1
Grant O'Brien
Group Performance and Strategic Priorities
Tjeerd Jegen
Australian Supermarkets and Petrol
Brad Banducci
Woolworths Liquor Group
Dave Chambers
New Zealand Supermarkets
Grant O'Brien
General Merchandise
Matt Tyson
Home Improvement
David Marr
Group Financial Performance
Grant O'Brien
Outlook
Continuing Operations
Before Significant Items1
Total Group
FY14
Change
Sales
$60.8b
 2.7%
EBIT
$3,775.2m
NPAT
Change
Normalised2
 4.7%
Change
$60.8b
 3.9%
 5.9%
 4.7%
$3,775.2m
 3.3%
 5.3%
$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%
27.0%
 101 bps
 50 bps3
ROFE
2
FY14
Change
Normalised2
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
FY14
FY13
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%
-
2.5
3,775.2
3,655.7
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
3,775.2
3,607.0
Group EBIT – Discontinued Operations
Total Group EBIT (before significant items)
Change
n.c
3.3%
Significant Items (before tax)
Total Group EBIT (after significant items)
3
Change
Normalised1
$ million
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
4
FY14 Progress
Australian Food & Liquor - Sales Growth (%)
• 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
• 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
• 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
Comparable
Total
4.7%1
3.8%
2.7%
5
1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13
2. Represents the 53 week period
3.0%
1.1%
FY12
FY13
FY14
Australian Food, Liquor & Petrol - EBIT Growth
6.7%1
5.3%
More To Do
• 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
4.7%1
+$255m2
7.2%1
+$169m
+$148m
FY12
FY13
FY14
Online Sales Growth ($b) / Sales Growth (%)
FY14 Progress
• 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
opened in July 14
• 'Track My Order' GPS routing on Supermarket online orders
• Roll out of cross divisional Click & Collect underway
50%
42%
95%
$1.2b
$0.8b
$0.6b
FY12
FY13
FY14
Masters Sales ($m) / Store Numbers
• 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
Sales ($m)
Store Numbers
$752
$529
More To Do
•
•
•
•
•
6
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
$146
15
FY12
31
49
FY13
FY14
FY14 Progress
• 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
7
• 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
More To Do
• 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
FY14 Progress
• 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
• 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
• 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)
• 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 $1.4b of property
divested through the creation of the SCA Property Group in FY13
8
More To Do
General Merchandise
• Roll out next wave of space and layout reconfiguration across BIG W stores
• Develop and implement new supply chain and replenishment systems to
transform our speed and efficiency to market
• Leverage EziBuy to drive online ambitions
Hotels
• Further development of our bar, food and entertainment offer
• Complete voluntary pre-commitment implementation prior to legislative
requirements
• Further targeted hotel acquisitions to provide a pipeline for Dan Murphy’s
and BWS store openings
9
10
Trading Performance
Sales – Food & Liquor ($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%
3,278.7 3,061.6
7.1%
9.1%
137.7
(35.1)%
(33.9)%
3,368.0 3,199.3
5.3%
7.2%
4,576.9 4,326.4
5.8%
EBIT – Food & Liquor ($m)2
– Petrol ($m)2
– Total ($m)2
Funds Employed ($m)
11
89.3
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
ongoing 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
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
of H2’14. From FY15, a combined result for Food, Liquor and Petrol will be provided
1. First choice for fresh food
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
•
•
12
2. Unbeatable value
•
•
•
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
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
13
4. Customer insights transforming our business
• 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%
on 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
14
5. Innovative offers
• 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
Trading Performance
• 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
our 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
15
Progress Against Objectives
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
16
$ billion
FY10
FY11
Comments
• Strong result for the year across
all three formats
5.6 6.8%
– Dan Murphy’s (Destination)
5.9 5.5%
– BWS (Convenience)
FY12
FY13
FY14
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
17
– The Wine Quarter (Online and
Direct)
6.6 12.1%
7.21 7.0%2
7.4 4.6%2
• Improved access through growing
