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1 28 February 2014 The Manager Companies Australian Securities Exchange Limited Company Announcements Office Level 4 20 Bridge Street Sydney NSW 2000 Dear Sir/Madam RE: Appendix 4D Half Year Results Appendix 4D - for the 27 weeks to 5 January 2014 is attached. For and on behalf of WOOLWORTHS LIMITED PETER J HORTON Group General Counsel and Company Secretary

2 ABN Half Year Financial Report for the Half Year Ended 5 January 2014 This Half Year Financial Report is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.2A.3 and should be read in conjunction with the 2013 Annual Financial Report and any announcements made to the market during the period.

3 Half Year Financial Report for the Half Year Ended 5 January 2014 Page Number Appendix 4D Additional Information 1 Directors Report 8 Auditor s Independence Declaration 9 Independent Auditor s Review Report 10 Directors Declaration 12 Half Year Financial Report Condensed Consolidated Statement of Profit or Loss 13 Condensed Consolidated Statement of Comprehensive Income 15 Condensed Consolidated Balance Sheet 18 Condensed Consolidated Statement of Changes in Equity 19 Condensed Consolidated Statement of Cash Flows 20 Notes to the Condensed Consolidated Financial Statements 21

4 Appendix 4D Additional Information For the Half Year Ended 5 January 2014 This Half Year Financial Report is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.2A.3. Current Reporting Period: Half Year ended 5 January 2014 (27 weeks) Previous Corresponding Period: Half Year ended 30 December 2012 (27 weeks) 1

5 Appendix 4D Additional Information For the Half Year Ended 5 January 2014 Results For Announcement To The Market For the Half Year Ended 5 January 2014 Revenue and Net Profit/(Loss) Revenue from continuing operations Revenue from discontinued operations up down Percentage Change % Amount to 32,060.5 Total Group revenue from ordinary activities up 3.8 to 32,060.5 Profit from continuing operations after tax attributable up 8.5 to 1,321.7 to members 1 Loss from discontinued operations after tax down to nil attributable to members 2 Profit from ordinary activities after tax attributable up 14.5 to 1,321.7 to members 3 Net profit attributable to members 3 up 14.5 to 1, In the prior year, a one-off loss of $28.5 million after tax was included in continuing operations as a result of the transaction to create the Shopping Centres Australasia Property Group (SCA Property Group) refer note 3 for further detail. Excluding the impact of this amount, profit from continuing operations after tax attributable to members was up 6.0%. 2 In the prior year, the net loss on sale of the Consumer Electronics businesses in Australia, New Zealand and India of $65.7 million after tax was included in discontinued operations. 3 Excluding the impact in the prior year of the one-off loss as a result of the transaction to create the SCA Property Group ($28.5 million after tax), as well as the net loss on sale of the Consumer Electronics businesses ($65.7 million after tax), net profit after tax attributable to members was up 5.8%. to nil Dividends (Distributions) Amount per security Franked amount per security Interim dividend 65 cents 65 cents Record date for determining entitlement to the dividend Interim Dividend: 21 March 2014 Brief Explanation of Revenue, Net Profit/(Loss) and Dividends (Distributions) Refer to Press Release First Half Profit Report and Dividend Announcement for the 27 weeks ended 5 January

6 Appendix 4D Additional Information For the Half Year Ended 5 January 2014 I. Details Relating to Dividends (Distributions) Date dividend payable Amount per security cents Interim dividend April April Interim dividend (distribution) per security Current Period cents Previous Corresponding Period cents Ordinary securities Interim dividend (distribution) on all securities Current Period Previous Corresponding Period Ordinary securities Represents the anticipated dividend based on the shares on issue as at the date of this report. This value will change if there are any shares issued between the date of this report and the ex-dividend date. Other disclosures in relation to dividends (distributions) The interim dividends in respect of ordinary securities for the Half Years ended 5 January 2014 and 30 December 2012 have not been recognised in this report in line with the requirements of AASB 137 Provisions, Contingent Liabilities and Contingent Assets. 3

7 Appendix 4D Additional Information For the Half Year Ended 5 January 2014 I. Details Relating to Dividends (Distributions) (continued) Dividend Reinvestment Plans The Dividend Reinvestment Plan shown below is in operation. Dividend Reinvestment Plan (DRP) Under the terms and conditions of the DRP, eligible shareholders may elect to participate in respect of all or part of their shareholding, subject to any maximum and/or minimum number of shares to participate in the DRP that the Directors may specify. There is currently no minimum number of shares which a shareholder may designate as participating in the DRP. The maximum number of shares which a shareholder (other than broker s nominees and certain trustees) may designate as participating in the DRP is 20,000. The last date for receipt of election notices for the DRP 21 March 2014 II. Net Tangible Assets Per Security Current Period Previous Corresponding Period cents per share cents per share Net tangible assets per security Add: Brand names, customer relationships, liquor and gaming licences and property development rights per security Net tangible assets per security adjusted for brand names, customer relationships, liquor and gaming licences and property development rights

