WESFARMERS LIMITED — M&A Activity 2007

Oct 29, 2007

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30 October 2007

Company Announcements Office ASX

Dear Sir / Madam,

SCHEME OF ARRANGEMENT - INDEPENDENT EXPERT

I attach a letter of advice received today from Grant Samuel and Associates, setting out Grant Samuel’s view of the impact of the increase in the Wesfarmers Limited share price on the value of the consideration offered by Wesfarmers to Coles Group shareholders under the proposed acquisition by Scheme of Arrangement.

Yours sincerely

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Richard Dammery

General Counsel & Company Secretary

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30 October 2007

The Directors Coles Group Limited 800 Toorak Road Tooronga VIC 3146

Dear Directors

Coles Group Limited - Independent Expert’s Report

1 Introduction

On 2 July 2007, Coles Group Limited (“Coles Group”) announced a proposed transaction with Wesfarmers Limited (“Wesfarmers”) under which Wesfarmers will acquire all the shares in Coles Group, by way of a scheme of arrangement (the “Wesfarmers Proposal”). The Directors of Coles Group engaged Grant Samuel & Associates Pty Limited (“Grant Samuel”) to prepare an independent expert’s report for inclusion in the documentation to be sent by Coles Group to its shareholders. Grant Samuel has completed a report dated 21 September 2007 (“Report”) and the Report has been provided to Coles Group shareholders.

Since Grant Samuel’s completion of the Report, the Wesfarmers share price has increased significantly, from levels around $39 per share at the time that the Report was completed to current levels in the approximate range $43-44 per share.

Coles Group has requested that Grant Samuel prepare a letter of advice (“Letter”) setting out:

• ! Grant Samuel’s view of the impact of the increase in the Wesfarmers share price on the value of the consideration offered by Wesfarmers to Coles Group shareholders, including the Coles Group dividend (“Consideration”);

• ! any consequent change to Grant Samuel’s opinion set out in the Report that the Wesfarmers Proposal is in Coles Group shareholders’ best interests; and

• ! Grant Samuel’s assessment of the impact of the increase in the Wesfarmers share price on the value of Wesfarmers Partially Protected Shares (“PPS”).

This Letter may be released to the Australian Securities Exchange, made available to shareholders, provided to the Court in relation to the scheme of arrangement, or otherwise publicly released.

The scope of Grant Samuel’s engagement to prepare the Letter is specifically limited to the matters set out above. Coles Group has not asked Grant Samuel to update or otherwise revise or review its valuation of Coles Group. The Letter does not purport in any way to be an Independent Expert’s Report.

2 Advice

Value of Consideration

In the Report, Grant Samuel used a Wesfarmers share price in the range $38-40 for the purpose of estimating the value of the Consideration. Since the completion of the Report, the Wesfarmers share price has increased. For the ten trading days ending 29 October 2007, Wesfarmers shares have traded in the range $42.42-44.16, with a volume weighted average price of $43.14. For the purpose of this letter, Grant Samuel believes it reasonable to adopt a Wesfarmers share price in the range $42.50-44.50.

This range of share prices is on a “cum dividend” basis. Coles Group shareholders will not receive Wesfarmers’ final dividend for the 2007 financial year of $1.40 per share. Wesfarmers shares will

commence trading on an “ex dividend” basis on 8 November 2007. The Wesfarmers share price can be expected to fall when the shares commence trading “ex dividend”.

On the basis of a Wesfarmers share price in the range $42.50-44.50, Grant Samuel has estimated a revised value for the Consideration in the range $16.03-16.56 per Coles Group share (including the Coles Group final dividend of $0.25 per share). The estimated value of the Consideration incorporates a deduction of $1.40 per Wesfarmers share in relation to the Wesfarmers final dividend. It should be noted that the value of the Consideration will change if the Wesfarmers share price changes.

The estimated value of the Consideration in the range $16.03-16.56 compares to Grant Samuel’s valuation of Coles Group as set out in the Report of $16.21-18.23 per share (before the payment of the Coles Group final dividend of $0.25 per share). Grant Samuel has not updated this valuation range.

Confirmation of Opinion

The increase in the assessed value of the Consideration reinforces Grant Samuel’s opinion that the Wesfarmers Proposal is in the best interests of Coles Group shareholders.

Value of Wesfarmers Partially Protected Shares

In the Report, Grant Samuel estimated premium values for the PPS relative to Wesfarmers ordinary shares based on Wesfarmers ordinary share prices in the range $38-40 as follows:

PPS Premium Values	for Wesfarmers Ordinary share prices of $38 - 40	for Wesfarmers Ordinary share prices of $38 - 40
Wesfarmers Ordinary Share Price		$38	$40
PPS Premium over Ordinary Share Price	Low	1.50	1.00
	High	2.00	1.50

However, the value of the PPS will vary with movements in the Wesfarmers share price. Because the PPS is a downside protection security, the premium value of the PPS relative to Wesfarmers ordinary shares declines as the Wesfarmers share price increases. If Wesfarmers ordinary shares trade above $45 for 20 consecutive days, the PPS automatically convert into ordinary shares and there is no premium value.

Grant Samuel has estimated the following premium values for the PPS for Wesfarmers ordinary share prices (on an “ex dividend” basis) in the range $41-45:

PPS Premium Values	for Wesfarmers Ordinary share	for Wesfarmers Ordinary share	for Wesfarmers Ordinary share	prices of	$41-45
Wesfarmers Share Price		$41	$42	$43	$44	$45
PPS Premium over Ordinary Share Price	Low	0.70	0.50	0.30	0.10	0.00
	High	0.95	0.70	0.45	0.20	0.00

Given the theoretical complexities in calculating the value of the PPS, the estimated premium values are subject to considerable uncertainty and represent a broadly based judgement. However, Grant Samuel believes that they are reasonable.

Coles Group shareholders will receive 0.14215 PPS per Coles Group share. The following table shows Grant Samuel’s estimate of the PPS premium value per Coles Group share for Wesfarmers ordinary share prices in the range $41-45:

	Incremental value of PPS per	Incremental value of PPS per	Coles share	Coles share
Wesfarmers Share Price		$41	$42	$43	$44	$45
Incremental value per Coles share	Low	0.10	0.07	0.04	0.01	0.00
	High	0.14	0.10	0.06	0.03	0.00

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3 Other Matters

Grant Samuel’s preparation of this Letter is subject to the qualifications, declarations and consents, to the extent appropriate for this Letter, set out in Sections 2 and 11 of its Report. The Report is available on request from Coles Group and a copy of the Report is on Coles Group’s website.

Yours faithfully GRANT SAMUEL & ASSOCIATES PTY LIMITED

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