WOOLWORTHS GROUP LIMITED — Interim / Quarterly Report 2012

Feb 29, 2012

Company Results

HY Ended 1 January 2012

Grant O'Brien Managing Director and Chief Executive Officer

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AGENDA

GROUP STRATEGIC PRIORITIES

PROGRESS AGAINST STRATEGIC PRIORITIES

BUSINESS UNIT RESULTS

FINANCIAL PERFORMANCE

1

GROUP STRATEGIC PRIORITIES

2

OUR AMBITION

WOOLWORTHS LIMITED IS AUSTRALIA'S LEADING RETAIL GROUP, CREATING A CUSTOMER-DRIVEN FUTURE OF INNOVATION AND GROWTH

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OUR MULTIPLE REASONS
CUSTOMER OPTIONS TO SHOP
Range
Service
Value
Convenience
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BRANDS FOR
EVERYDAY
NEEDS
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3

BUILDING ON OUR SUCCESS

OUR OBJECTIVE IS A RENEWED FOCUS ON INNOVATING FOR OUR CUSTOMERS AND OPTIMISE THE BUSINESS FOR OUR SHAREHOLDERS TO ACHIEVE GROWTH AND PERFORMANCE IMPROVEMENT FROM A STRONG AND STABLE BASE

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GP / CODB / EBIT Margin Rate $m Baselined: FY99 = 100
30% 700
We drove down COGS and
made supply chain more efficient,
600
25% offset by strong price re-investment
500
20%
We drove down CODB, 400
assisted by fractionalisation
15%
300
10%
200
5%
100
0% 0
FY99 [1] FY00 [1] FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
Sales $ [2] EBIT $ [2] GP Rate% (including Supply Chain Costs, excl Hotels) CODB Rate% (excluding Supply Chain Costs, excl Hotels) EBIT Margin %
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1. Sales revenue adjusted for the removal of wholesale sales tax (WST) 2. Baselined to FY99

4

STRATEGIC PRIORITIES FOR FUTURE GROWTH

EXTEND AND DEFEND 1 LEADERSHIP IN FOOD AND LIQUOR

• Re-establish marketing supremacy around value and growth

• Unlock sales growth for a tougher consumer and competitive environment

• Accelerate our leadership in Fresh Food

• Extend leadership in liquor

• Continue momentum to become #1 in New Zealand

ACT ON OUR PORTFOLIO TO 2 MAXIMISE SHAREHOLDER VALUE

• Revisit the way we participate in the consumer electronics category

• Accelerate alignment of BIG W offer to new consumer and competitive reality

• Continue to be Australia’s most responsible operator of local pubs

MAINTAIN OUR TRACK RECORD OF 3 BUILDING NEW GROWTH

• Be Australia’s undisputed leader in multi-option retailing

• Scale up from an encouraging start to become a unique, sustainable and profitable home improvement business

• Continue to consider new domestic and international growth opportunities

PUT IN PLACE THE 4 ENABLERS FOR A NEW ERA OF GROWTH

• Deliver step change in productivity through our supply chain

• Leverage investment in customer data to fuel growth and customer centricity

• Continue to invest in our business to ensure long-term shareholder growth

• Combine the best retail talent in Australia with the best in the world

5

PROGRESS AGAINST STRATEGIC PRIORITIES

6

1

STRATEGIC PROGRESS GOOD INITIAL START – MUCH MORE TO DO

EXTEND AND DEFEND LEADERSHIP IN FOOD AND LIQUOR

New Zealand transformation delivering strong results with market share gains and positive brand momentum

Tjeerd Jegen making excellent progress with people, planning and performance strategies for Australian Supermarkets

Space growth improvements continuing, further increasing Woolworths’ competitive position, with up to 39 new supermarkets this year

Excellent momentum in liquor continues with further extension of market share leadership and best value price perception

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Supermarkets marketing review nearing completion

30 shrinkage projects underway

Further work required to better capture fresh opportunities

7

2

ACT ON OUR PORTFOLIO TO MAXIMISE SHAREHOLDER VALUE

STRATEGIC PROGRESS GOOD INITIAL START – MUCH MORE TO DO

Accelerated the review of Dick Smith, culminating in a decision to restructure and divest the business. Sale process is underway with pleasing interest from prospective vendors

Initial steps taken to improve BIG W’s value perception with sharper entry price points and clearer messaging including

• "Get it For Less" campaign

• Launch of "Smart Value"

• Appointment of Saatchi & Saatchi as new marketing agency

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More work to be done to reinforce BIG W’s value perception

8

MAINTAIN OUR TRACK RECORD OF 3 BUILDING NEW GROWTH

STRATEGIC PROGRESS GOOD INITIAL START – MUCH MORE TO DO

Strong multi-option Launch of Door Buster, 118% increase in total growth with strategy Supermarkets mobile online sales for the firmly on track shopping app, virtual shopping half – 47% without under the direction wall, BIG W mobile app, "Click Cellarmasters of Penny Winn then Collect" trials and rollout of new supermarket platform

Acquisition of 12 Hotels from Compass Group in WA. Agreement to purchase Hotels from Laundy Group in NSW – a total of 31 new Hotels and 2 Bottle Shops, subject to ACCC. Acquisition of Tait Timber and Hardware by Danks

9 Masters stores currently open and trading well, with a further 18 under construction

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Continue to explore opportunities for further growth both domestically and overseas in a prudent manner

9

4

STRATEGIC PROGRESS GOOD INITIAL START – MUCH MORE TO DO

PUT IN PLACE THE ENABLERS FOR A NEW ERA OF GROWTH

Cost savings resulting from Quantum initiatives leveraging group scale and incorporating global best practices

Focused on assembling a world class retail team blending the best local and international talent at Board, Management Board and Senior Management level

Data driven "Category Lab" is proving to be a growing and powerful capability, leveraging Australia and NZ’s largest loyalty program

Latest supply chain initiative, Hoxton Park DC, about to go live – the most advanced retail DC in Australia, supporting BIG W, Home Improvement and multioption fulfilment