8 Appendix 4D Additional Information For the Half Year Ended 5 January 2014 III. Details of Entities Over Which Control Has Been Gained or Lost Control gained over entities Name of entity (or group of entities) Multichannel Holdings Limited Multichannel Limited Ezibuy Holdings Limited Ezibuy Limited Ezibuy Operations Limited Profile Limited Sara Apparel Limited Ezibuy Pty. Limited Ezibuy Australia Limited Ezibuy International Limited Date control gained 30 August 2013 Current Period Contribution of the controlled entity (or group of entities) to profit after tax from ordinary activities during the period, from the date of gaining control 2.8 Name of entity (or group of entities) Southtrade International Pty Ltd Date control gained 31 October 2013 Current Period Contribution of the controlled entity (or group of entities) to profit after tax from ordinary activities during the period, from the date of gaining control 0.5 For details of businesses acquired during the Half Year, refer to note 4. 5

9 Appendix 4D Additional Information For the Half Year Ended 5 January 2014 III. Details of Entities Over Which Control Has Been Gained or Lost (continued) Control lost over entities Name of entity (or group of entities) Austral Refrigeration (Suzhou) Co. Ltd Date control lost 15 November 2013 Current Period Contribution of the controlled entity (or group of entities) to profit after tax from ordinary activities during the period, up until the date control was lost 0.5 IV. Details of Associates and Joint Venture Entities Name of Entity Associates Ownership Interest Current Period % Previous Corresponding Period % Contribution to net profit Previous Current Corresponding Period Period Gage Roads Brewing Co Limited 25% 25% The Quantium Group Holdings Pty Limited 50% Aggregate share of profits

10 Appendix 4D Additional Information For the Half Year Ended 5 January 2014 V. Information on Audit or Review This half year report is based on accounts to which one of the following applies. The accounts have been audited. The accounts have been subject to review. The accounts are in the process of being audited or subject to review. The accounts have not yet been audited or reviewed. Description of likely dispute or qualification if the accounts have not yet been audited or subject to review or are in the process of being audited or subjected to review. NOT APPLICABLE Description of dispute or qualification if the accounts have been audited or subjected to review. NOT APPLICABLE 7

11 Directors Report The directors of submit herewith the half year financial report of and its subsidiaries (the Group or Consolidated Entity) for the half year ended 5 January DIRECTORS Set out below are the names of the Directors holding office at any time during the half year ended 5 January 2014 and up to the date of this Report: Non-Executive Directors R G Waters Chairman J F Astbury (retired 31 August 2013) J R Broadbent C Cross R S Deane (retired 31 August 2013) C J Hrdlicka I J Macfarlane A D D Mackay M J Ullmer Executive Directors G O Brien T W Pockett Managing Director and Chief Executive Officer Finance Director REVIEW AND RESULTS OF OPERATIONS Refer to Press Release First Half Profit Report and Dividend Announcement for the 27 weeks ended 5 January ROUNDING OF AMOUNTS The Company is of the kind referred to in Australian Securities and Investments Commission Class Order 98/100, dated 10 July 1998, relating to the rounding off of amounts in the Directors report and Financial Report. In accordance with that Class Order, amounts in the Directors report and half year financial report have been rounded off to the nearest tenth of a million dollars, unless otherwise indicated. AUDITOR S INDEPENDENCE DECLARATION The auditor s independence declaration as required under s.307c of the Corporations Act 2001 is set out on page 9. This Report is signed in accordance with a resolution of the Board of Directors made pursuant to s.306(3) of the Corporations Act 2001 on 28 February RALPH WATERS Chairman GRANT O BRIEN Managing Director and Chief Executive Officer 8

12 Auditor s Independence Declaration 9

13 Independent Auditor s Review Report 10

14 Independent Auditor s Review Report (continued) 11

15 Directors Declaration The Directors declare that: (a) in the Directors opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and (b) in the Directors opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity. Signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act On behalf of the Directors RALPH WATERS Chairman GRANT O BRIEN Managing Director and Chief Executive Officer 28 February

