20022002 A ANNUALNNUAL GGENERALENERAL MMEETINGEETING WOOLWORTHSWOOLWORTHS LIMITED LIMITED Annual General Meeting ROGER CORBETT Chief Executive Officer 22 November 2002 WOOLWORTHS LIMITED DELIVERING VALUE TO: SHAREHOLDERS AND CUSTOMERS 1 WOOLWORTHS BUSINESS PROFILE Sales Year to Store Numbers 30 June 2002 (current) $M’s Food and Liquor 19,595.0 686 Supermarkets 146 Liquor Stores (including Dan Murphy) Plus Petrol 1,119.3 269 Big W 2,280.5 104 Consumer Electronics 659.0 360 CtiiContinuing (1) Operations 23,653.8 1,565 • Woolworths emppyloyed over 145, 000 p eop le across Australia as at 30 June 2002 , or 1 in59 working Australians, 50,000 in regional and rural areas • During the year we welcomed 7,000 Franklins employees (1) Excludes Wholesale Operations 2 WOOLWORTHS VICTORIAN BUSINESS Stores Warehouses Employees Supermarkets 174 4 29, 616 Dan Murphy 12 - 520 BWS/First Estate 10 - 82 Plus Petrol 85 - 790 Big W 16 - 3,980 Consumer 74 - 821 Electronics Total 371 4 35,809 Woolworths has a $1 .5 billion investment in Victoria 3 RESULTS HIGHLIGHTS Y/E 30/6/02 • Sales up 17.0% to $24.5 billion • Costs down 38 basis points to 21.84% • Earningg()ps 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% 4 SALES GROWTH $3½ billion sales growth driven by - $2 billion organic & bolt ons - $1 billion ex-Franklins stores - $½ billion 53 rd week 26,000 24,473.0 24,000 22,000 20,915.1 +14. 9%* 20,000 18,988.8 +10.1% illion 17,527.3 MM 18,000 +8. 3% $ 16,001.1 * 16,000 +9.5% 14, 000 +10.2% 12,000 1998# 1999# 2000# 2001 2002 * 52 weeks comparable # Adjusted to exclude WST 5 FIRST QUARTER SALES RESULTS Comparable (()$ Millions) Store Sales FY2002 FY2003 Increase Increase Food and Liquor 47514,751 53875,387 13. 4% 55%5.5% Petrol 211 373 76.8% Supermarkets 4,962 5,760 16.1% BIG W 521 587 12.7% 6.4% Consumer Electronics 153 188 22.9% 12.3% General Merchandise 674 775 15. 0% * Continuing Operations 5,636 6,535 16.0% Wholesale Division 195 130 -33.3% Total Quarter Sales 5,831 6,665 14.3% 6 CODB / SALES 25 Costs = The Key Enabler Down 38pts Down 23.95 in FYO2 211pts in 24 23.59 3yrs 23.09 23 22.22 Cumulative 21. 84 Reductions % 22 $1,042 mil 21 20 19 1998# 1999# 2000# 2001 2002 Cost 0.86%x $19.0 b 1.73%x $20.9 b 2.11%x $24.5 b ` Reduction $163 m $362 m $517 m = $1042 m # Adjusted to exclude WST 7 GROSS PROFIT MARGIN Margin 0.67%x $19.0 b 1.43%x $20.9 b 1.79%x $24.5 b Reduction $127 m $299 m $438 m = $864 m 28 LOWERING THE COST OF LIVING 83% OF REDUCTION TO 27.03 INCREASE 27 26.82 CUSTOMERS 26. 36 DOWN DOWN 36PTS IN 179PTS IN FYO2 3YRS 26 25.60 % 25. 24 25 Cumulative Reductions $864 mil 24 23 1998## 1999 2000 # 2001 2002 # Adjusted to exclude WST 8 EBIT MARGIN SUMMARY EBIT MARGIN UP 2 BASIS POINTS. FRANKLINS CONTRIBUTES 2% ON $1B SALES, EQUATED TO 3.46% EX-FRANKLINS - UP 8 BASIS POINTS OR 3.49%O% OF SALE S F OR CONTINUIN G BUS INESS ES S( (EXC LUDIN G WH OLES ALE) 3.6 3.4 3.38 3.40 nn 3.2 3.27 3.23 Margi 303.0 3083.08 % 2.8 2.6 1998 # 1999 # 2000 # 2001 2002 # Adjusted to exclude WST 9 EBIT SUMMARY FY02 Increase After After Goodwill Goodwill $m Food & Liquor 734.7 19.7% Petrol 12.7 176.1% Total Supermarkets 747.4 20.8% BIG W 93. 