ACCT 2105 RMIT Financial Report Analysis and Sustainability Project

RMIT Classification: TrustedAccounting in Organisations & Society
Assessment 3
Financial Report, Analysis and Sustainability
Individual Case Report – 40%
RMIT Classification: Trusted
Course Learning Outcomes (CLOs)
This assessment corresponds to the following Course Learning Outcomes (CLOs):
CLO 1 Justify why different perspectives of organisations’ roles within society will in turn
influence the types of ‘accounts’ we would expect an organization to produce.
CLO 3 -Identify and justify various approaches to measuring an organisation’s performance,
including financial performance, social performance, and environmental performance.
CLO 4 – Interpret and analyze a range of approaches to providing accountability, including
measuring the performance of an organization inclusive of financial performance, social
performance, and environmental performance.
CLO 5 – Analyze case studies to identify instances that justify accounting is both a technical and
social practice in a changing and interconnected world.
CLO 6 – Application of technical skills to analyse big data and provide visualisations to evaluate
implications for practice.
Ready for Life and Work
This assignment is designed for you to demonstrate your analytical skills while applying your
knowledge of General Purpose Financial reports to real-life scenarios. This is a good opportunity
for you to experience how different stakeholders use financial information and ratios to evaluate
the financial health of businesses in the business world. In doing so, you will be connected once
again to the world of accounting practice and enhance your understanding of financial and nonfinancial reports.
RMIT Classification: Trusted
Instruction
Please use this link to access Woolworths Group’s annual reports for three years (2021,
2022, and 2023). Using information from the annual report and other reliable sources to
address the following questions.
Task I: Company overview
Within 200 words provide an overview of Woolworths Group, including the principal
activities of the Group and the accounting period.
Task 2: Understanding and evaluating financial statements and annual report
1. From the given Annual Reports of the company, and using the formulas provided,
calculate, and complete the ratio table A1 below.
2. Analyze the ‘profitability’, and “efficiency” of the company for the relevant years.
Consider industry averages when formulating your analysis.
3. If you were contemplating an investment in this company, identify other non-financial
information including sustainability factors that would assist your investment decision and
explain why this information is essential to you.
4. Who were the independent auditors for Woolworths in their 2023 annual report and what
opinion did they provide on the financial statements? As a shareholder of Woolworths,
how important is the auditor’s report to you?
RMIT Classification: Trusted
Table A1. Ratio table for Woolworths Group
Industry
Median
2021
2022
2023
Gross Margin
28.7%
29.3%
26.2%
?
EBITDA Margin
5.2%
9.6%
7.7%
8.6%
Operating Margin
2.7%
5.1%
4.4%
4.7%
Net Margin
1.6%
2.9%
2.6%
2.5%
Asset Turnover
1.34
1.43
1.68
?
ROA
2.8%
4.1%
4.3%
?
ROE
8.7%
31.7%
42.3%
26.3%
Quick Ratio
0.72
0.55
0.23
?
Current Ratio
1.07
0.68
0.57
?
Times Interest Earned
4.2
4.4
3.8
Debt to assets ratio
Account receivables (A/R)
turnover:
1.09
0.96
0.82
35.3
108.4
91.1
Average A/R Days
Inventory (Inv) turnover
10.3
3.4
4.0
?
9.0
10.4
13.3
?
Average. Inventory Days
40.8
35.0
27.3
?
Avg. A/P Days
60.4
49.4
40.9
?
4.3
?
68.7
RMIT Classification: Trusted
Formula table
Net profit
Profit for the period from continuing operations
Gross Margin
Gross profit/total revenue x 100
EBITDA Margin
Normalized EBITDA/total revenue x 100
Operating Margin
Operating income /total revenue x 100
Net profit margin
Net profit/ total revenuex100
Asset Turnover
Total revenue/Average total asset
Return on assets (ROA):
Net profit/average total assetx100
Return on Equity (ROE):
Net profit/average total equityx100
Quick ratio:
Current ratio:
(Total Current Assets – Total Inventory)/Total Current
Liabilities
Total Current Assets/Total Current Liabilities
Interest coverage ratio:
Operating income/net interest expense
Debt to assets ratio:
Total liabilities/total assets
Account receivables (A/R)
turnover:
Average A/R Days
Total revenue/Average total current trade and other
receivables
365/ Account receivables (A/R) turnover
Inventory (Inv) turnover
Cost of revenue/Average total inventory
Average Inventory Days
365/ Inventory turnover
Average Account payables (A/P) Average Account payable/(Cost of sales/365)
Days
Live better
together
2021 ANNUAL REPORT
WOOLWORTHS GROUP LIMITED
ABN 88 000 014 675
Contents
SECTION 1
PERFORMANCE HIGHLIGHTS
Our impact
Sustainability
How we create value
Our key strategic priorities
Chairman’s Report
Chief Executive Officer’s Report
Group financial performance
2
4
6
8
14
16
18
SECTION 2
BUSINESS REVIEW
Australian Food
New Zealand Food
BIG W
Discontinued operation
Our material risks
24
30
32
34
36
SECTION 3
DIRECTORS’ REPORT
Governance
Board skills and experience
Board of Directors
Group Executive Committee
Directors’ Statutory Report
Remuneration Report
42
43
44
46
50
52
SECTION 4
FINANCIAL REPORT
Auditor’s Independence Declaration
Financial Report
Directors’ Declaration
Independent Auditor’s Report
76
77
152
153
Acknowledgement of Country
Woolworths Group acknowledges the Traditional Custodians of Country
throughout Australia and recognises their continuing connection to land,
waters and community. We pay our respects to them and their cultures;
and to Elders both past and present.
We support the Uluru Statement from the Heart and the recognition
of Aboriginal and Torres Strait Islander peoples in the Australian
Constitution. We commit to continued listening and learning from
First Nations voices and to work in partnership to create change. We
acknowledge that we have a responsibility and must do more to truly live
our purpose to create better experiences together for a better tomorrow.
SECTION 5
OTHER INFORMATION
Shareholder information
Corporate Governance Statement
Glossary
Company directory
158
159
161
164
1
WOOLWORTHS GROUP
ANNUAL REPORT 2021
Building a strong
foundation for
a new era of
Woolworths Group
Woolworths Group is a diverse
group of retail businesses on a
journey to becoming a purpose‑led
organisation. Our Group purpose,
we create better experiences
together for a better tomorrow,
creates the framework for how
we aspire to operate, to be better;
for our customers, our team,
the communities we serve
and our shareholders.
2
Our impact
1
People
Customers
Product
Team members
Group Voice of
Customer NPS June
Removed
210,067
57
 1pt from Q3’21
Gender Equality
WGEA Employer
of Choice for Gender
Equality citation
Resourcing the Future
Indigenous team
members
~5,000
LGBTQ+ Inclusion
Awarded AWEI Gold
Employer Status for LGBTQ+
workplace inclusion for the
fourth consecutive year
‘I am here’ program
Customers served
on average per week
27.8M
Online visits
per week
19.7M
More ways to better
serve our customers 3
1,074
Supermarkets and
Metro Food Stores
184
734
Countdown
stores
Pick up
locations
176
875
32,000
BIG W
stores
team members trained
to identify and support
team members that need help
Direct to boot
locations
706
Home
Delivery stores
10
CFCs and
eStores
>2,500 tonnes
of plastic from
operations in F21
Animal Welfare
First Australian and
New Zealand retailer to
achieve Tier 2 in the global
Business Benchmark on
Farm Animal Welfare
Macro Whole
Living Products
100%
compliant with
Palm Oil Policy
Customers using
eReceipts
>250,000
2,905 tonnes
of soft plastic
returned to store
3
WOOLWORTHS GROUP
ANNUAL REPORT 2021
Planet
Community
Economic 2
Carbon emissions
27% below
2015 baseline
Total
community
contribution
Group sales
$67,278M
Group EBIT
$3,663M
Organic waste
113,238
diverted from landfill
$21.0M
Free cash flow
before dividends
$1,089M
Power from solar
capacity installed
24M
>
via store network
Odd Bunch fruit &
vegetables
35,506
Return on funds
employed 4
15.1%
Leveraged
fundraising
Dividend per share 5
$14.1M
108¢
S.T.A.N.D. donation
Tax paid 6
$2.9M
$738M
tonnes
purchased by customers
1
2
3
4
5
6
For the 2021 financial year including Endeavour Group.
Before significant items.
Including Australian and New Zealand Food and BIG W.
F21 ROFE calculation normalised to exclude the $7,870
million demerger distribution liability.
Full year fully franked dividend.
From Woolworths Group cash flow.
5
OTHER
INFORMATION
Food relief meals
donated
$13.9M
4
FINANCIAL
REPORT
31,480kW
In kind
3
DIRECTORS’
REPORT
tonnes
Cash donations
2
BUSINESS
REVIEW
$34.9M
PERFORMANCE
HIGHLIGHTS
1
4
Sustainability
Working together to
create a better tomorrow
Woolworths Group believes sustainability is the right thing
to do and sees it as an opportunity to create long‑term
value through innovation and resilience building
measures that will deliver benefits for decades to come.
Responsible Sourcing
F21 Performance
Audits reviewed
561
Workers surveyed
to understand
COVID-19
related concerns
2,694
BIG W team
members and
suppliers completed
a Responsible
Purchasing
Practices survey
111
Onsite follow-up
visits
16
Grievance
investigations
managed
19
Zero Tolerance
cases identified
20
Woolworths Group is committed
to creating positive change in our
business and our extended value
chain. We want to give our customers
confidence that their food and
everyday needs are delivered to
them ethically and sustainably –
truly creating better experiences
together for a better tomorrow.
Climate Change
We are determined to build on the
foundations of our 2020 Sustainability
Strategy to deliver an even more
ambitious sustainability agenda.
In November 2020, we released our
Sustainability Plan 2025: Working
together to create a better tomorrow –
our new program of positive change for
our people, our planet and our product.
• 63% reduction from own operations
(scope 1 & 2), and
While we have set our sights on
long‑term horizons, including goals
for 2030 (scope 1, 2 and 3 emissions)
and 2050 (net positive emissions),
we will deliver meaningful change year
on year. In F22 we will make progress
on areas such as green electricity,
retail careers in the workplace of the
future and regenerative agricultural
practices to minimise our impact on
the environment.
Recognising that addressing climate
change is of critical importance to
our business and economies globally,
Woolworths Group has set ambitious
emissions reduction goals aligned
to the Paris Agreement, to limit
temperature change to 1.5 degrees.
By 2030 we will deliver:
• 19% reduction across our supply chain
(scope 3).
Our targets have been endorsed by
the global Science Based Targets
initiative (SBTi).
The Group’s F21 scope 1 and 2
emissions were 27% below 2015
levels. Initiatives contributing to
this reduction include refrigeration
management, solar rollout, and our
Energy Management Centre which
continues to proactively manage our
energy use.
Electricity use is the largest contributor
to our greenhouse gas emissions.
Woolworths Group uses around
1% of Australia’s electricity, so our
commitment to source 100% renewable
electricity by 2025 represents
5
We act like a leader and speak up on issues that matter
We care for, and unlock the potential of our people
We have a positive impact on the planet
We apply circular thinking in everything we do
We embrace the power of partnerships to create change
1.23%
Carbon emissions
reduction
27%
F21 Plastics reduction
For more information see 2021 Sustainability Report.
As Australia’s largest retailer, with complex operations and supply chains,
Woolworths Group is exposed to dynamic human rights risks. Stakeholders continue
to identify human rights as one of our material risks. The human rights commitments
in the Sustainability Plan 2025 articulate our ambition to build a rights‑respecting
culture where human rights risks are identified, managed and mitigated in our
operations and supply chain. Progress highlights against this important initiative
can be found on the left bar on page 4.