store network and continued
online innovation
1. Continuing to evolve Dan Murphy’s
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
18
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
•
3. Maintaining leadership in Online and Direct via The
Wine Quarter
• 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
4. Increasing own and exclusive brand penetration through
Pinnacle Drinks
Providing customers with enhanced ranges as we continue to build our
own 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
19
Trading Performance
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
1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13
20
• 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
our 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
of 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 – $20m
1. To be Australia’s most responsible
operator of local pubs
• Industry leading hotel and gaming charter
underpinning our commitment to
responsible service
• Commenced a program to introduce
voluntary pre-commitment functionality
on all gaming machines ahead of any
planned state legislation
• Continued to promote the message of
responsible gambling
2. Grow our network
• Utilised opportunities to develop our
business with enhanced food, bars and
gaming offers
• Continued to grow our hotel network
through targeted acquisitions
• 4 hotels opened during FY14 (3 net),
total venues 329, which supported
an additional 16 BWS and 2
Dan Murphy’s (net)
Honeysuckle Hotel, Newcastle, NSW
21
3. Evolve our offer to meet customer needs
• Expanding the depth of our bar ranges to
cater for more premium products and
selectively adding branded food operations
• Food offers are being complemented by the
addition of children’s play areas and other
family friendly activities
• Improvements made to our online presence
including mobile enabled venue websites
Family friendly activities at The Ettamogah,
Kellyville Ridge, NSW
22
Trading Performance
Before Significant Items2
Sales ($m)
5,737
5,749
(0.2)%
1.6%
EBIT ($m)
309.8
302.7
2.3%
4.2%
3,052.9 3,221.4
(5.2)%
Funds Employed ($m)
Gross margin (%)
23.67
23.30
37 bps
CODB (%)
18.27
18.03
24 bps
5.40
5.27
13 bps
9.9
9.4
48 bps
EBIT to sales (%)
ROFE (%)
23
64 bps
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%
1. Customer value and innovative offers
• Providing increased value to customers via our ‘Price Lockdown’
campaign with its range of everyday lower price products,
including being the first supermarket with $1 bread
• Our ‘Price Lockdown’ campaign has resonated strongly with
customers and delivered strong basket penetration
• Our ‘Price Drop’ campaign was launched in H2’14 with reduced
shelf prices, generating strong basket growth
• 'Alessi' cutlery and 'DreamWorks Heroes' programs resonated
strongly with customers
• Continued to expand new customer offers, including Bulk Foods,
Apparel, Kitchenware and Pharmacy
24
2. Leverage local sourcing
• 96% of sales are sourced from suppliers that are owned or have a
base in New Zealand
• 76% of own brand sales use locally sourced products
• We source all our Fresh Food from New Zealand other than where
not commercially available
3. Online
• Sales from countdown.co.nz, New Zealand’s leading online food
site, increased more than 20% in FY14
• Continued site functionality and service improvements completed
during FY14 to support future growth, including 15 new online
fulfilment stores
25
4. Grow Countdown and franchise network
• Opened 5 new Countdown stores (net) during FY14, with the
network now 171 stores
• Franchise stores under the ‘Fresh Choice’ or ‘Super Value’ brands
now total 59 with 4 new stores opened in FY14
26
Trading Performance
Sales ($m)
4,352
4,383
(0.7)%
2.1%
EBIT ($m)
152.9
191.3
(20.1)%
(18.8)%
1,230.5
992.8
23.9%
Gross margin (%)
33.78
32.74
104 bps
CODB (%)
30.27
28.38
189 bps
Funds Employed ($m)
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
27
• 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
off of BIG W Online assets and costs associated with the business
transformation
• FY15 will be a year of significant change under the new leadership
of 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
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
28
2. Focus on winning on value everyday
• 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
29
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
offer
• Relaunched BIG W Online through a new platform, offering
customers an extended range from EziBuy
• Implemented Click & Collect across our entire network in HY14
30
Trading Performance
Sales ($m)
Masters
752
529
42.2%
HTH
775
710
9.2%
1,527
1,239
23.2%
(176.0)
(156.6)
12.4%
7.0
17.7
(60.5)%
(169.0)
(138.9)
21.7%
Total
25.7%
