DIRECTORS’ STATUTORY REPORT
This Report is given by the Directors in respect of the Woolworths
Limited Group (the “Group” or “consolidated entity”) consisting of
Woolworths Limited and the entities it controlled at the end of, or
during the financial period ended 24 June 2012.
THE DIRECTORS
The persons who have been Directors of the Company at any time
during or since the end of the financial period and up to the date of
this report are:
NON-EXECUTIVE DIRECTORS
J A Strong
Chairman
J F Astbury
J R Broadbent
C Cross
(appointed 30 January 2012)
R S Deane
C J Hrdlicka
L M L’Huillier
(retired 24 November 2011)
I J Macfarlane
A D D Mackay
(appointed 30 January 2012)
M J Ullmer
(appointed 30 January 2012)
R G Waters
EXECUTIVE DIRECTORS
M G Luscombe Managing Director and Chief Executive Officer
(retired 30 September 2011)
G O’BrienManaging Director and Chief Executive Officer
(appointed 1 October 2011)
Deputy Chief Executive Officer
and Chief Executive Officer Designate
(until 30 September 2011)
T W Pockett
Finance Director
Details of the experience, qualifications, special responsibilities
and other directorships of listed companies in respect of each of
the Directors are set out against their respective names from pages
34 to 36.
COMPANY SECRETARY
Mr Peter John Horton BA LLB.
Mr Horton joined Woolworths in November 2005 as Group
General Counsel and Company Secretary. Previously Mr Horton
was General Manager Legal and Company Secretary at WMC
Resources Limited.
PRINCIPAL ACTIVITIES
Woolworths Limited operates in Australia, New Zealand and
India with 3,329 stores and more than 190,000 employees. The
Company operates 1,033 Supermarkets under the Woolworths and
Safeway brands in Australia and under the Countdown brand in
New Zealand. In addition, 11 Thomas Dux supermarkets operate
in Australia. The liquor retailing division services different
customer needs through BWS, Dan Murphy’s, Woolworths/Safeway
attached liquor outlets, supermarket outlets in New Zealand and
Cellarmasters. Woolworths also has multi-channel operations for
all of its trading divisions.
The petrol retailing division has 599 canopies at year end across
Australia of which 132 are co-branded Woolworths/Caltex. The
general merchandise division services customers’ everyday
needs through 172 BIG W stores. The Hotel division includes 294
premium hotels, including bars, dining, gaming, accommodation
and venue hire operations. The Home Improvement division
includes 21 hardware stores and 15 Masters stores.
Following a strategic review, Woolworths announced on
31 January 2012 that the Dick Smith business would be restructured
and divested as a going concern in a staged and managed process.
At year end there were 348 stores, including 286 in Australia and 62
in New Zealand.
CONSOLIDATED RESULTS AND REVIEW OF THE OPERATIONS
The net amount of consolidated profit for the financial period after
income tax expense attributable to members of the Company and
its controlled entities was $1,816.7 million (2011: $2,124.0 million).
A review of the operations of the consolidated entity and its
principal businesses during the financial period and the results
of those operations is set out in the Chairman’s Report and the
Managing Director’s Report from pages 10 to 31 inclusive.
DIVIDENDS
The amounts set out below have been paid by the Company during
the financial period or have been declared by the Directors of the
Company, by way of dividend, but not paid during the financial
period up to the date of this Report. All dividends were fully
franked at the tax rate indicated.
FRANKING TAX RATE
%
DIVIDEND TOTAL PAID/PAYABLE
CENTS PER SHARE
$M
Final 2011 Dividend
Paid on 14 October 2011
30
65
792.9
Interim 2012 Dividend
Paid on 27 April 2012
30
59
723.9
Final 2012 Dividend
Payable on 12 October 2012
30
67
825.4
38
WOOLWORTHS LIMITED ANNUAL REPORT 2012
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than as referred to in the Managing Director’s Report, the
significant changes in the state of affairs of the Group during the
financial period are as follows:
A net increase in the issued share capital of the Company of
14,126,945 fully paid ordinary shares as a result of:
(i) the issue on 14 October 2011 of 4,201,331 fully paid ordinary
shares and the issue on 27 April 2012 of 3,729,213 fully paid
ordinary shares pursuant to the Dividend Reinvestment
Plan. Neither the 2011 final dividend nor the 2012 interim
dividend was underwritten and a cap of 20,000 maximum
share participation in the Dividend Reinvestment Plan was
in operation for both dividends; and
(ii) the issue on various dates, for cash at the relevant exercise
price, of 6,196,401 fully paid ordinary shares as a result of the
exercise of options held by a number of executives under the
Executive Option Plan (EOP) and the Long Term Incentive
Plan (LTIP).