As outlined in our second Modern Slavery Statement we continue to scale up our
human rights due diligence in non‑trade and operations, while maintaining focus
on commodities and countries with higher modern slavery risks to improve outcomes
for workers. Human rights due diligence is an ongoing process of bringing the
concerns of potentially affected stakeholders into consideration for decision making.
For more information see 2021 Modern Slavery Statement.
• Developed bespoke
due diligence strategies
for higher risk
commodities, including
seafood and cotton
• Oversaw the repayment
of $361,851 to 24 workers
in the cleaning and trolley
collector sector
• Supported our teams to
manage modern slavery
risks with the launch of
three new resources
– A toolkit for addressing
modern slavery in
our supply chains
and operations
– A guide to drafting and
negotiating modern
slavery contract clauses
– Human rights
due diligence
maturity framework
4
5
OTHER
INFORMATION
Human Rights & Responsible Sourcing
• Conducted a risk
analysis of labour and
service providers in
our operations and
strengthened key controls
3
FINANCIAL
REPORT
Woolworths Group considers
sustainability to be a board‑level
strategic issue. The CEO and Group
Executive Committee, including the
Chief Sustainability Officer, have
accountability for the implementation
of our sustainability strategy.
Human rights key
highlights in F21
DIRECTORS’
REPORT
Sustainability Governance
Climate‑related risks and opportunities
are identified through the Woolworths
Group Risk Management Process in line
with our Risk Management Framework
(RMF) framework. The RMF framework
sets out the required end‑to‑end
management of our risk assessment
and risk response processes, and
monitoring and reporting. Climate
change has been identified as a material
business risk and is included in the
material risk section of the Annual
Report on page 36. Our response
to these risks is contained in our
Sustainability Plan 2025.
2
BUSINESS
REVIEW
>2,500t
1
PERFORMANCE
HIGHLIGHTS
below 2015 levels
a significant investment in growing the
industry. In June, we announced our first
renewable power purchase agreement
(PPA) which will inject enough green
electricity into the state’s energy grid
to power 30% of Woolworths Group’s
NSW energy needs.
WOOLWORTHS GROUP
ANNUAL REPORT 2021
Our plan is explicitly underpinned
by our Guiding Principles
Community
contribution as %
of EBT on a 2-year
rolling average
6
How we create value
Our Value Drivers
Our Business Activities
Team
A diverse and inclusive environment for
our teams to work reflecting the diversity
of our communities
B2C Food
Customer services
Connecting customers with good food and
more everyday through convenient stores,
services and leading loyalty programs
Our cornerstone retail food businesses,
famous for good food, prices and acts,
and always convenient
Trusted brands and products
Providing best range and value, fresher food,
healthier options and everyday needs for our
customers in Australia and New Zealand
Sustainability
A leader in sustainability to create a
positive impact for generations to come
Stores
eCommerce
Products
Platforms & Partners
Technology, digital and analytics
enable retail platforms that deliver for
Woolworths Group and partners
Business platforms
Leading business platforms built
over many years enabling our
business activities
Financial
Strong balance sheet and disciplined
capital allocation to drive sustainable
growth and shareholder value
Primary
Connect
Digital
& Data
Partnerships
7
WOOLWORTHS GROUP
ANNUAL REPORT 2021
To create value we bring our customers good food and more everyday
through connected experiences. We’re focused on creating sustainable
long‑term value for our customers, team, shareholders, trade partners
and the broader community through living our purpose:
Creating better experiences together for a better tomorrow
Value Created
1
Innovating to meet our customer needs
57
B2B Food
19.7M
27.8M
Customers served
on average per week
Online visits
per week
Team
Expanding food into new customer
segments, channels and markets
Enabling and empowering our team
AWEI
WGEA
Mutual benefit through strong partnerships
4
Employer of
Choice citation
Partners
International
Wholesale
57%
Voice of Supplier
July 2021
Everyday Services
Everyday
Needs
Rewards
with Endeavour
Group and PFD
Community
Caring for each other and creating a more
sustainable future
27%
Carbon emission
reduction from
2015
Everyday
Services
Strengthened
data and analytics
partnership
113,238
$34.9M
Tonnes of organic
waste diverted
from landfill
total community
contributions
Shareholders
Delivering sustainable returns for
our shareholders
1
2
$1,972M
15.1%
108¢
F21 Group NPAT 2
F21 ROFE 3
F21 Full Year
Dividend
For the 2021 financial year.
Before significant items.
3
F21 ROFE calculation normalised
to exclude the $7,870 million
demerger distribution liability.
5
OTHER
INFORMATION
Complementary everyday categories
and services to provide more for
our customers
Quantium
Established
partnerships
FINANCIAL
REPORT
Gold Tier Status for
LGBTQ+ inclusion
Woolworths Future
of Work Fund
B2B
3
DIRECTORS’
REPORT
LAUNCHED
2
BUSINESS
REVIEW
Group Voice of
Customer NPS (June)
PERFORMANCE
HIGHLIGHTS
Customer
1
8
Delivering on our
strategic priorities
In F21, the six key priorities reflect the Group’s
transformation into a food and everyday needs
ecosystem which is enabled by our purpose, to create
better experiences together for a better tomorrow.
2021 Better
Tomorrow
achievements
PEOPLE
#1
Most diverse and
inclusive company in
Australia in the 2020
Refinitiv Diversity
& Inclusion Index
PLANET
Provided the equivalent of
>24M
meals through
our food rescue
partners to alleviate
food insecurity
PRODUCT
Animal Welfare
First Australian and
New Zealand retailer to
achieve Tier 2 in the global
Business Benchmark on
Farm Animal Welfare
Better Together for a Better
Tomorrow for our Customers,
Teams and Communities
The Group was proud to be ranked
first in Australia, and 49th globally
in the 2020 Refinitiv Diversity &
Inclusion Index, as the most diverse
and inclusive company. In F21, we
continued to make good progress
on our holistic diversity and
inclusion agenda, with a key focus
on reconciliation, cultural inclusion,
gender diversity and LGBTQ+
inclusion. Some highlights include
receiving AWEI gold tier status for
a fourth consecutive year and the
WGEA Employer of Choice citation.
We also delivered 85 actions as part
of our two‑year Reconciliation Action
Plan, partnered with the NAIDOC
Week Committee for a third year,
and continued the success of our
Refugee Employment Program
in partnership with Community
Corporate, successfully placing 200
refugees into roles in Woolworths
Supermarkets, Metro Food Stores
and fulfilment centres across
Australia. F22 will see an increased
focus on our accessibility agenda and
more work will be done to support
our commitment of offering equal
opportunities for all.
Launch of our third mini-Supermarket for special
schools at Black Mountain School in Canberra, NSW.
For more information on this initiative go
to page 27.
9
WOOLWORTHS GROUP
ANNUAL REPORT 2021
stores with Direct
to boot services
3
232
Delivery Now
stores
4
FINANCIAL
REPORT
5
425
Same Day Delivery
stores with 1 hour
delivery window
OTHER
INFORMATION
To continue to meet rapidly increasing
demand, we announced plans for our
first automated customer fulfilment
centre to be built in Auburn, NSW,
set to open in 2024. The facility will
be built in partnership with Knapp,
whose automation technology will help
Woolworths’ personal shoppers pick and
dispatch up to 50,000 home deliveries
a week in Western Sydney and better
serve their growing online grocery needs.
This will build on recent investments with
Takeoff’s micro‑fulfilment technology
(using Knapp automation) now live at
Carrum Downs and Maroochydore in
Australia, and Moorehouse and Penrose
in New Zealand. In F21, eCommerce
sales accounted for 8.5% of total sales
as we continue to see more and more
customers choosing eCommerce
services to complement their in‑store
shopping experiences.
629
DIRECTORS’
REPORT
WooliesX scaled
its convenience
propositions in
response to
increased demand
in F21 as more and
more customers
chose contactless,
COVIDSafe shopping
experiences.
2
BUSINESS
REVIEW
Accelerate Digital,
eCom and Convenience
for our increasingly
Connected Customers
1
PERFORMANCE
HIGHLIGHTS
More
convenience
for customers
in F21
10
OUR KEY STRATEGIC PRIORITIES
Differentiate our Food
Customer Propositions
Woolworths
Supermarkets launches
innovative community
store in Cabramatta.
A key priority for Woolworths
Supermarkets in F21 has been to
localise range and tailor our offering
for every community to ensure we
are providing the right range to
our customers in the right stores.
This includes an increased focus
on ethnicity and as part of this, the
team delivered its first innovative
community store in Cabramatta, NSW.
The goal was to extend the already
successful Asian range and provide
customers with a broad enough range
that they could complete their full
shop at the store. The store includes
over 1,000 Asian products with
over 300 being unique to the store.
The introduction of these new lines
further tailored the range to the local
community consisting of customers
of predominantly Vietnamese, Chinese,
Thai and Cambodian ethnicities, and
focuses on what is important to their
shopping needs. In addition to the
tailored ranging, the Cabramatta store
also features multilingual signage
(Cambodian, Cantonese and Khmer)
across all functional areas and neon
iconography for high level navigation.
11
WOOLWORTHS GROUP
ANNUAL REPORT 2021
Stand up
Endeavour Group
The key benefits under the partnership agreements include a framework
that supports joint growth opportunities and further develops capabilities
for mutual benefit; enables both groups to maintain the synergies and
collaborative relationships, and supports Endeavour Group with continuity
of its operations.
This is enabled by key agreements in place across:
•
Supply Chain & Stores
•
Loyalty & Fintech
•
Digital & Media
•
Business Support
•
International
The partnership agreements between Woolworths Group and Endeavour
Group also extend choice for customers to meet their everyday needs
through its businesses and partners.
2
3
4
FINANCIAL
REPORT
This was completed in February 2020;
however, the separation anticipated
for later that year was delayed to 2021
given the prioritisation of both groups’
COVID‑19 responses. Both businesses
continued to work on the separation
as well as establishing the partnership
agreements to support the ongoing
relationship between the groups.
The creation of a win-win partnership was at the core of the rationale for the
Endeavour Group separation. Post demerger, Woolworths Group and Endeavour
Group will continue to work together to retain ongoing benefits, including the
infrastructure built by Woolworths Group across its core competencies.
DIRECTORS’
REPORT
The separation process formally began
on 3 July 2019, when Woolworths Group
announced its intention to combine
its drinks and hospitality businesses
to create Endeavour Group through
a restructure of Endeavour Drinks and
subsequent merger with ALH Group.
Better together in partnership
BUSINESS
REVIEW
At the end of June, the
demerger of Endeavour
Group was successfully
completed following
a multi‑year journey to
separate the business.
PERFORMANCE
HIGHLIGHTS
1
5
OTHER
INFORMATION
Work on the separation formally
recommenced in February 2021.
A strong and experienced executive
team and board was assembled to take
the business forward following the
appointment of Steve Donohue as CEO
and Peter Hearl as Chairman in 2019.
Following formal approval at the General
Meeting on 18 June, Endeavour Group was
successfully separated on 28 June by way
of a demerger, with eligible shareholders
receiving one Endeavour Group share for
every share held in Woolworths Group.
The demerger of Endeavour Group
required an enormous combined effort
from team members across both
businesses and we look forward to being
better together in partnership with
Endeavour Group for many years to come.
Steve Donohue, Endeavour Group CEO and Brad Banducci, Woolworths Group CEO and Managing Director.
12
OUR KEY STRATEGIC PRIORITIES
Evolve our Portfolio and
Build Strong Adjacencies
Woolworths Group’s
investment in Quantium
aims to transform the
rapidly evolving retail
sector to help better
service our customers
and support our team
and supplier partners.
Quantium will become a key part of
Woolworths Group, while retaining its
senior leadership team and continuing
to operate in sectors outside of retail.
Announced in April of this year,
Woolworths Group strengthened
its partnership with Quantium by
increasing its shareholding from
47% to 75%.
Combined with the Group’s strategic
focus on connected and seamless
customer experiences, advanced
analytics will be key to improving
ranges and services as well as
support provided to team members
and supplier partners. As the retail
industry continues to rapidly change,
Woolworths Group recognises that
the way in which data is gathered,
interpreted and protected is becoming
ever more important.
Quantium is an industry leader in
advanced analytics, working across
a broad range of industries, including
retail & FMCG, banking & financial
services, and health & government.
For the last eight years Woolworths
Group and Quantium have partnered
to better understand our customers
through the responsible use of data.
In addition to the strategic partnership,
new business Q‑Retail was created
to bring together the best data science
and advanced analytics and retail
capabilities from across Quantium
and Woolworths Group. Specifically,
Q‑Retail will focus on delivering
Woolworths Group’s Advanced
Analytics Plan and commercialising
retail products globally.
Building strong
adjacencies
AUGUST 2020
Announced a strategic
investment in PFD Food Services
as a logical adjacency for
Woolworths Group to further
support its growing food and
everyday needs ecosystem.
SEPTEMBER 2020
Launched Woolworths at Work,
a procurement solution that
supports businesses with a
streamlined shopping experience
and dedicated support,
transforming how they manage
spending and budget.
FEBRUARY 2021
Announced the formation
of a stand-alone business,
Greenstock, to support the
Group’s growth and deliver
on the combined red meat
needs of partners across retail,
international and wholesale.
APRIL 2021
Announced an increase in holding
in Quantium from 47% to 75%,
as Quantium becomes a key part
of Woolworths Group, while
retaining its senior leadership
team and continuing to operate
in sectors outside of retail.
APRIL 2021
Woolworths Group’s venture
capital arm W23 announced an
investment in Australian startup
Marketplacer whose platform
is used by a number of global
retailers exploring third-party
marketplace strategies. The
partnership will play a key role
in powering the Group’s own
digital improvements ahead
of the launch of a marketplace
offering for woolworths.com.au.
JUNE 2021
Woolworths Group announced
the launch of Wpay to offer
end-to-end payment solutions to
merchants outside of the Group.
13
WOOLWORTHS GROUP
ANNUAL REPORT 2021
Keep our business
COVIDSafe and Futureproof
our E2E Operating Model
COVIDSafe
Vaccination clinics
Established pop-up vaccination
clinics at key food-related
DCs in NSW and Victoria
with assistance from Federal
and State governments
Paid leave for
vaccinations
QR check-in
Enabled Government QR code
check-in at our stores and
support sites nationwide
Woolworths Group’s supply chain arm, Primary Connect, commenced
building works in May this year on its new national distribution centre (NDC)
in the Moorebank Logistics Park in Western Sydney. Set to open in 2024,
the Moorebank NDC will service more than 1,000 Woolworths Supermarkets
across Australia. The site will be co-located with the Moorebank Regional
Distribution Centre, which will start construction later and open in 2025. With
cutting-edge automation and 75,000 square metre of floor space across both
sites, Moorebank will enable Woolworths to offer its customers an expanded
range and improved stock availability in-store.
The construction of a new temperature-controlled 76,000 square metre
facility was also announced in June. The new facility will be built at Wetherill
Park, Sydney and will service over 280 stores in NSW and replace the current
fragmented temperature-controlled network. With completion expected in F24,
the new facility will result in fresher products for customers, allow for ongoing
range expansion and also deliver material transport and operating efficiency
benefits from F25 onwards.
Testing and health
screening
Established five testing
facilities across Sydney DCs
and CFCs. Rolled out contact
tracing wristbands, split shifts
and health screening for
team members
Vulnerable customer
support
Scaled eCommerce and Priority
Assistance to support our most
vulnerable customers
4
5
OTHER
INFORMATION
Next generation supply chain
3
FINANCIAL
REPORT
Provided up to eight hours
of paid leave for full-time
and part-time team members
to receive vaccinations
2
DIRECTORS’
REPORT
In addition, a number of initiatives
have been rolled out to stores and
distribution centres to help protect
customers and teams. This includes
enabling Government QR code check‑in
for all states and territories, in‑store
Health Ambassadors, promotion of the
Sonder app to support team member
mental wellbeing as well as face shields
and additional cleaning procedures
across stores in high‑risk areas.
BUSINESS
REVIEW
The Delta variant of COVID has seen the
operating environment change rapidly
again in 2021. It has become clear that
vaccination is key and Woolworths
Group remains committed to playing its
part in supporting vaccination efforts
across the broader community.
PERFORMANCE
HIGHLIGHTS
We have been working
hard to help protect
our team so we can
continue to provide
food and everyday
needs for all customers.
1
14
CHAIRMAN’S
REPORT
A year driven
by purpose
Over the last 12 months we have
remained committed to our
purpose of being better together
for a better tomorrow and have
made significant progress in
transforming our business for
a new era of Woolworths Group.
Our team also continues to
operate with vigilance, great care
and resilience as we manage
the ongoing impacts of COVID.
Since the escalation of the Delta
outbreak in Australia, I again
am humbled and proud of
our team and their dedication
to do what is right. As part
of our ambition for a better
tomorrow we also recognise the
role we play in creating a safe
place for our team as well as
our customers. This purpose
has guided our response
in supporting vaccination
efforts where possible to
protect our wider communities.
15
We have made pleasing progress on our
sustainability agenda in F21; however,
we recognise there is still much to do
to continue to have a positive impact
on our wider communities.
To reflect our commitment to our
purpose and values, we have updated
our remuneration incentives from
F22 to include the Group’s reputation,
which will be externally and
independently measured. We
considered this to be an important
step to align our internal practices
on meeting customers and community
expectations in order to operate
as a responsible corporate citizen.
During the year, we made key executive
appointments to provide more focus
and structure for our commitment to
always do the right thing. David Walker
was appointed Chief Risk Officer
and Alex Holt was appointed Chief
Sustainability Officer to reflect the
increasing focus in each area.
Late last year my fellow directors and
I were pleased to welcome Maxine
Brenner to the Woolworths Group
Board following the retirement
of long‑standing board member,
Jillian Broadbent. I have no doubt
that Maxine’s skills and experience
will add tremendous value as Chair
of the Risk Committee and to the
Woolworths Group Board.
F21 Final Dividend
55c
 14.6% from F20
F21 shareholder returns 2
$1.3B
1
2
3
1
2
Group before significant items.
Based on payments during the year.
Looking ahead
I would also like to personally extend
my thanks to our team, especially those
at the frontline of our operations as they
continue to make sure customers have
access to their essential needs.
In conclusion, despite the uncertain
operating environment ahead,
I am excited about the next era for
Woolworths Group. By focusing on our
core businesses, investing in our supply
chain, leveraging our strong partnerships
and continuing to be guided by our
purpose and values, we will continue
to create value for all stakeholders
while striving for a better tomorrow.
Gordon Cairns
CHAIRMAN
4
5
OTHER
INFORMATION
Doing the right thing
We also recognised that we need to do
more to listen and learn when it comes
to our commitment to reconciliation.
In April of this year the Group made the
decision it would not proceed with the
proposed Dan Murphy’s store in Darwin
following an independent review of the
development which was commissioned
by the Group in December. The report
highlighted where we failed to meet
our aspirations and standards in our
purpose and values, and in doing so,
has emboldened us to take meaningful
steps forward which are consistent
with our purpose and commitment
to reconciliation.
FINANCIAL
REPORT
It is also pleasing to announce the
return of $2 billion to shareholders
by way of an off‑market buy‑back.
Together with the final dividend,
this is expected to return $1.1 billion
of franking credits to shareholders.
The ability to return this capital to our
shareholders reflects the strength
of our business and our solid balance
sheet position which also provides
sufficient capital to continue to invest
in growth opportunities.
 22.9% from F20
DIRECTORS’
REPORT
Woolworths Group has declared
a final dividend of 55 cents per share
bringing the full year dividend to 108
cents per share. Together with the
H2 dividend that Endeavour Group is
expected to pay, the combined dividend
is broadly in line with the improvement
in Woolworths Group NPAT before
significant items of 22.9%.
$1,972M
BUSINESS
REVIEW
We also completed a number
of investments to support our
continued growth. This included our
increased investment in Quantium
and the completion of our strategic
investment in PFD Food Services,
a logical adjacency for the Group
and our growing ecosystem.
Net profit after
tax attributable to
Woolworths Group
shareholders 1
PERFORMANCE
HIGHLIGHTS
Our busy agenda in F21 included
the successful completion of a key
milestone at the end of F21 with the
demerger of Endeavour Group. We are
confident that it will create value for
shareholders with each business now
able to focus on their core customer
offering and new growth opportunities
while continuing to benefit
from a strong partnership.
Across our pillars of People, Planet and
Product there have been a number of
achievements, including the recognition
for our work to improve diversity
and inclusion, the signing of our first
renewable power purchase agreement,
and initiatives to make being healthier
easier for our customers with the
launch of initiatives such as the online
platform HealthyLife.
WOOLWORTHS GROUP
ANNUAL REPORT 2021
Delivering for our
shareholders
16
CEO’S REPORT
New era for
Woolworths
Group
As we continue to be challenged
by COVID, in particular the Delta
variant, I’m extremely proud of all
of our team for their resilience as they
continue to demonstrate real care
for each other and our customers.
We remain committed to operating
COVIDSafe and ensuring we are doing
the right thing for our team, customers
and communities and by leading
the way to make shopping safer.
Building a strong foundation
for the new era
We know that the retail industry continues to change
rapidly, and we are committed to changing with it. In F20
we outlined plans to transform Woolworths Group into
a more focused food and everyday needs ecosystem by
building partnerships and delivering adjacent services for
our customers, and we have made good progress in F21.
At the end of the year we farewelled our Endeavour
Group colleagues as the multi‑year journey to separate
Endeavour Group was completed through a demerger.
While this was a bittersweet moment, we’re confident
that the demerger will deliver value for Woolworths
Group and Endeavour Group shareholders. I’d like to take
this opportunity to acknowledge and thank the many team
members of Endeavour Group who have contributed to
our success and I look forward to the next stage of our
journey together as partners for many years to come.
17
In New Zealand Food, sales growth in
H1 was impacted by low market growth,
particularly during the summer tourist
1
Before significant items.
Our people are the core of our business
and we’re continuing to focus on our
holistic diversity and inclusion agenda,
with more work to be done in F22. I’m
proud that our strong diversity has been
recognised and celebrated through
a number of external awards, including
the WGEA Employer of Choice for
gender equality citation and AWEI
gold tier status for LGBTQ+ inclusion
for the fourth consecutive year.
COVID, particularly the
Delta variant, will continue
to challenge our business
and community in F22.
While it’s difficult to predict
the environment we’ll be
operating in over the next
12 months with any certainty,
we know that operating
COVIDSafe is our priority.
I am confident that we have
the right foundations in
place to continue to deliver
value for our customers,
teams, communities
and shareholders.
Brad Banducci
CHIEF EXECUTIVE OFFICER
3
4
5
OTHER
INFORMATION
Our WooliesX digital and eCommerce
business had another year of
exceptional growth, with eCommerce
sales increasing by 74.7% compared
to the prior year. To meet customer
demand, we continued to scale up
our convenience propositions with
an expanded range of Home Delivery
and Pick up options.
Operating sustainably is not only
important to our customers, but
it’s increasingly intrinsic to our
business and the way we operate.
