focused on shareholder value Annual Report 2000 Continuing the company’s Once again the result was a strong performance. Highlights record. A detailed review of the of the 1999/2000 financial year year’s results and the outlook and results at a glance. for the future. 2 highlights 4 letter from the chairman contents 3 financial overview 6 managing director’s 3 creating wealth and review of operations adding value directory financial calendar Wesfarmers Limited ABN 28 008 984 049 Final dividend payment 48 cents per share 26 October 2000 Executive directors MA Chaney Managing Director and Chief Executive Officer Annual general meeting E Fraunschiel Finance Director and quarterly announcement of results 6 November 2000 Non-executive directors Half-year results and interim dividend announcement February 2001 CH Perkins Chairman KP Hogan, O.A.M. Deputy Chairman Half-year results summary DJ Asimus, A.O. mailed to shareholders March 2001 TR Eastwood, AM Interim dividend payment April 2001 TJ Flügge, A.O. LA Giglia Quarterly announcement of results May 2001 JP Graham Full-year results RD Lester and final dividend announcement August 2001 DEW Nuttall JM Paterson Annual report mailed to shareholders October 2001 DC White Final dividend payment October 2001 Company Secretary Annual general meeting PJ Johnston and quarterly announcement of results November 2001 Audit committee DC White Chairman of the committee LA Giglia Annual general meeting The 19th annual general meeting of RD Lester Wesfarmers Limited will be held at the Hyatt Regency Perth, DEW Nuttall 99 Adelaide Terrace, Perth on Monday 6 November 2000 Registered office at 2.00 pm. 11th Floor, Wesfarmers House 40 The Esplanade Annual report cost 50,000 copies of this annual report have Perth, Western Australia 6000 been produced at a cost of about $3.00 per copy. Telephone: (08) 9327 4211 Facsimile: (08) 9327 4216 Wesfarmers Limited Annual Report 2000 1 Operational performances A snapshot of Wesfarmers’ role at a glance followed by Directors, their details and the in the community. A summary Group financial statements, detailed reviews of each of corporate governance practices of useful information relating to statutory reports and details the group businesses. that are followed. your investment in the company. of shareholdings. 10 operational summary 26 board of directors 30 wesfarmers and 33 financial statements 12 hardware 28 corporate governance the community 14 gas 32 investor information 16 coal 18 fertilisers & chemicals 20 rural services & insurance 22 forest products 24 transport company profile Wesfarmers’ objective Wesfarmers is a major diversified Australian public company The primary objective of Wesfarmers Limited is to provide headquartered in Perth, Western Australia and is ranked with a satisfactory return to shareholders. the leading performers among Australia’s top 50 listed companies The company aims to achieve this by: in terms of shareholder return. This is seen as the ultimate test of the company’s performance. • satisfying the needs of customers through the provision of goods and services on a competitive and professional basis; The company’s origin in 1914 as a Western Australian farmers’ co-operative determined its early focus on the provision of services • providing a fulfilling and safe working environment for and merchandise to the rural community. While maintaining this employees, rewarding good performance and providing focus, Wesfarmers has undertaken a diversification programme over opportunities for advancement; the past decade resulting in a greatly broadened business and • contributing to the growth and prosperity of Australia by geographical base. conducting existing operations in an efficient manner and by Today it is a diversified corporation with interests in fertilisers and searching out opportunities for expansion; chemicals manufacture; gas processing and distribution; coal mining • responding to the attitudes and expectations of the and production; building materials, hardware retailing and forest communities in which the company operates and placing products; rural merchandise and services; transport; and insurance. strong emphasis on achieving sustainable development and Since its public listing in 1984, Wesfarmers has recorded strong protection of the environment; and growth in assets and profits. Today the group employs about 9,700 • acting with integrity and honesty in dealings both inside and people full-time and a further 4,700 on a part-time or casual basis. outside the company. Wesfarmers has 41,000 shareholdings on its register comprising farmers, institutions, employees and other investors. With a clear focus on shareholder value, Wesfarmers is active in its endeavours to expand the existing businesses and to assess new opportunities as they are presented both within Australia and overseas. Wesfarmers Limited Annual Report 2000 2 highlights of the year • operating profit after tax (before abnormal items and goodwill amortisation) up nine per cent to $202 million • nine