16 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS For the half year ended Note Consolidated 5-Jan Dec-12 Continuing Operations Revenue from the sale of goods 31, ,037.0 Other operating revenue Total revenue from continuing operations 31, ,121.0 Cost of sales (23,325.5) (22,025.6) Gross profit from continuing operations 8, ,095.4 Other revenue Branch expenses (5,247.2) (4,905.8) Administration expenses (1,439.8) (1,400.1) Earnings from continuing operations before interest and tax 1 2, ,901.9 Financial expense (148.6) (164.1) Financial income Net financing costs from continuing operations (140.7) (151.4) Profit from continuing operations before income tax expense 1, ,750.5 Income tax expense relating to continuing operations (572.9) (526.6) Profit from continuing operations after income tax expense 1 1, ,223.9 Discontinued Operations Loss from discontinued operations 12 - (63.9) Profit for the period 1, ,160.0 Profit attributable to: Equity holders of the parent entity 1, ,154.8 Non-controlling interests Profit for the period 1, ,160.0 Profit attributable to equity holders of the parent entity relates to: Profit from continuing operations 1 1, ,218.7 Loss from discontinued operations - (63.9) Profit attributable to equity holders of the parent entity 1, , In the prior year, a one-off loss of $32.8 million before tax ($28.5 million after tax) was incurred in continuing operations as a result of the transaction to create the Shopping Centres Australasia Property Group (SCA Property Group) refer note 3 for further detail. Excluding the impact of this amount for the half year ended 30 December 2012: - Earnings from continuing operations before interest and tax was $1,934.7 million; - Profit from continuing operations after income tax expense was $1,252.4 million; and - Profit attributable to equity holders of the parent entity relating to continuing operations was $1,247.2 million. 13

17 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS (continued) For the half year ended Consolidated 5-Jan Dec-12 Earnings Per Share (EPS) from continuing and discontinued operations Basic EPS (cents per share) Diluted EPS (cents per share) Weighted average number of shares used in the calculation of Basic EPS (million) 1, ,233.3 Earnings Per Share (EPS) from continuing operations Basic EPS (cents per share) Diluted EPS (cents per share) Weighted average number of shares used in the calculation of Basic EPS (million) 1, ,233.3 The condensed consolidated statement of profit or loss should be read in conjunction with the accompanying notes to the condensed consolidated financial statements. 14

18 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the half year ended Consolidated 5-Jan Dec-12 Profit from continuing operations 1, ,223.9 Loss from discontinued operations - (63.9) Profit for the period 1, ,160.0 Other comprehensive income/(loss) from continuing operations Items that may be reclassified subsequently to profit or loss Movement in translation of foreign operations taken to equity Movement in the fair value of cash flow hedges 57.1 (118.8) Transfer cash flow hedges to the income statement (84.8) Tax effect of items that may be reclassified subsequently to profit or loss (22.6) 2.3 Total items that may be reclassified subsequently to profit or loss Items that will not be reclassified to profit or loss Movement in the fair value of investments in equity securities Total items that will not be reclassified to profit or loss Other comprehensive income for the period (net of tax) from continuing operations Other comprehensive income/(loss) from discontinued operations Items that may be reclassified subsequently to profit or loss Movement in translation of foreign operations taken to equity Movement in the fair value of cash flow hedges Tax effect of items that may be reclassified subsequently to profit or loss - (0.1) Total items that may be reclassified subsequently to profit or loss Other comprehensive income for the period (net of tax) from discontinued operations Total comprehensive income from continuing operations 1, ,242.2 Total comprehensive loss from discontinued operations - (63.3) Total comprehensive income for the period 1, ,

19 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (continued) For the half year ended Consolidated 5-Jan Dec-12 Total comprehensive income from continuing operations attributable to: Equity holders of the parent 1, ,237.0 Non-controlling interests , ,242.2 Total comprehensive loss from discontinued operations attributable to: Equity holders of the parent - (63.3) - (63.3) Income tax on other comprehensive income Before tax Tax (expense)/ Net of From continuing operations benefit tax For the half year ended 5 Jan 2014 Items that may be reclassified subsequently to profit or loss Movement in translation of foreign operations taken to equity (30.9) Movement in the fair value of cash flow hedges 57.1 (17.1) 40.0 Transfer cash flow hedges to the income statement (84.8) 25.4 (59.4) (22.6) Items that will not be reclassified to profit or loss Movement in the fair value of investments in equity securities (22.6)

20 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (continued) Before tax Tax (expense)/ Net of From continuing operations (continued) benefit tax For the half year ended 30 Dec 2012 Items that may be reclassified subsequently to profit or loss Movement in translation of foreign operations taken to equity 17.7 (2.2) 15.5 Movement in the fair value of cash flow hedges (118.8) 35.6 (83.2) Transfer cash flow hedges to the income statement (31.1) Items that will not be reclassified to profit or loss Movement in the fair value of investments in equity securities Before tax Tax (expense)/ Net of From discontinued operations benefit tax For the half year ended 5 Jan 2014 Items that may be reclassified subsequently to profit or loss Before tax Tax (expense)/ benefit Net of tax For the half year ended 30 Dec 2012 Items that may be reclassified subsequently to profit or loss Movement in translation of foreign operations taken to equity Movement in the fair value of cash flow hedges 0.4 (0.1) (0.1) (0.1) 0.6 The condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes to the condensed consolidated financial statements. 17