Setting ambitious and measurable
sustainability goals as part of our
Sustainability Plan 2025 launched in
November last year will help us to play
our part in making the world a better
place for a better tomorrow.
F22 Outlook
2
FINANCIAL
REPORT
In Australian Food, H1 saw strong sales
growth as a result of our successful
Disney+ Ooshies and glass container
campaigns and elevated demand due
to lockdowns, whereas H2 sales were
impacted by cycling COVID in the
final four months of the year. Full year
Australian Food sales increased by
5.4%, with EBIT 1 increasing by 9.0%.
Right from the start of COVID, we have
prioritised being COVIDSafe and this
has continued in F21. We’ve partnered
with the Federal Government and other
food retailers, to establish pop‑up
vaccination clinics at our food‑related
distribution centres, as well as
increasing access to vaccines for our
store teams, who are critical to ensure
a stable supply of food and everyday
needs for our customers. No team
member should have to choose
between their health and their pay,
particularly as we know vaccination will
make shopping safer for our teams and
customers, and we have revised our
vaccination leave policy to reflect this.
1
DIRECTORS’
REPORT
The Group’s trading performance in F21
was strong with sales growth of 5.7%
and Group EBIT 1 increasing by 13.7%.
Working towards
a better tomorrow
We remain committed to resolving
the salaried team underpayments
announced in 2019. To date, more
than $350 million has been paid
to current and former salaried
team members. During the year,
we launched a program to enhance
our pay process integrity and to help
ensure it doesn’t happen again.
BUSINESS
REVIEW
Business performance
BIG W’s momentum continued with
another strong year of improved
customer scores, strong sales growth
of 11.6% and EBIT increasing over
300% in the year to $172 million. H2
sales growth moderated as expected
but remained positive with an increased
focus on digital and eCommerce and
providing customers with safe and
convenient shopping options.
We acknowledge the environmental
impact of our business and we continue
to focus on reducing our footprint with
the installation of solar panels in over
190 Woolworths Group sites. We also
signed our first power purchase
agreement in NSW in F21 as we
transition to 100% renewable energy by
2025. We’re also making good progress
on both eliminating food waste and
reducing plastic across our products.
PERFORMANCE
HIGHLIGHTS
We are also continuing to invest in our
supply chain transformation which
will deliver the capacity and capability
needed to support future growth. In F21
we opened Melbourne Fresh DC, as well
as commenced work on the Moorebank
NDC. This multi‑year transformation
will enable expanded range and better
availability for our customers, as well
as ensuring faster, fresher and more
efficient deliveries to our stores and
through our supply chain.
season. In H2, sales declined 5.5% as the
business cycled New Zealand’s restrictive
lockdown period. EBIT for the year
declined by 4.6% reflecting lower sales.
WOOLWORTHS GROUP
ANNUAL REPORT 2021
We have also made good progress
during the year building out the
Group’s ecosystem through a series
of strategic partnerships, investments
and new businesses. In June, we
completed our strategic investment
in PFD Food Services to expand our
food offering into new markets. We
know how important leveraging data
and analytics is in the retail industry
of the future, so we’ve increased our
ownership of Quantium and created
a partnership called Q‑Retail to
accelerate our advanced analytics
capabilities. We’ve also established
a number of new businesses, including
Greenstock, Wpay and HealthyLife to
provide greater value to our customers
and meet their changing needs.
18
Group Financial Performance
F21 was a significant year in the history of Woolworths Group following the successful separation
of Endeavour Group at the end of June. We also made progress in laying the foundations for the new
Woolworths Group, a more focused food and everyday needs ecosystem with a customer 1st team
1st culture at its core, and enabled by data and technology. The Group’s F21 trading performance
was strong with sales growth of 5.7%, and EBIT growth of 13.7% despite H2 EBIT growth in some
businesses being impacted by cycling COVID from late February in the prior year.
Group sales
Group eCommerce sales
$67,278M
$5,602M
 5.7% from F20
 58.1% from F20
Sales from continuing operations increased 4.9% with
strong full year sales growth for Australian Food and BIG W,
particularly in H1, somewhat offset by lower sales from
New Zealand Food. Total Group sales increased by 5.7%,
aided by growth of 9.3% from Endeavour Group.
Group eCommerce sales increased by 58.1%. Continuing
operations eCommerce sales increased 63.3% with penetration on
the same basis increasing 3 pts to 8.5% of sales. Average weekly
traffic to Group digital assets from continuing operations also
increased materially with 17.2 million visits per week during F21.
Gross profit as a % of sales 1
Cost of doing business as a % of sales 1
29.3%
24.4%
 44 bps from F20
 16 bps from F20
Gross profit increases across the Group reflected stock
loss improvements, favourable product mix changes,
fewer markdowns and less clearance activity.
Cost of doing business (CODB) % increased by 16 bps
driven by higher CODB (%) in New Zealand and a higher
contribution from BIG W to the Group total which has
a higher‑than‑average CODB (%).
Group EBIT 2
Significant items before tax
$3,663M
$59M
 13.7% from F20
Group EBIT increased by 13.7% to $3,663 million driven
by a 9% increase from Australia Food, an increase of over
300% from BIG W and a 22.6% increase from Endeavour
Group. EBIT from continuing operations before significant
items increased 11.1%.
Significant items reflect costs associated with the supply
chain network review, Metro Food Stores asset impairment,
gain on previously held equity interest in Quantium and
transaction costs.
Finance costs 2
NPAT from continuing operations attributable
to equity holders of the parent entity 1
$613M
$1,504M
 8.5% from F20
Finance costs declined on the prior year due to lower
non‑lease interest expense as a result of lower average
net debt and lower borrowing costs.
1
2
Continuing operations before significant items.
Group before significant items.
 20.1% from F20
NPAT from continuing operations increased
on the prior year reflecting the increase in EBIT
and a reduction in finance costs.
19
WOOLWORTHS GROUP
ANNUAL REPORT 2021
F20
(52 WEEKS)
CHANGE
Continuing operations
Australian Food
New Zealand Food
New Zealand Food (NZD)
BIG W
Other
Sales from continuing operations
44,441
6,652
7,146
4,583
18
55,694
42,151
6,823
7,192
4,106
–
53,080
5.4%
(2.5)%
(0.6)%
11.6%
n.m.
4.9%
Discontinued operations
Endeavour Drinks
Hotels
Sales from discontinued operations
10,167
1,417
11,584
9,275
1,320
10,595
9.6%
7.3%
9.3%
Total Group sales (including eCommerce)
67,278
63,675
5.7%
Continuing operations eCommerce sales
Discontinued operations eCommerce sales
Group eCommerce sales
Continuing operations eCommerce sales penetration (%)
Continuing operations – average weekly traffic to Group digital assets (million)
4,743
859
5,602
8.5%
17.2
2,905
637
3,542
5.5%
12.2
63.3%
34.7%
58.1%
304 bps
40.5%
1
2
BUSINESS
REVIEW
F21
(52 WEEKS)
PERFORMANCE
HIGHLIGHTS
F21 sales summary ($ MILLION)
CHANGE
Continuing operations before significant items
Australian Food
New Zealand Food
New Zealand Food (NZD)
BIG W
Group
EBIT from continuing operations before significant items
2,432
336
361
172
(176)
2,764
2,232
358
378
39
(144)
2,485
9.0%
(6.4)%
(4.6)%
344.9%
23.6%
11.1%
Discontinued operations
Endeavour Drinks
Hotels
Endeavour Group costs
EBIT from discontinued operations before significant items
Group EBIT before significant items
Significant items
Group EBIT
669
261
(31)
899
3,663
59
3,722
569
172
(7)
734
3,219
(591)
2,628
17.7%
51.7%
n.m.
22.6%
13.7%
n.m.
41.6%
4
5
OTHER
INFORMATION
F20
(52 WEEKS)
FINANCIAL
REPORT
F21
(52 WEEKS)
F21 EBIT summary ($ MILLION)
DIRECTORS’
REPORT
3
20
GROUP FINANCIAL PERFORMANCE
F21
(52 WEEKS)
F20
(52 WEEKS)
CHANGE
4,843
(2,079)
2,764
(613)
(647)
1,504
–
4,453
(1,968)
2,485
(671)
(555)
1,259
(10)
8.7%
5.5%
11.1%
(8.5)%
16.5%
19.2%
n.m.
1,504
102
1,249
(321)
20.1%
n.m.
468
2,074
237
1,165
98.0%
77.8%
Margins – continuing operations
F21
(52 WEEKS)
F20
(52 WEEKS)
CHANGE
Gross profit (%)
Cost of doing business (CODB) (%)
EBIT (%)
29.3
24.4
5.0
28.9
24.2
4.7
44 bps
16 bps
28 bps
F21
(52 WEEKS)
F20
(52 WEEKS)
CHANGE
1,256.9
156.9
165.0
164.2
119.6
127.7
119.1
127.1
53
55
108
1,257.9
127.5
92.7
92.2
99.5
73.9
98.9
73.5
46
48
94
(0.1)%
23.0%
77.9%
78.2%
20.2%
72.8%
20.4%
73.0%
15.2%
14.6%
14.9%
Group Profit or Loss for the 52 weeks ended 27 June 2021 ($ MILLION)
Continuing operations before significant items
EBITDA
Depreciation and amortisation
EBIT
Finance costs
Income tax expense
NPAT
Non-controlling interests
NPAT from continuing operations attributable to equity holders of the parent entity
before significant items
Significant items from continuing operations after tax
NPAT from discontinued operations attributable to equity holders of the parent entity
after significant items
NPAT attributable to equity holders of the parent entity after significant items
Earnings per share and dividends
Weighted average ordinary shares on issue (million)
Total Group basic EPS (cents) before significant items
Total Group basic EPS (cents) after significant items
Total Group diluted EPS (cents) after significant items
Basic EPS (cents) – from continuing operations before significant items
Basic EPS (cents) – from continuing operations after significant items
Diluted EPS (cents) – from continuing operations before significant items
Diluted EPS (cents) – from continuing operations after significant items
Interim dividend per share (cents)
Final dividend per share 1,2 (cents)
Total dividend per share 2
1
2
The 2021 final dividend payable on or around 8 October 2021 will be fully franked.
Dividend excludes H2 dividend declared by Endeavour Group. Including Endeavour Group H2 dividend, total dividend per share is broadly consistent with Group
NPAT before significant items growth.
Group
Net Group costs were $176 million, an increase of $32 million from $144 million in F20. Group costs in F20 have been restated
to exclude $7 million related to Endeavour Group. F21 Group costs included COVID-related costs of $28 million, the cost of
additional risk and payroll remediation resources, and higher insurance costs. For F22, Group costs will include Woolworths
Group’s equity accounted contribution from its 14.6% investment in Endeavour Group. Excluding this contribution, Group costs
in F22 are expected to be approximately $175 million.
21
REPORTED NORMALISED
27 JUNE 2021 27 JUNE 2021 1
($ MILLION)
4,434
(5,843)
(1,409)
894
(4,516)
–
8,953
333
7,717
12,062
136
24,170
992
25,162
(1,863)
464
(1,399)
(14,728)
(16,127)
(3)
9,032
290
8,742
9,032
(89)
122
33
47
(116)
(7,870)
628
(135)
799
608
(8)
(6,014)
(141)
(6,155)
433
(464)
(31)
(717)
(748)
(390)
(7,293)
70
(7,363)
(7,293)
33.5
(44.2)
15.1
35.8
(47.2)
13.7
(2.3)
3.0
143 bps
Key ratios – Group before significant items
Closing inventory days (based on cost of sales)
Closing trade payable days (based on cost of sales)
Normalised ROFE 2
1
2
Normalised to include the Endeavour Group balances transferred to assets or liabilities held for distribution.
F21 closing funds employed included in the ROFE calculation excludes the $7,870 million demerger distribution liability.
