kitchenware and Pharmacy

• 1. Customer value and innovative offers
• 2. Leverage local sourcing
• 96% of sales are sourced from suppliers that are owned or have a

base in New Zealand

• 76% of own brand sales use locally sourced products
• We source all our Fresh Food from New Zealand other than where

not commercially available

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• Sales from countdown.co.nz, New Zealand’s leading online food

site, increased more than 20% in FY14

• Continued site functionality and service improvements completed

during FY14 to support future growth, including 15 new online fulfilment stores

• 3. Online
• 4. Grow Countdown and franchise network
• Opened 5 new Countdown stores (net) during FY14, with the

network now 171 stores

• Franchise stores under the ‘Fresh Choice’ or ‘Super Value’ brands

now total 59 with 4 new stores opened in FY14

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• Comparable sales decreased 3.1% for FY14, impacted by the

previously advised transformation of BIG W, highly competitive trading conditions and ongoing price deflation (3.6% for FY14)

• Gross margin improvement primarily reflects the acquisition of

EziBuy with some improved buying and changes in sales mix

• CODB % increase primarily reflects the acquisition of EziBuy, lower

comparable sales in BIG W principally in exited categories, the write

• ff of BIG W Online assets and costs associated with the business

transformation

• FY15 will be a year of significant change under the new leadership
• f Alistair McGeorge. Alistair brings extensive international general

merchandise experience and will continue to develop the strategy whilst also bringing a strong focus on execution and operational excellence

• The transformation will continue to impact results in FY15, however,

we remain confident it will ensure the business is well placed to deliver profitable growth in the future

• ROFE decreased 616 bps1 impacted by lower EBIT, the acquisition of

EziBuy, the continued roll out of BIG W stores and capital expenditure associated with the business transformation

Sales ($m) 4,352 4,383 (0.7)% 2.1% EBIT ($m) 152.9 191.3 (20.1)% (18.8)% Funds Employed ($m) 1,230.5 992.8 23.9% Gross margin (%) 33.78 32.74 104 bps CODB (%) 30.27 28.38 189 bps EBIT to sales (%) 3.51 4.36 (85) bps ROFE (%) 13.8 20.2 (649) bps (616) bps

• 1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13

Trading Performance

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• 1. Transforming our business for the future
• First phase of category and space changes completed across 133 stores, rationalising space in non-core categories such as

Entertainment and expanding our offer in Toys and Footwear

• New BIG W senior leadership team introduced, including MD and heads of Merchandise & Buying, Marketing, Finance and HR
• Commenced a review of BIG W’s supply chain capabilities, as part of Mercury II
• Continued implementation of our new merchandise system which will go live in FY15

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• Relaunched our BIG W ‘Lowest Price Guarantee’, increasing our

commitment of giving the best choices at the lowest prices every day

• Further extended our key and exclusive brands including Lee

Cooper, Peter Morrissey Home as well as Michelle Bridges and Guy Leech activewear ranges

• 2. Focus on winning on value everyday
• 3. Growing our store footprint whilst realising our Online ambition
• Integration of EziBuy is progressing well with its world class

distribution capabilities being leveraged to enhance our online

• ffer
• Relaunched BIG W Online through a new platform, offering

customers an extended range from EziBuy

• Implemented Click & Collect across our entire network in HY14

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Sales ($m) Masters 752 529 42.2% HTH 775 710 9.2% Total 1,527 1,239 23.2% 25.7% EBIT ($m) Masters (176.0) (156.6) 12.4% HTH 7.0 17.7 (60.5)% Total (169.0) (138.9) 21.7% 24.1%

• Despite the 42% increase, Masters sales were lower than expected and

were impacted by a highly competitive market and the Federal Budget’s impact on consumer confidence. Losses before interest and tax were higher than anticipated

• Masters remains in its development phase, with stores having traded, on

average, for 17 months at the end of FY14. The current store network includes a number of stores in regional and future growth areas which will take longer to mature

• Home Timber and Hardware (HTH) sales were driven by sales from stores

acquired during FY13 and strong growth from store refurbishments completed during FY14

• The Home Timber and Hardware EBIT was impacted by higher costs

following FY13 property disposals and a highly competitive market

• Acquisition of Hudson Building Supplies will add 10 stores in NSW and

5 stores in QLD to our Home Timber and Hardware store network

• We continue to have a supportive Joint Venture partner in Lowe’s. Their
• ngoing commitment to this business has recently been further

demonstrated through a modification to the terms of their put option. From October 2015, Lowe’s can issue a notice setting an exercise date for the option triggering a 13 month notice period after which the option can be exercised

• 1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13

Trading Performance

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Rationale for entering the market remains as strong as ever with a large, growing and fragmented market We have quickly built a foundation of 49 stores with a pipeline focused on key metro areas taking advantage of the growth of big box Home Improvement retailers In a short period of time we have established a positive and strong brand awareness New businesses take time to build – we have the skills and commitment to make Home Improvement a successful business We are testing, learning and adjusting our plans to make our offer more appealing to