21 CONDENSED CONSOLIDATED BALANCE SHEET Consolidated Note 5-Jan Jun Dec-12 Current assets Cash and cash equivalents 1, ,274.9 Trade and other receivables ,014.8 Inventories 4, , ,498.9 Other financial assets , , ,828.4 Assets classified as held for sale Total current assets 7, , ,010.6 Non-current assets Trade and other receivables Other financial assets Property, plant and equipment 9, , ,722.1 Intangible assets 6, , ,637.6 Deferred tax assets Total non-current assets 16, , ,234.8 Total assets 24, , ,245.4 Current liabilities Trade and other payables 6, , ,680.6 Borrowings Current tax liabilities Other financial liabilities Provisions Total current liabilities 7, , ,093.3 Non-current liabilities Borrowings 4, , ,592.7 Other financial liabilities ,149.3 Provisions Other Total non-current liabilities 6, , ,548.8 Total liabilities 14, , ,642.1 Net assets 10, , ,603.3 Equity Issued capital 4, , ,283.3 Shares held in trust (139.0) (180.5) (59.1) Reserves (206.3) Retained profits 5, , ,315.6 Equity attributable to the members of Woolworths Limited 9, , ,333.5 Non-controlling interests Total equity 10, , ,603.3 The condensed consolidated balance sheet should be read in conjunction with the accompanying notes to the condensed consolidated financial statements. 18

22 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the half year ended 5 January 2014 Issued Capital Shares Held In Trust Hedging Reserve Foreign Remuneration Currency Reserve Translation Reserve Asset Revaluation Reserve Equity Instrument Reserve Retained Equity Profits Attributable to Members of Woolworths Limited Non- Controlling Interests Total Equity Balance at 1 July ,522.7 (180.5) (35.6) (167.3) (79.0) 4, , ,300.5 Profit after income tax expense , , ,334.4 Other comprehensive income for the period (net of tax) - - (19.3) (0.1) Total comprehensive income for the period (net of tax) - - (19.3) , , ,530.8 Dividends paid (888.2) (888.2) (15.6) (903.8) Dividends paid - treasury shares Issue of shares as a result of options exercised under employee long term incentive plans Issue of shares as a result of the dividend reinvestment plan Issue of shares under the employee share plan and long term incentive plans (41.5) Issue of shares to non-controlling interests Equity settled share based payments expense Reclassification of non-controlling interests for recognition of financial liability (44.2) (44.2) Other (14.6) (14.6) Balance at 5 January ,664.7 (139.0) (54.9) (72.5) 5, , ,098.1 For the half year ended 30 December 2012 Issued Capital Shares Held In Trust Hedging Reserve Foreign Remuneration Currency Reserve Translation Reserve Asset Revaluation Reserve Equity Instrument Reserve Retained Equity Profits Attributable to Members of Woolworths Limited Non- Controlling Interests Total Equity Balance at 25 June ,336.6 (60.7) (52.8) (349.0) (111.9) 4, , ,446.3 Profit after income tax expense , , ,160.0 Other comprehensive income for the period (net of tax) - - (10.4) Total comprehensive income for the period (net of tax) - - (10.4) , , ,178.9 Dividends paid (826.9) (826.9) (7.0) (833.9) Issue of shares as a result of options exercised under employee long term incentive plans Issue of shares as a result of the dividend reinvestment plan Issue of shares under the employee share plan and long term incentive plans (0.5) Issue of shares to non-controlling interests Equity settled share based payments expense Sale of businesses - - (0.2) Reclassification of non-controlling interests for recognition of financial liability (102.5) (102.5) In-specie distribution to shareholders (338.6) (176.1) (514.7) - (514.7) Other (0.4) Balance at 30 December ,283.3 (59.1) (63.4) (324.5) (98.4) 4, , ,603.3 The condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes to the condensed consolidated financial statements. 19

23 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the half year ended 5-Jan Dec-12 Note Cash Flows From Operating Activities Receipts from customers 34, ,008.1 Receipts from vendors and tenants Payments to suppliers and employees (31,604.2) (30,137.0) Interest and costs of finance paid (177.0) (198.9) Interest received Income tax paid (564.8) (507.8) Net cash provided by operating activities 2, ,201.8 Cash Flows From Investing Activities Proceeds from the sale of property, plant and equipment and subsidiaries Proceeds from the sale of property to the SCA Property Group (Advances)/repayments of property related receivables 25.3 (20.8) Payments for property, plant and equipment property development (324.6) (387.1) Payments for property, plant and equipment (excluding property development) (506.8) (522.3) Payments for the purchase of intangible assets (20.6) (41.0) Dividends received Payments for the purchase of businesses 4 (337.7) (201.6) Net cash used in investing activities (1,076.2) (343.6) Cash Flows From Financing Activities Proceeds from the issue of equity securities Proceeds from the issue of equity securities in subsidiary to noncontrolling interest Proceeds from external borrowings 4, ,945.3 Repayment of external borrowings (4,668.9) (4,943.8) Dividends paid (776.9) (722.8) Dividends paid to non-controlling interests (15.6) (7.0) Net cash used in financing activities (500.1) (430.2) Net Increase In Cash Held ,428.0 Effect of exchange rate changes on foreign currency held Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial period 1, ,274.9 The condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes to the condensed consolidated financial statements. 20