EBIT ($m)
Masters
HTH
Total
31
24.1%
1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13
• 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
ongoing 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
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
our customers
32
33
$ million
FY14
FY13
4,693.2
4,205.4
11.6%
(4,657.1)
(4,080.0)
14.1%
36.1
125.4
(71.2)%
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%
6,335.0
5,784.3
9.5%
14,614.6
13,373.6
9.3%
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)%
(880.5)
(751.4)
17.2%
10,525.4
9,300.5
13.2%
Inventory
Trade Payables
Net Investment in Inventory
Receivables
Intangible Assets
Total Funds Employed
Net Tax Balances
Other Financial Liabilities2
Total Net Assets
34
Change
• 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
Number of Days
FY10
FY11
FY12
35
Comments
• Average inventory increased
1.9 days impacted by the
continued roll out of Masters
stores and incremental global
sourced inventory
31.0
31.5
32.71
33.8
FY13
33.81 36.4
FY14
34.11
Note: Average inventory based on 13 months rolling average
1. Excludes Home Improvement and in FY14 also excludes incremental global sourced inventory
38.3
• Excluding these, average inventory
increased 0.3 days
• Closing inventory increased
2.1 days on FY13
$ million
Total EBITDA
Gain on disposal of Consumer Electronics businesses
Change in net investment in inventory
Net change in other working capital and non-cash
FY13
Change
4,771.5
4,572.5
4.4%
-
(9.9)
103.2
(490.6)
98.7
79.7
Cash from Operating Activities before interest and tax
4,973.4
4,151.7
Net interest paid
(338.2)
(454.5)
(1,162.5)
(977.3)
3,472.7
2,719.9
Tax paid
Total cash provided by Operating Activities
Proceeds from the sale of property to the SCA Property Group
Proceeds from the sale of subsidiaries and property, plant and equipment
Payments for the purchase of businesses
Payments for property, plant and equipment
Payments for intangible assets
Dividends received
Total cash used in Investing Activities
Lowe’s cash contributions (Home Improvement)
Free Cash Flow
Proceeds from share issues / other
Dividends paid (including to non-controlling interests)
Free Cash Flow after equity related Financing Activities
36
FY14
12.2
802.8
218.7
206.1
(371.5)
(263.4)
(1,856.4)
(1,888.6)
(42.3)
(66.7)
7.9
8.1
(2,031.4)
(1,201.7)
183.0
230.0
1,624.3
1,748.2
35.5
193.7
(1,523.1)
(1,416.8)
136.7
525.1
1. Represents full year growth adjusted to remove the approximate impact of the 53rd week in FY13
19.8%
27.7%
• 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
69.0%
• 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
$ billion
Comments
Interim dividend
Final dividend
Buy back
In-specie distribution
CAGR:
13.8%
2.2
2.2
0.7
0.5
1.7
1.1
0.9
0.7
0.5
0.8
0.9
0.9
0.9
0.6
0.5
0.4
0.3
37
0.7
0.7
1.7
1.6
0.3
1.3
• In FY14, we have
continued to grow
dividend payments to
shareholders
0.2
0.3
0.4
0.5
FY05
FY06
FY07
FY08
1. Before significant items
0.6
0.7
0.7
0.7
0.8
0.8
FY09
FY10
FY11
FY12
FY13
FY14
• Payout ratio of 70% is in
line with FY131
Percentage
Comments
FY10
FY11
29.3%
FY12
27.8%
FY13
28.0%
FY14
38
31.0%
27.0%
• ROFE from continuing
operations before significant
items was 27.0%
• On a normalised 52 week
basis ROFE decreased 50 bps
• Excluding the investment in
our Home Improvement
business, ROFE increased
57 bps
32.4%2
33.0%2
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
• 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
39
41
Percentage
FY10
Comments
• GP margin increased 17 bps on the prior
year reflecting
25.91%
– Improvements in buying
FY11
26.03%
– More effective promotional activity
– Growth in exclusive brand ranges
FY12
FY13
FY14
42
26.40%
26.94%
27.11%
– 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
FY10
FY11
FY12
FY13
FY14
43
Comments
19.95%
19.98%
20.29%
20.70%
20.90%
• 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
$ million – Full Year
New Stores
2013
Actual
300
2014
Actual
478
405
Growth Capex
778
671
390
Normal and Ongoing Capex $m, Capex % to Sales
Capex Spend $m
266
Refurbishments
Supply Chain, IT, Online and Stay in Business
2015
Fcst
2,000
4%
1,500
3%
1,000
2%
500
1%
0
604
0%
2010
Home Improvement
Normal and Ongoing Capex
110
111
1,278
1,386
Capex as a % to Sales
2011
2012
2013
2014
Normal and Ongoing Capex $m, Depreciation % to Sales
1,730
Capex Spend $m
Depreciation as a % to Sales
2,000
Property Developments (net of sales) –
excluding Home Improvement
343
3%
1,500
177
2%
1,000
Property Developments – Home Improvement
Net Capex before SCA Property Group transaction
44
296
235
1,917
1,798
1%
500
2,230
0
0%
2010
2011
2012
2013
2014
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
otherwise 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.
45