Annual General Meeting

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WOOLWORTHS LIMITED
WOOLWORTHS LIMITED
Annual General Meeting
ROGER CORBETTChief Executive Officer
22 November 2002
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WOOLWORTHS LIMITED
DELIVERING VALUE TO
SHAREHOLDERS AND CUSTOMERS
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WOOLWORTHS BUSINESS PROFILE

• Woolworths employed over 145,000 people across
  Australia as at 30 June 2002, or 1 in 59
  working Australians, 50,000 in regional and rural
  areas
• During the year we welcomed 7,000 Franklins
  employees
• (1) Excludes Wholesale Operations

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WOOLWORTHS VICTORIAN BUSINESS
Woolworths has a 1.5 billion investment in
Victoria
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RESULTS HIGHLIGHTS Y/E 30/6/02

• Sales up 17.0 to 24.5 billion
• Costs down 38 basis points to 21.84
• Earnings before Interest and Tax (EBIT) up 17.8
• Net Operating Profit after Tax and servicing
  Income Notes up 22.2 to 523.2 million
• Earnings per share up 25.1 to 50.24 cents
• Dividends per share up 22.2 to 33 cents
• Days inventory down 3.3 days to 37.3 days
• Average Return on Funds Employed (ROFE) up to
  38.1
• Average Return on Equity (ROE) up to 48.1

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SALES GROWTH
3½ billion sales growth driven by- 2 billion
organic bolt ons- 1 billion ex-Franklins
stores- ½ billion 53rd week
14.9
10.1
8.3

9.5
10.2




52 weeks comparable
Adjusted to exclude WST
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FIRST QUARTER SALES RESULTS


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CODB / SALES
Costs The Key Enabler



Cost
0.86x 19.0 b 1.73x 20.9 b
2.11x 24.5 b
Reduction
163 m 362 m
517 m 1042 m

Adjusted to exclude WST
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GROSS PROFIT MARGIN
Margin 0.67x 19.0 b 1.43x 20.9 b
1.79x 24.5 b Reduction 127 m
299 m 438 m
864 m
LOWERING THE COST OF LIVING INCREASE
83 OF REDUCTION TO CUSTOMERS
DOWN 179PTS IN 3YRS
DOWN 36PTS IN FYO2
Cumulative Reductions 864 mil



Adjusted to exclude WST
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EBIT MARGIN SUMMARY
EBIT MARGIN UP 2 BASIS POINTS.FRANKLINS
CONTRIBUTES 2 ON 1B SALES,EQUATED TO 3.46
EX-FRANKLINS - UP 8 BASIS POINTSOR 3.49 OF
SALES FOR CONTINUING BUSINESSES (EXCLUDING
WHOLESALE)
Adjusted to exclude WST
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EBIT SUMMARY
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FRANKLINS ANALYSIS

• 72 ex Franklins stores acquired, current status
  
• 13 trading as Food for Less
• 54 trading as Woolworths / Safeway Supermarkets
• 1 store to reopen as Woolworths Supermarket in
  F03 (now open)
• 1 store converted and reopened as Dan Murphy
  (Belconnen)
• 3 stores to be converted to Dan Murphy in F03
  (Eltham, Vermont Sth and Frankston) (2 now open)
• Smooth transition overall was very pleasing,
  however as always several areas could have been
  handled better
• 4 existing Supermarkets were sold in accordance
  with ACCC undertakings
• Capital conversion costs of 117 milion (105 mil
  in F02) vs original estimate 126 mil

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FRANKLINS ANALYSIS

• Store sales results for F02 slightly above our
  acquisition expectation at 1.05 bil (1.01 bil
  excluding sales in respect of 4 stores sold in
  accordance with ACCC undertakings)
• Store costs higher than existing Woolworths /
  Safeway stores but in line with acquisition
  expectation and will improve to Woolworths norms
  in F03
• F02 EBIT of 20 mil was at the top end of our
  acquisition expectation