• ur customers

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$ million FY14 FY13 Change

Inventory 4,693.2 4,205.4 11.6% Trade Payables (4,657.1) (4,080.0) 14.1% Net Investment in Inventory 36.1 125.4 (71.2)% Receivables 1,033.9 985.2 4.9% Other Creditors (3,184.9) (3,086.1) 3.2% Working Capital (2,114.9) (1,975.5) 7.1% Fixed Assets and Investments 10,394.5 9,564.8 8.7% Intangible Assets 6,335.0 5,784.3 9.5% Total Funds Employed 14,614.6 13,373.6 9.3% Net Tax Balances 522.9 425.2 23.0% Net Assets Employed 15,137.5 13,798.8 9.7% Net Repayable Debt1 (3,731.6) (3,746.9) (0.4)% Other Financial Liabilities2 (880.5) (751.4) 17.2% Total Net Assets 10,525.4 9,300.5 13.2%

• Closing inventory increase was driven by new store openings, in

particular, 34 Australian Supermarkets (net) and 18 Masters stores since FY13, increased direct global sourcing, changes in product mix and increased bulk wine holdings

• Working capital was impacted by differences in the timing of

creditor payments relative to the reporting dates (impact of approximately $300m). Adjusting for this, the decrease in working capital was driven by the higher investment in inventory

• Fixed assets and investments increase reflects ongoing property

development and capital expenditure, with 147 new stores and 130 refurbishments since FY13

• Intangible assets increase reflects the acquisition of EziBuy and

increased intangible assets in our New Zealand Supermarkets business attributable to the stronger New Zealand dollar

• Net repayable debt was impacted by differences in the timing of

creditor payments relative to the reporting dates. Adjusting for this, the increase broadly reflects the acquisition of EziBuy

• Other financial liabilities increase primarily reflects an increase in

the value of the Lowe’s put option in our Home Improvement business to $771.2m

• 1. Includes cash, borrowings, hedge assets and liabilities
• 2. Represents put options held by non-controlling interests and the Hotels gaming entitlement liability resulting from the FY13 changes to the Victorian gaming regulations

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• 1. Excludes Home Improvement and in FY14 also excludes incremental global sourced inventory

Number of Days 31.5 31.0 34.11 33.81 32.71 FY14 FY13 FY12 FY11 FY10 Comments

• Average inventory increased

1.9 days impacted by the continued roll out of Masters stores and incremental global sourced inventory

• Excluding these, average inventory

increased 0.3 days

• Closing inventory increased

2.1 days on FY13

36.4

Note: Average inventory based on 13 months rolling average

38.3 33.8

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$ million FY14 FY13 Change

Total EBITDA 4,771.5 4,572.5 4.4% Gain on disposal of Consumer Electronics businesses

• (9.9)

Change in net investment in inventory 103.2 (490.6) Net change in other working capital and non-cash 98.7 79.7 Cash from Operating Activities before interest and tax 4,973.4 4,151.7 19.8% Net interest paid (338.2) (454.5) Tax paid (1,162.5) (977.3) Total cash provided by Operating Activities 3,472.7 2,719.9 27.7% Proceeds from the sale of property to the SCA Property Group 12.2 802.8 Proceeds from the sale of subsidiaries and property, plant and equipment 218.7 206.1 Payments for the purchase of businesses (371.5) (263.4) Payments for property, plant and equipment (1,856.4) (1,888.6) Payments for intangible assets (42.3) (66.7) Dividends received 7.9 8.1 Total cash used in Investing Activities (2,031.4) (1,201.7) 69.0% Lowe’s cash contributions (Home Improvement) 183.0 230.0 Free Cash Flow 1,624.3 1,748.2 Proceeds from share issues / other 35.5 193.7 Dividends paid (including to non-controlling interests) (1,523.1) (1,416.8) Free Cash Flow after equity related Financing Activities 136.7 525.1

• Cash flow from operating activities before interest and tax

increased 19.8%, impacted by differences in the timing of creditor payments relative to the reporting dates. Excluding this, cash flow from operating activities before interest and tax increased approximately 4.3% on a normalised 52 week basis1

• Net interest paid decreased due to a reduction in long term

debt following the sale of properties to SCA in FY13

• Tax paid increased following a change in tax legislation

effective from January 2014 which requires income tax instalments to be paid monthly, rather than quarterly

• Payments for the purchase of businesses primarily related to

the EziBuy acquisition

• Payments for property development were lower in FY14

given a decrease in the level of property development activity

• Payments for property, plant and equipment were higher in

FY14 and included our continued investment in new stores and refurbishments as well as investments in online and data analytics capabilities, merchandising systems and enhanced product offerings

• Proceeds from share issues were lower as a result of fewer

employee options exercised under long term incentive plans given the transition to the use of performance rights

