COL ASX Release

17 February 2021 The Manager Company Announcements Office Australian Securities Exchange Dear Sir or Madam Coles Group Limited (Coles) – Appendix 4D and Half Year Report for the period ended 3 January 2021 In accordance with ASX Listing Rule 4.2A and the Corporations Act 2001 (Cth), I enclose the following for immediate release to the market: 1. Appendix 4D; 2. Half Year Directors’ Report; 3. Half Year Financial Report; and 4. Independent Auditor’s review report, for the half year ended 3 January 2021. Coles will conduct an analyst briefing on the half year results from 9.45am AEDT. This briefing will be audio webcast and is accessible via the Company’s website at www.colesgroup.com.au. This announcement is authorised by the Board. Yours faithfully, Daniella Pereira Company Secretary Coles Group Limited ABN 11 004 089 936 800 Toorak Road Hawthorn East Victoria 3123 Australia PO Box 2000 Glen Iris Victoria 3146 Australia Telephone +61 3 9829 5111 www.colesgroup.com.au Appendix 4D and Half Year Financial Report For the half year ended 3 January 2021 APPENDIX 4D Under ASX Listing Rule 4.2A.3 Current reporting period 29 June 2020 to 3 January 2021 Previous corresponding period (PCP) 1 July 2019 to 5 January 2020 This information should be read in conjunction with the Coles Group Limited 2020 Annual Report. RESULTS FOR ANNOUNCEMENT TO THE MARKET 1H21 1H20 27 WEEKS 27 WEEKS $M $M Revenue from ordinary activities 20,569 up 8.0% from 19,046 Earnings before interest and income tax (EBIT) 1,020 up 12.1% from 910 Profit from ordinary activities after tax attributable to members 560 up 14.5% from 489 Profit after tax attributable to members 560 up 14.5% from 489 Total revenue from ordinary activities increased by 8.0% to $20,569 million driven by improved trading performance of the Group’s reportable segments from successful channel and trading plan execution and increased demand for in-home consumption associated with COVID-19. EBIT increased by 12.1% to $1,020 million with higher revenue and gross margin benefits associated with strategic sourcing and supply chain initiatives offsetting the impact of lower fuel commission income and increased administration expenses during the current period (inclusive of costs associated with COVID-19). Net profit for the period increased by 14.5% to $560 million largely driven by the increase in EBIT. DIVIDENDS NAME AMOUNT PER SECURITY FRANKED AMOUNT PER SECURITY Current period Interim dividend 33.0 cents 33.0 cents Previous corresponding period Interim dividend 30.0 cents 30.0 cents Year end (28 June 2020) Final dividend 27.5 cents 27.5 cents Conduit foreign income component: nil Record date for determining entitlement to the interim dividend: 1 March 2021 Payment date of interim dividend: 26 March 2021 The Company operates a Dividend Reinvestment Plan (DRP) under which eligible holders of ordinary shares are able to reinvest all or part of their dividend payments into additional fully paid Coles Group Limited shares. The DRP will operate at nil discount. The last date to elect to participate in the DRP is 2 March 2021. In accordance with the DRP Rules, the offer price will be calculated as the arithmetic average of the daily volume weighted average market price of the Company’s shares during the 5 trading days commencing on 9 March 2021. NET TANGIBLE ASSETS PER SHARE 3 JANUARY 2021 5 JANUARY 2020 Net tangible assets per share ($)1 0.88 0.72 1 Net tangible assets are calculated by deducting intangible assets from the net assets of the Group. Following the adoption of AASB 16 Leases on 1 July 2019, net assets include the right-of-use assets and corresponding lease liabilities recognised under the standard. COLES GROUP LIMITED | HALF YEAR FINANCIAL REPORT 2 APPENDIX 4D (CONTINUED) ENTITIES WHERE CONTROL WAS GAINED DURING THE PERIOD NAME DATE Coles Captive Insurance Pte. Ltd.1 Incorporated on 9 December 2020 1 Registered in Singapore. DETAILS OF EQUITY ACCOUNTED INVESTMENTS OWNERSHIP INTEREST NAME TYPE 3 JANUARY 2021 5 JANUARY 2020 Loyalty Pacific Pty Ltd Joint venture 50% 50% Queensland Venue Co. Pty Ltd Associate 50% 50% Additional Appendix 4D disclosure requirements can found in the accompanying Half Year Financial Report. COLES GROUP LIMITED | HALF YEAR FINANCIAL REPORT 3 COLES GROUP LIMITED AND CONTROLLED ENTITIES ABN 11 004 089 936 HALF YEAR FINANCIAL REPORT FOR THE PERIOD ENDED 3 JANUARY 2021 PAGE DIRECTORS’ REPORT 5 AUDITOR’S INDEPENDENCE DECLARATION 9 STATEMENT OF PROFIT OR LOSS 10 STATEMENT OF OTHER COMPREHENSIVE INCOME 11 STATEMENT OF FINANCIAL POSITION 12 STATEMENT OF CHANGES IN EQUITY 13 STATEMENT OF CASH FLOWS 14 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 15 1 BASIS OF PREPARATION AND ACCOUNTING POLICIES 15 2 SEGMENT REPORTING 16 3 EARNINGS PER SHARE 17 4 INCOME TAX 17 5 CASH AND CASH EQUIVALENTS 19 6 PROVISIONS 19 7 INTEREST BEARING LIABILITIES 20 8 DIVIDENDS PAID AND PROPOSED 20 9 IMPAIRMENT OF NON-FINANCIAL ASSETS 20 10 FINANCIAL INSTRUMENTS 21 11 RELATED PARTY DISCLOSURES 22 12 COMMITMENTS 22 13 