24 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1 Significant accounting policies (the Company ) is a company domiciled in Australia. The condensed consolidated financial report of the Company for the 27 weeks ended 5 January 2014 comprises the Company and its subsidiaries (together referred to as the Consolidated Entity or Group ). Statement of compliance The half year financial report for the 27 weeks ended 5 January 2014 ( Half Year Financial Report ) is a general purpose financial report which has been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. The condensed consolidated half year financial report does not include all of the information required for a full annual financial report, and should be read in conjunction with the annual financial report of the Consolidated Entity as at and for the 53 weeks ended 30 June 2013 and any public announcements by Woolworths Limited and its subsidiaries during the half year in accordance with continuous disclosure obligations under the Corporations Act The Half Year Financial Report was approved by the Board of Directors on 28 February Basis of preparation The half year financial report has been prepared on the basis of historical cost, except for available for sale financial assets, derivative financial instruments, financial assets valued through other comprehensive income and other financial liabilities that are measured at re-valued amounts or fair values. All amounts are presented in Australian Dollars, unless otherwise noted. The Company is of a kind referred to in ASIC Class Order 98/100, dated 10 July 1998, and in accordance with the Class Order, amounts in the financial report have been rounded off to the nearest tenth of a million dollars, unless otherwise stated. The accounting policies and methods of computation adopted in the preparation of the half year financial report are consistent with those adopted and disclosed in the Company s annual financial report for the 53 weeks ended 30 June 2013, except for the impact of the standards and interpretations described below. These accounting policies are consistent with Accounting Standards and with International Financial Reporting Standards. Certain comparative amounts have been reclassified to conform with the current year s presentation to better reflect the economic nature of the assets and liabilities of the Group. The following amendments to Australian Accounting Standards have been adopted during the period but do not have a material impact on the Group. Where there has been a significant change in accounting policy, an explanation of the change has been provided below: AASB 10 Consolidated Financial Statements ; AASB 10 changes the definition of control such that an investor controls an investee when a) it has power over an investee, b) it is exposed, or has rights to variable returns from its involvement with the investee, and c) has the ability to use its power to affect its returns. All three criteria must be met for an investor to have control over an investee. Previously, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefit from its activities. AASB 11 Joint Arrangements ; AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists has changed. The Group is required to classify its interests in joint arrangements as either joint operations or joint ventures in accordance with the structure of the arrangement. Joint operations give the parties a right to the underlying assets and obligations of the arrangement and are accounted for by recognising the Group s share of those assets and obligations. Joint ventures give the parties a right to the net assets of the venture and are accounted for using the equity method. 21

25 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 1 Significant accounting policies (continued) Previously, AASB 131 Interests in Joint Ventures contemplated three types of joint arrangements jointly controlled entities, jointly controlled operations and jointly controlled assets. The classification of joint arrangements under AASB 131 was primarily based on the legal form of the arrangement (e.g. a joint arrangement that was established through a separate entity was accounted for as a jointly controlled entity). AASB 13 Fair Value Measurement and AASB Amendments to Australian Accounting Standards arising from AASB 13 ; AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. It does not change when fair value is required to be used, but rather provides guidance on how to determine fair value when required or permitted. The scope of AASB 13 is broad and applies to both financial instrument items and non-financial instrument items where other AASBs require or permit fair value measurement (excluding share based payments under AASB 2 Share-based Payment and leasing transactions within the scope of AASB 117 Leases ). AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal market at the measurement date under current market conditions. Fair value is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. AASB 13 has been applied prospectively. AASB 119 Employee Benefits (2011) and AASB Amendments to Australian Accounting Standards arising from AASB 119 (2011) ; The revisions to AASB 119 have resulted in amendments to the Group s accounting policy for defined benefit plans. The interest cost and expected return on plan assets used in the previous version of AASB 119 are replaced with a net interest amount, which is calculated by applying the discount rate to the net defined benefit asset or liability. The impact of this change is immaterial to the Group and therefore there is no restatement to comparative information. AASB 12 Disclosure of Interests in Other Entities ; AASB 127 Separate Financial Statements (2011) ; AASB 128 Investments in Associates and Joint Ventures (2011) ; AASB Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements standards ; AASB 1053 Application of Tiers of Australian Accounting Standards and AASB Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements ; AASB Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements ; AASB Amendments to Australian Accounting Standards Presentation of Items of Other Comprehensive Income ; AASB Amendments to Australian Accounting Standards Disclosures Offsetting Financial Assets and Financial Liabilities (Amendments to AASB 7) ; AASB Amendments to Australian Accounting Standards arising from the Annual Improvements Cycle ; AASB Amendment to AASB 1048 arising from the Withdrawal of Australian Interpretation 1039 ; and AASB Amendments to Australian Accounting Standards Transition Guidance and Other Amendments. 22

26 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 2 Segment Information The Group has six reportable segments related to continuing operations. The reportable segments were identified on the basis of internal reports on the components of the Group that are regularly reviewed by the Chief Operating Decision Maker in order to allocate resources to the segment and assess its performance. These business units offer different products and services and are managed separately because they require different technology and marketing strategies. The Group s reportable segments are as follows: Australian Food and Liquor procurement of food and liquor and products for resale to customers in Australia New Zealand Supermarkets procurement of food and liquor and products for resale to customers in New Zealand Petrol procurement of petroleum products for resale to customers in Australia General Merchandise procurement of general merchandise products for resale to customers in Australia and New Zealand Hotels provision of leisure and hospitality services including food and alcohol, accommodation, entertainment and gaming Home Improvement procurement of home improvement products for resale to customers in Australia The Unallocated group consists of the Group s other operating segments that are not separately reportable as well as various support functions including property and head office costs. Discontinued operations represents the Consumer Electronics segment, which was the procurement of electronic products for resale to customers in Australia and New Zealand and a wholesale business in India. 23

27 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 2 Segment Information (continued) Australian Food & New Zealand Petrol Liquor (1) General Merchandise (2) Supermarkets Hotels (3) Home Improvement Unallocated (4) Total Continuing Operations Discontinued Operations (5) Consolidated Segment disclosures HY14 HY13 HY14 HY13 HY14 HY13 HY14 HY13 HY14 HY13 HY14 HY13 HY14 HY13 HY14 HY13 HY14 HY13 HY14 HY13 $A m $A m $A m $A m $A m $A m $A m $A m $A m $A m $A m $A m $A m $A m $A m $A m $A m $A m $A m $A m Business segments Sales to customers 21, , , , , , , , , , , ,678.6 Other operating revenue Inter-segment revenue Segment revenue 21, , , , , , , , , , , ,112.2 Eliminations (385.6) (349.4) (385.6) (349.4) - (0.2) (385.6) (349.6) Unallocated revenue (6) Total revenue 21, , , , , , , , , , , ,875.3 Segment earnings before interest and tax 1, , (64.4) (58.5) (74.9) (56.7) 2, , , ,937.2 Loss on SCA Group property transaction Profit/(Loss) on sale of subsidiaries - (32.8) (32.8) (63.7) - (63.7) Earnings before interest and tax 2, , (61.2) 2, ,840.7 Net financing cost (140.7) (151.4) - (0.5) (140.7) (151.9) Profit before income tax expense 1, , (61.7) 1, ,688.8 Income tax expense (572.9) (526.6) - (2.2) (572.9) (528.8) Profit after income tax expense 1, , (63.9) 1, ,160.0 Segment depreciation and amortisation Capital expenditure (7) , , , ,285.2 (1) Australian Food & Liquor is comprised of supermarket and liquor stores and wholesale food and liquor in Australia. (2) General Merchandise includes BIG W and EziBuy (3) Hotels is comprised of on-premise liquor sales, food, accommodation, gaming and venue hire. (4) Unallocated is comprised of corporate head office and the property division. (5) Discontinued operations is comprised of Consumer Electronics Australia, New Zealand and India. (6) Unallocated revenue is comprised of rent and other revenue from operating activities across the Group. (7) Capital expenditure is comprised of property, plant and equipment and intangible asset additions. 24