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Extensive Quantum initiatives underway covering supply chain, IT, finance, call centres, non-trading procurement and global direct sourcing

10

BUSINESS UNIT RESULTS

11

RESULTS — HALF YEAR 2012

	Continuing	Continuing	Total Group Before	Total Group Before	Total Group After	Total Group After
	Operations		CE Provision1		CE Provision
	HY12		HY12		HY12
Sales – Group	$28.9b	5.2%	$29.7b	5.0%	$29.7b	5.0%
EBITDA	$2,282.5m	4.1%	$2,314.2m	3.9%	$2,014.2m	9.6%
EBIT	$1,825.9m	3.3%	$1,845.4m	3.3%	$1,545.4m	13.5%
NPAT	$1,184.3m	3.2%	$1,198.1m	3.1%	$966.9m	16.8%
EPS	97.2¢	3.4%			79.4¢	16.6%
DPS					59¢	3.5%
ROFE	15.4%	164 bps2
ROFE (Ex Masters)	16.8%	70 bps

1. Consumer Electronics provision $300m pre tax, $231m after tax

2. The decrease in ROFE reflects investment in Masters, acquisition of Cellarmasters and property development undertaken

12

Supermarkets Tjeerd Jegen Managing Director Australian Supermarkets & Petrol

13

AUSTRALIAN FOOD, LIQUOR & PETROL

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	HY11 HY12 Change
Sales – Food & Liquor ($m)	18,772 19,571 4.3%
– Petrol ($m)	2,945 3,434 16.6%
– Total ($m)	21,717 23,005 5.9%
Gross margin (%)	24.80 24.83 3 bps
CODB (%)	18.04 18.04 -
EBIT to sales (%)	6.76 6.79 3 bps
EBIT ($m)	1,468.2 1,560.9 6.3%
Funds Employed ($m)	3,509.8 4,188.5 19.3%

Comparable Sales – Australian F&L – H1 1.5%

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8.0
6.0
3.9 [1]
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2.5
2.0 1.9
2.0 1.1
0.0
Q1 Q2 Q3 Q4
2011 2012
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• Sales up 5.9%, EBIT up 6.3%

• Comparable Food and Liquor sales up 1.5%

• Average prices index was in deflation of 3.7% (HY11 3.8%)[2,3 ] primarily driven by produce

• Gross margin improvements due to significant focus on shrinkage, improvements in buying, global sourcing expansion, expansion and improvements in exclusive brand ranges, further reductions in direct store deliveries and rollout of new formats

• Food and Liquor CODB $ were well controlled

• 25 new supermarkets opened. A further 14 new supermarkets are planned to open in the second half

• Q3 and Q4 2011 adjusted for the impact of Easter

• Standard shelf price index was 0.9% (HY11 2.2%)

• Volume weighted including specials

14

GROWTH IN SUPERMARKETS — OUR NEW VISION

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BEST RETAIL TALENT AND BEST RESOURCES

WORLD CLASS TEAM

• Strong local talent now blending with globally experienced new recruits to create depth of expertise and breadth of experience

• Average length of tenure of senior team is 15 years

WITH THE BEST RESOURCES

• 4 month marketing review process nearing completion

• Thorough analysis of optimum external resources required to support new strategy

• Encompassing advertising, research and media planning

• New campaign expected to launch Q4 2012

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From left to right

Rod Evenden – GM Strategy; Cheryl Rae – GM HR; Lizzie Ryley – GM Marketing; Tjeerd Jegen – MD Australian Supermarkets & Petrol; David Marr – GM Finance; Gordon Duncan – Own Brand; Mike Whalan – GM Design & Construction; Pat McEntee – GM Fresh; Ziggy Kwarcinski – GM Store Operations

16

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FIRST CHOICE FOR FRESH FOOD

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AUSTRALIA'S FRESH FOOD PEOPLE

• Innovations in Fresh Food have continued, with positive sales momentum, led by Bakery, Deli and Meat

INDUSTRY LEADING SUPPLY CHAIN

• Approximately half a day removed from Produce end to end supply chain in the last 6 months – good progress on target of 1 day reduction

WINNING IN-STORE FORMAT

• 2015 format continues to develop, delivering strong growth in Fresh

17

FIRST CHOICE FOR FRESH FOOD — MSA BEEF

A UNIQUE MODEL

• First National Australian Supermarket to receive MSA accreditation

• Sourcing livestock for over 20 years direct from Australian farmers

• Unique end to end sourcing model with full control of meat quality at every step

CUSTOMER APPROVED

• Customers agree MSA beef provides tender, juicy beef every time

• Launched early January 2012 with a very strong customer response

• 13 cuts so far with more in development, including roasts

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UNBEATABLE VALUE

GREAT PROGRESS ON OUR VALUE CONTRACT WITH CUSTOMERS

• Roll out of new store-wide price ticketing clearly highlighting value

• Strong customer response to seasonal value offers

• Lamb leg coupons

• Christmas ham offer

CONTINUED IMPROVEMENTS IN REDUCING COGS JUST STARTING TO FLOW THROUGH

• Improved promotional effectiveness

• Significant improvements in shrinkage – 30 projects in scope

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19

CUSTOMER LED

POWER OF INSIGHTS

• Extensive progress on "Category Lab" reviews with 6 dedicated teams – a growing and powerful capability

• Completion of category deep dives on over 20% of sales base or 35 key categories in last 6 months

• Started weekly ‘Customer Talkback’ focus groups in stores to improve individual store performance and to obtain greater insights into opportunities and customer delights

DELIVERING REAL BENEFITS

• More effective use of space

• More accurate ranging decisions

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• Clarity on own brand and brand opportunities

• Reviewing EDR data is providing greater identification of range gaps which will further enhance customer offer

20

EXCITING NEW OFFERS — BRANDS

CUSTOMERS APPRECIATE CHOICE

• Our depth and breadth of range is appreciated by our customers

• Proprietary brands remain the most important offer in longlife complemented by a strong Own Brand range

