Richard Goyder - MD John Durkan - MD Coles John Gillam - MD Home Improvement and Office Supplies Guy Russo - MD Kmart Stewart Machin - MD Target Tom O'Leary - MD Chemicals Energy and Fertilizers Stewart Butel - MD Resources Oliver Chretien - MD Industrial and Safety Terry Bowen - Finance Director

Craig Woolford - Citigroup Shaun Cousins - JPMorgan David Errington - Bank of America Merrill Lynch Ben Gilbert - UBS Tom Kierath - Morgan Stanley Michael Simotas - Deutsche Bank Andrew McLennan - CBA David Thomas - CLSA Bryan Raymond - Macquarie Grant Saligari - Credit Suisse

Well thank you and hello everyone and welcome to the Wesfarmers 2015 full year results briefing. I'll commence by covering the Group's performance highlights. Then I'll be followed by the Group Managing Directors, who will each provide a performance summary and outlook for their respective divisions. Then Terry Bowen will provide commentary on the performance of our other businesses, balance sheet and cash flows. I'll then conclude in providing an outlook for the Group. As usual we'll have opportunities for questions at the end of the formal briefing. Before I touch on the Group's performance highlights, I'd like to mention a couple of things regarding the Group's leadership team and last week's announcement relating to the organisational structural changes within the Group. Specifically relating to the leadership team, in November we were very pleased to announce the appointment of Maya vanden Driesen as Group General Counsel, following the retirement of Paul Meadows. Maya, who was previously General Manager Litigation, took up the position on January 1 this year and I'm delighted that she's joined the leadership team. Last Tuesday we announced an organisational restructure and senior management changes, to streamline the Group's management and better position it for future growth. In the restructure, Wesfarmers three industrial businesses -- the chemicals, energy and fertilizers, resources, and industrial and safety, were clustered under a new industrials division, of which Rob Scott is Managing Director and former insurance division Managing Director, Anthony Gianotti, is Finance Director. Olivier Chretien, who was the Industrial and Safety Managing Director since 2008, now leads the business development and corporate planning functions in the role of Managing Director, Business Development and Group Planning. Tim Bult, the Group's former head of business development, has moved to a new role; that of Director of Associate Businesses and International Development, to oversee the Group's associate investments and further develop the Group's offshore business development networks. In addition to streamlining decision making, the changes will enhance sharing of knowledge and ideas between naturally clustered business units reinforce the Group's performance and development culture and better position the Group for growth. The divisional managing directors for this last financial year will present their businesses performances today. So moving on to Slide 4, we're pleased to report a net profit after tax of $2.44 billion for the 2015 financial year, an underlying increase of 8.3% when excluding discontinued operations and non-trading items. On the same underlying basis, earnings per share rose 9.9%, to $2.161, and return on equity on a rolling 12 basis increased to 9.8%. The Group's retail portfolio delivered strong earnings growth, with all retail businesses growing earnings and having benefitted from hard work to deliver an improved merchandise offer and better value for customers. Notwithstanding a good performance from the chemicals, energy and fertilizer’s business, the industrials division recorded lower earnings. There was a strong focus on cost control and operational productivity, but lower commodity prices provided a challenging environment. Cash flow generation was a highlight, supported by working capital improvement and good capital expenditure disciplines. This allowed for an increase in the ordinary final dividend, to $1.11 per share fully franked, bringing the full year ordinary dividend to $2 per share, above last year's ordinary dividend of $1.90 per share fully franked. The Group continued to strengthen its existing businesses during the year, including through further advancement of digital offers and investment in retail store networks. Growth opportunities to complement the existing portfolio were also secured. These included the acquisition of the Workwear Group, the exercising of the call option to acquire the remaining 50% of the Coles credit card joint venture and the investment of a 13.7% interest in Quadrant Energy. Now turning to Slide 5, I won't focus too much on this slide, but I will call out that, during the year Group revenues increased to $62.4 billion and included strong growth in the Group's online sales to approximately $1.3 billion, up 30%, reflecting continued investment and advancement of digital offers across the portfolio. Also earnings before interest and tax from continuing operations, and excluding non-trading items, increased 5.4%. Turning to Slide 6, as I mentioned earlier, the strong performances of our retail businesses underpinned the increase in underlying earnings achieved, with our retail portfolio delivering earnings growth for the year of $305 million, an increase of 8.7%. Whilst, as I mentioned, the industrial division operated in challenging conditions, a strong focus on costs and cash management saw the industrials businesses generate higher free cash flows during the year. The chemicals, energy and fertilizer business, in particular, was a standout, generating more than $300 million of free cash flow during the year, up approximately 47% on last year. Turning to Slide 7 now, in terms of return on capital, we maintain a very strong focus on return on capital throughout the Group. Pleasingly, return on capital for all our retail businesses increased. Coles continued to improve its ROC, lifting that to 11%. Despite a record level of capital expenditure through higher investment and extending brand reach, Bunnings strong earnings growth and disciplined capital management saw a significant improvement in ROC, up over 400 basis points to 33.5%. At Kmart, return on capital increased around 600 basis points, to 32.9%, due to the strong increase in earnings, as well as disciplined capital expenditure and effective working capital management. Officeworks performance was clearly its best under Wesfarmers ownership, with strong earnings growth and disciplined capital inventory management resulting in an improvement in ROC of 200 basis points, to 11.3%. Given the challenging trading conditions, return on capital for our industrials division fell to 8.3% during the year. While this rate of return is below our target, it is important to mention that we accept short-term reductions in ROC where significant capital investment takes place, for example, the recent chemicals, energy and fertilizer AN3 expansion, given we are investors in assets which will deliver positive MPV to shareholders over the medium to long-term. And importantly, over the long-term, the businesses within our industrials division have generated sound returns on capital through the sector cycles and above the Group's risk adjusted cost of capital. In strong market positions, low cost structures do provide leverage as markets recover. Turning to Slide 8, on Slides 8 and 9 you'll find divisional performance summaries, which I won't cover in detail as the divisional managing directors will cover these. But I do want to say that the businesses are well run, with strong management teams, and we've had some very good performances over the last 12 months. Turning to Slide 10, consistent with our primary objective of delivering a satisfactory return to shareholders, earnings growth, balance sheet strength and good cash flow generation have supported an increase in distributions to shareholders. The Board today declared a fully franked final dividend of $1.11 per share, taking the full year ordinary dividend to $2.00 per share; as I said earlier, representing an increase of 5.3% on the 2014 financial year full year ordinary dividend of $1.90 per share. In December 2014, the Group returned over $1.1 billion to shareholders, via a capital management distribution of $1.00 per fully paid ordinary share. The Centenary dividend of $0.10 per share fully franked, which we announced this time last year, was also paid in October last year. As you'll recall, a capital management distribution was undertaken after the sale of the insurance division, to return a portion of the Group's surplus capital to shareholders, to achieve a more efficient capital structure. On Slide 11, Wesfarmers is about creating value for all our stakeholders, as we're currently doing within our businesses and for our millions of customers. Ultimately a good reputation is underpinned by strong financial performance. Without that we would not be in a position to make many of the other contributions we currently do. And we continue to build the engagement that we have with all our stakeholders. As this chart shows, Wesfarmers continued to make a very broad contribution to all our stakeholders. The Group now employs around 205,000 people, including around 3000 Indigenous Australians, all of whom constantly strive to deliver great value and service to our customers. During the year we paid almost $8.2 billion in wages, salaries and other benefits. Our customers are benefitting from better products, services and lower prices. We estimate that a typical family shopping at Coles is now $600 a year better off than they would have been before we acquired the business in 2007. To our shareholders we distributed, via dividends and capital management, almost $3.5 billion during the year. Through both direct contributions and with the support of our customers, we made over $90 million worth of community contributions during the year, in support of the arts, education, medical, research and a variety of community projects. And we made government payments of around $1.3 billion, including income taxes and government royalties and rebates. Finally, we have more than 15,000 suppliers and paid more than $43 billion to them during the year for materials and inventory. We're also providing increased opportunities for our employees, and also opportunities for our suppliers, to innovate and grow with us as we invest in all our businesses. With that I'll now hand over to John Durkan who will talk through Coles' performance for the year.

