22 September 2015 The Manager Market Announcements Office Australian Securities Exchange Dear Sir, 2015 ANNUAL REVIEW Attached is the Wesfarmers Limited 2015 Annual Review. A copy of the review will be sent in October 2015 to those shareholders who have elected to receive a copy. The review is also available on the company’s website www.wesfarmers.com.au. Yours faithfully, L J KENYON COMPANY SECRETARY Delivering value today and tomorrow. Annual Review 2015 About About Wesfarmers this review From its origins in 1914 as a Western This annual review is a summary Australian farmers’ cooperative, of Wesfarmers’ and its subsidiary Wesfarmers has grown into one of companies’ operations, activities Australia’s largest listed companies. and financial position as at With headquarters in Western 30 June 2015. In this review Australia, its diverse business references to ‘Wesfarmers’, ‘the operations cover: supermarkets; company’, ‘the Group’, ‘we’, ‘us’ home improvement and office and ‘our’ refer to Wesfarmers Limited supplies; department stores; (ABN 28 008 984 049) unless chemicals, energy and fertilisers; otherwise stated. coal; and industrial and safety References in this review to a ‘year’ products. Wesfarmers is one of are to the financial year ended Australia’s largest private sector 30 June 2015 unless otherwise employers and has a shareholder stated. All dollar figures are expressed base of approximately 500,000. in Australian dollars (AUD) unless otherwise stated. All references to ‘Indigenous’ people are intended to include Aboriginal and/or Torres Strait Islander peoples. This review is printed on environmentally responsible paper manufactured under ISO14001 environmental standards. Our Objective The primary objective of Wesfarmers is to provide a satisfactory return to our shareholders. Contents 2 Chairman’s message 4 Managing Director’s report 6 Highlights summary 8 Operating and financial review 20 – Coles 21 – Home Improvement and Office Supplies Wesfarmers is one of Australia’s 23 – Department store retailing largest private sector employers 23 – Kmart and has a shareholder base of 24 – Target approximately 500,000. 25 – Industrials 25 – Chemicals, Energy and Fertilisers 26 – Resources 27 – Industrial and Safety 28 – Other activities 29 Sustainability overview 37 Board of directors 41 Corporate governance summary 45 Remuneration overview 51 Five-year financial history 52 Corporate directory 53 Wesfarmers brands Chairman’s message It gives me great pleasure to introduce Building on strong Wesfarmers’ annual review for 2015 and my last foundations Last year, as we celebrated our as Chairman. I am extremely pleased that we have centenary year, we reflected on again been able to produce another very strong the Wesfarmers journey since result for shareholders. being registered in June 1914 as a farmers’ cooperative with a paid up capital of £2,050. By the time we listed as a public company on 15 November 1984, we still only had a market capitalisation of We are in a very sound financial $30 million. Today we are one position, our balance sheet is strong of Australia’s largest companies and we are well positioned to take with a market capitalisation of advantage of growth opportunities in more than $45 billion. We are the future. We achieved a net profit one of the nation’s largest private after tax of $2,440 million for the sector employers with more than full-year, an underlying increase 205,000 employees in Australia, of 8.3 per cent when excluding as well as in New Zealand and Asia. discontinued operations and With that size comes responsibility, non-trading items. and employing more people, paying On the same underlying basis, our taxes and supporting suppliers The Wesfarmers story is unique earnings per share rose 9.9 per cent. are all obligations we take extremely in Australia. It’s all been possible The directors were able to declare seriously. because of the skills and attributes of a fully-franked final dividend of Our core values – integrity, openness, our people who have adjusted and set $1.11 per share at year’s end. accountability and boldness – stay the new directions as the domestic and That took the full-year dividend same. Our financial discipline must international realities have changed to $2.00 per share, up 5.3 per cent, remain of paramount importance. around them. The company has excluding last year’s special ‘Centenary’ If we are not financially strong and demonstrated incredible resilience dividend of 10 cents per share. successful, with a focus on our over the 101 years of its existence. It This year’s result builds on a truly returns to shareholders, we cannot has developed a very strong culture excellent legacy. Since listing, survive, prosper and do the many which gives us the ability to recruit Wesfarmers has delivered