GRANT OF OPTIONS
On 12 December 2011 offers were made under the Long Term
Incentive Plan (LTIP) with an effective date of 1 July 2011 granting
296,761 performance rights with stringent performance measures
relating to EPS and TSR hurdles and 2,097,820 performance rights
with stringent performance measures relating to NPAT hurdles.
A further 127,000 retention performance rights were offered with
effective dates of 1 September 2011, 24 November 2011, 1 December
2011, 12 December 2011, 29 February 2012 and 1 March 2012.
Between 25 June 2012 and 18 September 2012, 1,874,904 shares
were allotted as a result of the exercise of options granted under
the LTIP in July 2007 and July 2008.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL
PERIOD
On 28 June 2012, ALH Group Pty Ltd (ALH), a 75% owned
subsidiary of Woolworths Limited received approval from the
Australian Competition and Consumer Commission (ACCC) for
the acquisition of 28 Hotels from the Laundy Hotel Group, Waugh
Hotel Group and DeAngelis Group. Approval was later obtained
from the ACCC for the acquisition of one further hotel and one
bottleshop. As at the date of this report, 28 sites have been acquired
in five separate tranches for total consideration of $159.8 million.
The acquisition of an additional hotel is pending finalisation and
two hotels remain subject to ACCC approval.
In 2006 the Victorian Government announced new arrangements
for gaming machine licenses that came into effect from 16 August
2012. The new arrangements allow venue operators to acquire and
operate their own gaming machines in approved venues. ALH
has a commitment of $164.3 million to acquire electronic gaming
machine entitlements over the next four years and a commitment
to acquire electronic gaming machines to the value of $26.2 million
in August 2012. ALH will recognise the entitlement as an intangible
asset on acquisition in the 2013 financial year. This will be
amortised on a straight line basis over the life of the entitlement.
In addition, the obligation to the Victorian Government will
be recorded at amortised cost and equal the present value of
the remaining future payments to be made following initial
recognition of the licence in 2012.
FINAL DIVIDEND
On 24 August 2012, the Directors declared a final dividend of
67 cents per share, fully franked at the 30% tax rate, on each of
the issued ordinary shares of the Company. The final dividend
is payable on 12 October 2012.
TRANSACTIONS WITH THE ALH GROUP AND RELATED
COMPANIES
Details of certain transactions between the ALH Group and related
companies are set out below:
The ALH Group purchased various building supplies and services
totalling $766,804 (2011: $18,969,623) from Lifetime Developments
Pty Ltd, a company with which Mr Bruce Mathieson is a related
party through a family member/s who is/are a Director/Directors
of Lifetime Developments Pty Ltd. Amounts were billed based
on commercial market rates for such supplies and were due and
payable under commercial payment terms.
The ALH Group purchased various building supplies and services
totalling $ nil (2011: $3,071,787) from TAG Constructions Pty Ltd,
a company with which Mr Bruce Mathieson is a related party
through family member/s who is/are a Director/Directors of TAG
Constructions Pty Ltd. Amounts were billed based on commercial
market rates for such supplies and were due and payable under
commercial payment terms.
The ALH Group purchased various marketing services totalling
$415,860 (2011: $265,600) from Capricornia Pty Ltd, a company
which Mr Bruce Mathieson is a related party. Amounts relate
to a pro-rata of shared marketing costs associated with the
promotion of two ALH accommodation properties jointly with one
Capricornia accommodation property.
The ALH Group purchased trading stock totalling $880,281
(2011: $38,888) from Big Bottle Purchases Pty Ltd, a company which
Mr Bruce Mathieson is a related party. Amounts were billed based
on commercial market rates for such supplies and were due and
payable under commercial payment terms.
These transactions were subject to review and testing on a sample
basis by Woolworths’ Business Review (internal audit). Significant
construction activity is also subject to independent review by a
quantity surveyor and competitive tender.
39
DIRECTORS’ STATUTORY REPORT
TRANSACTIONS WITH THE CELLARMASTERS GROUP AND RELATED COMPANIES
Details of certain transactions between the Cellarmasters Group and related companies are set out below:
A subsidiary in the Cellarmasters Group, New Zealand Wine Cellars Limited purchased grapes and finished products totalling NZ$312,504
from the Aurora Vineyard Limited, a company with which Mr Brad Banducci is a related party. Amounts were billed based on commercial
market rates for such supplies and were due and payable under commercial payment terms.