• 1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13

37

$ billion Comments

• In FY14, we have

continued to grow dividend payments to shareholders

• Payout ratio of 70% is in

line with FY131

0.2 0.3 0.4 0.5 0.6 0.7 0.7 0.7 0.8 0.8 0.3 0.4 0.5 0.6 0.7 0.7 0.8 0.9 0.9 0.9 0.5 0.5 0.7 0.9 1.1 1.3 1.7 2.2 1.6 2.2 1.7 FY11 FY05 FY06 FY07 FY08 FY09 FY10 Buy back Interim dividend FY12 In-specie distribution FY14 FY13 Final dividend

CAGR: 13.8%

0.3 0.7

• 1. Before significant items

38

Percentage 28.0% 27.8% 29.3% 31.0% 27.0% 33.0%2 32.4%2 FY14 FY13 FY12 FY11 FY10 Comments

• ROFE from continuing
• perations before significant

items was 27.0%

• On a normalised 52 week

basis ROFE decreased 50 bps

• Excluding the investment in
• ur Home Improvement

business, ROFE increased 57 bps

• 1. Based on average of opening and closing funds employed. For comparability, this excludes Consumer Electronics Australia, New Zealand and India from FY12
• 2. Excluding the investment in our Home Improvement business, on a normalised 52 week basis

39

• Our businesses are well positioned to continue to deliver exceptional value to customers

through a focus on our four Strategic Priorities, providing growth and attractive returns for our shareholders

• However, we expect trading conditions to remain challenging in FY15 with consumers

managing cost of living pressures in a time of economic uncertainty

• Subject to the uncertainties noted above, we expect FY15 to be another year of growth

with Net Profit After Tax expected to increase 4% - 7%. Please note that we will be reviewing our practice of providing profit guidance at the time of our full year profit announcement

41

42

27.11% 26.94% 26.40% 26.03% 25.91% FY13 FY12 FY11 FY10 FY14

• GP margin increased 17 bps on the prior

year reflecting – Improvements in buying – More effective promotional activity – Growth in exclusive brand ranges – Positive changes in sales mix

• We continued to reinvest in lower prices,

delivering greater value to customers as evidenced by continued average price deflation in Australian Food & Liquor and BIG W as well as low inflation in New Zealand Supermarkets

Percentage Comments

43

20.90% 20.70% 20.29% 19.98% 19.95% FY13 FY12 FY11 FY10 FY14

• CODB margin increased 20 bps on the

prior year

• Excluding non-comparable additional net

costs in FY14 following the SCA transaction and the Home Improvement business which remains in start up phase, CODB margin increased 7 bps, reflecting the large number of new stores and lower sales in General Merchandise limiting the ability to fractionalise costs

Percentage Comments

44

$ million – Full Year 2013 Actual 2014 Actual 2015 Fcst New Stores 300 266 Refurbishments 478 405 Growth Capex 778 671 Supply Chain, IT, Online and Stay in Business 390 604 Home Improvement 110 111 Normal and Ongoing Capex 1,278 1,386 1,730 Property Developments (net of sales) – excluding Home Improvement 343 177 Property Developments – Home Improvement 296 235 Net Capex before SCA Property Group transaction 1,917 1,798 2,230

Normal and Ongoing Capex $m, Capex % to Sales Normal and Ongoing Capex $m, Depreciation % to Sales

0% 1% 2% 3% 500 1,000 1,500 2,000 2010 2011 2012 2013 2014 Depreciation as a % to Sales Capex Spend $m 0% 1% 2% 3% 4% 500 1,000 1,500 2,000 2010 2011 2012 2013 2014 Capex as a % to Sales Capex Spend $m

45

This presentation contains summary information about Woolworths Limited (Woolworths) and its activities current as at the date of this presentation. It should be read in conjunction with Woolworths’ other periodic and continuous disclosure announcements filed with the Australian Securities Exchange, available at www.asx.com.au. This presentation has not been audited in accordance with Australian Accounting Standards. This presentation contains certain non-IFRS measures that Woolworths believes are relevant and appropriate to understanding its business. Refer to the Final Profit and Dividend Announcement for further details. This presentation is for information purposes only and is not a prospectus or product disclosure statement, financial product or investment advice or a recommendation to acquire Woolworths shares or other securities. It has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek legal and taxation advice appropriate to their jurisdiction. Past performance is no guarantee of future performance. No representation or warranty, expressed or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of Woolworths and its related bodies corporate, or their respective directors, employees or agents, nor any other person accepts liability for any loss arising from the use of this presentation or its contents or

• therwise arising in connection with it, including, without limitation, any liability from fault or negligence.

This presentation may contain forward-looking statements including statements regarding our intent, belief or current expectations with respect to Woolworths' business and operations, market conditions, results of operations and financial condition, specific provisions and risk management practices. When used in this presentation, the words ‘plan’, ‘will’, 'anticipate', 'expect', 'may', 'should' and similar expressions, as they relate to Woolworths and its management, are intended to identify forward-looking statements. Forward looking statements involve known and unknown risks, uncertainties and assumptions and other important factors that could cause the actual results, performances or achievements of Woolworths to be materially different from future results, performances or achievements expressed or implied by such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof.