Discontinued Operations

TRADING PERFORMANCE

Home Improvement

Home Improvement sales declined in FY17 compared to the prior year following the closure of Masters stores in December 2016 and the sale of Home Timber & Hardware Group (HTH) to Metcash in October 2016.

Home Improvement EBIT for FY17 reflects the trading losses up until the dates of closure and sale of Masters and Home Timber & Hardware and other operating expenses offset by gains from asset and provision reassessments.

On 4 August, Lowe’s one third share in the Home Improvement joint venture was acquired for $250.8 million. We expect to complete the Home Consortium transaction in late September which will finalise the sale of 61 freehold properties and the transfer of 20 leaseholds to Home Consortium.

Petrol

On 24 December 2016, we entered into a binding agreement to sell 527 Woolworths-owned fuel convenience sites and 16 committed development sites to BP for $1.785 billion. Consequently, the Petrol business has been classified as a discontinued operation. The transaction is subject to certain conditions including, but not limited to, obtaining Australian Competition and Consumer Commission (ACCC) and Foreign Investment Review Board (FIRB) approval. On 10 August, the ACCC released its Statement of Issues on the transaction. This outlined the key areas of focus for the ACCC in considering the transaction. Woolworths and BP will continue to engage with the ACCC to address any issues that may prevent the transactions being approved. Completion is expected to occur no earlier than 2 January 2018.

Petrol sales were $4.7 billion, an increase of 1.5% on the previous year (volumes decreased by 0.6%) driven primarily by rising average fuel sell prices (unleaded FY17: 121.6 cpl; FY16: 120.5 cpl). Comparable Petrol sales (dollars) declined 0.4% with comparable fuel volumes declining by 2.4%. Merchandise sales for the year increased 2.7% and comparable Merchandise sales increased 0.1%. EBIT increased by 34% due to higher gross profit, strong cost control and reduction in depreciation following the reclassification of Petrol to ‘net assets held for sale’.

Refer to Note 5.1 of the Financial Report for a reconciliation of EBIT/(LBIT) from discontinued operations to profit/(loss) from discontinued operations.

BEFORE SIGNIFICANT ITEMS1 FY17
52 weeks		 FY16
52 weeks		 Change
Sales        
Home Improvement ($m) 903 2,100 (57.0)%
Petrol ($m) 4,682 4,612 1.5%
EBIT/(LBIT)    
Home Improvement ($m) 159.0 (218.8) n.m.
Petrol ($m) 157.9 117.8 34.0%
ENDNOTES

n.c.  Not comparable

n.m.  Not meaningful

  1. There were no significant items recognised in FY17.
    In FY16, total significant items of $4,013.7 million before tax ($2,627.8 million after tax attributable to equity holders of the parent entity) were recognised. Details of these costs have been provided in Note 1.4 of the Financial Report. Where noted, profit and loss items have been adjusted to reflect these significant items.
  2. In line with the classification of Petrol as a discontinued operation, the financial performance and operating metrics previously disclosed under ‘Australian Food and Petrol’ has been split to disclose Australian Food separately from Petrol in this announcement. Funds employed and ROFE have also been separately presented for Endeavour Drinks.
  3. Return on funds employed (ROFE) is calculated as EBIT before significant items for the previous 12 months as a percentage of average (opening, mid and closing) funds employed. This methodology has been adopted for FY17 and FY16. In previous reporting periods, ROFE was calculated as EBIT before significant items for the reporting period as a percentage of average (opening and closing) funds employed. Lease adjusted ROFE adjusts funds employed for the present value of future lease obligations and EBIT for the implied interest on those obligations.
  4. Growth for New Zealand Food is quoted in New Zealand dollars.
  5. Operating cash flow as a percentage of group net profit after tax before depreciation and amortisation.
  6. Group earnings before interest, tax, depreciation, amortisation and rent (EBITDAR) divided by rent and interest costs. Rent and interest costs include capitalised interest but exclude foreign exchange gains/losses and dividend income.
  7. The credit ratings referred to in this document 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. The credit ratings in this document are published for the benefit of Woolworths Group’s debt providers.