Overheads, Balance Sheet & Cash Flow


Central overheads before significant items1, including EziBuy, were $154.3 million for the year. Excluding EziBuy, central overheads were $151.8 million and increased $9.2 million on the prior year, partly driven by higher team performance-based bonuses. The loss before interest and tax for EziBuy was $2.5 million compared to LBIT of $15.2 million in the prior year. EziBuy was sold at the end of June 2017.


Closing inventory of $4,080.4 million decreased $478 million with $490 million of the decrease attributable to the exit from Home Improvement and the reclassification of Petrol inventory to ‘net assets held for sale’. Excluding the impact of the above items, inventory increased by only $12 million, despite sales growth from continuing operations of 3.7%, resulting in a one day reduction in closing inventory days (excluding Home Improvement and Petrol) to 37.6 days.

Net investment in inventory of $987.8 million declined $737 million on the prior year. Excluding Home Improvement, the reclassification of Petrol to ‘net assets held for sale’ and sale of EziBuy, net investment in inventory decreased $330 million due to business growth and working capital initiatives.

Other creditors of $1,928.4 million increased $177 million driven by an increase in accruals for short-term team performance-based bonuses and other trading accruals.

Provisions of $2,481.5 million decreased $796 million driven by utilisation of FY16 significant items1 provisions. Excluding Home Improvement, significant items1 previously recognised and the reclassification of Petrol to ‘net assets held for sale’, provisions increased $29 million primarily due to an increase in provisions for employee entitlements and onerous lease provisions for BIG W recognised in HY17.

Fixed assets and investments of $8,555.7 million increased by $184 million. Excluding the transfer of Petrol and other Group properties to ‘net assets held for sale’, fixed assets and investments increased by $695 million. This was driven by net capital expenditure of $1,754 million relating to new stores, store refurbishments and support assets offset by depreciation charges and asset disposals and retirements in the ordinary course of business.

Net assets held for sale of $1,222.9 million represents assets and liabilities primarily relating to Petrol, property, plant and equipment relating to Masters, and other Woolworths Group properties held for sale. The increase on the prior year was largely as a result of the reclassification of Petrol to ‘net assets held for sale’ offset by the disposal of Home Timber & Hardware, EziBuy and other Group properties held for sale.

Intangible assets of $6,532.8 million declined marginally driven by the reclassification of Petrol to ‘net assets held for sale’.

Total funds employed increased by $301 million, primarily driven by the utilisation of significant items provisions 1 and net investments in stores offset by improvements in working capital.

Net tax balances of $291.4 million decreased $167 million primarily due to the revision of net tax benefits associated with Home Improvement business exit costs.

Net repayable debt of $1,895.0 million declined by $1,191 million due to the strong free cash flow during the year.

Other financial liabilities of $250.8 million increased $231 million, primarily due to the recognition of the Lowe’s put option liability of $250.8 million following the acquisition of Lowe’s one third share of Home Improvement on 4 August 2017.

Shareholders’ equity increased $1,055 million to $9,526.0 million primarily reflecting the profits generated from operations attributable to equity holders of the parent entity of $1,533.5 million, offset by dividend payments of $860 million.

ROFE before significant items1 was 25.0%, an increase of 590 bps or excluding Home Improvement and Petrol was 22.3%, a 61 bps increase on the prior year. Lease adjusted ROFE increased 179 bps to 14.0% or declined 16 bps excluding Home Improvement and Petrol.


Cash flow from operating activities before interest and tax increased $529 million to $4,024.1 million. Excluding Home Improvement, cash flow from operating activities before interest and tax increased $287 million primarily driven by the improvement in net investment in inventory as well as general business growth offset by utilisation of significant item 1 provisions.

Cash realisation ratio5 was 117.6% impacted by the Home Improvement business. Excluding Home Improvement, our cash realisation ratio was 122.5% (FY16: 103.6%) primarily driven by the improvement in net investment in inventory.

Net interest paid of $234 million decreased $55 million due to a decrease in the net effective interest rate on lower debt.

Tax payments decreased to $668.1 million for the year (FY16: $848.5 million) predominately due to the reduction in the income tax instalment rate reflecting lower FY16 earnings.

Cash used in investing activities was $1,431.4 million, an increase of $165 million on the prior year. Cash proceeds of $481 million were received from the sale of property, plant and equipment, businesses and investments including proceeds from the sale of HTH.

Payments for the purchase of property, plant and equipment, property development, intangible assets, investments and contingent consideration decreased by $91.5 million, primarily as a result of $220.1 million lower property development expenditure in the current period. This was offset by a $169 million increase in investment in property, plant and equipment of $1,633.6 million which included continued investment in new stores, store renewals and spend associated with supply chain and IT asset initiatives.

Our fixed charges cover ratio6 is 2.5 times. Fixed charges cover ratio from continuing operations is 2.4 times (FY16: 2.4).


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.