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PROFIT AFTER TAX (AFTER WINS)
22.2
17.6
16.6
3.9
16.5

53 Weeks
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EARNINGS PER SHARE
25.10
24.10
18.75
2.68
14.10
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DIVIDENDS PER SHARE
22.2
17.4
27.8
5.9
6.3
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DAYS STOCK ON HAND
INVENTORY DOWN 3.3 DAYS WITH IN-STOCK POSITION
RECORD HIGH
Tandy Liberty Liquor
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RETURN ON FUNDS EMPLOYED
Based on average of opening and closing funds
employed
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RETURN ON EQUITY
Based on average of opening and closing
Shareholders funds
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PROJECT REFRESH
Restatement of Project Refresh after three years

• Refresh savings over the next five years to be
  no less than 1 of annual sales ie 20 bps per
  annum
• Refresh savings will be shared approximately
  50/50 between customer and shareholder

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PROJECT REFRESH
Cumulative savings 5.1 bil over 8 years
Level III - Development
24.5
Level II - Logistics
24.10
18.75
2.68
Level I - Reorganisation / line items
14.10
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PROJECT REFRESH
8 year cum savings 5.1 bil
3.11 of sales
Savings in years 4 to 8 4.1 bil
Level II
Additional 1 of sales to 3.11 cumulative
Increasingly logistics driven
3 year Cum savings 1.0 bil
2.11 of sales
Level I
Mainly line items and reorganisation
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GROWTH

• Considerable opportunities for continuing growth
  in both revenues and earnings
• Add 15 to 25 new Supermarkets per year for the
  foreseeable future
• Expand BIG W at a rate of 6 - 8 per year (10 for
  2002/2003 year) growing the chain from its
  current level of104 to150
• Grow liquor from sales of 1.4bil to 2.5bil
• Grow petrol from 269 canopies currently open to
  350 over 3 years
• Further potential to grow sales in existing core
  businesses
• Relatively low share of national fresh food
  market
• Significant number of new stores yet to mature
• Trend towards gradual deregulation of trading
  hours and product restrictions
• New formats and ranges
• Strength of our balance sheet allows us to
  address larger acquisitions should they become
  available, these will be examined and pursued if
  they add to shareholder value

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SALES AND EARNINGS GUIDANCE

• As consistently stated previously, we anticipate
  sales will grow in the high single digits and
  earnings (EBIT and EPS) will grow in the low
  double digits for the foreseeable future
• Sales and earnings guidance were reviewed at the
  end of the first quarter and left unchanged with
  the release of the first quarter sales
• It is not Woolworths normal practice to provide
  sales guidance, however sales guidance is given
  for this year only to help the market understand
  the impact of non comparable sales from ex
  Franklins stores, as well as the impact of moving
  from a 53 week year in FY02 to a 52 week year in
  FY03. Our normal practice of providing earnings
  guidance will of course continue
• Sales have continued to perform well and have
  grown in line with our expectations in the 6
  weeks since the end of the first quarter

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SALES AND EARNINGS GUIDANCE

• Subject to current trends continuing and a
  satisfactory Christmas trading period, we now
  expect normalised (52 week) sales growth for 2002
  / 2003, for continuing operations, will be of the
  order of 10.5 to 11.0 (previous guidance
  anticipated a 10.0 increase)
• Our costs continue to reduce and in line with our
  objectives we anticipate that EBIT growth for the
  half year and full year will exceed sales growth,
  resulting in thickening EBIT margins
• We now anticipate EPS will grow in a range of
  55.5 cps to 57.5 cps after goodwill (previously
  55 cps to 57.5 cps) and 58 cps to 60 cps before
  goodwill (previously 57.5 cps to 60 cps). This
  improves our previous earnings guidance by 1 or
  0.5 cent at the bottom of the range
• This guidance is given subject to a continuation
  of the current business and economic environment
  and a satisfactory Christmas trading period

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