Fixed assets, investments, loans provided
to related parties and convertible
notes of $9,581 million increased by
$628 million mainly due to additions
reflecting investment in new stores,
property development, refurbishments
of existing stores, investment in
eCommerce and digital, IT infrastructure
and acquisitions of businesses.
Lease assets of $12,670 million
increased by $608 million primarily
driven by lease remeasurements of
$1,253 million and lease additions of
$537 million, partially offset by lease
depreciation of $1,228 million.
Trade payables of $5,721 million
decreased by $122 million compared to
F20, primarily due to decreased volume
replenishments of COVID contingency
stock compared to the prior year,
particularly in Q4 together with shorter
payment terms for smaller suppliers.
Total funds employed decreased
$6,014 million, largely driven by the
$7,870 million demerger distribution
payable to shareholders as a result of
the Endeavour Group demerger, partially
offset by a $799 million increase in
intangible assets due to the acquisition
of Quantium and software additions.
A demerger distribution liability of
$7,870 million reflects the fair value
of the demerger distribution payable
to shareholders following the approval
Lease liabilities of $15,445 million
increased by $717 million, primarily
driven by commencement of new
leases of $556 million, remeasurements
during the period of $1,242 million and
interest of $687 million, partially offset
by $1,845 million of payments made
in the period.
Net assets of $1,739 million includes
a $390 million put option liability over
the non-controlling interest in Quantium.
The liability reflects the amount expected
to be paid at the exercise of the put option.
Group ROFE was 15.1%, 143 bps
higher than F20. ROFE increased for all
businesses reflecting EBIT growth well
above increases in funds employed other
than New Zealand Food. Closing funds
employed used for the Group ROFE
calculation has been adjusted to remove
the impact of the demerger distribution
liability which has resulted in a temporary
reduction in funds employed at year end.
Shareholders’ equity of $1,379 million
decreased by $7,363 million mainly
due to the recognition of the demerger
distribution liability of $7,870 million
recognised in reserves and share
capital. As discussed below, this
timing impact will reverse in F22 and
shareholders’ equity will increase when
the gain on the demerger of Endeavour
Group of approximately $6.4 billion
is recognised in Q1 F22.
3
4
5
OTHER
INFORMATION
Closing inventory of $4,345 million
decreased by $89 million compared to
F20, mainly due to normalised inventory
levels in the Food businesses following
an inventory build in F20. This was
partially offset by a rebuild of inventory
in BIG W. Closing inventory days were
2.3 days lower and average inventory
days from continuing operations declined
by 0.5 days on the prior year reflecting
strong sales momentum in F21.
of the demerger resolutions for
Endeavour Group in June 2021.
2
FINANCIAL
REPORT
The normalised balance sheet as at 27
June 2021 does not include the impact
of transferring the Endeavour Group
balances to assets or liabilities held for
distribution. To aid comparability, all
balance sheet commentary provided
compares the F21 normalised closing
balance sheet to F20.
1
DIRECTORS’
REPORT
4,345
(5,721)
(1,376)
941
(4,632)
(7,870)
9,581
198
8,516
12,670
128
18,156
851
19,007
(1,430)
–
(1,430)
(15,445)
(16,875)
(393)
1,739
360
1,379
1,739
BUSINESS
REVIEW
3,132
(4,832)
(1,700)
782
(4,008)
(7,870)
7,605
5,728
4,671
9,553
128
14,889
1,119
16,008
(1,863)
–
(1,863)
(12,016)
(13,879)
(390)
1,739
360
1,379
1,739
NORMALISED
CHANGE
PERFORMANCE
HIGHLIGHTS
Inventories
Trade payables
Net investment in inventory
Trade and other receivables
Other creditors, provisions, and other liabilities
Demerger distribution liability
Fixed assets, investments, loans to related parties and convertible notes
Net assets held for sale and distribution
Intangible assets
Lease assets
Other assets
Total funds employed
Net tax balances
Net assets employed
Cash and borrowings
Derivatives
Net debt (excluding lease liabilities)
Lease liabilities
Total net debt
Put option over non-controlling interest
Net assets
Non-controlling interests
Shareholders’ equity
Total equity
REPORTED
28 JUNE 2020
WOOLWORTHS GROUP
ANNUAL REPORT 2021
Group balance sheet as at 27 June 2021
22
GROUP FINANCIAL PERFORMANCE
Group cash flows for the 52 weeks ended 27 June 2021
($ MILLION)
EBITDA – continuing operations
EBITDA – discontinued operations
Significant items
Group EBITDA
Decrease/(increase) in inventories
(Decrease)/increase in trade payables
(Decrease)/increase in provisions
Net change in other working capital and non-cash
Cash from operating activities before interest and tax
Interest paid – leases
Net interest paid – non-leases
Tax paid
Total cash provided by operating activities
Proceeds from the sale of property, plant and equipment, subsidiaries and investments,
net of cash disposed
Payments for the purchase of property, plant and equipment and intangible assets
Other
Total cash used in investing activities
Repayment of lease liabilities
Dividends paid (including to non-controlling interests)
Payments for shares held in trust
Free cash flow after equity and lease related financing activities
Cash flow from operating activities
before interest and tax was $6,162
million, an increase of $95 million or
1.7% on the prior year. The increase
in Group EBITDA of $1,244 million
was largely offset by outflows
from working capital and non-cash
movements compared to inflows in
the prior year. The increase in EBITDA
reflects higher trading EBITDA from
continuing and discontinued operations
as well as a gain on significant items in
F21 compared to a loss on significant
items in F20.
in payables was lower due to lower
Q4 inventory replenishments, and
inventory optimisation initiatives.
Increase in trade payables was
unusually high in F20 due to creditor
payment timing and high trade payables
due to increased COVID-related stock
replenishments. In F21, movement
Tax paid increased 13.5% due to higher
tax instalments on higher profits in
F21 and stamp duty payable on the
Endeavour Group demerger.
In F21, decrease in provisions of $183
million was due to ongoing progress
and cash payments for salaried team
member remediation resulting in
a lower provision balance compared
to the prior year.
Net interest paid (non-leases)
decreased by 26.9% reflecting lower
net debt during the year and lower
borrowing costs.
F21
(52 WEEKS)
F20
(52 WEEKS)
CHANGE
4,843
1,428
59
6,330
103
(115)
(183)
27
6,162
(687)
(113)
(738)
4,624
4,453
1,224
(591)
5,086
(152)
632
223
278
6,067
(701)
(155)
(650)
4,561
8.7%
16.7%
n.m.
24.4%
n.m.
n.m.
n.m.
(88.9)%
1.7%
(1.7)%
(26.9)%
13.5%
1.4%
408
(2,389)
(219)
(2,200)
(1,158)
(1,154)
(177)
(65)
295
(2,149)
(91)
(1,945)
(1,066)
(1,199)
(102)
249
38.8%
11.3%
139.7%
13.1%
8.7%
(3.8)%
74.0%
n.m.
Cash used in investing activities was
$2,200 million, an increase of $255
million or 13.1% above the prior year.
The increase was primarily due to the
Group acquiring a controlling interest in
Quantium for $169 million (net of cash
acquired), and increased investment
in eCommerce, IT and digital projects,
partially offset by higher proceeds
on property sales.
Repayment of lease liabilities
increased by 8.7% reflecting lease
additions and lease remeasurements.
The Group cash realisation ratio was
97.4% (F20: 124.4%), primarily due
to the cash payment of salaried team
member remediation.
23
Capital management objectives
The Group manages its capital structure with the
objective of enhancing long-term shareholder value
through funding its business at an optimised weighted
average cost of capital. The Group returns capital
to shareholders when consistent with its long-term
capital structure objectives and will enhance
shareholder value.
In September 2020, the $654 million US Senior
Notes matured. In November 2020, the $229 million
European Medium Term Notes also matured. The
Group refinanced these maturities with a $1 billion
domestic Medium Term Note issuance in May 2020.
1
Upcoming maturities and transactions
Subject to market conditions, the Group is intending
to launch a debt capital markets transaction (total
value approximately $1.5 billion) where the proceeds
will be used for general corporate purposes, including
the long-term funding of the Group’s increased
investment in Quantium, the acquisition of PFD,
and represents an opportunity to secure long-term,
low-cost debt and reduce the Group’s overall cost
of debt and weighted average cost of capital.
Off‑market buy‑back
On 26 August 2021, the Group announced a capital
return of $2 billion to shareholders by way of an
off-market buy-back. The buy-back is expected to
return approximately $840 million of franking credits
to shareholders. For more information, please visit
www.woolworthsgroup.com.au/buyback
These credit ratings have been issued by a credit rating agency which holds an Australian Financial Services Licence with an authorisation
to issue credit ratings to wholesale clients only and are for the benefit of the Group’s debt providers.
1
2
3
DIRECTORS’
REPORT
In December 2020, the Group entered into a $384
million bank guarantee facility and into $398
In April 2021, the $424 million US Senior Notes were
repaid with existing surplus cash and bank facilities.
BUSINESS
REVIEW
Financing events during 2021
million direct surety bond facilities to support
the Group’s workers’ compensation obligations
as a self-insurer. These transactions refinanced
the Group’s $500 million bank guarantee facility,
which matured in January 2021.
PERFORMANCE
HIGHLIGHTS
The Group remains committed to solid investment
grade credit ratings and several actions can be
undertaken, if required, to support the credit profile.
This includes the sale of non-core assets, further
working capital initiatives, and adjusting growth
capital expenditure and the property leasing profile.
The Group’s credit ratings 1 are BBB (stable outlook)
from S&P and Baa2 (stable outlook) from Moody’s.
WOOLWORTHS GROUP
ANNUAL REPORT 2021
Capital management
Non‑IFRS Financial Information
These measures are used by management and the
directors as the primary measures of assessing the
financial performance of the Group and individual
segments. The directors also believe that these
non-IFRS measures assist in providing additional
meaningful information on the underlying drivers
of the business, performance and trends, as well
as the financial position of the Woolworths Group.
Non-IFRS financial measures are also used to enhance
the comparability of information between reporting
periods (such as comparable sales), by adjusting for
non-recurring or uncontrollable factors which affect
IFRS measures, to aid the user in understanding the
Woolworths Group’s performance. Consequently,
non-IFRS measures are used by the directors and
management for performance analysis, planning,
reporting and incentive setting purposes and have
remained consistent with the prior year. Non-IFRS
measures are not subject to audit or review.
5
OTHER
INFORMATION
The 2021 Annual Report for the 52 weeks ended
27 June 2021 contains certain non-IFRS financial
measures of historical financial performance, balance
sheet or cash flows. Non-IFRS financial measures
are financial measures other than those defined or
specified under all relevant accounting standards and
may not be directly comparable with other companies’
measures but are common practice in the industry
in which Woolworths Group operates. Non-IFRS
financial information should be considered in addition
to, and is not intended to be a substitute for, or more
important than, IFRS measures. The presentation of
non-IFRS measures is in line with Regulatory Guide
230 issued by the Australian Security and Investments
Commission in December 2011 to promote full and
clear disclosure for investors and other users of
financial information and minimise the possibility
of being misled by such information.
FINANCIAL
REPORT
4
24
Australian Food
Woolworths Supermarkets and Metro
Food Stores continued its focus on
operating COVIDSafe in F21 as well as a
focus on sustainability, health and product.
F21
Highlights
Sales ($M)
$44,441
 5.4% from F20
Trading Performance
Australian Food VOC NPS (Store and
Online) finished F21 at 53, an increase
of three points on the prior quarter
and in line with the prior year. Storecontrollable VOC of 81% increased one
point compared to the prior quarter
and decreased one point compared to
the prior year. Positive Q4 momentum
in customer metrics for both stores
and online reflects positive sentiment
across Ease of Pick up, Queue Wait
Time and Fruit and Vegetable scores.