GROWING CATEGORY VALUE WITH BRANDS

• Together with our branded suppliers we are collaborating on new growth opportunities

LONGLIFE — SUCCESSFUL LAUNCHES

• Cherry Ripe Dark – first to market, massive store support, highest trial rate of any new bar line in 7 years

• Omo Pods launched 1 month ahead of market. The pod segment contributes strongly to growth in the category and Woolworths overtrade in this segment

FRESH — SUCCESSFUL LAUNCHES

• 5am Organic Yoghurt — exclusive to Woolworths. Gippsland family business, $6.5m new sales line. Now partnering with Macro

• Continental Salami is the fastest growing area in smallgoods. Hans 100g premium salami products are growing at 10% in this segment

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21

EXCITING NEW OFFERS — OWN BRANDS

CONTINUED SUCCESS FOR MACRO

• Macro now our fastest growing segment. Creating a new ‘Food that is good for you’ category with new opportunities for branded players to enter

• Fastest growth of Macro is in Fresh Foods where our Free Range Poultry products have gained strong popularity with our customers

ONGOING OWN BRAND INNOVATION

• Own brand reinvigorating category growth. eg, Select Pizzas turned around a declining frozen pizza category

• Sales increases achieved through quality enhancements, improved design and packaging, improved pricing and space allocation

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22

SHOPPING TAILORED FOR OUR CUSTOMERS

MOBILE…

…TO ONLINE

• 1.5m customers have downloaded Australia's most subscribed shopping app

• New online shopping platform was launched November 2011

• Upgraded mobile app launched 2 weeks ago which now connects to online shopping, 500k downloads so far

• Virtual shopping wall trialled in Sydney and Melbourne last week

• Enhanced features and benefits include predictive searching, favourites list, multi-buy offers and "have you forgotten" prompts

• "Click then Collect" trial has commenced

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23

PETROL

A STRONG RESULT

• Sales were $3.4b, up 16.6%. Merchandise (non-fuel) up 9.4%

• Comparable sales (dollars) increased by 13.7% reflecting higher fuel prices

• Volumes increased 2.5% for the half

• National average fuel prices were 140.8 cpl for the half year, up from 124.0 cpl at HY11

• Market share and customer numbers increased during the half

• EBIT increased by 6.3% to $67.4m as a result of increased volumes and buying benefits achieved together with supply partner Caltex

• 10 new canopies opened during the half

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24

Woolworths Liquor Group Steve Greentree Director Woolworths Liquor Group

25

LIQUOR

CONTINUED MOMENTUM

• Group Liquor sales $3.6b (HY11: $3.2b)

• The Liquor group experienced another half of strong growth across all brands, gaining further market share, despite increased competitor activity

LEADERSHIP IN MULTI-OPTION

• The acquisition of the Cellarmasters Group, has provided unrivalled capability in direct marketing, production and distribution

A TRULY VERTICALLY INTEGRATED BUSINESS

• We have now produced the first own brand lines at Dorrien Estate that have been sold through our retail channels

CONTINUED STRONG SPACE GROWTH

• Opened 14 Dan Murphy's and 32 BWS stores, totalling 1,302 outlets at the end of HY12

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26

HOTELS

	HY11	HY12	Change
Sales ($m)	612	636	3.9%
Gross margin (%)	81.60	81.47	(13) bps
CODB (%)	63.32	63.20	(12) bps
EBIT to sales (%)	18.28	18.27	(1) bps
EBIT ($m)	111.9	116.2	3.8%

Comparable Sales – H1 2.9%

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5.7 [1]
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4.0
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2.0
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Q1 Q2 Q3 Q4
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• Sales increased 3.9% with gaming comparable sales up 1.3%

• Result reflects the strong sales across both food and bar offerings

• There continues to be a change in sales mix towards food resulting in lower gross margins with higher sales and good cost control assisting the CODB %

• 12 hotels located in Western Australia were acquired from the receivers of the Compass Group, integration completed in February

• Venues now totalling 294

• Growth in hotels will continue to be delivered organically through continued improvements in food and entertainment offers combined with bolt on acquisitions

2011 2012

1. Q3 and Q4 2011 adjusted for the impact of Easter

27

LIQUOR & HOTELS — 7 IMPERATIVES TO DRIVE GROWTH

1 GROW NETWORK

• Opened 14 Dan Murphy's and 32 BWS stores, totalling 1,302 liquor outlets at the end of HY12

• Compass Group acquisition added 12 hotels to the network. Laundy, subject to regulatory approval, will represent an additional 31 hotels and 2 bottle shops

IMPROVE STORE FORMATS

2 IMPROVE STORE FORMATS

• 23 Dan Murphy's now trading in the new format

• Continued to refine space utilisation and customer offer for BWS and Woolworths Liquor

MULTI-OPTION 3

• Dan Murphy's online experienced a very strong half - well positioned to be the leading Liquor website in Australia

• Cellarmasters integration completed with the business continuing to deliver on available synergies

4 GROW OWN BRAND SHARE

• Own label now equivalent to the 2[nd] largest supplier to the liquor division by value

• 100 new lines launched including alcoholic ginger beer, flavoured ciders, rum and premium bourbon

5 VERTICAL INTEGRATION

• First own brand lines managed by Dorrien Estate now available for retail sale

• Volume growth at Gage Roads over 70%

• Transitioning underway of own brand bottling to our own facilities

6 AUSTRALIA’S BEST LOCAL PUBS

• Industry leading hotel and gaming charter underpinning strong commitment to responsible service

• Implementation of changes to meet new Victorian gaming arrangements has commenced

• Completion of new systems implementations in hotels, including centralised price and range control, payroll, rostering and time and attendance

7 GROW THE BEST TALENT

• Continued to focus heavily on staff training and development to advance responsible service

• Retirement of Bruce Mathieson Snr and succession of Bruce Mathieson Jnr as ALH CEO