compound good things in the community we like talented people and that has been annual growth in total shareholder to do. To attract the best talent by the single most important factor in return (TSR) of 20.3 per cent, being an employer of choice, we must Wesfarmers’ success this year as in 1.8 times the rate of TSR growth also reflect the communities in which previous years. achieved by the market as represented we operate, and to set and live up to by the All Ordinaries Index. the standards we believe are desirable 2015 – our performance Over the past five years, Wesfarmers in those communities. I’d like to thank everybody who has delivered compound annual In a nation where we want to see has played a part in achieving this growth in TSR of 11.5 per cent, women given every opportunity to year’s result. Your contributions are compared with TSR growth of the fulfil their potential in employment at what makes Wesfarmers such a ASX 200 of 9.4 per cent. all levels, we must do everything we great company, able to deliver on its can to provide those opportunities commitment to provide satisfactory and encourage that potential. In a returns to our shareholders over the society where we believe Indigenous long-term and, in so doing, create value for all our stakeholders. 2 WESFARMERS ANNUAL REVIEW 2015 people need better representation The Board I would like to thank my Board in employment, we need to provide On behalf of the Board, I would like colleagues for their hard work those opportunities and help address to thank the Wesfarmers Leadership and support throughout the year. the issues and difficulties which Team led by our Managing Director, Their varied skills, experience and may be inhibiting their progress. Of Richard Goyder, for the tremendous perspectives is complemented by a critical importance is the profound work it has done over the past truly collaborative and cooperative responsibility we have to provide 12 months to ensure that this approach. I can faithfully report that a safe working environment for company’s future remains bright. the Board members are serving the all our employees – in fact, a safe Richard has been at the helm shareholders well. And I would like to environment for all our stakeholders. throughout my time as Chairman and, extend my appreciation to all the other All of these factors are important to in that period, has developed into people who have served on the Board our chances of remaining strong in one of the very best chief executives with me. Their individual and collective the modern economy. I am proud in Australia. It has been a pleasure contributions to the company have to say we are increasingly providing working with him. been enormous, their unwavering greater career opportunities for focus has been on delivering value to We had two retirements and one women; we now employ several our shareholders, and their support addition to the Board during the 2015 thousand Indigenous Australians for me in my role as firstly fellow Board financial year. Charles Macek and when just a few years ago we had member and then Chairman has been Colin Carter retired last November, only a handful; and we provide much tremendous. I cannot thank them after long and outstanding service in safer workplaces for our employees. enough for it. their respective roles. Their combined There is still much to be done, but the efforts over more than a decade of Thank you to shareholders progress has been good and I thank significant change and growth for and further encourage all of those Most importantly, of course, I want the company were outstanding. I involved in these efforts. to thank all our shareholders whose and the other Board members truly continued support and involvement in Our uncomplicated view is that we appreciated their wise counsel. our company is such a vital ingredient want to make the communities we are I am delighted Michael Chaney in the mix that makes the culture of part of stronger, healthier and better has joined the Board as Chairman- Wesfarmers so unique. places to live and raise families. It’s elect, some 10 years after his very the same vision that small group of I am humbled to have been Chairman successful period as Managing farmers had when they started the of this company, whose history and Director of the company. When I was company way back in 1914. culture has been fashioned by the appointed Chairman of Wesfarmers, contribution of many hundreds of There will always be challenges. I declared my main objective was thousands of people over such a long Successful companies must have to be custodian of the company’s period of time. the right vision supported by great culture. Who better then to succeed strategies and implemented by the me than Michael Chaney, who It has been a privilege to serve you. right people.