28 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 3 Significant Transactions Creation of SCA Property Group and In-specie Distribution to Shareholders In October 2012, announced a proposal to create the Shopping Centres Australasia Property Group (SCA Property Group), a newly established ASX listed Real Estate Investment Trust (REIT) through an in-specie distribution of stapled units in the SCA Property Group to all shareholders. This proposal was voted in favour of at the Annual General Meeting on 22 November 2012 and the transaction was implemented on 11 December Woolworths transferred its ownership of 65 properties to the SCA Property Group in December 2012, reducing the property, plant and equipment held by the Woolworths Group by $1.3 billion. A one-off loss of $28.5 million after tax was incurred as a result of this transaction, relating largely to provisions for rental guarantees provided by Woolworths in relation to specialty leasing risk. Cash consideration of $764.0 million was received from the SCA Property Group in respect of the sale of the properties. An additional three New Zealand properties were sold to the SCA Property Group in the second half of the 2013 financial year and one final New Zealand property was sold in November 2013, bringing the total consideration to $815.0 million, and a total reduction in property, plant and equipment held by the Woolworths Group of $1.3 billion. Divestment of Consumer Electronics Businesses In October 2012, Woolworths completed the sale of 100% of its shares in Woolworths Wholesale (India) Private Limited to Infiniti Retail Limited and in November 2012 completed the sale of the Dick Smith Electronics Australia and New Zealand businesses to Anchorage Capital Partners. Refer to note 12 for further details. US 144A Bond Redemption Costs In June 2013, the redemption of some US 144A bonds was finalised. US$614.8 million of bonds were redeemed with a one off cost to the profit or loss (financing costs) of $82.3 million before tax ($57.6 million after tax) in the 2013 financial year. 4 Business Acquisitions On 30 August 2013, Woolworths completed the acquisition of Multichannel Holdings Limited and EziBuy Holdings Limited, along with all associated subsidiaries (the EziBuy acquisition) for consideration of $307.0 million. EziBuy is a leading direct-to-customer retailer of apparel and homewares in Australia and New Zealand. Over the course of the half year, also acquired a hotel venue and various other businesses. Woolworths controls each business acquired during the half year ended 5 January 2014 and has consolidated their results from the dates of acquisition. Total net consideration was $337.7 million (inclusive of the EziBuy acquisition). Net assets acquired comprised inventory $31.6 million, brand, customer relationship and other intangible assets $49.5 million, property, plant and equipment $14.9 million, other assets of $17.2 million and other liabilities of $35.6 million, with goodwill on acquisition of $260.1 million. Goodwill has arisen on acquisition of these businesses primarily because of their capacity to generate recurring revenue streams. 25

29 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 5 Dividends Paid 5-Jan Jun Dec weeks ended Final dividend in respect of 2013 year of 71 cents (2012: 67 cents) per fully paid ordinary share 100% franked at 30% tax rate (2012: 100%) Interim dividend in respect of 2013 year of 62 cents (2012: 59 cents) per fully paid ordinary share 100% franked at 30% tax rate (2012: 100%) On 28 February 2014, the board of directors declared a 2014 interim dividend of 65 cents (2013: 62 cents) per share. This will be paid on 24 April 2014 will be approximately $815.5 million (2013: $770.6 million). No provision for the dividend has been made in the half year Financial Report in line with the requirements of AASB 137 Provisions, Contingent Liabilities and Contingent Assets. 6 Contingent Liabilities Contingent liabilities were as follows: 5-Jan Dec-12 Bank guarantees Workers compensation self-insurance guarantees Outstanding letters of credit issued to suppliers Other This item largely comprises guarantees relating to conditions set out in development applications and for the sale of properties in the normal course of business. 2 State Work Cover authorities require guarantees against workers compensation self-insurance liabilities. The guarantee is based on independent actuarial advice of the outstanding liability. No provision has been made in the half year Financial Report in respect of these contingencies, however there is a provision of $563.0 million (30 December 2012: $561.8 million) for self-insured risks, which includes liabilities relating to workers compensation claims, that has been recognised in the balance sheet at balance date. 26

30 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 7 Capital Expenditure Commitments Capital expenditure commitments were as follows: Estimated capital expenditure under firm contracts, not provided for in these financial statements, payable: 5-Jan Dec-12 Not later than one year Later than one year, not later than two years Goodwill The intangibles balance in the condensed consolidated balance sheet includes the following movements in goodwill: 5-Jan Dec-12 Carrying amount at start of period 3, ,221.8 Additions arising from the acquisition of businesses Disposals and transfers - (0.5) Effect of movements in foreign exchange rates Carrying amount at end of period 3, , Refer to note 4. 27

31 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 9 Issued Capital Issued and paid up share capital 1,254,616,061 fully paid ordinary shares (30 December 2012: 1,242,618,001) Fully paid ordinary shares carry one vote per share and the right to dividends 5-Jan Dec-12 Reconciliation of fully paid share capital Balance at beginning of period 4, ,336.6 Issue of shares as a result of options exercised under executive long term incentive plans Issue of shares as a result of the dividend reinvestment plan Adjustment to reflect the final proceeds for shares issued under the Employee Share Plan - (0.4) In-specie distribution to shareholders associated with creation of the SCA Property Group 1 - (338.6) Balance at end of period 4, ,283.3 Reconciliation of fully paid share capital No. of shares m No. of shares m Balance at beginning of period 1, ,231.9 Issue of shares as a result of options exercised under executive long term incentive plans Issue of shares as a result of the dividend reinvestment plan Balance at end of period 1, ,242.6 Shares held in trust Reconciliation of shares held in trust Balance at beginning of period (180.5) (60.7) Issue of shares under the employee share plan and long term incentive plans Balance at end of period (139.0) (59.1) Reconciliation of shares held in trust No. of shares m No. of shares m Balance at beginning of period Issue of shares under the employee share plan and long term incentive plans (1.6) (0.1) Other shares acquired by the Woolworths Employee Share Trust Balance at end of period Includes capital component of the in-specie distribution as well as costs (stamp duty, advisory and other) associated with the transaction. 28