Thanks Richard. Over the past 12 months, we've been getting on with the job of delivering against the strategy we outlined to the market a year ago. We continued to deliver cost savings by driving efficiencies in our cost base and simplicity in the way we work. And we reinvest those savings directly into lower prices, improving our fresh offer and investing in greater customer service. We're proud of the fact that our strategy continues to lower the cost of a basket of goods in our stores and leaves our customers with more money in their pockets. This is not a short-term play. For the past six years we have achieved price deflation and we are absolutely committed to reducing prices further in the years to come. Our customers want more than low prices, they want real value. And for us, price is just one part of that. Real value to us at Coles means great quality products, a wide range that is always available. Our team has been working really hard this year to deliver this strategy for our customers. And we are very proud of the all the team members across the country who have delivered these results. The results I will go through today are not only testament to their focus on delivering in FY15, but also to set us up for future growth. During the year, total revenue increased by 2.2%, to more than $38 billion. In food and liquor, all key performance metrics improved during the year. Comparable food and liquor sales grew by 3.9%. Coles invested further in lower prices during the year, with food and liquor deflation of 0.8%. Our EBIT grew by 6.6%, to nearly $1.8 billion. Our convenience business, Coles Express, experienced a 9.2% decline in revenues, to $7.4 billion. This was due to lower fuel sales and was partially offset by strong headline convenience store sales, which grew by 9.8% over the year. I will now turn to Slide 13. We are more focused than ever before on responding to what our customers are asking of us. Through the year we led the market in reducing the prices of a number of key household products, including cheese, cream, tinned fruit, Blue Ribbon ice-cream and sugar. We also moved the majority of our bought-in bread range to Every Day, as we listened to customers more and more telling us they wanted price reliability in that range. Our cumulative deflation since FY09 is now close to 6% and there are more than 2,000 items on Every Day pricing, so customers do not have to wait for specials to buy at a great value price. We're continuing to deliver exceptional value, quality and innovation to our customers, through our Coles brand. We've been on a journey to improve our fresh food offer since Wesfarmers bought Coles eight years ago. Over the past year we made further investments to speed up our supply chain, in order to improve quality, freshness and availability in produce, bakery, meats and dairy. In FY15 we invested over 170,000 hours of on the job training across Fresh, and aim to invest even more in craft skills training over FY16. We are making progress. And, while I know we have a long way to go, we can see that our customers are responding to the improvements we are making. I will now turn to Slide 14. The ability to fund our customer offer has been the result of continued work in unlocking our cost base. Simplifying how we work or enabling productivity is a key pillar of our strategy. And we spent the year making a number of improvements to our supply chain, stores and above store operations. We've continued to implement a range of DC and transport initiatives, including flow through strategies to move product through DCs faster, resulting in improved freshness and more in home life for our customers. And we're moving more products onto stockless distribution. In fresh meat, Coles brand milk and ready meals; stock is received from suppliers into a DC and already directly assigned to a store delivery. We continue to invest in simpler and smarter stores, through simplifying processes and introducing innovative tools to improve store productivity. On the supplier front, Coles is doing more than ever to develop deeper and longer term partnerships. During the year we implemented the Coles Supplier Charter, a best practice compliance and arbitration framework. And we recently signed the Federal Government's Food and Grocery Code of Conduct. We're also doing our bit to support Australian businesses, in developing new market leading products, technologies and processes through our $50 million Nurture Fund. I will now turn to Slide 15. Coles’ financial services continue to introduce simple and competitive products to our customers. This includes our award winning mobile wallet, which has won the Australian Banking and Finance Award for the most innovative product and the Australian Mobile and App Design Award for financial information and tools. In financial services, we now have 880,000 customers across car, home, life, landlord insurance and our credit cards. Through Coles Online we are seeing strong new customer and sales growth. There are now over 120 sites around Australia with click and collect, and there are more to come. I will now turn to Slide 16. Our liquor business remains challenging. However, I am pleased to say, we are where we planned to be at this stage of the turnaround. During the last 12 months, we've made significant investments in lowering prices across all three liquor brands, and we will continue to do so. Significant work was done to reset and reduce the Liquorland range, to improve operational efficiencies across the supply chain and in stores. We are reshaping the liquor network. During the year, 29 underperforming stores were closed and 56 were opened. Net space growth is moving towards our target net space growth of 1% to 2%. I will now turn to convenience on Slide 17. I'm pleased with the work achieved by our Coles Express team over the past year. Convenience revenue was impacted by lower fuel volumes in the first half and lower fuel prices throughout the year. When you go into our convenience stores around Australia today, you will see a significantly improved value proposition, a better range and a food to go offering; I'd encourage you all to have a look. Network growth in Coles Express was the strongest on record, with 22 new sites opened and two closed in FY15. Of the 22 new sites, seven of these were pad sites next to our supermarkets, reflecting our focus to support customers in the end-to-end offering. I will now turn to Slide 18. So in conclusion, it is clear that competition within the Australian food and grocery industry continues to intensify on a number of fronts. We do not take our position in the market for granted and we're looking harder than ever -- working harder than ever to gain and hold the trust of our customers. Over the next year you will see much of the same from us. We're focused on listening to our customers and delivering on their needs. We will continue our pursuit of improving our cost base, through simplicity and productivity initiatives. And we'll be reinvesting those savings directly back into lowering prices, improving the quality of our fresh food offer and investing in customer service. And you will see us continuing to progress the liquor transformation and grow our convenience business. I'm excited about the opportunities that lie ahead for Coles, as we aim to be a little better every day, and deliver the value that our customers want and deserve. Thank you, I'll now hand over to John Gillam.

Thanks John. Just before I kick off, just to help people follow the slide pack, there was an insertion of an additional slide late this morning into Richard's action and John's numbers that he was referring to then were one slide out so hopefully you haven't got confused and been able to follow your way through. I'm going to start with the Bunnings section, I'm on Slide 22. The results delivered in the 2015 year were very pleasing. Our strategic agenda has a focus on multiple growth drivers as well as actions to make our business stronger and healthier and with all five growth drivers firing in sync we challenged ourselves to push harder to make the most of favorable conditions. The key outcomes you see here, strong growth in both sales, and earnings a good lift in returns and improved safety. These are the results of high quality work right across every part of our business. Moving to Slide 23, revenue increased in absolute terms in the year, by 1 billion. And that increase was achieved in a very healthy manner, across consumer and commercial, in every major trading region and in all merchandising categories. Our new stores performed well and the 8.8% store-on-store growth number highlights both the underlying strength of our network, as well as our total market capability. As was noted in the written release, the lift in EBIT came from the combination of good trading, productivity improvements and operating cost disciplines. These factors allowed us to absorb higher network development costs and the impact of creating more value for customers. Turning to Slide 24, we're seeing ongoing positive engagement trends with consumer and commercial customers. Strong value creation, great new products, range enhancements and further improvements in service are driving this. The acceleration in our brand reach is very exciting. The digital investments and property development work we've completed over the past three to four years are really delivering for us, with 29 new trading locations opened in the year and record levels of online participation. I mentioned the focus we have on actions to make our business stronger and healthier. We've bedded down a significant expansion to our supply chain and completed a major upgrade to our core trading IT systems. Product flowed more effectively, we invested in actions that made things better and safer for our team, and there were more productivity gains. Across the last 24 months, we've enjoyed significant gains within our stores, from a large number of improvement initiatives, which are all part of what we call the 70/30 project. We have redesigned and digitized store tasks to make those tasks easier and much faster to complete. That has funded a large lift in the time available for store team members to serve customers, as the graph bottom right on this slide shows, if you move now to Slide 25, you can see a longer term view of CapEx and returns. We have invested over $3.3 billion in the last six years, and you can see that this investment is generating good returns; our ROC now exceeds 33%. The investment program this year has been particularly strong, which makes the lift in returns more pleasing. CapEx included extensive network development, new stores, upgrades, extensions and replacing older sites that we've outgrown with a better location. All of this aimed at bringing our full merchandising offer and our latest service standards to customers. Total CapEx for the year of $711 million also included investments into core IT areas, as well as innovations in store tech and other productivity projects. Ongoing capital recycling initiatives were also completed during the period, with very good development outcomes. Turning now to outlook Slide 26, our strategic agenda is giving the Bunnings business good drive. We see favorable long-term prospects and investing for growth continues. More value creation, better experiences, expanding brand reach, more work in commercial areas and further merchandising initiatives underpin the growth agenda. Actions to develop and reward our team, support higher trading volumes and strengthen core business elements will also continue. Within the supplementary pack you'll find, on page 9, a restatement of the forecast or network expansion comments from the main investor briefing day. Across this financial year, and the next, we expect to open 30 to 36 Bunnings Warehouse stores and four to eight smaller format Bunnings stores. Longer term we plan to open 10 to 14 warehouses and two to four smaller format stores each year. By way of an update, at the start of this week we have over 60 sites in our property pipeline of which nine are under construction. In the first seven weeks of the new financial year we've already opened three stores. The strength and quality of the new sites we're opening is really exciting. In summary I am very pleased with the tremendous team effort that underpins these good results. I'd like to thank everyone in Bunnings for their great work in the past year and for their continued commitment. That great team effort has positioned the Bunnings business to continue performing strongly in the foreseeable future. I'll now switch to the Officeworks results. I've moved to Slide 27. The 2015 year saw further strong results from the Officeworks business. I'd like to acknowledge up front the impressive work that Mark Ward and the Officeworks team are doing. This year's result has built on the past good work to position the business to outperform. All key performance measures lifted. Safety improved; ROC increased by 200 basis points; revenues were 8.8% up and EBIT increased by over 14%; another stand-out year's performance for the Officeworks team. Moving to Slide 28 and looking at some highlights in a little more detail, the two charts on this slide paint a great picture of the improving performance over seven years. Year-on-year increases to the top line, to the bottom line and to returns. Fundamentally that's the result of actions taken to build the strength of the Officeworks presence in every channel: stores, online and direct. There were further investments and enhancements made across all channels to make things better for customers. Inside the revenue line good growth was achieved both online and in stores. This illustrates the importance of all the work done in prior years and the importance of making it easier for customers to shop Officeworks seamlessly anywhere anyhow there were also investments to improve productivity, better logistics, and core processes, lowering costs and using trading capital more effectively. Turning to Slide 29, there was a busy agenda within the business with a strong aim at improving the offer for customers. Investments were made within a number of merchandising areas as well as to the look and flow of stores. The online presence continues to be enhanced after the successful launch 15 months or so ago of a new online platform and there was also good work done improving service levels within all channels. Seven new stores were open during the year with pleasing early trading results. The growth in earnings combined with productivity gains and improved cost of doing business to drive ROC higher. Moving to Slide 30, the strong every channel Officeworks presence gives customers the convenience of shopping wherever and whenever it suits them. This in turn opens up wider options and opportunities for Officeworks. The outlook for Officeworks is for ongoing growth in a competitive market where continued pressures on sales and margins are a feature. The strategic agenda for the business is very sound. The team continues to evolve and innovate within the wider office supplies market. Central to the strategic agenda is enhancing the Officeworks offer for customers across every channel and leveraging the growth that it has achieved with good productivity work. I'll now hand over to Guy.