new Bunnings warehouse stores opened in mainland Australia • completion of a new $150 million ammonia plant at Kwinana in Western Australia • acquisition of the Curragh coal mine in Queensland’s Bowen Basin • completion of the jointly owned 180,000 tonne per annum Queensland nitrates project Wesfarmers Limited Annual Report 2000 Operating profit Dividends per share Earnings per share Return on average 3 after tax shareholders’ equity before abnormal items before abnormal items and goodwill amortisation and goodwill amortisation before abnormal items ($ millions) (cents) (cents) (%) financial overview 2000 1999 % Change Operating revenue $m 3,496 3,119 + 12.1 Operating profit before abnormal items, interest and tax $m 320 268 + 19.4 Operating profit after tax before abnormal items and goodwill amortisation $m 202 185 +9.2 Operating profit after tax before abnormal items $m 195 178 + 9.6 Dividends $m 193 178 + 8.4 Total assets $m 3,169 2,576 + 23.0 Net borrowings $m 829 438 + 89.3 Shareholders’ equity $m 1,231 1,207 + 2.0 Capital expenditure on property, plant and equipment $m 189 352 - 46.3 Depreciation and amortisation $m 125 120 + 4.2 Earnings per share before abnormal items and goodwill amortisation cents 75.7 71.9 + 5.3 Return on average shareholders’ equity before abnormal items % 16.0 15.0 + 6.7 Dividends per share cents 73 67 + 9.0 Net tangible assets per share $ 4.13 3.96 + 4.3 Cash flow per share $ 1.20 1.16 + 3.4 Gearing (net debt to equity) % 67.3 36.3 + 85.4 Net interest cover before abnormal items (cash basis) times 18.9 23.0 - 17.8 For a detailed financial history, refer to page 72. creating wealth and adding value $m $m Wealth creation Total operating revenue 3,496 3,119 Total cost of materials, goods and services and other external costs 2,525 2,267 Total value-added, representing the wealth created by Wesfarmers 971 852 This created wealth was shared as follows: • to employees as salaries, wages and other benefits 420 370 • to governments as income tax, royalties and other taxes 186 158 • to lenders as interest on borrowed funds 32 24 • to shareholders as dividends on their investment 194 178 • reinvested in the business as depreciation, amortisation and retained earnings 139 122 Wesfarmers Limited Annual Report 2000 4 letter from the Dear Shareholder, should be willing to pay for assets. Wesfarmers has been a I am delighted to present the “value investor” and, as a result, chairman Wesfarmers 2000 annual report. its assets provide good returns. On behalf of the board, In the review by Wesfarmers it is pleasing to report on Managing Director, another year in which record Michael Chaney, and the levels of revenue and profits detailed business unit reports were established. that follow you will find full details of the group’s 1999/2000 Highlights of the year included performance as well as another outstanding contribution comments and information from the group’s national about future prospects. hardware retailing business and I encourage you to read significant profit turnarounds by these reports. the rural/insurance and forest products operations. Revenue and earnings from the group’s energy businesses also improved on last Dividend year with a positive first-year In line with the company’s contribution from the new current policy of maintaining a Bengalla coal mine, but reduced dividend payout ratio of contributions were recorded by 100 per cent of after-tax profit fertilisers/chemicals and transport. before abnormal items, a fully As the graphs on this page franked final dividend of illustrate, Wesfarmers has 48 cents per share has been achieved strong profit growth declared (last year 42 cents). and provided very substantial This lifts the full-year distribution returns to its shareholders since to 73 cents per share compared it listed on the Stock Exchange to last year’s 67 cents. in 1984. An investment of The directors have also $1,000 in Wesfarmers at that time would be worth $36,000 reinstated the company’s today if all dividends had been dividend investment plan as a reinvested. This compares with result of higher group gearing, around $8,000 for an as explained in more detail in investment of $1,000 in the the Managing Director’s review. basket of stocks comprised in New shares issued under this the All Ordinaries index. plan will be at a discount of 2.5 per cent to the market price It is no coincidence that for the final 2000 dividend, Wesfarmers has achieved these the same discount that applied results while maintaining strict prior to the plan’s suspension in guidelines on how much it August 1999. once again the result was a record Share price versus operating profit after tax Australian accumulation indices 1984-2000 Share price Wesfarmers Limited Operating profit after tax (before abnormal items and goodwill amortisation) All Ordinaries All Industrials Wesfarmers Limited Annual Report 2000 5 Board retirement During the year, the board announced the retirement of Warren Murphy after a long and distinguished executive career with Wesfarmers.