5 12. 1% Consumer Electronics 28.0 -9.1% Total General Merchandise 121.5 6.4% Total Trading Result 868.9 18.6% Property 34.2 3.3% Central overheads (77.8) 31.9% Cont inu ing ope rat io ns 825.3 16.7% Wholesale 7.4 48.0% Discontinued operations - - Grou p EBIT 832. 7 17. 8% 10 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) – 1t1 store conver tdted an d reopene d as Dan Murp h(Blhy (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 11 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 12 PROFIT AFTER TAX (AFTER WINS) 550 523. 2 500 450 428. 0 400 22.2% llion 364.0 17.6% 350 $ Mi 300.5 312.3 300 16.6% 3.9% 250 16.5% 200 1998 1999 2000 2001 2002 * * 53 Weeks 13 EARNINGS PER SHARE 50. 24 50 45 40. 16 40 s tt 35 32. 36 25.10% Cen 30 26.54 27.25 24. 10% 25 18.75% 20 2.68% 14.10% 15 1998 1999 2000 2001 2002 14 DIVIDENDS PER SHARE 36 33 33 30 27 27 ts nn 24 23 Ce 22.2% 21 18 17 17. 4% 18 27.8% 5.9% 15 6.3% 12 1998 1999 2000 2001 2002 15 DAYS STOCK ON HAND INVENTORY DOWN 3.3 DAYS WITH IN-STOCK POSITION RECORD HIGH 50 47 46.2 44.7 44 s 40.8 Day 40.6 41 Tandy & Liberty 38 Liquor 37.3 35 1998 1999 2000 2001 2002 16 RETURN ON FUNDS EMPLOYED 40% 38.07% 36% 35.04% 32% % 29.08% 28% 26.83% 24.43% 24% 20% 1998 1999 2000 2001 2002 Based on averaggpge of opening and closing funds emp pyloyed 17 RETURN ON EQUITY 50 48.13 45 43.19 40 35 % 30 28.92 25 23.15 21.88 20 15 10 1998 1999 2000 2001 2002 Based on averaggpge of opening and closing Shareholders funds 18 PROJECT REFRESH Restatement of Project Refresh after three years: • “Refresh” savings over the next five yearstobenoyears to be no less than 1% of annual sales ie 20+ bp’s per annum • Refresh savings will be shared approximately 50/50 between customer and shareholder 19 PROJECT REFRESH Cumulative savings $5.1 bil over 8 years Level III - Development 24.5% Level II - Logistics24. 10% 18.75% 2.68% Level14.10% I - Reorganisation / line items 99 00 01 02 03 04 05 06 07 20 PROJECT REFRESH 1,200 8 year cum savings = $5.1 bil 3.11% of sales 1051 Savings in years 4 to 8 = $4.1 bil Level II Additional 1% of sales to 3.11% cumulative 925 900 807 Increasingly logistics driven 697 3 year Cum savings = $1.0 bil gs $ m 595 2.11% of sales nn 600 517 368 Level I A Savi PP Mainly line 300 items and 163 reorganisation 0 00 01 02 03 04 05 06 07 21 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 pe trol from 269 canop ies curren tly 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 22 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 23 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 , f or conti nui ng operati ons, will be o f the or der o f 10.