Thank you, John. Good morning everyone. I'd now love to run through Kmart's result for FY15 and provide some insights into the areas of focus for our business going forward. Slide 32; Kmart delivered revenue of $4.6 billion, up 8.2% on last year and comparable store sales grew by 4.6%. For the fourth quarter, Kmart sales increased 13.1% on last year. Comparable store sales increased 8%. Sales growth was underpinned by an increase in customer transactions and units sold. Across the business we saw strong performance with all key categories achieving growth on last year. Earnings for the year grew 18% to $432 million driven by our sales growth and complemented by productivity initiatives to manage costs. Return on capital improved by 600 basis points on last year to 32.9% assisted by our continuous focus on working capital. Safety was in line with last year with the Rolling 12 months at seven. Slide 33; in every aspect 2015 was indeed a year of firsts for Kmart. It was the first time we cracked 150 million transactions. It was the first time we sold over 680 million units. It was the first time our annual comparable store sales grew by more than 4%. First time our return on capital exceeded 30% and the first time our earnings exceeded $400 million. It was the first time our business opened 11 new Kmarts and completed 29 store refurbishments in one year. Our continuous effort to improve our ranges and create greater value across all price points has been well received by our customers. This has enabled Kmart to achieve such pleasing results. Side 34, Kmart remains unwavering on price leadership. We are committed to providing great products to Australian and New Zealand families at irresistibly low prices. We will continue to focus on four strategic pillars for growth: being a volume retailer; driving operational excellence; delivering adaptable stores; and having a high performing culture. We will continue to improve our range architecture to deliver even greater value for our customers. Expanding our digital strategy, managing foreign currency impacts and improving our operational efficiency will also be key focus areas for the business. In FY16 we plan to add six new stores to our network. Today I'm very happy to welcome another brand new Kmart that just opened a few hours ago at Lidcombe in Sydney. Congratulations and welcome to Raj Singh and Howard Brett and 130 brand new Kmart team members. We'll also refurbish a further 40 stores. Kmart will continue to be uncompromising in relation to team member and customer safety, ethical sourcing and building a sustainable future. Kmart has had a fantastic year. I would like also to take this opportunity to thank all our Kmart team members for their tireless efforts and congratulate everyone across the business on the great results achieved. Thank you for your time. I'll now hand over to Stewart.

Thanks Guy. I will now provide an update on Target's performance for the 2015 financial year and an outlook for 2016. Turning to Slide 36, revenue for the full year of 3.4 billion was 1.8% lower than the previous year. Comparable store sales for the year were 1% lower, with an improving trend particularly in the last quarter. Earning for the year grew by 5% to 90 million. We saw a continued improvement in our safety performance with an LTIFR of 4.7. Turning to Slide 37, we have continued to see an improving revenue trend during FY15. As highlighted in my previous updates our challenge has been one of volume growth. As our ranges come together for the first time I'm pleased to say that our investment in Lower Prices Every Day is starting to pay off. Final quarter sales after adjusting for the earlier timing of Easter were flat year-on-year. Additionally our online channel continues to deliver profitable growth with revenue up 51%. Although still modest, the volume growth as well as continued transition to First Price Right Price, has driven an improved margin performance. Earnings as a result have moved slightly forward for the first time in some years with investments in supply chain being offset by an 11% reduction in costs of doing business. Cash flow generation also improved in the year. Turning to Slide 38, 18 months into the rebuilding of target we've made progress in fixing the basics. We are now moving to the second phase of our transformation of growth and efficiency. Our focus will be on driving sourcing and supply chain efficiencies, step changing availability, accelerating our store renewal program, continuing to grow our profitable on-line channel and further reduce SKUs and continue to invest in fashion, style and quality as well as our everyday lower price strategy. We are convinced we can differentiate on these key strategies with a particular focus on mums and be different to other general merchandise discount department stores. We continue to expect our sourcing activities to offset further devaluation in the Australian dollar and we will gain further efficiency savings from the investments we've made in improving the business' underlying processes. Overall I believe we've made satisfactory progress and have been doing the right things to improve the business for the medium to long-term. Current trading performance has also been encouraging. I'd now like to hand over to Tom O'Leary. Tom O'Leary: Thanks Stewart. Looking now at the Chemicals, energy and Fertilizers performance summary on Slide 40 and starting with safety at the foot of the slide, I'm very pleased to report the significant decline in the rolling 12 lost time injury frequency rate and that the decline is consistent with continuing improvements in other safety metrics. We've been seeing consistently improving trends over the past few years with each business in the division reducing its injury frequency rates. This is the lowest since the division was formed five years ago. We believe the results are an outcome of the improved safety culture within the division where we have been targeting stronger risk awareness across the workforce, heightened leadership and more effective safety support systems. However, the job is never done so no room for complacency. Divisional earnings were $233 million which included a number of one-off items, namely a $21 million insurance payout relating to last year's unscheduled outage of the nitric acid ammonium nitrate number 2 plant, a $14 million gain on sale of Kleenheat's east coast LPG operations that I mentioned at the May investor briefing, and some asset write-downs in Kleenheat and Australian Vinyls. Excluding one-offs EBIT of 223 million was in line with the previous year with significantly higher earnings in ammonium nitrate and fertilizers being offset by lower earnings in the ammonia, Australian Vinyls and Kleenheat businesses. Return on capital including one-off items increased to 15.2%. Turning to highlights on the next slide, even excluding insurance proceeds, the ammonium nitrate business recorded a significant increase in earnings notwithstanding the absence of some $20 million in carbon abatement income. It's a particularly pleasing result in the current environment and with the reduced production rates I mentioned at the May briefing. In chemicals overall, increased ammonium nitrate earnings were more than offset by reduced earnings from the ammonia and Australian Vinyls businesses. As I covered in previous briefings, ammonia results were impacted by increased gas input costs put in place in the previous year. As expected, this impact was around 30 million. In addition, the ammonia business undertook two shut downs during the year. Neither of these were anticipated to be required at the start of the year given the major shut down scheduled for the first half calendar 2016. However repairs were required on the primary reformer in September and some catalysts needed to be replaced in May. Fortunately in both cases the shuts were able to be planned and undertaken in a controlled environment so as to minimize the risk and disruption. Nonetheless the shuts had a negative impact on earnings. Australian Vinyls earnings declined during the year with the PVC-VCM spread reducing again following a relatively short-lived increase in the previous year. This longer term declining trend can be seen in the graph contained in the supplementary pack. As I mentioned in May a strategic review of the PVC business is underway. In Kleenheat earnings declined significantly as the Saudi CP tracked oil prices down, reducing nearly 30% from an average of around $9.50 a tonne in 2014 to around $6.80 a tonne over this last year. LPG content in the Dampier to Bunbury natural gas pipeline was also lower. However LPG production was broadly in line with the prior year as a result of the continued focus on optimization. Fertilizer earnings were significantly higher with sales exceeding 1 million tonnes, a milestone as achieved in 2008. This was largely a result of increased nitrogen application at the beginning of the financial year. Turn to outlook on Slide 42. The overall outlook for the division is positive. The ammonium nitrate business is focused on leveraging growth in the Western Australian explosive grade AN markets and supplementing those sales with exports and sales into our fertilizer business as a substitute for imported urea ammonium nitrate liquid fertilizer. This unique ability to access multiple markets puts us in a good position given the current environment. Our sodium cyanide business is expected to continue to perform well having secured sales for this financial year for all of its expanded production capacity. As I mentioned earlier the ammonia business will undertake a major four-yearly shutdown in the second half of the financial year which will result in lost production and earnings. International ammonia pricing has also declined from last year's levels. Kleenheat is in the process of negotiating new terms of supply for gas feed stock for its LPG production and given progress to date I am optimistic of a positive outcome there. Business performance though remains dependent on LPG production, economics and Saudi CP pricing. A good 2014 harvest in Western Australia and better than average returns in most areas mean farmers will be in good financial shape for the 2015 season. Volumes for the new financial year are off to a good start but as always, full year fertilizer earnings will remain dependent upon a good seasonal break in the second half of the financial year. And finally, following the acquisition by Wesfarmers of a 13.7% interest in Quadrant Energy earnings from that investment will be included in our divisional earnings going forward. I'll now hand over to Stewart Butel.

