2018 HALF-YEAR RESULTS SHAREHOLDER

QUICK GUIDE For personal use only use personal For

1 2018 Half-year Results GROUP PERFORMANCE SUMMARY Shareholder Quick Guide

We are pleased to provide The Group reported a net profit after shareholders with a summary tax (NPAT) of $212 million for the Earnings before interest and tax breakdown Interim dividend per share half‑year ended 31 December 2017. of Limited’s This includes post-tax significant items results for the half-year ended of $1,323 million relating to Bunnings BUNNINGS AUSTRALIA AND NEW ZEALAND DEPARTMENT STORES 31 December 2017. For more detail United Kingdom and Ireland (BUKI) we encourage you to read the and Target. Excluding these significant $864m $415m $1.03 relevant announcements released items, NPAT for the half-year decreased TOTAL 2.7 per cent to $1,535 million. BUNNINGS UK AND IRELAND by the ASX on 21 February 2018. DIVISIONAL EBIT The continued strong momentum in ($165m) $68m Bunnings Australia and New Zealand $2,421m Outlook (BANZ), Kmart and Officeworks, in a COLES INDUSTRIALS Overall, the Group remains well-positioned competitive retail environment, was a for the future. highlight. Strong production volumes $790m $449m and higher coal prices in the Resources BANZ is expected to continue building on business contributed to a significant the strong results achieved in the first half increase in the Industrials division’s Good sales momentum was maintained, the prior year, with higher Chemicals and and will continue to invest in the customer earnings. Higher earnings across a with comparable transaction growth Energy earnings partially offset by lower offer to drive further growth and create majority of the Group’s businesses accelerating in the second quarter and Fertilisers earnings due to continued better experiences for customers and the were offset by losses in BUKI and reaching the highest level in six quarters. competitive price pressures. wider community. The review of BUKI is lower Coles earnings following planned The business continued to improve its ongoing and an update will be provided to Earnings from the Industrial and investments in price and service. customer offer across value, quality, the market in June 2018. The short-term Safety business were in line with product innovation and service, resulting focus for the business is on improving the In line with the Group’s dividend policy, the prior period. A strong focus on in overall improvements in customer trading performance of . which considers earnings, cash flows, operational efficiencies, and improved satisfaction metrics. franking credits and credit metrics, the operational and sourcing disciplines, Coles’ supermarkets business is expected directors declared a fully-franked interim Department Stores’ earnings increased offset a 1.7 per cent decline in revenue to continue to improve, as it delivers better dividend of $1.03 per share, in line with 7.2 per cent to $415 million, the highest and investments in supply chain, value, quality, service and convenience the previous corresponding period. level of combined Kmart and Target first merchandising and customer service. for customers. The strong performance half earnings since the 2010 financial of Kmart is expected to continue and the Retail year. Kmart invested significantly Cash flow repositioning of Target’s merchandise offer in the customer offer, delivering will be further progressed. Officeworks BANZ achieved another very strong greater value for customers and The Group generated record operating has had a strong start to the second half result, underpinned by continued driving continued growth in volumes. cash flows of $2,897 million for the of the financial year, supported by the sales growth across all of its market Target stabilised its earnings through half, supported by proactive working critical back-to-school trading period, segments, productivity initiatives and productivity initiatives and improved capital management. Strict capital and is well-positioned to drive growth operating leverage. The solid momentum trading margins, while continuing to disciplines were maintained and the in a competitive environment with a reflected continued strong execution reposition its merchandise offer. Group retained a very strong balance market‑leading omnichannel offer. of its strategy, with further investments sheet, with improvements achieved in its WesCEF expects the continuation of made in customer value, product Officeworks’ growth was driven by credit metrics. The cash realisation ratio strong demand for Chemicals in the ranges, the store network and digital. continued improvements in the core offer, increased 12.9 percentage points to second half. Earnings will be subject complemented by new and expanded 132.6 per cent. Michael Chaney AO BUKI’s loss for the half reflected product ranges, improvements in to international commodity prices and Chairman continued trading and execution layouts and store design, and further Gross capital expenditure of exchange rates, as well as seasonal challenges as a result of the rapid enhancement of the omnichannel offer. $1,004 million was 8.7 per cent higher conditions in Fertilisers. Industrial and repositioning of Homebase following than the prior corresponding period, Safety is expected to experience generally the acquisition. The management team Industrials primarily due to the acquisition of stable market conditions for the remainder has been strengthened and a review is the rights to the Kmart brand name of the financial year and remains focused