28

NZ Supermarkets Dave Chambers Managing Director PEL

NEW ZEALAND SUPERMARKETS

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NZ$	HY11 HY12 Change
Sales ($m)	2,795 2,879 3.0%
Gross margin (%)	22.41 23.02 61 bps
CODB (%)	17.44 17.75 31 bps
EBIT to sales (%)	4.97 5.27 30 bps
Trading EBIT ($m)	138.9 151.7 9.2%
Less intercompany charges ($m)	(4.6) (2.6) 43.5%
Reported EBIT ($m)	134.3 149.1 11.0%
Funds Employed ($m)	3,211.8 3,364.7 4.8%

Comparable Sales – H1 4.5%

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Q1 Q2 Q3 Q4
2011 2012
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• Sales up 3.0%, Trading EBIT up 9.2%

• Comparable sales up 4.5%

• Largest retail brand by turnover in New Zealand sustained by growth in market share, customer numbers, basket size and items sold

• Food inflation 1.7% (HY11: 0.6%)

• Gross margin improvements due to benefits of merchandising, point of sale and replenishment core support systems with further improvements in shrinkage

• CODB $ increased with commissioning and transitioning costs of new national Distribution Centre and increased insurance premiums

• 2 new, 1 replacement and 1 reopened earthquake damaged Countdown in HY12

• Q3 and Q4 2011 adjusted for the impact of Easter

30

NEW ZEALAND SUPERMARKETS

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1

• Last Foodtown and Woolworths stores rebranded just SINGLE BRAND before Christmas

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GROW

2

• 2 further new stores opened in January 2012 including the first Countdown Metro store in the Auckland CBD

COUNTDOWN NETWORK

• LARGER, MODERN Replacement, extension and refurbishment program continues

• 3 FORMAT STORES providing customers with improved value offer

• Continued high online sales growth. Leveraging onecard loyalty card, targeted email and direct marketing, my specials, my mailer, facebook, You Tube, Countdown website

4

MULTI-OPTION

5 GROW FRANCHISE NETWORK

• Opened first FreshChoice franchise store in Auckland in new format and brand package. Continue growth of franchise network

6

GROW MARKET SHARE

• Sustained growth in market share over last 2½ years in both dollars and units sold

7 SUPPLY CHAIN

• Successful commissioning of the National Distribution Centre in South Auckland providing growth in range and distribution effectiveness

31

BIG W Julie Coates Director BIG W

32

BIG W

	HY11	HY12	Change
Sales ($m)	2,392	2,362	(1.3)%
Gross margin (%)	29.52	30.37	85 bps
CODB (%)	24.29	25.31	102 bps
EBIT to sales (%)	5.23	5.06	(17) bps
EBIT ($m)	125.0	119.6	(4.3)%
Funds Employed ($m)	717.8	734.1	2.3%

Comparable Sales – H1 (2.8)%

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(3.9) (4.2) (4.5)
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Q1 Q2 Q3 Q4
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• Sales down 1.3%, EBIT down 4.3%. EBIT in Q2 grew positively

• Comparable sales down 2.8%, prior year down 4.2%

• Pleasing increase in customer numbers and units sold in December in a challenging trading environment

• Deflation averaged 5% during the first half

• CODB was well controlled with CODB dollars for comparable stores remaining flat when compared to the prior year

• 4 new stores opened during the half. Total stores 169, further 3 stores by FY12

2011 2012

1. Q3 and Q4 2011 adjusted for the impact of Easter

33

BIG W — STRATEGIC PRIORITIES

1 WIN ON VALUE EVERYDAY

• Successful launch of

• Emerson brand, on-trend product at an entry level price point

• "Get it For Less" marketing campaign effectively communicates our price leadership position

• Successful launch of BIG W's "Smart Value" range to appeal to price conscious shoppers

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34

2

BIG W — STRATEGIC PRIORITIES

3

CONTINUE TO GROW STORE FOOTPRINT

• Delivered 4 new stores in the half, further 3 to open in second half

• Strong property pipeline to deliver up to 35 stores in the next 5 years

• 69% of stores now have the new livery

LEAD IN MULTI-OPTION

• Extended leadership with exceptional online sales growth with sales doubling in the half over the prior year

• Mobile shopping app to be fully transactional prior to Christmas

• Daily Deals site launched

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35

BIG W — STRATEGIC PRIORITIES

4 EXPLOIT BENEFITS OF SUPPLY CHAIN OVERHAUL

• DC in Hoxton Park about to go operational

• Continued investment in enhanced supply chain systems

STEP UP GLOBAL SOURCING

5

• 85 bps increase in gross margin influenced by increase in global sourcing volumes

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36

Home Improvement

HOME IMPROVEMENT

• 7 stores opened this half with 8 more planned to open next half

• Of the 150 sites we plan to secure over 5 years, there are over 100 sites in the pipeline

• 18 stores currently under construction

• DC in Hoppers Crossing, VIC has capacity to service at least 40 stores

• DC in Hoxton Park, NSW planned to commence operations in first quarter FY13

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• Acquired Tait Timber and Hardware in Melbourne

• Our multi-option project is well underway, with a fully transactional website to be launched in 2012

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39
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DISCONTINUED OPERATIONS

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CONSUMER ELECTRONICS — AUSTRALIA AND NZ

A$	HY11	HY12	Change
Sales ($m)	868	873	0.6%
Gross margin (%)	26.01	24.71	(130) bps
CODB (%)	23.71	22.48	(123) bps
EBIT to sales (%)	2.30	2.23	(7) bps
EBIT ($m)	20.0	19.51	(2.5)%

• Acceleration of restructure with a view to divesting the business in a staged and considered process

• Provision of $300m taken in HY12

• Up to 100 underperforming stores identified to close within 2 years

• Australia

• Sales increased 0.7% for the half year

Australia – Comparable Sales – 2.4 %

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• Comparable store sales increased 2.4% for the half year (HY11: 4.1%)

• New Zealand

• Sales increased 2.2% (NZD) and was flat (AUD) for the half year

• Comparable store sales increased 6.5% (NZD) for the half year (HY11: decreased 5.0%)