Thanks Tom. I'll refer you to Slide 44. Operating revenue of $1.37 billion was 11% below the prior year. Export market conditions remain challenging with significant reductions in both metallurgical and export steaming coal prices. Average metallurgical coal prices were down 17.4% compared to FY14. The impact of lower export prices was partly mitigated by a record metallurgical coal production and a comparatively weaker Australian dollar. Royalties were down $54 million on last year, comprising a lower Stanwell rebate of $67 million plus lower state royalties of $100 million. Mining and other costs of $992 million were 4% below the prior year. FY15 unit mine cash costs were similar to last year for both mines despite increased overburden removal activity. Our focus on cost control and operational productivity continues. The division delivered strong EBITDA over the last year during a very difficult period in the pricing cycle. Earnings before interest and tax of $50 million was down $80 million on FY14; results reflecting the significant decline in coal prices as previously mentioned. I now refer you to Slide 45, Resources highlights. Following our ongoing focus on safety we achieved a further significant improvement in safety performance for FY15. During the year Curragh also achieved record coal mined and metallurgical coal production. Curragh's cost performance for FY15 remains strong despite increased overburden removal activity as well as less favorable geological conditions compared to the previous year. This reflects our continued focus on manageable, controllable factors such as costs and productivity. The mining lease application for the development of MDL162 adjacent to the Curragh mine is progressing. A low-cost capital expansion of Bengalla to 10.7 million tonnes per annum ROM was completed during the early part of calendar year 2015. In March this year Bengalla was granted a new development consent which extends the mine life through to 2039 and allows the mine to expand up to 15 million tonnes of ROM production. I now refer you to Slide 46, Resources outlook. The outlook for the export marketplace remains challenging with supply in the near term expected to exceed demand. Continued low export prices are anticipated in the first half of FY16, which will result in a significant downward impact on profitability. Curragh's weighted average metallurgical coal price for the September 2015 quarter has decreased by approximately 15% below the June 2015 quarter prices. Our focus remains and continues to be on cost control and productivity improvement. Curragh is now targeting a further 15% cash cost reduction in FY16. Curragh's metallurgical coal sales are forecast to be in the range of 8 million to 9 million tonnes. Full year sales mix is forecast to be 40% hard coking coal, 34% semi and 26% PCI. The Stanwell rebate for FY16 is estimated to be in the range of $65 million to $75 million based on an average Australian dollar, U.S. dollar exchange rate of $0.74. As mentioned at the briefing day in May, Curragh is defending a legal claim by Stanwell for additional rebate payments. And we’ve issued a counterclaim to that legal dispute. In the current challenging environment for competitive reasons, quarterly coal price negotiation announcements will cease from July 1 2015, with updates provided in the half-yearly and full year results presentations. I will now hand over to Oliver Chretien from Industrial and Safety.

Thanks Stewart. Good afternoon. I will now cover the Industrial and Safety division. As you can see on Slide 48, the division's full year results continued to be adversely affected by difficult market conditions. Operating revenues were up 9.3% to $1.8 billion, including Workwear Group's contribution since December. Earnings before interest and tax fell to 70 million including 20 million in one-off restructuring costs. Return on capital declined to 5.5%, partly reflecting the impact of the Workwear acquisition. We continue to improve safety outcomes with total Rolling 12 Lost Time Injury Frequency Rate decreasing to 9.2. Looking at some of the key highlights for the full year on Slide 49, significant performance continued to be adversely affected by depressed conditions across industrial markets. Most notably in mining, as well as reduced project activity. Customer spending reduction initiatives, including significant retendering activity led to a highly competitive market. Margin pressures were also exacerbated by a lower Australian dollar, as well as pricing investment to retain and grow market-share. In response to difficult market conditions, the division restructured its operations to reset its costs and capital base. This included reviewing this with networks and customer service and supply chains. The division also implemented strategic relationships with its key suppliers and did further work to expand global sourcing capabilities. This restructuring work resulted in the closure of 19 branch locations, and a 5.7% reduction in employee numbers prior to acquisitions. We also streamlined processes for the work on our new ERP for Blackwoods and Protector Alsafe, having implemented ERP upgrades across other businesses. And we have maintained service levels and investing in value to retain and grow market-share together with developing new revenue streams such as Blackwoods Small & Medium Business offer and the division's integrated supply services. Workwear Group, which we acquired from Pacific Brands in December 2014, performed to expectations, with corporate wear and footwear offsetting difficult conditions in industrial markets. The Workwear Group's integration is well underway with improvements already made in supply chain and customer service. Now turning to the outlook for the industrial and safety division on Slide 50, the trading environment for 2016 is expected to remain challenging, with limited volume recovery and strong margin pressure anticipated. Within this environment the division will continue to drive business efficiencies and long-term productivity improvements while seeking to retain and grow market-share for improved customer service and value. Integration and ongoing improvement of the Workwear Group will be a key focus as a platform for growth. On a final note, I'm very proud of the work we've achieved with the team in industrial and safety over the past seven years, and I would like to thank my team for their hard work and great support. I know the business will be in good hands with Rob Scott as part of the Industrial division. I wish him and the team all the best as they go through the next set of goals, while I move to corporate wide business development and strategic planning. Thank you. I will now hand over to Terry Bowen.

Thanks Olivier. Good afternoon everyone. I'll now provide an overview of the group's other businesses as well as cover off on cash flow, capital expenditure, our funding position and dividend distribution. So turning to Slide 52, our other businesses and corporate overheads recorded an expense of $105 million for the year, with this compared to an expense of $122 million last year. There were no contributions from discontinued operations or NTIs this year, unlike last year. In relation to earnings from the group share, it profited from associates. They were $65 million this year compared to $45 million last year, with the earnings growth last year reflecting an improved result from BWP. Interest revenue increase to $27 million from $10 million last year, this reflected the higher average cash balance that we had in the first half of the year prior to the capital management distribution that was paid in December, corporate overheads increased by $11 million to $124 million, and this was largely due to increased corporate and commercial activity that was undertaken last year. Turning to Slide 53, improved working capital productivity remained a strong focus during the year and as the chart indicates on this slide we've made significant progress in this area over a number of years now. At a group level, while net working capital days showed a relatively flat result, this belies the fact that every retail division improved their net working capital days, and really what you're seeing is a greater influence of Bunnings business in the mix of the group. Overall the group recorded a cash in-flow from working capital of $138 million this year, versus an out-flow last year of $331 million. This result reflected not only good inventory management, but also period end timing differences which did result in an additional creditor payment run last year in Coles. Further information on the balance sheet and working capital is available in the supplementary pack on Slides 46 and 47. Turning now to Slide 54, the group remains highly cash generative and this was reflected in overall good cash realization recorded this year. Operating cash flows of $3.8 billion were $565 million or nearly 18% above last year and a cash realization ratio of 104% was recorded. Turning to our capital investment and property recycling on Slide 55, our gross capital expenditure of $2.2 billion was in line with last year. The group retained very strong discipline in relation to capital expenditure. This was again weighted to the group's retail portfolio which most of this growth focused on refurbishment and growth of store networks. Investment in this area was highest as you can see in Coles and Bunnings, and we think this provides long-term growth and attractive returns. This is illustrated by the returns in these businesses which was 29.7% and excluding goodwill basis for Coles and 45.8% in Bunnings. Kmart also saw higher levels of investment this year due to its store renewal program and strong network growth. The return on capital in this business again is strong excluding goodwill, up at 78% at the moment, so very strong. Capital expenditure in the industrials division, as you can see, was well down on the prior year. This followed largely the completion of the ammonium nitrate plant capacity expansion and de-bottlenecking of sodium cyanide last year. As part of our discipline in respect to effectively managing our capital employed, the Group continued to look for attractive opportunities to recycle property through sale and leaseback activity. We had very strong proceeds last year. This year was still very good at $687 million and resulted in a net capital expenditure of $1.55 billion for the year. Looking towards 2016 we expect net capital expenditure to be between the range of about $1.5 billion to $1.9 billion. Again it's early in the year and this will be very dependent on the level of freehold property activity that comes up. Turning to Slide 56, as this chart illustrates, the Group's operating cash flows and proceeds from divestment activities over the seven year period have funded our organic investment activities as well as dividend growth and capital management. In the current year, higher operating cash flows were partially offset by increased acquisition activity and also the lower property proceeds that I've referred to. If we look at free cash flow, it was still $1.9 billion for the year and this was $159 million above last year if we exclude the proceeds from the disposal of the insurance division. Turning to dividends on Slide 57, an important part of the Group's approach to managing, sorry funding costs on Slide 57, an important component of the Group's approach to managing its balance sheet is ensuring that we've got a manageable maturity profile without any significant refinancing spikes in any one year. The top chart shows the current staggering of debt maturities. We have a very manageable level of debt maturing in any one year. Given Wesfarmers' scale, we also aim to maintain access to diverse and deep funding markets. As shown in the bottom chart, the Group's debt profile is in very good shape with current sources of debt largely comprising foreign and domestic bonds. During the year we issued a seven year bond in October, and that raised €600 million, approximately $864 million, and we did this through a Euro medium term note program. In May 2015 the Group also issued five and a half fixed and floating bonds through our Australian medium term notes program and that raised $500 million. In regards to our debt repayment activity, in September 2014 following the settlement of the insurance division the Group repaid $500 million of domestic medium term notes from our existing cash on-hand. During the year we also reduced syndicated debt facilities by a net $750 million. Since the year end in July we've also repaid €500 million in our medium term notes. Upcoming bond maturities this year include a 600 million bond that matures in May. The Group's debt levels increased during the year following the capital management distribution paid in December as well as acquisitions at Pacific Brands, Workwear, the 13.7% interest in Quadrant Energy, and the remaining 50% of the Coles credit card joint venture, which included the entire financing of the credit book which reflected the receivables balance that we acquired. Gross debt at the end of the period less cash at bank and on deposit was $6.2 billion. Net financial debt, which includes the now significant benefit of cross-currency interest rate swaps that the Group has in place, was $700 million lower at $5.5 billion. Net debt to equity was 25.1%. Turning to Slide 58, finance cost decreased 13.2% to $315 million. This was largely as a result of a lower average net debt balance. The Group's all-in weighted average cost of debt was in line with the prior year at 5.45%. We expect this year the guidance to be around 5%. However, this is going to be more than offset by a higher average debt balance. As well as earnings and available dividends and franking credits, turning to Slide 60, the Group considers its current liquidity position and through the cycle cash flows when determining our dividend. In line with this approach, and as Richard has mentioned, the Board today has declared a fully franked ordinary dividend of $1.11 per share, taking the full ordinary dividend to $2.00 per share, representing an increase of 5.3% on the full ordinary dividend of last year. The dividend will be paid on 30 September and on the Company's register on 27 August, the final date for that final dividend. Consistent with the recent practice and the preference of many shareholders to receive dividends in the form of equity, the Group will continue to provide shareholders with the option to participate in the dividend investment plan. The last date for receipt of applications to participate in or cease or vary participation in the plan is 28 August. The allocation price for shares issued under the debt will be calculated at the average of daily volume weighted average price of Wesfarmers share on the 15 consecutive days between 1 September and 21 September. No discount will apply to the allocation price and the DIP will not be underwritten. Given the Company's current capital structure and strong balance sheet, any shares to be issued under the DIP will be acquired on market and transferred to participants on 30 September. I'll now hand back over to Richard who will talk about the outlook for the Group.