underway to identify the actions required Earnings for the Industrials division in Australia and New Zealand for on realising the benefits associated with For personal use only use personal For to improve shareholder returns. were $449 million, $72 million higher $100 million, and additional BANZ recent investments in supply chain and Rob Scott than the prior corresponding period, store openings, partially offset by lower customer service. Resources earnings will Coles’ decline in earnings reflected the Managing Director largely reflecting higher coal prices expenditure in Coles due to the timing be subject to rail capacity and thermal and annualisation of investments made in and strong production volumes in the of store refurbishments. Net capital metallurgical coal prices, and the full-year the customer offer in the 2017 financial Resources business. expenditure increased $286 million to earnings contribution will be dependent year, lower property earnings due to $686 million, reflecting lower proceeds on the timing of the completion of the sale a one-off gain in the prior year, lower Wesfarmers Chemicals, Energy and from property disposals compared to of Curragh. An update will be provided to financial services earnings following the Fertilisers’ (WesCEF) earnings were the prior year, which included one-off the market when appropriate. sale of Coles’ credit card receivables in $188 million for the period, compared transactions in Coles and WesCEF. 20 February 2018 February 2017, and lower fuel earnings. to underlying earnings of $165 million in

2 2018 Half-year Results GROUP PERFORMANCE SUMMARY Shareholder Quick Guide

The continued strong momentum in Bunnings Australia and New Zealand, Kmart and Officeworks, in a competitive retail environment, was a highlight for the half.

Revenue Earnings before Net profit after tax Earnings per share Return on equity (R12) interest and tax

$35,903m $2,350m $1,535m $1.36 12.0% 2.8% 3.3% 2.7% 3.2% 1.8ppts Excluding significant items1 Excluding significant items1 Excluding significant items1 Excluding significant items1

$35,903m $34,917m $2,429m $2,350m $1,535m $1,577m $1.36 $1.40 12.0% 10.2%

6.4% $1,113m

$212m $0.19

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 For personal use only use personal For

Excluding significant items.

Reported.

1 2018 excludes the following pre-tax (post-tax) significant items: $931 million ($1,023 million) relating to Bunnings United Kingdom and Ireland, and $306 million ($300 million) relating to Target. 2017 ROE excludes post-tax non-cash impairments of $1,844 million.