32 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 10 Financial Instruments Fair value of the Group s financial assets and financial liabilities that are measured at fair value on a recurring basis Some of the Group s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined. They are grouped into levels 1 to 3 based on the degree to which the fair value measurement inputs are observable. Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Financial assets/ financial liabilities Fair value as at Fair value hierarchy Valuation technique(s) and key input(s) Significant unobservable input(s) Relationship of unobservable inputs to fair value 5-Jan Dec-12 Listed equity securities Assets $152.6m Assets $112.3m Level 1 Quoted last sale prices in an active market n/a n/a Forward exchange contracts and foreign currency options Assets $14.2m Liabilities $5.7m Assets $20.9m Liabilities $2.5m Level 2 Discounted cash flow Future cash flows are estimated based on market forward exchange rates as at the end of the reporting period and the contract forward rate, discounted by the observable yield curves of the respective currency n/a n/a 29

33 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 10 Financial Instruments (continued) Financial assets/ financial liabilities Fair value as at Fair value hierarchy Valuation technique(s) and key input(s) Significant unobservable input(s) Relationship of unobservable inputs to fair value 5-Jan Dec-12 Interest rate swaps Liabilities $221.6m Liabilities $398.2m Level 2 Discounted cash flow Future cash flows are estimated based on market forward interest rates as at the end of the reporting period and the contract interest rates, discounted at a rate that reflects the credit risk of the various respective counterparties n/a n/a Cross currency swaps Assets $211.7m Liabilities $98.7m Assets $111.1m Liabilities $250.7m Level 2 Discounted cash flow Future cash flows are estimated based on a combination of market forward exchange rates and market forward interest rates as at the end of the reporting period and the contract forward exchange and interest rates, discounted at a rate that reflects the credit risk of the various respective counterparties n/a n/a 30

34 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 10 Financial Instruments (continued) Financial assets/ financial liabilities Fair value as at Fair value hierarchy Valuation technique(s) and key input(s) Significant unobservable input(s) Relationship of unobservable inputs to fair value 5-Jan Dec-12 Put options over noncontrolling interests Liabilities Liabilities $702.8m $536.4m Level 3 Discounted cash flow Free cash flow forecasts over the explicit forecast period The higher the free cash flow forecasts, the higher the fair value Terminal value The higher the terminal value, the higher the fair value The discount rate applied to the free cash flow forecasts and terminal value The higher the discount rate, the lower the fair value There were no transfers between Level 1 and Level 2 in the period. Lowe s Companies, Inc. ( Lowe s ) put option owns 66.7% of Hydrox Holdings Pty Ltd (Hydrox) with the remaining 33.3% held by Lowe s. As part of the terms of the Agreement between the parties which was entered in the 2010 financial year, Lowe s holds a put option, which originally could be exercised after the fourth anniversary of the Agreement (i.e. after 20 October 2013). In the 2013 financial year, Lowe s agreed to amend the Agreement such that the option cannot be exercised for five years (i.e. after 20 October 2014) and in the 2014 financial year agreed to a further amendment such that the option cannot be exercised for six years (i.e. after 20 October 2015). If exercised, this option requires Woolworths to acquire Lowe s non-controlling interest shareholding of 33.3% in Hydrox at an amount which is representative of Fair Market Value. The Fair Market Value of the equity in Hydrox was determined based on a discounted cash flow ( DCF ) methodology using the Board approved five year cash flow forecasts, adjusted for current trading results. Cash flows beyond the five year period were extrapolated using estimated growth rates, which are based on the Group s estimates taking into consideration past historical performance as well as expected long-term operating conditions. Growth rates do not exceed the long-term average growth rate for the industry. The forecast cash flows over the explicit forecast period and terminal value were discounted to present value using a post-tax discount rate in the range of 11.0% to 12.0%. Discount rates are based on the weighted average cost of capital determined by prevailing or benchmarked market inputs. Other assumptions are determined with reference to external sources of information and use consistent and conservative estimates for variables such as terminal cash flow multiples. If the above discount rate applied to the valuation model were 0.25% higher/ lower while all other variables were held constant, the carrying amount of the put option liability would increase/ decrease $48.7 million. Other put options This relates to put options granted to the non-controlling interests in a subsidiary of Hydrox Holdings Pty Ltd and a subsidiary of Pinnacle Liquor Group Pty Ltd. 31