Thanks Terry. Just finally turning to Slides 62 and 63, the Group's well placed to strengthen and further build upon its existing businesses with a focus, as always, on seeking to deliver satisfactory returns to shareholders. With consumers remaining focused on value, the Group's portfolio of retail businesses expected to benefit from strategies that drive further value for customers' improvements in merchandise offers. As the Group enters the 2016 financial year, the Coles, Bunnings, Officeworks, and Kmart businesses all have good momentum, with Target expected to improve as its transformation plan continues. The retail businesses will seek to create increased value for customers through reinvestment of sourcing and supply chain efficiencies as well as other productivity gains. Each business also has strategies aimed at driving increased merchandising innovation, better customer service and extending channel reach, and performance through improving store networks and digital offers. The near-term outlook for the Group's industrials division remains challenging. In this environment, each business will seek to further reduce cost structures and optimize plant and mine performance. At a Group level Slide 63, Wesfarmers will retain a strong balance sheet to secure growth opportunities should they arise and where practical optimize the portfolio. We continue to invest in and strengthen our human resource capability which we believe is a critical core competence of the Group. Our balance sheet and capital efficiency afford the Group the opportunity to invest should opportunities arise. With that, Terry and I and the divisional managing directors will be happy to answer any questions that you have.

We will now begin the question and answer session. [Operator Instructions] We will take our first question today from the line of Craig Woolford from Citigroup. Please ask your question.

My first question is around currency. It's been mentioned both in Kmart and Target release. So firstly can I just clarify what was the hedge rate that applied in FY15 through the P&L for Kmart and Target?

Terry here, I might have a go at that to begin with. Rather than give you the actual hedge rate, because we think increasingly in this market this has been something that we've managed well and arguably a competitive issue, what we'd say is the hedge rate came down off -- if you like, reduced on an average balance versus last year by about $0.04. It'll come off this year, if we look at the similar book, it'll be off somewhere around an average of about $0.07 lower in the year that we're going into, if we look at the average there. So rather than give you the exact figures that what we're facing at the moment. What's worth nothing is with that obviously profit increased strongly in Kmart and was on an underlying basis increased very strongly in Target as well if you allow for some winter clearance that went on in that first quarter that we spoke about.

Yes, I guess that. So the other comment that was made about was made increasing offshore sourcing eventually and understanding where that level of offshore sourcing is for the Kmart, Target, and Bunnings businesses, and are you referring to those brands when you talk about increasing offshore sourcing?

Well maybe Craig. It's John Gillam here. I'll go first and then let Guy and -- Target talk. I don't think you should bundle those comments together at all. That'd lead to a very poor lot of thinking on your part. Firstly, our offshore sourcing is as strong as it's ever been, but it sits at 8% to 10% of our total range. In terms of the currency, 30 %, 35% to 40% of what we buy and is in our stores is sourced from Australia and New Zealand so that's a comment that I've spoken publicly about over a number of years. We manage the currency day-in day-out and our sourcing activities continue to work mainly through the world's leading and Australia's best suppliers as really strong partners. So yes, let's just make sure you don't draw a broad brush here and make an error in terms of how you're thinking. I'll let Guy and…

I'm sure he's not going to make an error. Hi Craig, it's Guy. I'm a little bit similar to John. There's lots of moving parts within our business and I'd like to give the exact formula so that way you wouldn't be misguided. But the problem with that is that then everyone else out there will figure out how we're doing it. That Aussie dollar issue, that's just reflecting in my mind the Kmart price index which, both are in freefall. And for us it's all about our vision which we've kept for the last seven years. It's for families, everyday items at lowest price, and our team are really focused and guided by that. What moving parts are working for us is the more we drop prices the more volume we sell. I think the biggest dangers really happen while we move from country to country as we look for quality suppliers. The biggest change that's happened in Kmart is that our opening price points are better than what they were a year ago. Our one up and two ups are better, lower in price than what they were a year ago. And the last change I think that's happening to our business is our products are more desirable than what they were seven years ago and definitely they were a year ago with our design team. So the formula is the customers are really pleased with lower prices with great products. The two questions you're asking about the dollar or the Kmart price index if you like, that's one of many moving parts that happen on our P&L. The benefit's happening the customers are entering our doors because of the vision.

It’s Stewart from Target. Just very quickly from us, this is something we have to manage every day. We're well-hedged in terms of inline with the current policy. I think for us, we've been lowering prices. If you think last year our prices went down by 5%. The prior year some of our categories had lowered everyday prices by about 20%, and we're starting to get recognition with our customers on those lower prices. The key thing for us in Target is we think we've got some upside in our sourcing, so that's where our opportunity still is.

Our next question comes from the line of Shaun Cousins from JPMorgan. Please ask your question.

Just a question on Coles -- just probably for John, I'm just curious about how much change in headcount has occurred at the store support centre based on press articles that suggested over 600 people? And when will the cost savings be annualized, I'm just curious how much can price reductions be funded by store support centre savings into fiscal '16?

So it was a sizable amount during the year. It was actually more than 600 in total over the year. In terms of cost savings the above store costs are just one element of our cost savings. We saw some of them occur during the year, because we made some headcount reductions early in the year. But they aren't just the elements that drive our lower prices. The growth in our volume, the fractionalization of our supply chain costs, and productivity and efficiency in our supply chain are equally as strong in terms of drivers of being able to lower prices to customers.

Okay. You made a comment previously that 30% of your customers don't buy any fresh from you. You've highlighted double-digit growth in fresh, in revenue and volumes. Can you maybe update us with that number in terms of is that down to 28% or how much progress are you making there in fresh please?

The double-digit growth is in fruit and veg-only. The rest of our fresh business is growing strongly, but not as strongly as produce. We've seen a slight change over the year. I mean this is a number that just because of the size of the amount of customers that we have every week and the amount of baskets, it's a metric that moves slowly. We've certainly seen a change in terms of the penetration of our fresh foods across the year and that continues to develop. It's not a number that we publish, and as I said, it's across many categories. We're only highlighting the fact that our produce business has grown very strongly.

Maybe just particularly, just on Bunnings, can you just talk a bit about -- you obviously had some profits on property sales. Maybe -- just give us a range about how much property Bunnings actually currently owns. I'm just curious about how we should see property divestments over the medium term as capitals being recycled.

Yes I'm happy to say, Shaun -- hello. Just by background for those that aren't aware and I know you are, but we are a property developer, and we're probably one of Australia's larger property developers. We've got a team of about 50 people. There's no surprise there. We've been doing this for 21 years and so it's a really important part of that network side of brand reach, which is one of our five growth drivers. This year's result which came on the back of some really, really good work from the property team to get great outcomes in terms of yields and get developments away is a little big higher in terms of the overall percentage that it's been the last couple of years, but we've had high yields. Someone jokingly made the comment on the way in that they thought that we should actually have less, take less profit. Well in the end, we're a property developer, we want to produce fantastic Bunnings sites, and then get the best outcome we can in terms of recycling. Sitting on our balance sheet at the moment in terms of land and buildings is something in the order of 600 million to 800 million. That's heading towards being transacted and another couple hundred million that's got a little bit more of a longer-term development profile in that order. Recycling of the assets is really important at the right time and on good terms. We continue to make sure that our tenure is kept to the least amount possible. Ahead term's around 10, 11, 12 years. We think that's really important for longer-term flexibility with lots of options. Hopefully that gives you the flavor you're looking for.

Our next question today comes from the line of David Errington from Merrill Lynch. Your line is now open.