3 2018 Half-year Results DIVISIONAL PERFORMANCE SUMMARY Shareholder Quick Guide

BUNNINGS AUSTRALIA BUNNINGS UNITED COLES DEPARTMENT STORES AND NEW ZEALAND KINGDOM AND IRELAND

Financial performance Financial performance Financial performance • Comparable fuel volumes down Financial performance • Significant transition to deliver • Total store sales growth of • Operating revenue down 15.5 per cent • Earnings decline reflected 19.3 per cent reflecting changes • Revenue up 3.2 per cent; quality and fashion at low prices 10.1 per cent and store-on-store to £517m resulting in loss before annualisation of investments in the in Alliance agreement; average continued strong growth at continued with ongoing reset of sales up 9.0 per cent interest and tax of £97m customer offer, a one-off property weekly volumes broadly in line Kmart partially offset by Target product, price and range over the past three quarters • Sales growth across consumer and • Pre-tax significant items of £531m gain in the prior year, lower financial • Highest combined first half • Earnings growth driven by commercial markets, all regions and reflecting Homebase’s current trading services earnings following the Outlook earnings since FY2010 improved trading margins and sale of credit card receivables; lower supply chain and store product categories performance and a moderated outlook • Sales momentum in Supermarkets • Kmart total sales up 8.6 per cent and lower fuel earnings operating costs • Prior period affected by late start for BUKI expected to continue in the and comparable sales up to spring and competitor stock • Continued challenges from the rapid • Improved sales trend during second half 5.4 per cent Outlook the half, with headline food and liquidation repositioning of Homebase • Price deflation expected to remain • Sales growth driven by increased • Division is well-positioned to grow liquor sales up 1.9 per cent and • More store upgrades, category • Early sales results encouraging from at elevated levels due to lower transactions and units per basket comparable sales up 0.9 per cent • Kmart’s solid sales momentum refresh work and investment in 15 Bunnings pilots fresh produce prices • Significant price investment in line expected to continue in the • Food and liquor deflation of customer value • Senior leadership team strengthened • Divisional earnings expected with Kmart’s lowest price strategy second half 1.6 per cent underpinned by to be affected by increased • Earnings growth driven by Outlook Outlook seasonally driven lower fresh • Plans to open four new Kmart team member costs, with a new an enhanced product range, • Good trading momentum expected produce prices stores and complete nine store • Review underway to identify actions to enterprise agreement likely to be improved sell-through of full‑price to continue refurbishments in the second half improve shareholder returns; update in • Double-digit sales growth in Coles finalised in the second half, and inventory, and productivity • Introduction of online transactions June 2018 Online • Target will continue to reflect the lower Convenience earnings due improvements significant transition underway to for special orders expected in the • Focus on significantly improving • Positive comparable sales growth to ongoing impact of changes in • Target total sales down fashionable home, kidswear and second half retail execution to lift Homebase in Liquor as transformation terms with its Alliance partner 6.2 per cent and comparable womenswear offers performance over spring and summer program continues • Exciting initiatives for customers, sales down 6.5 per cent • Comparable convenience store including Sports for Schools sales up 0.4 per cent program

Bunnings Australia Bunnings United Kingdom Coles Department and New Zealand and Ireland Stores

Revenue $6,566m 10.2% $875m 15.7% $19,978m 0.4% $4,769m 3.2%

2018 $6,566m 2018 $875m 2018 $19,978m 2018 $4,769m 2017 $5,957m 2018 2017 2017 $1,038m 2018 2017 2017 $20,056m 2018 2017 2017 $4,619m 2018 2017

Earnings $864m 12.2% ($165m) $790m 14.1% $415m 7.2% before interest and tax 2018 $864m 2018 ($165m) 2018 $790m 2018 $415m

2017 $770m 2018 2017 2017 ($48m) 2018 2017 2017 $920m 2018 2017 2017 $387m 2018 2017 For personal use only use personal For

Return on 4 7.0 % 8.0ppts (22.0%) 9.0 % 2.1ppts 26.2% 17.0ppts capital (R12)

2018 47.0% 2018 (22.0%) 2018 9.0% 2018 26.2% 2017 39.0% 2018 2017 2017 n.a. 2018 2017 11.1% 2018 2017 2017 9.2% 2018 2017

4 2018 Half-year Results DIVISIONAL PERFORMANCE SUMMARY Shareholder Quick Guide

OFFICEWORKS INDUSTRIALS Chemicals, Energy and Fertilisers Industrial and Safety Resources

Financial performance Outlook Earnings for the division were Financial performance Financial performance Financial performance • Sales growth of 9.8 per cent • Back-to-school trading period $72 million higher than the prior • Earnings up 13.9 per cent, after • Blackwoods’ earnings in line with prior • Revenue and earnings up due to corresponding period largely reflecting • Earnings growth achieved through delivered a strong start to excluding one-off profit in the prior corresponding period, supported by continued strength in export coal higher coal prices and strong higher sales across stores and second half period on sale of land improved trading margins, offset by prices, higher sales volumes and lower production volumes in Resources. online, and effective management • Continue to drive growth and • Chemicals’ earnings up due to strong continued investments in customer hedge book losses of gross margin and cost of doing productivity by executing strategic production performance and demand service, supply chain and digital • During the half, Wesfarmers agreed to business agenda • Kleenheat’s earnings up due to higher • Workwear Group earnings improved sell Curragh coal mine to Coronado • Ongoing improvement in customer • Competitive intensity to continue, Saudi CP pricing, increased LPG as a result of lower operating costs Coal Group – subject to completion offer driven by continued focus on particularly in technology exports and continued growth in • Coregas’ earnings affected by core offer complemented by new • Well-placed to continue to drive natural gas retailing competitive pressures and rising and expanded product ranges, growth and enhancements to its • Lower fertiliser earnings due to impact energy input costs improvements in merchandise offer through range extension and of increased competition layouts and store design, online merchandising initiatives enhancements, and a relentless focus on price, range and service Outlook • Strong momentum maintained in • Production and demand for WesCEF’s products is expected to remain strong for • Performance improvement activities will continue in Blackwoods and business-to-business customer the remainder of the financial year Workwear Group segment • Increased competition and oversupply in AN and fertiliser markets in the • Coal prices are expected to remain volatile in the near term medium term • Resources’ full-year contribution dependent on timing of completion of Curragh sale • International commodity prices, exchange rates and seasonal factors will continue • Curragh’s metallurgical sales volumes forecast to be 8.5 to 8.8 million tonnes for to influence WesCEF’s earnings FY2018 due to the impact on rail capacity of ’s recently announced changes • Market conditions and demand for products are expected to remain stable for all to network practices and January 2018 derailment Industrial and Safety businesses, except Coregas which expects continued margin • Strategic review of 40 per cent interest in Bengalla mine is ongoing pressure and rising energy input costs