Australian Food F21 sales increased
5.4% to $44.4 billion, with comparable
sales increasing 4.2% (4.5% excluding
Tobacco). Two-year average sales
growth was 7.1%. eCommerce sales
increased 74.7% to $3.5 billion, with
sales penetration for the year of 7.9%.
H1 sales growth of 10.6% benefitted
from COVID-related demand and
the successful Disney+ Ooshies and
glass containers campaigns. H2 sales
increased 0.2% as the business cycled
EBIT ($M)1
$2,432
$ MILLION
METRO
Sales
EBITDA before significant items
Depreciation and amortisation
EBIT before significant items
Significant items
EBIT
Gross margin (%)
CODB (%) 1
EBIT to sales (%) 1
Sales per square metre ($)
Funds employed
ROFE (%)
5–15
Plastic removed (tonnes) 2
Scope 1 & 2 carbon emissions (tonnes)
 9.0% from F20
New stores medium‑term
annual target
WOOLWORTHS
SUPERMARKETS
10–25
1
2
F21
(52 WEEKS)
F20
(52 WEEKS)
CHANGE
44,441
4,006
(1,574)
2,432
(94)
2,338
29.4
24.0
5.5
18,158
9,717
25.8
42,151
3,707
(1,475)
2,232
(176)
2,056
29.2
23.9
5.3
17,935
9,161
25.0
5.4%
8.1%
6.7%
9.0%
n.m.
13.7%
21 bps
3 bps
18 bps
1.2%
6.1%
86 bps
2,551
1,784,786
2,116
1,850,569
20.6%
(3.6)%
Before significant items.
Annualised calculated values for each reporting period based on virgin plastic weight removed per unit
times annualised sales volumes.
25
WOOLWORTHS GROUP
ANNUAL REPORT 2021
Hundreds
of healthier
products
at Low Prices
In F21 we worked hard
to make healthier more
affordable, adding more
healthier products to our
Low Prices program.
PERFORMANCE
HIGHLIGHTS
1
Sales per square metre increased 1.2%
to $18,158. During the year, 23 net
new stores were opened, including
13 Supermarkets and 10 Metro Food
Stores, with 65 Renewals completed.
Two new dedicated eCommerce
fulfilment centres were also opened in
Notting Hill (Vic) and Lidcombe (NSW),
and the first eStore in Australia, Carrum
Downs (Vic). At the end of the year,
there were 996 Supermarkets, 78 Metro
Gross margin (%) increased 21 bps to
29.4% with stock loss improvements
through higher sales velocity and
successful stock loss initiatives, as well
as product mix being favourably impacted
by COVID. This was partially offset by
higher eCommerce delivery costs.
CODB (%) excluding significant items
increased 3 bps to 24.0%. COVID
costs in the year remained material
at $205 million (excluding discretionary
team discount and bonus payments)
but moderated as the year progressed
until an increase in June due to
COVID outbreaks.
Higher cash CODB reflects incremental
store wages associated with higher
eCommerce penetration, investment
in IT platforms, developing new digital
capabilities to optimise the customer
experience, incremental supply chain costs
including Melbourne Fresh Distribution
Centre transition costs, and investment
in new businesses. Inflation was broadly
offset by productivity benefits.
F21 EBIT before significant items
increased by 9.0% to $2.4 billion,
with H1 growth of 13.0% and H2
growth of 4.5%. EBIT margin
increased 18 bps to 5.5%.
Funds employed increased $556
million to $9.7 billion from F20, with
investment in new stores, Renewals,
eCommerce and supply chain as well
as higher lease assets from new stores
and the reassessment of lease options.
This was partially offset by lower net
working capital. Despite higher average
funds employed, ROFE increased by 86
bps due to the strong increase in EBIT.
During the year, we amplified our
focus on supporting our communities
through living our core value of ‘We
Care Deeply’. Together with customers,
we provided more than $8 million in
support to OzHarvest, Foodbank and
Fareshare with 10,000 tonnes of edible
surplus food provided to charities.
Initiatives in F21 supporting our 2025
Sustainability Plan included solar
panels having been installed across
129 Woolworths Supermarkets and
four distribution centres, 111,950 tonnes
of organic waste diverted from landfill,
and the launch of sustainable packaging
across a selection of our own brand red
meat ranges.
3
4
5
OTHER
INFORMATION
Adjacency business F21 sales grew
8.9% to $809 million with growth
driven by the wholesale businesses.
In Q4, average prices decreased
1.2% (decrease of 2.6% excluding
Tobacco), with deflation across all
major categories except Tobacco
and Meat, due to the cycling of the
temporary reduction in promotions
in the prior year following the onset
of COVID. Inflation in Meat was driven
by increased livestock costs.
Depreciation and amortisation increased
by 6.7% driven by investment in new
stores, Renewals, supply chain and
shorter-life technology and digital assets.
FINANCIAL
REPORT
Metro Food Stores F21 sales declined
4.9% to $897 million, impacted by
reduced foot traffic across CBD and
transit locations, with comparable sales
declining approximately 45% and 30%,
respectively. The Group recorded a
non-cash impairment of $50 million in
F21 in relation to store and lease assets
across 13 stores within the network.
Food Stores and two Summergate
stores, with a total fleet of 1,076 stores.
DIRECTORS’
REPORT
COVID pantry-loading in the prior year.
In Q4, total sales increased 1.2% and
comparable sales increased by 0.1%,
with cycling of prior year pantry-loading
partly offset by elevated sales in May
and June following COVID outbreaks
in Victoria and NSW and a strong
trade plan throughout the year. Own
and Exclusive Brands sales increased
5.8% in F21 supported by new products
developed by Woolworths FoodCo and
launched during the year. The Cook,
BBQ and Crumbed ranges continue
to resonate well with customers.
BUSINESS
REVIEW
2
26
AUSTRALIAN FOOD
Introduction of recyclable
meat trays
In September, Woolworths launched new recyclable
paper meat trays across a selection of its own brand
beef, the latest milestone as part of larger sustainability
commitments to introduce more sustainable packaging.
The new paper trays used for Woolworths’ Specially
Selected and Grass Fed beef ranges are the first step
in a plan to make all Woolworths’ own brand red meat
trays recyclable. The redesigned packaging now uses
75% less plastic than the previous packaging and will
eliminate 114 tonnes of plastic from the supply chain
each year across seven popular beef cuts.
Today’s Fresh Food People
In July of this year ‘Today’s Fresh Food People’ was
relaunched as a reimagination of what being the fresh
food people means today and how it will continue to
evolve in the future. ‘Today’s Fresh Food People’ is all
about good food, celebrating Australian fresh, helping
customers make healthier choices, caring for local
communities, and helping to create a greener planet.
The campaign will continue to come to life throughout
F22 and we will continue to differentiate ourselves and
solidify our stance on the things that matter most to our
customers and communities.
Free Fruit for Kids hits
100 million milestone
More than 100 million pieces of fruit have now
been given to Australian kids since the launch
of Woolworths Free Fruit For Kids program.
Building fresh fruit habits from an early age,
the Woolworths initiative was the first national
program of its kind when it began in 2015, aimed
to help get more fruit into kids’ diets. Woolworths
estimates more than 14,000 tonnes of free
fruit have been eaten by kids since the program
launched – the equivalent to filling more than six
Olympic sized swimming pools.
27
Woolworths has invested more than $2 million
in grants to 24 dairy farms across Australia to
support innovation, efficiency and seasonal
resilience. The inaugural round of the Woolworths
Dairy Innovation Fund has awarded grants up to
$100,000 to farmers for future focused projects,
including solar‑powered desalination, milk sensor
technology, enhanced bushfire protection, herd
monitoring technology and dairy automation.
We’re proud to have continued our collaboration with our
technology partner Fujitsu to launch mini supermarket
stores in Australian special education schools. Since 2018
we’ve launched three mini supermarket stores in NSW
and ACT, with plans to launch a fourth in SA in F22.
With this season delivering the best conditions
many dairies have seen in recent years, the
projects to be funded show a concerted focus on
investments that will shore up farms to withstand
future seasonal challenges.
2
BUSINESS
REVIEW
The mini Supermarkets provide students with work
experience in a safe environment that promotes skills,
knowledge, independence, confidence and self-esteem.
Each of the stores feature registers, products, ticketing
and signage, as well as uniforms and name badges, and
provides students with an opportunity to gain an authentic
retail experience.
1
PERFORMANCE
HIGHLIGHTS
Three mini Supermarket stores launched
in special education schools
WOOLWORTHS GROUP
ANNUAL REPORT 2021
Woolworths supports
Australia’s dairy farming
innovators
DIRECTORS’
REPORT
3
Woolworths named Green Supermarket of the Year
FINANCIAL
REPORT
5
OTHER
INFORMATION
In F21 Woolworths was named Green Supermarket of the Year by Finder, which helps Australians find companies leading
the way on sustainability. In F21, Woolworths Supermarkets has been working hard to make positive changes that customers
can see in their shopping baskets, including increased plastic reduction and recycling, as well as making the entire business
more sustainable. The award recognised the Group’s science-based emissions targets and our commitment to external
benchmarks, as well as supplier engagement, which are detailed in the Sustainability Plan 2025. F21 saw the launch of our
newest sustainability store in West End, Qld which has sustainability at the centre of the store’s construction and design,
bringing together a number of our key sustainability initiatives. The new store will operate with 15% fewer greenhouse gas
emissions than the average Woolworths supermarket in Qld, which is equivalent to taking 290 cars off the road each year.
The store’s shopping trolleys are made from 100% locally sourced recycled milk bottles and customers can return used
batteries, mobile phones, coffee pods and soft plastics to recycling stations in the store.
4
28
F21 has been a record year for WooliesX that saw a scaling
of convenience propositions as a result of increased
demand from customers choosing eCommerce services.
Trading Performance
DIGITAL & MEDIA
Average weekly
traffic (million)
12.1
in Q4’21
eCOM & FULFILMENT
WooliesX’s Digital and Media business
reported an increase in average weekly traffic
to Woolworths’ websites and apps of 25.8%
to 12.1 million in F21. Improving customer
satisfaction with their digital experiences,
in particular helping inspire, plan and shop
safely remained the focus. Key upgrades
to experiences included personalised lists,
the launch of Fresh Ideas for You on the
Woolworths App, addition of new recipes
and launching in-app push notifications.
eCommerce sales grew by $1.5 billion
(+74.7%) to $3.5 billion in F21 representing
7.9% of Australian Food sales, up 3.1 points
on the prior year. Growth moderated to
36.5% in Q4 as the business cycled strong
demand last year.
Cartology continued to enhance its client
experience through expanded inventory and
data-led customer insights and achieved
strong growth across all key advertising
channels. By year end, Cartology digital
advertising screens had been rolled
out to 1,218 stores across Woolworths
Supermarkets and Dan Murphy’s.
Over the year, the business met the demand
for increased convenience by adding
379 Direct to boot sites assisting Pick up
penetration to reach 37.5% of sales in Q4.
Another 125 Delivery Now locations were
added, and same day delivery was rolled out
to 425 stores where customers can order
and receive their order within a one-hour
window later in the day.
Perfect order ended the year at an all-time
high, improving by 20.9% on the prior
year, through a focus on complete baskets
and improving on-time delivery. VOC NPS
improved consistently as the year progressed.