Richard, my first question -- I've got two, but my first question is on the industrial businesses. When you look at the second half performance of those businesses, the combined EBIT of the three, coal, industrial services and chemicals, would barely be $150 million, and the majority of that was in the chems and fertz business. The outlook looks as though is that two of those three businesses will probably be in losses in the not too distant future if the current trends continue. And you've got over capital employed of over $4 billion in those businesses. The question has to be is, will you be hoping to consider an impairment on those assets? The second question is, I understand the cost reduction strategy, but there comes a point in time where if you just keep cutting costs, you're going to really impair the ability of those businesses to recover. I suppose the third question that I'm really concerned is, why Group those three businesses under a group of management, and all due respect to Rob and Anthony, and I know that they are first class executives. But their background is in insurance. And at a critical time of having $4.5 billion of capital employed, where those industrial businesses are going through pretty tumultuous timing, I'm really surprised at your timing that to group them all together, and probably provide even less disclosure to the market than what's currently there. So I'm really concerned about those three Group of businesses and question why you're going about grouping them in the one area. So there is a lot of questions, there but I'd be really appreciative of what your view is toward that.

Yes, I'll try and be succinct Dave because there's a fair bit in there. Firstly, in an overall sense, I think we're pretty clear. We're not satisfied, although we understand. We're not satisfied with performance although we understand why. Second thing is, I don't agree with your comments that two of the three are close to being loss making. Certainly, there is significant pressure at Curragh at the moment and the first quarter coal prices, export coal prices we're dealing with now 15% below the last period. So there's significant pressure at Curragh. Industrial safety, as you know had some -- we had some restructuring costs last year. We've acquired the Workwear Group and I think that's, in a difficult sector, going to certainly maintain its profitability and hopefully increase it. And as you inferred, I think the chemicals business has had -- and certainly I'll tell you my commentary has had a pretty strong year, and has got I think pretty good prospects. On impairment, the Board, all Boards, look at impairments with auditors and things like that and on most of these businesses we're more than comfortable that there's significant headroom in carrying value. The issue on costs, I think it's different across each business. So it's absolutely appropriate that Stewart and Craig McCabe at Curragh are pushing the costs lever as hard as we can without compromising on safety. But I don't think that infers that we don't have the capacity to take advantage of turnarounds in those markets. I think Stewart has given guidance of 8 million to 9 million tonnes of export net coal this year, so we'll maintain our production capability of that mine. I think it's absolutely appropriate that we go hard on costs as Bengalla is and has been. And Olivier in his business has been doing a lot of work on costs, again, quite appropriately. And there is elements of -- Tom's operations where costs are being managed. I think that's entirely appropriate in sectors where there is cyclical issues. But I do think that we've got good people in those businesses, they've got good assets and they're well positioned for recovery. On the management thing, it's pretty simple. We want to give a focus to these businesses of, we have got two I think outstanding executives in Rob Scott and Anthony Gianotti into the Group. They're not just insurance, they both came out of business development and have got different backgrounds before that. They're both highly commercial. Add to those too, Tom O'Leary and Tom's team, Olivier's team and Stewart and his team and I think we've got a powerful group of people. To look at how we can improve the performance of existing businesses, but really importantly look to see how we can grow. And there'll be a real focus of Rob and Anthony on how we can grow these businesses. I saw someone report yesterday, Warren Buffet says the time to buy is when people fear. Well, we think this is a really important time to be growing these businesses because they're important to the Group.

So you're looking to grow these businesses?

Yes, when and where we can, absolutely.

And my final thing is on Curragh. You're looking at -- I was quite surprised that -- and I wanted to talk about the disclosure of the Group, because it looks to me like the disclosure is really shrinking in terms what you're recording to the market. But why is the Stanwell royalty not falling much? I mean, it's still at $65 million, $75 million this year. And I suppose when I talk about the disclosure, why are you not going to report quarterly Coles earnings? Then you've gone and grouped petrol and food together so we can't work out, well what's food and liquor EBITs growing? I'm assuming that you're not going to record the EBIT of the fertilizers and chems. It just looks to me that disclosure is shrinking at the moment and I'm just questioning why that is so?

I can get Terry to talk about it overall. The reason on coal pricing is because we're disclosing more information than our competitors and giving our suppliers a free kick. So there's a very strong commercial reason for that but Terry you might want to comment on the rest.

Yes. I mean we highlighted at the briefing day, David, for the same kind of commercial reasons that we wouldn't be highlighting petrol or Coles Express earnings separately, so -- and we've done that. To the extent that there's any material change in earnings or disclosure that's required, we'll make it without necessarily showing the dollars. In relation to how we'll disclose the industrial division, we haven't sat down and spoken about that. As you can see, we've given the same level of disclosure in this briefing that we've always given on the industrial businesses. At this stage, we haven't made a decision not to do that.

Not [understand] all the rebate or the royalty payments, the reason why it's gone up slightly is all to do with the exchange rate.

Your next question comes from the line of Ben Gilbert from UBS. Please ask your question.

Just first question for John at Coles, just a couple of things around how you're thinking about one, instead of the number of production you've got on EDLP, I think it's sort of over 2,000 now, so how you're thinking about that over the next 12 months or so? And secondly also the refurbishment target. I noticed that you [indiscernible] right now but from memory I think John you said you're going to get [indiscernible] on the end of FY16 is still that correct?

Are they both the -- sorry, the question was a bit [distorted]. First was on EDLP, the second one was on renewals for? So, everyday pricing, we don't have a set target for everyday pricing on the amount of products. We look at it on a basis of customer demand more than anything else. There will be more products moving through everyday pricing but we're still going to maintain a strong, weekly, high low, promotional campaign, particularly around impulse categories. Where there is every day commodities, we're trying to move as many of those to everyday pricing. In terms of renewals, we're at two-thirds of the way through our renewals. We've got a strong program this year in terms of renewing a good number of our stores. Whether we finally get to every single store, we haven't yet decided. There may be a small number left, but eventually we will get out of them, therefore we won't spend capital on renewing them.

The returns you're getting on the renewals, are they still sort of satisfactory or as strong as you have been? Is that sort of factoring in to your thoughts around the number of renewals that you're doing?

Yes, I mean, as you can see from Terry's comment on -- if you take goodwill out of our capital expenditure, we're close to 30%. And of course renewals are in the middle of that and they're a sizable part of our spend throughout the year. So we're getting the returns that we require out of them. We don't spend the same amount on every shop as you can imagine. On the bigger trading shops we spend a lot more money, and then on the smaller shops we spend a sizable amount less. So it's not one size fits all, but we're getting the returns that we require out of them.

Just a final one for Terry, there is another strong cash flow result, how much opportunity or how much more -- again but you’ve got the working capital side of things going forward to manage to keep delivering the cash conversion over 100%?

We've guided towards them and we are a strong cash generative group of businesses I think and so we've guided towards -- well at one point in time, we were up around the 110 and we said with those levels of capital -- release from working capital would be unlikely to continue. So we're heading down towards 100% with maybe a couple of points above and that's where we've been this time. So I think that's where I'd be. In terms of what we are seeing is working capital efficiencies as I disclosed in all of our retail businesses. So if we look at net inventory days and net creditor days in the right way, they've declined in every business. There is big mix affects that come through our group and that's what I tried to explain. Obviously Bunnings has positive working capital and Coles has negative working capital. So Bunnings is growing particularly fast, it'll have an influence on the way the group looks, but within those numbers, there is certainly some good capital efficiency going on and there is still more we can do, more in some businesses than others. Obviously Target is one area where Stewart's making some progress and we expect more to continue.

Your next question comes from the line of Tom Kierath from Morgan Stanley. Please ask your question.

I've just got a question for John Durkan on CapEx. It's come down a fair bit, especially in the second half. Could you just talk about how CapEx is being allocated now across the Coles business?

Yes Tom; so it's not dramatically changed. We've spent more in the last couple of years on software, particularly upgrading our point of sale system going in to Coles, which were in trial and soon begin to roll out. So a fair amount's gone in to software development. We're spending about the same amount on property as we were and there'll be no material change actually this year in terms of our net capital expenditure. There's not a lot changing in that apart from, as I said, the last two years. We spent more on software than we have in the previous terms.

Just one for John Gillam and Guy, the returns -- well return on capital's gone up a lot, 33% or so per cent for both businesses. Is there a level where you think you're over earning and you need to reinvest back in to the business to kind of ward of more competition in your space?

I'll go first, thanks Tom. Well in 2009 we had an ROC of 30% and the six years since then we've invested 3.3 billion and grown our business substantially and our ROCs up 10%. The point you make's a valid one in an overall sense. You can sometimes artificially enjoy the short-term lifts in ROC because you're actually working capital too hard, but our rate of investment is very strong so I don't think that thought applies to us at all. We don't like to see assets overtrading. One of the things we've been very successful at doing is making sure that we keep renewing our sites. We find new ones to replace old over shopped or undersized stores, and we get in to new markets. We've got huge format variability and all the investment that goes into making sure we can successfully run a productive business and keep our business model very vibrant. That investment's very strong as well. So, yes, I understand your point from an overall business principle point of view, but we are nowhere near that risk at the moment. We think with everything that's going, we should continue to produce market-leading returns.