Officeworks Industrials Chemicals, Energy Industrial and Safety Resources and Fertilisers

Revenue $1,017m 9.7% $2,704m 16.5% $764m 9.9% $869m 1.7% $1,071m 44.3%

2018 $1,017m 2018 $2,704m 2018 $764m 2018 $869m 2018 $1,071m 2017 $927m 2018 2017 2017 $2,321m 2018 2017 2017 $695m 2018 2017 2017 $884m 2018 2017 2017 $742m 2018 2017

Earnings before interest $68m 9.7% $449m 19.1% $188m 0.5% $52m $209m 51.4% and tax

2018 $68m 2018 $449m 2018 $188m 2018 $52m 2018 $209m

2017 $62m 2018 2017 2017 $377m 2018 2017 2017 $187m 2018 2017 2017 $52m 2018 2017 2017 $138m 2018 2017 For personal use only use personal For

Return on 15.7% 1.8ppts 28.0% 2.9ppts 8.3% 2.4ppts 7 7.0 % 83.1ppts capital (R12)

2018 15.7% 2018 28.0% 2018 8.3% 2018 77.0% 2017 13.9% 2018 2017 2017 25.1% 2018 2017 2017 5.9% 2018 2017 2017 (6.1%) 2018 2017

5 2018 Half-year Results SHAREHOLDER INFORMATION Shareholder Quick Guide

Key dates Wesfarmers brands

2018 Half-year results announcement and briefing 21 February 2018 Home Improvement 2018 Interim dividend – Ex-dividend date 26 February 2018 – Record date 5:00pm AWST 27 February 2018 – Last date for receipt of election notice for DIP 5:00pm AWST 28 February 2018 Coles – Payment date and DIP allocation date 5 April 2018 *Strategy Briefing Day 7 June 2018

* Dates are subject to change should circumstances require. All changes will be advised to the ASX.

Share registry Dividend Investment Plan (DIP) Shareholders seeking information about their The DIP provides a convenient way for shareholders shareholdings or who wish to manage their to invest their dividends in new fully paid shares in Department Stores shareholdings should contact our share registry, Wesfarmers, without paying brokerage or other costs. Computershare Investor Services Pty Limited. At each dividend payment date, dividends on shares The registry can assist with queries such as nominated to be subject of the DIP are automatically share transfers, dividend payments, the Dividend invested in Wesfarmers ordinary shares. Investment Plan, and changes of name, address or bank details. Wesfarmers Investor Centre Officeworks The Investor Centre is a dedicated online resource Computershare Investor Services Pty Limited for keeping shareholders informed about our Shareholder information line: performance. For information such as current and 1300 558 062 (in Australia) historical share prices, company announcements, or (+61 3) 9415 4631 reports and presentations, dividend and capital management information and key financial dates, www.investorcentre.com/wes visit http://www.wesfarmers.com.au/investor-centre. Industrials You can also link to our share registry where you can manage your shareholding.

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Wesfarmers Limited ABN 28 008 984 049 Follow @wesfarmers on Twitter Other businesses Level 14, Brookfield Place Tower 2 123 St Georges Terrace Perth, Western Australia Email: [email protected] Website: www.wesfarmers.com.au

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