Digital metrics
eCom sales ($M)
$3,523
 74.7% from F20
Average weekly traffic to digital
assets 1 (million)
Average weekly traffic growth
(year on year %)
Q4’21
(12 WEEKS)
Q3’21
(13 WEEKS)
Q2’21
(13 WEEKS)
Q1’21
(14 WEEKS)
12.1
12.4
12.4
11.4
12.4%
47.7%
69.8%
75.5%
Q4’21
(12 WEEKS)
Q3’21
(13 WEEKS)
Q2’21
(13 WEEKS)
Q1’21
(14 WEEKS)
63
60
58
58
838
36.5%
8.5%
37.5%
878
90.5%
7.9%
35.7%
846
83.3%
7.4%
33.1%
961
100.0%
8.0%
32.1%
Q4’21
(12 WEEKS)
Q3’21
(13 WEEKS)
Q2’21
(13 WEEKS)
Q1’21
(14 WEEKS)
13.1
53.7%
12.9
54.0%
12.8
53.6%
12.6
53.1%
eCommerce metrics
Customer metrics
Online VOC NPS
eCommerce sales metrics
eCommerce sales ($ million) 2
eCommerce sales growth
eCommerce penetration
Pick up mix (% of eCommerce sales)
Everyday Rewards metrics
Total Everyday Rewards members
(million)
Scan rate 3 (%)
1
2
3
Digital assets include Woolworths website and app, Everyday Rewards website and app, and Woolworths
Insurance website.
WooliesX sales numbers are included in Australian Food total and comparable sales.
Scan rate for Woolworths Supermarkets excluding Tobacco.
29
WOOLWORTHS GROUP
ANNUAL REPORT 2021
EVERYDAY REWARDS
Wpay was launched as a
standalone payments business
in June and will offer customers
cost effective solutions such
as transaction processing,
settlement services, in-store
terminals, custom gifting and
loyalty initiatives and reporting
and analytics.
4
5
WooliesX
wins 2021
Mozo People’s
Choice Awards
WooliesX eCom services
recognised as the highest
rated online supermarket,
winning all seven awards
in the category.
OTHER
INFORMATION
Our commitment to convenience continues to see increasing numbers
of customers choosing our eCommerce services to complement their
in‑store shopping experience. Our rapid and consistent response to
consumer need for contactless, COVIDSafe shopping, included the
ongoing support of Priority Assist services dedicated to the elderly
and vulnerable. We also saw subscriptions grow our customer
base with the launch of a revamped Delivery Unlimited. We scaled
convenience propositions in response to demand, expanding to offer
a range of different services from next day delivery to Same Day
(425 stores), frictionless Direct to boot (629 stores) and Delivery
Now (232 stores). In addition, we launched our first automated
eStore at Carrum Downs and shared plans for our first automated
customer fulfilment centre set to open in Auburn in 2024, which
will ensure continued convenient service growth. At the same time,
NPS continued to improve with improvements to availability and the
launch of new features, like
‘Quick Reorder’ and ‘Have
You Forgotten’, delivering
an even more personalised,
seamless experience for
customers and making
online shopping easier.
As customers increasingly
shop eCommerce on the go,
the Woolworths App has
grown in popularity.
3
FINANCIAL
REPORT
Ultra Convenience
2
DIRECTORS’
REPORT
Everyday Rewards members
increased 6.0% to 13.1 million, with
scan rates improving to 53.7% by
year end. The Everyday Rewards
app continues to provide value and
convenience to members across
partners, with the ability to boost
offers, check points balance and
access eReceipts.
1
BUSINESS
REVIEW
WooliesX eCom services was
recognised by Australians in
the 2021 Mozo People’s Choice
Awards as the highest rated
online supermarket, winning all
seven awards in the category.
The Everyday Rewards program
increased the value available
to customers by adding new
partners, including Origin Energy,
SuperPharmacy and Pet Culture.
Strong member engagement
with record levels of interest
and participation were driven
by the Rewards exclusive glass
container collectable and Bank
for Christmas offering, as well
as the ability for members to
continue to earn Qantas Points.
PERFORMANCE
HIGHLIGHTS
Woolworths at Work was
launched to provide businesses
with a tailored online shopping
experience. The platform provides
access to features such as line of
credit, consolidated billing, and
two-hour delivery windows.
Everyday Rewards has rebranded and
expanded to deliver an even better
customer experience. Membership
has grown by almost one million
and the program now has more
than 13 million members, many of
whom are connecting with us in the
Everyday Rewards app and millions
who are boosting personalised
offers regularly. The app celebrated
its first birthday and weekly active
users continue to grow, creating even
more opportunities to connect with
customers multiple times across
the week. Our first ever Everyday
Rewards branded collectable
campaign launched in F21, with 1.6
million members participating, and
new partnerships were established
with Bupa, Origin, Pet Culture and
SuperPharmacy, further expanding
the value Everyday Rewards offers
members. Everyday Rewards
members were also given the
opportunity to choose eReceipts when
they shop in-store at Woolworths,
BIG W and BWS. Opting out of paper
receipts is not only convenient for
customers but also another small
step towards our commitment to
reduce waste as we strive toward
a better tomorrow.
30
New Zealand Food
In F21 New Zealand Food focused on
scaling its eCommerce services and
ongoing digital transformation.
Trading Performance 1
F21
Highlights
Sales (NZ$M)
$7,146
 (0.6)% from F20
EBIT (NZ$M)
$361
 (4.6)% from F20
New stores medium‑term
annual target
3–4
New Zealand Food’s customer scores
declined marginally on the prior year
with F21 VOC NPS decreasing two
points to 45 and Store-controllable
VOC also decreasing two points at
80%. Some softening took place in Q4
with Out of Stocks, which was impacted
by a combination of global supply
challenges and shipping delays and
stronger sales than anticipated.
Total sales for F21 declined 0.6% to
$7.1 billion, cycling the strict COVID
lockdowns in H2 F20. Sales in H2
decreased 5.5% after cycling growth
of 13.8% in the prior year. Q4 sales
declined 3.9% and comparable sales
declined 4.2%; average two-year
comparable growth in Q4 rose to 4.9%.
Digital and eCommerce momentum
was again a highlight for the year.
eCommerce sales grew 30.2%, despite
cycling elevated sales from COVID
impacts in H2, with Q4 penetration at
12.5%. Additional capacity was added
with two new eStores in Grenada North
(Lower North Island) and Moorhouse
(Christchurch); the first two automated
fulfilment units were launched in
partnership with Takeoff Technologies at
the Auckland Penrose eStore in January
and at Moorhouse in March. Other
digital highlights include the launch and
scale-up of the Countdown transactional
app and Delivery Saver subscription
service. Further innovations included
two Cleveron locker units for Pick up
and the roll out of Scan&Go to six stores.
F21
(52 WEEKS)
F20
(52 WEEKS)
CHANGE
Sales
EBITDA
Depreciation and amortisation
EBIT
Gross margin (%)
CODB (%)
EBIT to sales (%)
Sales per square metre ($)
Funds employed
ROFE (%)
7,146
633
(272)
361
25.3
20.2
5.0
17,147
4,329
8.4
7,192
634
(256)
378
25.0
19.8
5.3
17,832
4,190
8.8
(0.6)%
(0.2)%
6.3%
(4.6)%
24 bps
45 bps
(21) bps
(3.8)%
3.3%
(40) bps
Plastic removed (tonnes) 2
Scope 1 & 2 carbon emissions (tonnes)
16.4
61,802
–
68,426
n.m.
(9.7)%
NZD $ MILLION
1
2
Growth for New Zealand Food quoted in New Zealand Dollars.
Annualised calculated values for each reporting period based on virgin plastic weight removed per unit
times annualised volumes.
31
WOOLWORTHS GROUP
ANNUAL REPORT 2021
eCommerce continued
to gain momentum in F21
F21 eCom
sales growth
12.5%
Total eStores
4
1
PERFORMANCE
HIGHLIGHTS
30.2%
Q4’21 eCom
penetration
In October, a simplified and strengthened
Onecard rewards program was launched
and Cartology New Zealand was
launched in February.
Average prices decreased by 0.5%
in Q4 primarily driven by deflation in
Grocery, Perishables and Meat, which
was partly offset by some inflation
in Produce. The reduction in average
prices moderated relative to Q3 which
experienced a more significant COVID
impact last year than Q4, with both
quarters impacted by a reduction in
promotions in H2 F20.
Following the launch of Countdown’s
2025 Sustainability Commitments,
progress has continued in F21, including
no longer selling plastic cutlery from our
stores as well as shifting our fresh pasta
into PET from PVC, all hot smoked
salmon to clear PET and the removals
of all glitter products from our stores.
We also explored new opportunities
to reduce carbon emissions, including
working with the Sustainable Business
Council and other businesses and
logistics operators to develop the
Low Carbon Freight Pathway report
to progressively decarbonise New
Zealand’s freight system.
3
4
5
OTHER
INFORMATION
New Zealand Food’s franchise stores
(Fresh Choice and Super Value) had
strong two-year sales growth despite
the impact from lack of international
tourists, particularly over the summer
period. One new Super Value store
opened in December.
EBIT for the year was $361 million,
a 4.6% decline on the prior year
following a 10.7% increase in EBIT
in F20. H2 EBIT declined 13.3% due
to cycling COVID.
In late F21, Countdown delivered
New Zealand’s very first Green
Star accredited supermarket.
Countdown Richmond has been
built with sustainability at the
heart of both its construction
and design and will be accredited
in the coming months. The store
is Countdown’s first site with
solar panels, which will deliver
up to 10–15% of the energy
needed to run the store. Other
initiatives include doors on
fridges to reduce energy use, a
transcritical refrigeration system,
digital shelf tickets to prevent
paper going to landfill, water
efficient fixtures and fittings and
much more. Richmond is the first
of many Green Star projects for
Countdown as it works towards
meeting its commitment that
all new property developments
will have a 4 star Green Star
design and as-built rating, and
a 5 star Green Star minimum
standard by 2025.
FINANCIAL
REPORT
The new Hilton meat plant went live
in July 2021 supplying cabinet ready
meat to all North Island Countdown
stores. Progress was made on the
new Palmerston North ambient and
Auckland Fresh distribution centres
which are scheduled for opening
in September 2021 and May 2022,
respectively.
CODB (%) increased by 45 bps, with
the biggest driver being team member
wage increases driven by enterprise
agreements. Other increases included
store depreciation and digital spend
arising from investment in the store
network, eCommerce capacity and
mix and digital capability, which have
helped support eCommerce growth.
Richmond store
Green Star
accreditation
DIRECTORS’
REPORT
Two new Countdown stores were
opened in Pokeno and Richmond, the
first New Zealand 4 star Green Star
rated store, and one Metro store.
Two replacement Countdown stores
and 10 Renewals were also completed.
Sales per square metre declined by
3.8% to $17,147 due to the reduction in
sales and an increase in average space.
Gross profit (%) increased 24 bps on
last year, helped by continued progress
in stock loss, mix improvements and
increased use of data-driven tools
in category management, such as the
promotional effectiveness tool. A new
‘Value You Can Count On’ campaign
was launched to accompany over 4,000
products on the Great Price program.
BUSINESS
REVIEW
2
32
BIG W
F21 was a strong year for BIG W that saw
improved customer scores and sales growth
as it continued to live its purpose of making
a real difference for families.
F21
Highlights
Sales ($M)
$4,583
 11.6% from F20
EBIT ($M)
$172
Trading Performance
BIG W’s continued focus on its purpose
of making a real difference for families
has had a positive impact on customer
metrics with Store-controllable VOC
at 83%, an improvement of six points
compared to the prior year. VOC NPS
(Store and Online) increased four
points on the prior year to 62 and
softened one point from Q3. Notable
improvements in VOC include Stock
Availability, Ease of Locating Products
and Correct Price Ticketing.
BIG W achieved record annual sales of
$4.6 billion in F21, up 11.6% on the prior
year, with comparable sales increasing
by 13.0%. All major categories
experienced strong annual growth.