Yes, may be similar. An interesting question about over earning, I mean it's not a focus that we have to try to reduce earnings, but the business is really in full throttle at the moment on adding profitable new sites, and we're really happy about, I mean we started with nearly zero in our pipeline and they're all starting to come through now. The good news about the new sites, which you really don't know about until you open them, they're really performing well. Existing sites, you know the 190 that we had, there was very little spend on them in the pre-ownership. We've got the plan seed format worked out well now and that's in full throttle as well. So we've converted 60 stores that look really superb, including the Lidcombe store that opened in Sydney today if any of you haven't seen it, is that new model. We're in full mode in rolling out and converting the other 140. We invest in price and the more we invest in price, we continue to over earn. So, the last one that we're investing in, which we're not shy of is our people that are producing these great results. So we'll continue to do the investing, and the more investing we continue to do, we seem to continue to do what you said about your question about over earning, so not sure.

Tom, it's Richard. I'd just add to that. I think one of the things that we're happy about with a number of our businesses at the moment is that they are being bold and investing in value, investing in new markets, investing in new stores, and we're not -- I'm not concerned at all about any degree of complacency. In fact, I think there's a really, really strong focus on improving and innovating in all these businesses. It actually goes a bit to Craig's question earlier. One of the ways you deal with currency -- I mean there's other factors in currency like steel prices and fuel prices and a whole bunch of other things -- but the other way you deal with currency is, you invest in your business, as we are in all of these businesses, and get more customers in your door and as you buy more, you expect more benefits and you do a whole lot things better through your supply chain. So there's a very strong focus and these businesses are getting better.

Our next question today comes from the line of Michael Simotas from Deutsche Bank. Please ask your question.

I was just hoping you could give a little bit more color on the underlying profitability of the Coles food and liquor business in the second half. Now, I don't expect you to give me the number, but the margin we can see is obviously very susceptible to falls in petrol prices and I guess the reason I ask is, the EBIT growth in the second half was just a little bit over 6% which is still a good outcome but that was on a very healthy food and liquor sales growth. So was the underlying level of profitability in food and liquor maintained growth at similar sorts of rates to what it has been in the past?

So yes, I'll answer that. There wasn't a vast change in our margin shape half-on-half. If you take the first half year-on-year and the second half year-on-year I think they're both…

Okay.

Equally at 20 basis points roughly margin expansion and underlying that the Coles Express business didn't have a material change year-on-year either and as Richard has already said in his commentary, that our liquor business was broadly flat year-on-year. So that gives you an indication actually that we're seeing reasonable growth in both the Coles Express business and in the supermarkets business and liquor, as we've said, has just finished its first year of transformation and we expect a little bit more out of it this year.

While I've got you, John, in the Coles business there seems to have been a little bit more price investment in private label over the past few months relative to branded products. Is that consistent with the way you see things and could you just talk a little bit about the motives for going down that path if that's the case?

So it's -- we have been investing in Coles brand. We've been investing across fresh foods which tend to be all Coles branded very few brands in our fresh food business. So more investment in terms of our fresh foods and then in some of the grocery lines, it's in the pure commodity space. So I talked about tinned fruits and cream and others, but there's a mixture because if you take only a week ago, we dropped the price of Weet-Bix as well. So it's -- we're seeing both brands and Coles brand reducing but the reason for doing Coles brand is that it's our lowest entry price point. So it's the access for customers into these categories and it tends to be the lowest price point within the category and therefore meets the needs of our customers who are on a budget.

Your numbers would suggest it is, but do you see that as defending your turf from the hard discount segment as well as it needs to?

So it's part of our strategy in terms of lowering our prices and it certainly plays to the fact that as I said, it's the lowest entry into the category and therefore when we're up against a hard discounter, it certainly helps in that vein. Saying that, the hard discounter sells some branded goods as well so we're very aware of making sure we've got our branded products in the right place as well.

Your next question comes from the line of Andrew McLennan from CBA. Please ask your question.

My question is for John Durkan, please. Just given the conversation we had with Guy and John Gillam around not wanting to overtrade and rolling out stores et cetera, in that regard, the current guidance for new store expansion, 2% to 3%. You've seen a very significant increase over the period since 2007 in sales density. Is there any likelihood in the medium term that you could change your expectations on store expansion?

No we're sticking with the same guidance in supermarkets of 2% to 3%. It was slightly higher in this year because of some stores we acquired from IGA in Western Australia. And in terms of sales density, we still see lots of head room in sales density and if we take our metrics versus global best practice, there's still some head room in terms of that. So there will be no change in terms of our guidance of new space and that's across all of our brands actually.

Okay and just in relation to your value credentials, obviously there's been a lot of reinvestment going on. Do you have a sense of where you're sitting versus Aldi and Woolworths?

Yes we -- no we have a real, a really strong sense. We have -- we monitor our prices every single week and thousands of prices across states every single week, so we have a really good handle on our price indices and of course they've been very strong this year.

Can you give us a sense of how much improvement you're seeing at the moment?

Well again, this goes to sensitivity. We wouldn't want to give any of our competitors' insight as to what we do and how we do it and therefore all I'm happy to say is that our indices have got stronger this year.

That's against both your high discounters and full service.

Yes, yes, yes.

Okay and one for John Gillam if I could. You talk about the improvement in technology and also online. I'm just wondering, there's obviously lots of examples of this offshore but Screwfix is an interesting business that combines both convenience and online for trade customers in Europe. Are there any particular learnings that you're implementing in Australia that would lean on that business model?

Look, we study all our global peers. We did a major study earlier this year on players in Western Europe because there's some very interesting dynamics there. Research online, purchase offline is a very, very dominant characteristic and we've got significant investments and continue to make significant investments in content and engagement across our digital ecosystem and we gave quite a bit of insight more than we've done in previous years, into that in the investor briefing which probably if you haven't had a good look at, you might want to reflect on. The sort of trading models that are going on, there's lots of ways you can reach into heavy commercial, light commercial and the consumer market with digital tools. Our use of digital tools in the light commercial market is very, very strong and for reasons of commercial sensitivity, we don't make a habit of telling people what we're doing. We're in a good space, we're very aware of other models. We tear them apart and try to pick the best line that we think the market conditions and the opportunities that are before us.

Your next question today comes from the line of David Thomas from CLSA. Please ask your question.

Richard, well you can give me a bit of a master class in a vanilla outlook statement but optimize the portfolio where practical perhaps takes that to a new level. Can you give us some insights into what that actually might mean or some color around optimizing the portfolio?

I reckon they're Terry's words David, I can blame him.

He's not bad either.

Sorry?

He's not bad at it either.

Well I guess over the years -- I mean there's nothing new in it in the sense that we haven't sort of deliberately picked those words this year to signal anything different. You know, where we get an opportunity to buy -- obviously we love expanding our existing businesses, where we get opportunities to buy new businesses that can generate new value for our shareholders, we'll take those opportunities. Where we can dispose of businesses that are in shareholders' interests and that opportunity arises, we've done that as well and the most recent example obviously is insurance and we did it with the Air Liquide WA last year as well. So that's all it means, is you know, if the opportunity comes and it's in the interests of our shareholders, we'll do those things.

So you wouldn't say there's anything that's outstanding at the moment you would think is not optimal within the portfolio.

It's interesting, David. Without -- so one of the things we do try to do is look through cycles. Guy Russo was talking to the Board yesterday, all the divisional MDs come and talk to the Board regularly and have a conversation with the Board with what's on their mind. Not only did we not think about -- did we think about not keeping Kmart when we acquired Coles and obviously it was a very good decision to keep Kmart and bring Guy into the business, but after a year or two of Guy being there, we actually thought about whether we'd retain the New Zealand part of Kmart and we've kept that. The growth we're getting in Kmart in New Zealand at the moment is sensational. So, one of the things we don't try and overreact to what we think are the cyclical things all businesses that aren't performing well because of management issues, we try and sort those out because we think that's the right thing to do. But from time to time, someone comes along and knocks on our door, offers us a price for a business that we -- we do NPV and we say, this is a very good deal for our shareholders and that's what insurance was.

Just on that Guy, I know you sort of touched on the plan C in the new formats going well. Can you give any color around the uplift in sales you are seeing from the new formats or at least maybe some of the category mix that might be changing as you've pushed into those new formats?

Yes thanks, David. Yes. So the uplift is better than the fleet which is why we're -- so we've got 204 stores as of today, 60 of them are plan C. So when I say better than the fleet, there's 140 old store formats that need to be converted. So yes, the 60 are doing very well, better than the fleet on every way that you want to measure it to make sure that if the fleet are getting an uplift, what would have happened had we converted those stores just to a normal typical fleet store. So yes, we're impressed with that. What categories are increasing? The only category I've been calling out over the last few years that's been declining, so all categories are increasing. The one that was not performing well for us was entertainment and the good news there is that over this first six weeks, seven weeks of the year, it's the first time we've seen positive movement in that space. So not -- we're not shooting the lights out in that space but we've stopped the decline that's been happening there for the last three to four years, decline in revenue I'm referring to. We've never had a decline in real terms in profit. So really happy with that and that's kind of in the back corner of the store, so it's not like it's front and centre. So it's doing well, so you know, we're excited. So to continue that challenge that we've got which is increasing earnings momentum, the more of these plan C stores we convert, we'll still have that problem.

One quick one if I can for Terry. There's a line item in the balance sheet for $850 million for finance and loans receivable, looks like it's a new line item. Is there anything obvious that that refers to?