• Excludes the $300m Consumer Electronics provision

2011 2012

1. Q3 and Q4 2011 adjusted for the impact of Easter

40

PRODUCTIVITY

41

COST FOCUS — THE NEXT PHASE

LEVERAGING GROUP QUANTUM SCALE AND BEST PRACTICE OVER THE NEXT 5 YEARS

• DIRECT ABOVE PROCUREMENT SUSTAINABILITY

• GLOBAL STORE NOT FOR COST

• SOURCING COSTS RESALE SAVINGS

• • • •

• HY12 51% growth New procurement $55.7m invested in Significant focus on Target double spend strategy underway energy saving above store costs has in the next 3 years • $4b targeted spend initiatives since 2007 commenced Sales and non-resale delivering significant • Material benefits will products savings begin to flow through • 40% reduction in CO from FY13 2

• emissions by 2015

• HY12 51% growth

• HY12 51% growth • New procurement

• • Target double spend strategy underway in the next 3 years • $4b targeted spend

• Sales and non-resale products

42

LOGISTICS COSTS AS A % TO SALES CONTINUING TO REDUCE

AUSTRALIAN FOOD AND LIQUOR: FY06-FY16

• World class food and liquor supply chain capability to realise group benefits

• Best practice transport system includes 40% inbound volume handled by Woolworths Primary Freight reducing trucks to Distribution Centres by 1,500 per week

• Best practice processes including reduction in Direct Store Delivery and Technology

• Project Refresh intellectual property being applied across other businesses

• Next 5 years will see us sweating the assets with no major Capex required

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CREATING LEVERAGING
CAPABILITIES CAPABILITIES
105
95
85
75
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
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Note: Rebased to 100 in FY06

43

FINANCIAL PERFORMANCE

44

BALANCE SHEET

BALANCE SHEET
$m FY11 HY11 HY11 Proforma1 HY12	Inventory balances are up 14.4%, driven by start up of our Masters business, Cellarmasters acquisition, additional overseas sourcing and incremental liquor inventory from new DC structure. Excluding the impact of these items, average inventory days are 30.8 days, down from 31.4 days at HY11 Fixed assets and investments increased by $1,260.3m to $9,423.7m, primarily reflecting ongoing capital expenditure, primarily for property development, offset by depreciation Net repayable debt (includes cash, borrowings, financial assets and liabilities) has increased by $657.1m to $4,130.2m reflecting increased borrowings to fund capital expenditure and the FY11 share buy backs Shareholders equity has increased from retained earnings, the dividend reinvestment plan and options exercised under the Executive share option plan Trade payables up 6.4%, reflecting purchasing for the Masters business, Cellarmasters acquisition and general business growth Intangibles increased $304.2m, reflecting intangibles related to Cellarmasters acquisition, Compass Group and Home Improvement retail outlets Receivables up 15.7%, primarily reflecting timing of receivables collection and Cellarmasters acquisition Relates to put option in JV with Lowe’s
Inventory 3,736.5 3,989.6 3,592.5 4,111.5 Trade Payables (4,398.1) (4,917.8) (4,753.1) (5,057.4)
Net Investment in Inventory – Continuing Operations (661.6) (928.2) (1,160.6) (945.9)
Receivables 1,044.1 1,106.8 1,062.6 1,229.0 Other Creditors (2,646.8) (2,567.5) (2,498.9) (2,667.9)
Working Capital – Continuing Operations (2,264.3) (2,388.9) (2,596.9) (2,384.8)
Fixed Assets and Investments 8,830.5 8,296.8 8,163.4 9,423.7 Intangibles 5,236.6 4,975.0 4,902.3 5,206.5
Total Funds Employed – Continuing Operations 11,802.8 10,882.9 10,468.8 12,245.4
Net Tax Balances 305.7 238.6 227.8 344.1
Net Assets Employed – Continuing Operations 12,108.5 11,121.5 10,696.6 12,589.5
Net Repayable Debt – Continuing Operations (4,010.9) (3,475.9) (3,473.1) (4,130.2)
Other Financial Liabilities (Lowe's Put Option) (344.8) (151.7) (151.7) (365.9)
Capital Call Receivable from Minority Interest (Lowe’s) 93.0 - - -
Net Assets – Continuing Operations 7,845.8 7,493.9 7,071.8 8,093.4
Assets Classified as Held for Sale - - 653.9 458.5 Liabilities Associated with Assets Classified as Held for Sale - - (231.8) (324.7)
Net Assets – Discontinued Operations - 422.1 133.8
Total Net Assets 7,845.8 7,493.9 7,493.9 8,227.2
Shareholders' Equity 7,593.2 7,237.1 7,237.1 7,964.9 Non-controlling Interest 252.6 256.8 256.8 262.3
Total Equity 7,845.8 7,493.9 7,493.9 8,227.2

1. Excludes Australia and New Zealand Consumer Electronics as this is treated in HY12 as discontinued operations

45

AVERAGE INVENTORY DAYS FOR CONTINUING OPERATIONS

INVENTORY DAYS INCREASED 1.2 DAYS. WHEN WE EXCLUDE THE IMPACT OF INCREMENTAL IMPORTED INVENTORY, ADDITIONAL INVENTORY ASSOCIATED WITH CELLARMASTERS AND HOME IMPROVEMENT, INVENTORY DAYS DECREASED BY 0.6 DAYS

Number of Days

HY11 HY10 HY09 HY08	31.4 31.6 30.2 30.3
HY12	32.6

Our target is to reduce inventory holdings by up to 1 day per year (excluding petrol, incremental indent and Masters)