 344.9% from F20
Prioritising our Planet goal and
responding to customer shopping
patterns, BIG W transitioned
from print to exclusively digital
catalogues (outside of the much
loved Toy Mania catalogue),
saving at least 8,000 tonnes
of paper in F21.
BIG W’s digital acceleration continued
in Q4 with eCommerce sales growth
of 4.6% and penetration reaching
a record 9.9%, up from 8.4% in the
prior year. In Q4, BIG W X remained
focused on creating more connected
and convenient customer experiences
by launching a new BIG W website,
F21
(52 WEEKS)
F20
(52 WEEKS)
CHANGE
Sales
EBITDA
Depreciation and amortisation
EBIT
Gross margin (%)
CODB (%)
EBIT to sales (%)
Sales per square metre ($)
Funds employed
ROFE (%)
4,583
348
(176)
172
33.6
29.9
3.7
4,517
1,194
16.5
4,106
207
(168)
39
31.8
30.9
0.9
3,962
947
3.6
11.6%
67.6%
4.2%
344.9%
180 bps
(100) bps
280 bps
14.0%
26.1%
12.9 pts
Plastic removed (tonnes) 1
Scope 1 & 2 carbon emissions (tonnes)
3.1
115,882
–
126,764
n.m.
(8.6)%
$ MILLION
Commitment to
building a sustainable
future for families
Q4 total sales declined 10.4%
(comparable: -9.4%) with trade
impacted by lockdowns across Victoria
and NSW in late Q4, and the cycling of
the peak COVID demand in the prior
year. Two-year average comparable
sales growth in Q4 was 10.6%,
supported by a strong customer plan
and a successful Toy Mania sale event.
1
Annualised calculated values for each reporting period based on virgin plastic weight removed per unit
times annualised sales volumes.
33
F21 eCom sales growth
60.5%
Pick up locations
Direct to boot
78
F21 online VOC NPS
59
Average weekly
digital traffic
4.2M
1
PERFORMANCE
HIGHLIGHTS
176
WOOLWORTHS GROUP
ANNUAL REPORT 2021
Scaling up the digital experience
BUSINESS
REVIEW
2
evolving the online layby solution, as
well as rolling out contactless Direct
to boot to a further four locations,
bringing total locations to 76.
4
5
Making a real difference
for families
BIG W continued to focus on its purpose
of “making a real difference for families”
throughout F21. Through the challenges
of COVID, the BIG W team continued to
provide an essential service, while their
financial, physical and mental wellbeing
was supported. In the community,
BIG W’s partnership with Good360 saw
over seven million items donated to
over 1,300 charities and schools in need
across Australia through the floods and
impact of COVID.
OTHER
INFORMATION
CODB (%) reduced by 100 bps due
to better fixed cost leverage, partly
offset by the annualisation of costs
associated with a new enterprise
agreement, higher supply chain costs
driven by the transition of Monarto
DC to a third-party logistics provider,
higher costs to support digital sales
acceleration and investment in building
digital and data analytics, and insight
capability across teams.
3
FINANCIAL
REPORT
Gross profit (%) improved 180 bps
in F21, with stronger margin expansion
in H2 from continuing momentum
in full price Apparel sales, coupled
with H2 category mix changes due
to cycling elevated sales of lower
margin COVID-impacted categories,
including Leisure and Toys and Home
Essentials last year.
Closing inventory was higher than the
prior year due to higher inventory to
support increased sales volumes, as
well as normalising from COVID surge
buying and stock availability challenges
impacting last year. Average inventory
days declined on the prior year due
to sales momentum and good stock
management. Higher closing inventory
and capital investments resulted in higher
funds employed at the end of the period.
Despite this, ROFE improved to 16.5%,
up from 3.6% in F20, due to the material
EBIT increase compared to the prior year.
BIG W continued to show real
care for our communities through
continuing its Free Books for Kids
initiative distributing over 4.8 million
free books to families. BIG W is
committed to Woolworths Group’s
2025 Sustainability Plan and has made
progress in a number of areas during
the year, including the activation
of ethical partnerships through the
whole value chain such as Action
Collaboration Transformation and
Better Cotton Initiative. We recognise
that reducing plastics is important
to our customers and whilst pleased
with our start, there is a lot more
to do in the coming year.
DIRECTORS’
REPORT
BIG W closed three stores during the
year as part of its ongoing property
network review, with total store
numbers now at 176. Sales per square
metre increased 14.0% due to strong
sales growth and lower average space
than the prior year. As previously
announced, the Monarto DC closed
in Q4, with the transition to a new
third-party DC network in Perth and
Melbourne in place from Q3.
BIG W’s EBIT increased 344.9% to
$172 million, and an EBIT margin of
3.7%, up from 0.9% in the prior year.
34
Discontinued operation – Endeavour Group
Endeavour Drinks
Endeavour Group separation
On 18 June 2021, Woolworths Group obtained shareholder
approval for the separation of Endeavour Group which
resulted in two of the Group’s separate major business lines,
Endeavour Drinks and Hotels, being classified as discontinued
operations. The Group classified the respective assets and
liabilities of Endeavour Group as held for distribution and have
presented these amounts at carrying value and separately
from other assets and liabilities in the balance sheet as at
27 June 2021.
Trading performance
Endeavour Drinks’ total sales for the year were $10.2 billion,
up 9.6% on the prior year. Sales growth was driven by the shift
to in-home consumption and ongoing premiumisation trends.
H2 sales decreased by 0.4%, with Q4 sales declining by 7%
after cycling 23.2% growth in Q4 F20.
BWS and Dan Murphy’s continued to improve customer metrics.
Dan Murphy’s VOC ended the year at 79, up three points on the
prior year and BWS VOC was 71, up one point on the prior year.
eCommerce sales increased 34.7% in F21, with eCommerce
penetration now 8.4% of sales (F20: 6.9%). Penetration
has remained high even in periods when lockdowns and
on-premise restrictions have eased.
Endeavour Drinks’ retail store network increased to 1,643,
with 33 net new stores added during F21. At the end of the year,
the fleet consisted of 251 Dan Murphy’s stores and 1,392 BWS
stores. Sales per square metre increased 7.2% reflecting strong
sales growth ahead of an increase in average space.
Gross margin (%) increased 109 bps in F21 mainly due to lower
promotional activity and was supported by premiumisation and
product mix shifts. CODB (%) was 17.6%, 64 bps higher than
the prior year. The higher sales provided fixed cost leverage,
which partially offset increases in team member costs, COVID
costs and investments in technology and EndeavourX.
EBIT increased 17.7% to $669 million in F21, and H2 EBIT
increased 8.3%.
Endeavour Drinks
$ MILLION
Sales
EBITDA
Depreciation and amortisation
EBIT
Gross margin (%)
CODB (%)
EBIT to sales (%)
Sales per square metre ($)
Funds employed
ROFE (%)
F21
(52 WEEKS)
F20
(52 WEEKS)
CHANGE
10,167
960
(291)
669
24.2
17.6
6.6
20,989
3,804
17.9
9,275
826
(257)
569
23.1
17.0
6.1
19,579
3,592
15.1
9.6%
16.3%
13.4%
17.7%
109 bps
64 bps
45 bps
7.2%
5.9%
283 bps
35
WOOLWORTHS GROUP
ANNUAL REPORT 2021
Hotels
Trading Performance
Endeavour Group costs
In F21, total sales increased by 7.3% to $1,417 million with
EBIT increasing by 51.7% to $261 million. In H2, sales
increased by 87.1% cycling a period in the prior year when
most hotels were closed. EBIT in H2 increased to $139
million following a loss of $52 million in the prior year.
Endeavour Group incurred Group costs of $31 million
in F21 compared to $7 million in the prior year. The costs
reflect the ongoing costs of establishing Endeavour
Group as a stand-alone business.
The most significant impact of COVID lockdowns
and restrictions was in the key state of Victoria where
operations were somewhat impacted throughout the
financial year. Hotels re-entered lockdown in early July 2020
and reopened in early November with capacity limits and
trading restrictions in place. There were further short-term
snap lockdowns in both February and June.
PERFORMANCE
HIGHLIGHTS
In F21, five hotels were acquired, taking the total
network of hotels to 339 (including five managed clubs)
and 26 hotels were refurbished, including significant
redevelopments of two hotels.
BUSINESS
REVIEW
1
2
$ MILLION
F20
(52 WEEKS)
CHANGE
1,417
499
(238)
261
85.0
66.6
18.4
3,865
6.7
1,320
405
(233)
172
83.0
70.0
13.0
4,065
4.2
7.3%
22.8%
1.7%
51.7%
206 bps
(333) bps
538 bps
(4.9)%
251 bps
4
FINANCIAL
REPORT
Sales
EBITDA
Depreciation and amortisation
EBIT
Gross margin (%)
CODB (%)
EBIT to sales (%)
Funds employed
ROFE (%)
F21
(52 WEEKS)
DIRECTORS’
REPORT
3
Hotels
OTHER
INFORMATION
5
36
MATERIAL RISKS
Our Material Risks
a
st
Su and
in
a
co b ili t
mp y, le
li a n g a l
ce
on
ce a l
Risks
ulture
nd c
le a
op
Pe
Financ
ial
Strategy and
sformation
tran
ti
e ra n
O p cell e
ex
We operate in a fast-paced and ever-changing
environment, and that has never been more evident than
in the previous 12 months. Our businesses, both domestic
and international, continue to face both opportunities
and threats that could materially impact our operations.
Woolworths Group is made up of a portfolio of some of Australia and New
Zealand’s most trusted retail brands and growth platforms. Wherever we operate,
we are led by our Purpose, Core Values and Ways-of-Working to create better
experiences together for a better tomorrow.
Our food and everyday needs ecosystem is focused on delivering on the needs
of our connected customers and leveraging our unique assets, brands and
capabilities. To be confident we will achieve our purpose and execute our strategy,
we need to manage risk (both internal and external) effectively across the Group
to protect the value of our assets today, but also to enable the Group to deliver
growth for tomorrow.
The Group acknowledges that the
COVID-19 pandemic is a contributory
and/or causal factor to risks relating
to, amongst others, lockdowns and
trading impacts, customer and team
member safety, mental health, economic
conditions, consumer sentiment, and
multiple operational and supply chain
impacts. We are proud of our response
to the pandemic and our ability to keep
our team and customers safe while
maintaining supply. However, we continue
to be prepared for the rapidly evolving
nature of the virus and emergence of new
variants that make impacts difficult to
predict and respond to.
Despite this challenging environment, we
successfully completed the separation of
Endeavour Group as well as the formation
of our retail, international and wholesale
red meat business, Greenstock.
Looking towards the future in this highly
competitive and dynamic retail and online
market, we also recognise the occurrence
of continued market disruption and
strategy execution risks.
Our recently refreshed Risk Appetite
Statement, as agreed with our Board,
captures the types and amount of
risk we are willing to accept in pursuit
of value creation and guides how we
manage and control risks.
The Board has demonstrated its
commitment to Risk Management,
with the formation of a new Risk
Committee and the appointment of
a Chief Risk Officer to the Woolworths
Group Executive Committee, reporting
to the CEO and Committee chair.
Woolworths Group has commenced
on a risk management journey to
achieve a future objective where
“Woolworths Group is confident that
we are operating effectively to the
Woolworths Group Risk Appetite”.
Our material risks are considered
and where appropriate, adjusted
through regular meetings with senior
management followed by review and
oversight by the Board. We evaluate
our risks in line with changes to our
environment and may also identify
additional and emerging risks that
could adversely affect the Group.
Further information in relation to risk
management can be found throughout
the Annual Report and in the Corporate
Governance Statement which is available
on the Wo…