DIRECTORS’ INTERESTS IN SHARES/OPTIONS/PERFORMANCE RIGHTS
Particulars of Directors’ relevant interests in shares, options and performance rights in the Company as at 18 September 2012 are set
out below:
DIRECTOR
SHARES
J A Strong
G O’Brien
J F Astbury
J R Broadbent
C Cross
R S Deane
C J Hrdlicka
I J Macfarlane
A D D Mackay
T W Pockett
M J Ullmer
R G Waters
40
WOOLWORTHS LIMITED ANNUAL REPORT 2012
70,479
40,739
12,797
65,138
2,300
40,000
1,735
13,200
3,790
133,000
11,000
14,000
OPTIONS PERFORMANCE RIGHTS
–
110,665
–
–
–
–
–
–
–
246,750
–
–
–
110,478
–
–
–
–
–
–
–
155,882
–
–
MEETINGS OF DIRECTORS
The table below sets out the number of meetings of the Company’s Directors (including meetings of Committees of Directors) held during
the financial period ended 24 June 2012 and the number of meetings attended by each Director. In addition to attending formal Board and
Board Committee meetings, the Directors undertake other duties including attending strategic review sessions, retail market study trips,
as well as Board and Board Committee Meeting preparation and research. These additional responsibilities constitute a further significant
time commitment by Directors.
MEETINGS ATTENDED/HELD WHILE IN OFFICE
DIRECTORS
J A Strong1, 2, 3
M G Luscombe4
G O’Brien
J F Astbury1a, 3, 5, 10, 12
J R Broadbent1, 3
C Cross2c, 3, 6, 11
R S Deane2a, 3, 11
C J Hrdlicka2, 3, 10, 11
L M L’Huillier1c, 3, 7, 8, 9, 10
I J Macfarlane1, 3, 10
A D D Mackay2c, 3, 6, 11
T W Pockett
M J Ullmer1b, 3, 6, 12
R G Waters2b, 3, 11
BOARD MEETINGS
AD-HOC
BOARD MEETINGS
10/10
3/3
10/10
9/10
10/10
5/5
10/10
10/10
5/5
10/10
5/5
10/10
5/5
10/10
3/3
1/1
3/3
3/3
3/3
1/1
3/3
2/3
2/2
3/3
1/1
3/3
1/1
3/3
AUDIT, RISK
MANAGEMENT
AND COMPLIANCE
COMMITTEE11
6/6
2/2
6/6
6/6
6/6
2/3
4/6
2/6
2/3
4/6
2/3
6/6
3/3
2/6
PEOPLE POLICY
COMMITTEE12
5/5
2/2
5/5
2/5
–
2/2
5/5
4/5
–
–
2/2
5/5
2/2
5/5
1 Member of the Audit, Risk Management and Compliance Committee
1a Chairman of the Audit, Risk Management and Compliance Committee until 28 February 2012. From 1 March 2012 was a Member of the Audit, Risk Management and Compliance Committee
1b Member of the Audit, Risk Management and Compliance Committee from 30 January 2012. Appointed Chairman of the Audit, Risk Management and Compliance Committee 1 March 2012
1c Member of the Audit, Risk Management and Compliance Committee until 24 November 2011
2 Member of the People Policy Committee
2a Chairman of the People Policy Committee until 30 November 2011. From 1 December 2011 was a Member of the People Policy Committee
2b Appointed Chairman of the People Policy Committee 1 December 2011. Until 30 November 2011 was a Member of the People Policy Committee
2c Member of the People Policy Committee from 30 January 2012
3 Member of the Nomination Committee which meets at the same time as the Board meetings
4 Retired 30 September 2011
5 Director of Hydrox Holdings Pty Ltd and Chairman of its Audit Committee
6 Appointed a Director, effective 30 January 2012
7 Chairman of the Woolworths Group Superannuation Plan’s Policy Committee
8 Director of ALH Group Pty Ltd and Chairman of its Audit Committee
9 Retired from the Board of Woolworths Limited on 24 November 2011 but remains on the Board of the ALH Group
10 Leave of absence granted
11 Attended meetings of the Audit, Risk Management and Compliance Committee however was not a Committee member
12 Attended meetings of the People Policy Committee however was not a Committee member
41