Yes we pulled that out separately. It represents the receivables of the -- on the credit card book that we acquired from GE and obviously because it's a financing activity within an industrial business we felt that that was good disclosure to pull so you could see it.

Your next question today comes from the line of Bryan Raymond from Macquarie. Please ask your question.

This one's for Terry. The outlook for capital returns, your balance sheets obviously very well capitalized and you talked more about potential acquisitions and disposals. But putting that to one side, what's your view on the optimal balance sheet position? Are there any metrics we should really focus on that you guys internally would look at as indicators? So just any color you can provide around where you might see those indicators getting to versus your expectation.

Yes, I mean first of all it comes down to a broader decision, which in conversation that we had with the Board is what rating do you want to have for a company. At the moment we're an A-minus rated Company so therefore you start with your metrics coming off of those and when your rating agencies and indeed when we look at our leverage, we don't just look at the debt on the balance sheet. Again, I tried to call to call out today that you know, the debt on the balance sheet, you've got face value debt but we hedge all of our overseas exposures with interest rate swaps and bring those back and those interest rate swaps now are very much in the money because of just where interest rates and currencies have gone. And so off the back of that, we've got about a $700 million reduction in the face value of the debt that we'd otherwise have to be refinancing and we've made that clear. Then we look at the lease costs on top of that and as does the rating agencies. And the lease costs in our business represent about 70% to 75% of our total debt. And so, we've got a lot of debt that sits off balance sheet and then off that, we then look at our free cash flow cover against that debt and indeed our fixed charges cover which is interest plus lease costs against that. We've often -- for a long while we were saying an A rated company was around three times fixed charges cover which is exactly where we are at the moment. Increasingly, as interest rates got to very low levels, rating agencies are looking more at the principal of the debt and less at the interest charge, because that could change and you know. And we're about in line with an -- towards the bottom level, which is where we've targeted to be of an A rated Company at the moment or A3. So that's A- with S&P and A3 with Moody's. So, unless the Board makes a decision to change our rating, there's not a lot from A-minus to BBB+, and as I say we do have these conversations, then there wouldn't be a lot of extra headroom for capital management as the balance sheet stands today. Bearing in mind that we did return a lot this year and we also have acquired between currently financing the GE book off our own debt facilities as well as the other acquisitions we've called out. There was over $1.1 billion worth of payments made this year in relation to those as well. And we do maintain a pretty strong dividend payout ratio, which we think is the right thing to do if we've got the liquidity because it gets to banking credits which are worth a lot to shareholders back in their hands as quickly as possible.

Sure, sure. Okay, thanks for that. Officeworks, interested in the June sales growth performance, obviously a bit over the budget stimulus there in this sector interested if there's any trends that you saw there in overall sales growth that might be an indicator that there was a bit of lift stimulus essentially?

Thanks Bryan. Well, firstly, I'm not going to call it one month out. It's a bit dangerous. June has always been a very strong month for Officeworks because of their tax time campaigns and the way that tax, the tax year closes and people can put returns in and get refunds if they've got eligible deductions means that that's been a big focus and the team have done a very good job of getting a good outcome for an important month and an important event. The budget changes this year have been helpful. Plenty of people have commented on that and I wouldn't disagree. But Officeworks were having a good year and it made the last quarter a little stronger. You can see that in the fourth quarter numbers that are there in the release and we've started the New Year in good shape.

Great, great and then finally just on Target. I'm just interested in the volume performance in the fourth quarter. Obviously constant improves, just trying to get a feel. I think at the strategy day you did illustrate that volume performance and how it is offsetting the price investment. Is there any color you can provide around that over the fourth quarter in particular?

Yes, thanks Bryan. Without the actual specifics, I mean in general terms our prices have been down by about 5%. So you can work out the difference roughly, roughly. But in the fourth quarter we definitely saw some slight improvement in volume. So, it's taken some time to really our key thing is establishing that first, price right, price, so this every day pricing strategy. And I'm pleased to say our communication has started to improve and our customers have absolutely seen the price is lower now and even new customers who have just started to come back to Target have commented on the significant movement in lower prices. So, you can probably just about work it out, that it's starting to turn…

The next question today comes from the line of Grant Saligari from Credit Suisse. Please ask your question.

Thank you. Richard, I was just wondering on the industrials division structural change, I was just wondering why you've reached the conclusion that now is the right time to make that change to the organisation?

Grant, because we've got -- if you look at the group, the Coles division is a significant part of the group obviously and makes just under $2 billion of earnings. Bunnings and Officeworks now are well over $1 billion of earnings. Target and Kmart together, you know, is material as well, and then we've got relatively smaller business. So I think it's logical. I think it also means as I said earlier, we'll have a stronger focus on the growth in that business and frankly it frees some of my time and some of Terry's time up to do the things that you'd expect us to be doing. So that's why.

Just a detail one if I could. On Target, are you able to tell us what the provision utilization on the Target result was this period and if any of that was sort of cost of goods like stock related?

Hi, sorry Grant, it's Terry here. Target's not carrying any provisions. Are you referring to the liquor restructuring provision?

No, I thought there might have still been some left in Target. So there was no provision utilisation?

Yes, no I think that was well used up two years ago.

Two years ago.

Two years ago Grant.

Your next question today comes from Craig Woolford from Citigroup. Please ask your question.

Hi guys. I thought I'd just have a follow-up. Firstly, in a presentation in one of the strategy days Bunnings called out 10% floor space growth. I think that was FY15 and FY16 and that was measured in square metres. Can you just clarify whether Bunnings achieved that 10% floor space growth?

Thanks Craig, John here. We got pretty close in that year and we've not -- there was -- that guidance was provided at that point, I think it was two years ago, just to make sure that people understood the scale of what was coming and that scale of what's coming you've been able to see in terms of what we've done with our network and we spoke about today, 30 to 36 stores new Bunnings warehouses and four to eight smaller format Bunnings stores that are coming over the next two financial years with 10 to 14 Bunnings stores every year thereafter is that forecast. And we gave also some guidance in the Investor Day around the sort of -- and this is probably relevant for you to get your focus on the years out. We talked about that there was a lot of runway and that by 2019 we could see around 1.5 million households in the Aussie market that had a greater than 20 minute drive to a Bunnings store. So in terms of a couple years ago, just trying to get the scale of what we were going after in people's minds. In a similar way, that disclosure at the Investor Day of our demographic modeling and our network forecasts, and that household penetration with greater than 20 minute drive time. That's a very important disclosure in terms of opportunity for network expansion and that's why it's such an important part of our brand reach agenda within the growth drivers.

Yes just trying to wrap my head around the 10% space growth in square metres, because the store growth on my calculations was about 4.4%. So you know, I guess the conclusion from that is the size of the stores that are opening are just so much larger than the existing fleet.

No. What we tried to portray at the Investor Day was just how varied our brand reach was and we spoke about the smaller formats and their sizes, we spoke of multi-levels and elevated, we spoke of the warehouse store and what we could do with it and even hybrid sites. So I'm sorry that that complexity creates a modeling challenge for you, but I'm not sorry about what it does for us commercially because it drives an enormous market capability and gives us huge flexibility to put a very effective business model and a strong offer for customers into all sorts of markets, nooks and crannies. That's one of our real advantages and a real skill of our operational merchandising store dev -- visual merchandising and property teams to be able to actually run such a varied network and it makes it very exciting when we think about what we can do with our brand reach.

Just if I can on liquor, I just want to understand, do you think the decline in liquor comp store sales are over? I think it seems to have been dragging on now for over two years. I know -- understand there was wind back of, you know, loss [indiscernible] profitable sales that maybe impacted, but I would have thought that washed its way through the system but sales are still going backward. I also note very strong growth in the Liquorland brand and store numbers but no store growth in First Choice. What's the future for First Choice?

Hi Craig, it's John. So it'd be foolish to predict that the declines in comps are over forever. So what we're certainly seeing in our liquor business is that it's improved throughout the year and actually our comps as we've gone on have got better and certainly current trading would suggest that we're seeing green shoots of good growth and particularly in our Liquorland business where we think that we've got a strong network and strong goods, co-location with supermarkets. So we think there's a strength in our business in terms of that business. In terms of First Choice, we're still working through the ideal model for First Choice. There's minimal store openings in terms of First Choice coming down the track at us and we're working through the type and shape of format that we want in that business. You have to remember though that by far the biggest part of our business is Liquorland and will continue to be Liquorland and that's where we focus our attention.

Your next question comes from Ben Gilbert from UBS. Please ask your question.

Sorry, just one final one from me. Just Richard, how you're seeing trading sort of through July/August and specifically I suppose interested around groceries. A number of the landlords -- or bigger property guys have come out over the last week or two and said that there's been this sort of gradual slowing in grocery over the last sort of three to six months.

I'll get John to comment on that. On an overall sense, Ben, I'd say that there hasn't been much difference and what that would say to you in retail, is that we've got -- I said my commentary, good momentum in Coles, Bunnings, Kmart and Officeworks and Stewart said in his commentary that this year's kicked off in a pretty good light for Target. So John, do you want to add a comment?

Yes. Ben, there's -- over the seven weeks or so there's no material changes from fourth quarter really trading. I don't know what you're hearing from landlords but you always get ups and downs in any weekly training pattern. Certainly from a year-on-year perspective, certainly no -- no material change in terms of the trading pattern.

There are no further questions at this time.

All right well thank you all very much for your time and we look forward to catching up soon.