CONTINGENCIES 22 14 EVENTS AFTER THE REPORTING PERIOD 23 DIRECTORS’ DECLARATION 24 INDEPENDENT AUDITOR’S REVIEW REPORT 25 COLES GROUP LIMITED | HALF YEAR FINANCIAL REPORT 4 DIRECTORS’ REPORT This Half Year Financial Report is presented by the directors in respect of Coles Group Limited (‘the Company’) and the entities it controlled (collectively, ‘the Group’) at the end of and during the half year period from 29 June 2020 to 3 January 2021. DIRECTORS The following persons were directors of the Company during the half year period and up to the date of this report, unless stated otherwise: James Graham AM Chairman and Non-Executive Director Steven Cain Managing Director and Chief Executive Officer David Cheesewright Non-executive Director Jacqueline Chow Non-executive Director Abigail Cleland Non-executive Director Richard Freudenstein Non-executive Director Wendy Stops Non-executive Director Paul O’Malley Non-executive Director (appointment effective 1 October 2020) Zlatko Todorcevski Non-executive Director (retired 30 September 2020) REVIEW AND RESULTS OF OPERATIONS REVIEW OF OPERATIONS The Group’s reportable segments are set out below: SUPERMARKETS Fresh food, groceries and general merchandise retailing (includes Coles Online and Coles Financial Services) LIQUOR Liquor retailing, including online delivery services EXPRESS Convenience store operations and commission agent for retail fuel sales RESULTS OF OPERATIONS The Group results for the half year ended 3 January 2021, and the comparative half year ended 5 January 2020, are presented below: HALF YEAR ENDED HALF YEAR ENDED 3 JANUARY 2021 5 JANUARY 2020 27 WEEKS 27 WEEKS CHANGE $M $M % Sales revenue 20,378 18,846 8.1% EBIT 1,020 910 12.1% Sales revenue increased 8.1% to $20,378 million driven by successful execution of trading plans, growth in eCommerce, and revenue uplift associated with increased demand for in-home consumption associated with COVID-19. EBIT for the Group increased 12.1% to $1,020 million primarily due to improved trading performance and cost management initiatives, partly offset by lower fuel commission income and higher administration expenses (inclusive of costs associated with COVID-19). COLES GROUP LIMITED | HALF YEAR FINANCIAL REPORT 5 DIRECTORS’ REPORT (CONTINUED) REVIEW AND RESULTS OF OPERATIONS (CONTINUED) IMPACTS OF COVID-19 Coles continues to play an important role during the COVID-19 pandemic, providing an essential service to the community while prioritising the safety of our team members and customers. Supermarkets During the reporting period, Supermarkets continued to experience increased sales from elevated levels of in-home consumption through its stores and eCommerce business, with customers favouring neighbourhood stores over shopping centre and central business district (CBD) stores. Costs continued to be elevated to maintain a safe in-store environment for team members and customers, although these moderated during the reporting period as restrictions eased. Liquor Liquor sales remained elevated during the reporting period despite the relaxation of restrictions for on-premise consumption, with a continued trend towards eCommerce sales, customer preference for large format stores and value- oriented purchases. Express Fuel volumes began to recover during the reporting period as restrictions eased. Convenience store (C-Store) sales remained strong with customers continuing to shop locally and use convenience stores for top-up shopping. AWARD COVERED SALARIED TEAM MEMBER REVIEW In February 2020, Coles announced it was conducting a review into the pay arrangements for team members who receive a salary and are covered by the General Retail Industry Award 2010 (GRIA). The review does not relate to team members who are remunerated in accordance with approved enterprise agreements and who comprise over 90% of our workforce. As announced in February 2020, Coles recognised a provision of $20 million in its 2020 Half Year Financial Report in relation to expected remediation costs. Coles has continued to be supported by a dedicated team of external experts as we complete the review. Remediation to affected current and former team members commenced in June 2020. The Fair Work Ombudsman (FWO) is conducting an investigation into the subject matter of the announcement which is ongoing at the date of this report. In May 2020, Coles was notified that a class action proceeding had been filed in the Federal Court of Australia in relation to payment of Coles managers employed in supermarkets. Coles is defending the proceeding. The potential outcome and total costs associated with this matter are uncertain as at the date of this report. BALANCE SHEET The key balance sheet highlights for the half year ended 3 January 2021 are as follows: Cash and cash equivalents increased by $186 million to $1,178 million largely driven by additional sales associated with the peak trading period falling at the end of the half year, and the timing of trade payables settlements relative to the prior reporting period.

Load more