Note: Average inventory based on 13 months rolling average

46

CASH FLOW

ASH FLOW
$m HY11 HY12	Change 3.9% (5.1)% (10.4)% Increased as expected as a result of higher debt level reflecting the full impact of the buy-back activity undertaken in the prior year and funding of capital expenditure and business acquisitions Tax payments increased as a result of a lower instalment rate in the prior year. The prior year contained advantages relating to R&D claims and investment allowance incentives Relates to the acquisition of Compass Group and Tait Timber and Hardware Timing of superannuation payments differs from the prior year The timing of collection of receivables Higher investment in overseas inventory from increased global sourcing Net inventory purchases for the commencement of the Masters business
EBITDA – Total Group 2,227.3 2,314.2 Net decrease / (increase) in net investment in Masters inventory - (42.6) Net decrease / (increase) in investment in overseas indent inventory 13.5 (20.1) Net (increase) in ongoing inventory (548.7) (683.3) Net increase in ongoing creditors 723.8 818.5 Net (increase) in receivables (107.4) (177.2) Net increase in superannuation accruals 47.0 8.6 Net change in other working capital and non cash 84.9 97.4
Cash from Operating Activities before Interest and Tax 2,440.4 2,315.5
Net interest paid (including cost of income notes) (151.5) (187.7) Tax paid (423.1) (455.7)
Total Cash Provided by Operating Activities 1,865.8 1,672.1
Payments for the purchase of business – other (113.4) (128.8) Payments for property, plant and equipment – property development (411.4) (647.4) Proceeds on disposal of property, plant and equipment 68.4 72.9 Payments for property, plant and equipment – other (628.8) (612.5) Payments for the purchase of investments - (0.6) Dividends received 5.3 3.2
Total Cash Used in Investing Activities (1,079.9) (1,313.2)
Lowe's cash contributions (Home Improvement) 74.6 121.0
Free Cash Flow 860.5 479.9
Proceeds from share issues / other 92.4 117.2 Dividends paid (662.4) (688.7)
Free Cash Flow After Share Issues and Dividends 290.5 (91.6)
Share buy-back 737.9 -

47

SHAREHOLDER PAYOUTS

FRANKING CREDITS AVAILABLE FOR DISTRIBUTION (AFTER THE INTERIM DIVIDEND) = $1.4b

$ million

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Dividend
Buy-Back
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2,191
Buy-Back
1,749 704
325
1,487
1,424
1,280
941 1,121
894
604
534
724
693
141
538
463
407
346
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 HY12
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Profit growth,
coupled with
balance sheet
management,
will have
delivered over
$11b payout to
shareholders
since July 2001
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48

CAPITAL MANAGEMENT

CAPITAL STRUCTURE OBJECTIVE TO ENHANCE SHAREHOLDER VALUE THROUGH OPTIMISING WEIGHTED AVERAGE COST OF CAPITAL WHILST RETAINING FLEXIBILITY TO PURSUE GROWTH AND CAPITAL MANAGEMENT OPPORTUNITIES

• In October 2011, executed a A$1.2b syndicated revolving bank loan facility in two tranches of three years (A$580m) and 5 year (A$620m). Shortly thereafter, two existing syndicated bank loan facilities of A$800m and USD$700m, maturing in April and May 2012 respectively, were terminated

• In November 2011, issued A$700m in hybrid notes having a 25 year maturity with a non-call period of 5 years

• There are no maturities of debt in the immediate term

• At the end of the half, we had $3.5b in undrawn bank loan facilities

• Future capital management initiatives will be assessed in light of growth opportunities, capital markets, environment and our focus on maintaining strong credit ratings

• There will be no share buy-back activity in 2012 given the subdued trading environment

• Property — targeting sales of up to $200m subject to market conditions

49

RETURN ON FUNDS EMPLOYED[1]

Percentage

Comments

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HY08 17.85
HY09 17.51
HY10 17.74
HY11 16.66 17.02 [2]
HY12 15.09 [3] 16.70 [2]
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• Decrease reflects investment in the start up phase of the Masters business and the acquisition of Cellarmasters

• Excluding the impact of these, return on funds employed decreased 32 bps

• ROFE is being adversely impacted by the property development activity being undertaken by the group

• Based on average of opening and closing funds employed. The decrease in ROFE reflects lower earnings in our general merchandise businesses, strategic investment in development properties

• Return on Funds employed excludes the Consumer Electronics provision and results of Masters and Cellarmasters

• Return on Funds employed excludes the Consumer Electronics provision

50

OUTLOOK

• We anticipate trading will continue to be subdued over the remainder of the year as a result of the prevailing external conditions

• As noted previously, Woolworths plans for future growth, through expansion into the circa $40b Home Improvement market. We anticipate start up costs for Masters in FY12 of up to $100m (before tax and non-controlling minority interests). The amount of the start up costs is dependent upon a range of factors, particularly the pace of our new store roll out

• Woolworths is well positioned in all its market segments and has a strong and sustainable business model geared towards the less discretionary retail segments. Therefore, we continue to expect growth of Net Profit after Tax, excluding the $300m restructuring provision for Consumer Electronics, to be in the range of 2% – 6% in FY12, subject to the uncertainty in prevailing external conditions

51

RECAP

AMBITION

Woolworths Limited is Australia's leading retail group, creating a customer-driven future of innovation and growth

STRATEGY

EXTEND AND ACT ON OUR DEFEND PORTFOLIO TO 1 LEADERSHIP IN 2 MAXIMISE FOOD AND SHAREHOLDER LIQUOR VALUE

MAINTAIN PUT IN PLACE OUR TRACK THE ENABLERS 3 RECORD OF 4 FOR A BUILDING NEW NEW ERA OF GROWTH GROWTH

52

Company Results

HY Ended 1 January 2012

Grant O'Brien Managing Director and Chief Executive Officer

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APPENDICES

54

PROFIT AFTER TAX FROM CONTINUING OPERATIONS — UP 3.2%

$ million

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HY08 29.1% 860.8
HY09 11.6% 960.8
HY10 11.6% 1,072.3
HY11 7.0% 1,147.6
HY12 3.2% 1,184.3
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55

EBIT FROM CONTINUING OPERATIONS — UP 3.3%

EBIT GROWTH UNDERPINNED BY SOLID GROWTH IN AUSTRALIAN FOOD AND LIQUOR

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$ million
Total Group EBIT
HY08 19.4% 20.5%
from Continuing
Operations
Australian Food
HY09 16.6% 11.4%
and Liquor EBIT
HY10 11.4% 11.1%
HY11 8.1% 7.2%
HY12 6.3% 3.3%
0 500 1,000 1,500 2,000
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56

CODB / SALES FROM CONTINUING OPERATIONS

INCREASED BY 26 BPS BUT HAS BEEN WELL CONTROLLED IN DOLLAR TERMS IN A CHALLENGING TRADING PERIOD WITH SIGNIFICANT SELLING PRICE DEFLATION

Percentage

Comments

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HY08 19.76%
HY09 19.44%
HY10 19.57%
HY11 19.60%
HY12 19.86%
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• Reflects

• Investment in Masters

• First year impact of the Cellarmasters acquisition

– Additional costs incurred as a result of the higher than usual number of stores opened

• We are very focused on reducing our cost base, particularly above the store, with project Quantum well underway and set to commence delivering results from FY13 onwards

57

GROSS PROFIT MARGIN FROM CONTINUING OPERATIONS

INCREASE OF 15 BPS DUE TO THE BENEFITS OF GLOBAL DIRECT SOURCING, IMPROVED SHRINKAGE RATES, MOVING TO DISTRIBUTION CENTRE DELIVERY IN LIQUOR AND INCREASING SALES OF EXCLUSIVE BRAND PRODUCTS

Percentage

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HY08 24.03% 25.50%
HY09 23.92% 25.31%
HY10 24.53% 25.83%
HY11 24.77% 26.04%
HY12 24.94% 26.19%
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Total GP Margin
from Continuing
Operations
GP Margin from
Continuing
Operations ex
Hotels
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58

RETURN ON EQUITY[1 ] BEFORE CONSUMER ELECTRONICS PROVISION

Percentage

HY11 HY10 HY09 HY08	16.05 14.63 15.08 14.97
HY12	14.62

1. Based on closing Shareholders Funds

59

DIVIDENDS PER SHARE — INTERIM

THE INCREASE IN DIVIDENDS PER SHARE EXCEEDED EARNINGS GROWTH

Cents

HY11 HY10 HY09 HY08	57 53 48 44 7.5% 10.4% 9.1% 25.7%
HY12	59 3.5%

60

HALF YEAR TOTAL GROUP SALES OF $29.7b — UP 5.0% — UP 3.7 % EXCLUDING PETROL

				Half Year
$m	HY11	HY12	Increase	Comp Sales
Australian Food and Liquor	18,772	19,571	4.3%	1.5%
New Zealand Supermarkets (AUD)	2,183	2,244	2.8%	4.5%1
Petrol (dollars)	2,945	3,434	16.6%	13.7%
Petrol (litres)	2,542	2,605	2.5%	(0.1%)
Supermarket Division	23,900	25,249	5.6%	-
BIG W	2,392	2,362	(1.3%)	(2.8%)
Consumer Electronics – India	177	193	9.0%	-
Hotels	612	636	3.9%	2.9%
Home Improvement	354	412	16.4%	-
Group Sales – Continuing Operations	27,435	28,852	5.2%	-
Group Sales – Continuing Operations (excluding Petrol)	24,490	25,418	3.8%	-
Consumer Electronics – Australia	726	731	0.7%	2.4%
Consumer Electronics – NZ	142	142	-	6.5%1
Group Sales – Discontinued Operations	868	873	0.6%	-
Total Group Sales	28,303	29,725	5.0%	-
Total Group Sales(excluding Petrol)	25,358	26,291	3.7%	-

1. NZD

61

GROUP EBIT FROM CONTINUING OPERATIONS — UP 3.3%

$m	HY11	HY12	Change
Australian Food and Liquor	1,404.8	1,493.5	6.3%
New Zealand Supermarkets (NZD)	134.3	149.1	11.0%
New Zealand Supermarkets (AUD)	108.6	118.5	9.1%
Petrol	63.4	67.4	6.3%
Supermarkets Division	1,576.8	1,679.4	6.5%
BIG W	125.0	119.6	(4.3)%
Hotels	111.9	116.2	3.8%
Total Trading Result – Continuing Operations	1,813.7	1,915.2	5.6%
Property Income / (Expense) and Central Overheads1	(46.7)	(89.3)	(91.2)%
Group EBIT – Continuing Operations	1,767.0	1,825.9	3.3%
Consumer Electronics - Australia / New Zealand	20.0	19.5	(2.5)%
Group EBIT – Discontinued Operations before Consumer Electronics Provision	20.0	19.5	(2.5)%
Group EBIT before Consumer Electronics Provision	1,787.0	1,845.4	3.3%
Consumer Electronics Provision2	-	(300.0)	n.m
Group EBIT	1,787.0	1,545.4	(13.5)%

1. Includes Home Improvement and Consumer Electronics India

2. $300m provision for Consumer Electronics Australia and New Zealand

62

EARNINGS PER SHARE — EXCLUDING CONSUMER ELECTRONICS PROVISION UP 3.3%

Cents

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HY08 25.9% 74.06
HY09 9.3% 80.93
HY10 10.0% 89.05
HY11 6.9% 95.20
HY12 16.6% 79.39 3.3% 98.38
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----- Start of picture text -----

EPS for the
Group was 79.39.
Excluding the
Consumer
Electronics
provision EPS
was up 3.3% on
the prior year
to 98.38
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63

CAPITAL EXPENDITURE — HALF YEAR

$m	$m	HY11 Actual HY12 Actual 164 174 309 184 473 358 106 138 74 72 13 53
New Stores Refurbishments Growth Capex Stay in Business Supply Chain and Data Centre Home Improvement
Normal and Ongoing Capex Property Developments (net of sales)
Net Capex
	0.00% 0.40% 0.80% 1.20% 1.60% 0 300 600 900 HY08 HY09 HY10 HY11 HY12 Depreciation As A % To Sales Capex Spend $m

LF YEAR
	New Stores1			Refurbs
Store numbers	2012	2011		2012	2011
Australian Supermarkets2		25	12	49	41
Liquor		46	41	12	31
PEL - NZ Supermarkets		4	8	4	13
Petrol		10	9	1	-
BIG W		4	3	3	9
Hotels		14	2	13	28
Danks		2	9	-	-
Masters		7	-	-	-
Group	112		84	82	122

1. Gross store openings

2. Includes attached liquor

Normal and Ongoing Capex $m, Capex % to Sales

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Capex Spend $m Capex As A % To Sales
4.00%
900
3.00%
600
2.00%
300
1.00%
0 0.00%
HY08 HY09 HY10 HY11 HY12
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64

CAPITAL EXPENDITURE — FULL YEAR

$m – 2012	Current Fcst Previous Fcst Var
New Stores Refurbishments Growth Capex Stay in Business Supply Chain and Data Centre Home Improvement	393 303 90 297 454 (157) 690 757 (67) 248 314 (66) 132 161 (29) 167 186 (19)
Normal and Ongoing Capex	1,237 1,418 (181)

LL YEAR
$m – Full Year	2010 Actual 2011 Actual 2012 Fcst
New Stores Refurbishments Growth Capex Stay in Business Supply Chain and Data Centre Home Improvement	225 288 393 622 492 297
	847 780 690 229 249 248 119 164 132 5 39 167
Normal and Ongoing Capex	1,200 1,232 1,237

Normal and Ongoing Capex $m, Depreciation % to Sales

Normal and Ongoing Capex $m, Capex % to Sales

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Capex Spend $m Depreciation As A % To Sales
2,000 3%
1,500
2%
1,000
1%
500
0 0%
2008 2009 2010 2011 2012
Current Previous
$m – Full Year
Fcst Fcst Var
Property Developments (net of sales) 998 [1] 995 [2] 3
Net Capex 2,235 2,413 (178)
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Capex Spend $m Depreciation As A % To Sales
2,000 4%
1,500 3%
1,000 2%
500 1%
0 0%
2008 2009 2010 2011 2012
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$m – Full Year	2010 Actual	2011 Actual	2012 Fcst
Property Developments (net of sales)1	620	603	998
Net Capex	1,820	1,835	2,235

1. Restated to include property development for Home Improvement which was previously excluded

2. Includes property development for Home Improvement and includes proceeds from the property sale program which took place during the year

65

CAPITAL EXPENDITURE — NOTES

New Stores

• Reflects the continued rollout of new stores across all our brands. Capital spend increased in HY12 as a result of more new stores being completed (112: HY12 vs 84: HY11). The full year forecast increase is mainly driven by a continuation of this trend into the second half

Refurbishment

• Reflects the continuation of refurbishment activity across our brands. Capital spend reduced in HY12 mainly as a result of less stores being refurbished and lower costs of refurbishments per store (82: HY12 vs 122: HY11). In a challenging trading environment refurbishment spend has been retargeted at key refurbishments and specific merchandising initiatives with a focus on sustainability initiatives

Stay In Business

• Includes expenditure on a variety of IT and other projects including enhancement of our data analytics capabilities, merchandising systems upgrade and other equipment. The increase in HY12 compared to HY11 was due to several large projects in Australian Supermarkets. The current full year forecast decreased on our original forecast as a result of a re-prioritisation of non-critical projects

Supply Chain and Data Centre

• Includes investment in BIG W and Home Improvement distribution centre in Hoxton Park, re-engineering of the Melbourne National Distribution centre, construction of a new distribution centre in Tasmania, investment in a new meat processing plant in Western Australia and a distribution centre dock safety project. The current full year forecast decreased on our original forecast as a result of a re-prioritisation of non-critical projects

Home Improvement

• Includes capital for the fit-out of new stores, IT and Supply Chain. The increase in HY12 spend compared to HY11 is due to significantly higher capital expenditure in relation to the fit-out of new stores as the first 7 stores were opened during the half year and a further 18 were under construction

Property Developments (net of sale)

• The increase in HY12 reflects a higher level of property development, driven by retail developments and Home Improvement, partially offset by higher property sales. The current full year forecast is in line with the previous full year forecast

WE CONTINUE TO INVEST IN ALL OUR BUSINESSES

66

SUPPLY CHAIN

DEVELOPED WORLD CLASS FOOD AND LIQUOR SUPPLY CHAIN DELIVERING A STEP CHANGE IN OUR COSTS AND SERVICE

LOGISTICS PERFORMANCE

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BEST PRACTICE - TRANSPORT

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2006-2011

CARTONS HANDLED	+ 45%
LOGISTICS COSTS (% OF SALES)1	- 57 bps
LABOUR COST PER CARTON $2	- 0.4%

1. Excluding DSD

• 40% OF INBOUND VOLUME HANDLED BY WOOLWORTHS PRIMARY FREIGHT – reducing trucks to DC's by 1,500 per week through better consolidation, and utilising outbound trailer fleet

• METRO TRANSPORT MODEL (MTM) – we control route planning and load allocations. As well as own our own outbound trailer fleet

2. ABS data shows wage inflation in the sector up 17.9% for same period

BEST PRACTICE – DCs

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BEST PRACTICE – PROCESS & TECHNOLOGY

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----- Start of picture text -----

• 31 DCs down to 20 DCs by FY12
• 2 1
Transition to an NDC / RDC network
• Purpose built
liquor DCs
• Cumulative network spend 4 2
–
DCs ~$800m
– IT / other ~$450m 4 2 4 2 8 41
• DC spend fully recovered via Sale 5 1
2002 – 31 DCs 4
and leaseback
2012 – 20 DCs
4 2
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• AutostockR – automated in store and DC stock replenishment systems

• Warehouse Management Systems (WMS), Material Handling System (MHS) and Labour Planning System enhancing DC efficiency

• Transport Management System (TMS) enhancing transport efficiency

• Reduction in Direct Store Delivery (DSD) to remove complexity from stores

67