2023 Annual Report
Coles Group Limited
ABN 11 004 089 936
Acknowledgement of Country
Coles wishes to acknowledge the Traditional Custodians of
Country throughout Australia.
We recognise their strength and resilience and pay our
respects to their Elders past and present.
Coles extends that respect to all Aboriginal and Torres Strait
Islander people, and recognises their rich cultures and their
continuing connection to land and waters.
Aboriginal and Torres Strait Islander people are advised that
this report may contain names and images of people who
are deceased.
All references to Indigenous and First Nations people in this
report are intended to include Aboriginal and/or Torres Strait
Islander people.
Forward-looking statements
This report contains forward-looking statements in relation to
Readers are cautioned not to place undue reliance on
Coles Group Limited (‘the Company’) and its controlled entities
forward-looking statements. Except as required by applicable
(together, ‘Coles’, Coles Group’, or ‘the Group’), including
statements regarding the Group’s intent, belief, goals,
objectives, opinions, initiatives, commitments or current
expectations with respect to the Group’s business and
operations, market conditions, results of operations and
financial conditions, and risk management practices. This
report also includes forward-looking statements regarding
laws or regulations, the Group does not undertake to publicly
update, review or revise any of the forward-looking statements
or to advise of any change in assumptions on which any such
statement is based. Past performance cannot be relied on as a
guide for future performance.
Non-IFRS information
climate change and other environmental and energy transition
This report contains IFRS and non-IFRS financial information. IFRS
scenarios. Forward-looking statements can generally be
identified by the use of words such as ‘forecast’, ‘estimate’,
‘plan’, ‘will’, ‘anticipate’, ‘may’, ‘believe’, ‘should’, ‘expect’,
‘intend’, ‘outlook’, ‘guidance’ and other similar expressions.
Any forward-looking statements are based on the Group’s
current knowledge and assumptions, including with respect to
financial information is financial information that is presented in
accordance with all relevant accounting standards. Non-IFRS
financial information is financial information that is presented
other than in accordance with relevant accounting standards
and may not be directly comparable with other companies’
information.
financial, market, risk, regulatory and other relevant
Any non-IFRS financial information included in this report has
environments that will exist and affect the Group’s business and
been labelled to differentiate it from statutory or IFRS financial
operations in the future. The Group does not give any
information. Non-IFRS measures are used by management to
assurance that the assumptions will prove to be correct. The
assess and monitor business performance at the Group and
forward-looking statements involve known and unknown risks,
segment level and should be considered in addition to, and
uncertainties and assumptions, that could cause the actual
not as a substitute for, IFRS information. Operating metrics that
results, performance or achievements of the Group to be
are prepared on a non-IFRS basis have been included in the
materially different from the relevant statements. There are also
segment commentary to support an understanding of
limitations with respect to scenario analysis, and it is difficult to
comparable business performance. Non-IFRS information is
predict which, if any, of the scenarios might eventuate.
not subject to audit or review.
Scenario analysis is not an indication of probable outcomes
and relies on assumptions that may or may not prove to be
correct or eventuate.
Cover image
Coles State General Manager Queensland Jo Brown, Executive General Manager Supermarket Operations Claire Lauber, and e-Commerce graduate Shaz.
Contents
Our strategic pillars
Message from the Chairman
Managing Director and
Chief Executive Officer’s Report
Our operations
How we create value
Sustainability
Governance
Board of Directors
Executive Leadership Team
Operating and Financial Review
Board of Directors: Biographical details
Directors’ Report
Remuneration Report
Financial Report
Independent Auditor’s Report
Shareholder information
Glossary
Corporate directory
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Our 2023 reporting suite
Our corporate reporting suite contains detailed information on Coles’ strategy, risk
management and governance frameworks. The suite also includes our financial and
non-financial performance and progress against our sustainability and human rights
commitments. We continually evolve our reporting suite in response to shareholder
and stakeholder feedback, and to align with legislation, disclosure frameworks and
leading practices.
To view these reports visit www.colesgroup.com.au
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report Our vision is to become
the most trusted retailer
in Australia and grow long-
term shareholder value.
Our strategic pillars
Destination for food and drink
is why our customers come to Coles and what
we aspire to be known for.
•
Deliver quality, delicious and healthy food
•
Enhance value across the customer offer
•
Innovate and differentiate through exclusive brands
•
Inspire customers through tailored range and events
•
Provide convenient meal solutions and home needs
•
Grow through strong supplier relationships
2
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report Our strategic pillars
Our strategic pillars
Accelerated by digital
is how we intend to meet our customers increasing
digital usage by creating an easier, faster and more
enjoyable omnichannel shopping experience.
•
Deliver a seamless experience
•
Personalise the customer journey
•
Expand offer through eCommerce
•
Anticipate and solve customer missions
•
Grow media through Coles 360
Delivered consistently for the future
is our focus on delighting our customers with our food
and drink offering each and every day, today and into
the future.
•
Simplify and Save to Invest
•
Enable and develop customer-focused teams
•
Revitalise stores and network
•
Reimagine sourcing and supply chain
•
Create a more sustainable future
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report Message from
the Chairman
I am confident that we are well-positioned
to deliver on our vision to become the
most trusted retailer in Australia and grow
long-term shareholder value.
Dear Shareholder,
An important aspect of the Company’s
In April 2023, we announced the
The percentage of our team members
strengthened the management team
Four years ago, following the demerger
from Wesfarmers, we embarked on a
strategy to transform the business and
strategy is to look ahead, anticipate
change and to initiate investments
proposed acquisition of two automated
who identify as Aboriginal and/or Torres
and steered the business through the
milk processing facilities from Saputo
Strait Islander has risen to 3.5%, up from
complexities of COVID-19. On behalf of
which will support our long term success.
Dairy Australia to improve the security
3.2% in FY22.
position ourselves for long-term
In April of this year we opened our first
sustainable growth. Since then we have
Automated Distribution Centre (ADC) in
invested deeply to drive efficiencies and
Redbank, Queensland, in partnership
innovation as we seek to create value
with Witron. This is an example of
from our strategy and deliver returns to
identifying world-leading technology
shareholders.
2023 has been a year of change and
renewal as we have navigated many
challenges including disruption from
natural disasters, economic uncertainty
and other inflationary pressures.
and engineering to transform and
enhance our supply chain. The Redbank
ADC serviced more than 100
supermarkets as at the end of June and
will greatly improve efficiency, team
member safety and availability for our
stores as it becomes fully operational.
We continued to grow and enhance our
The opening of our second ADC in
core business of selling food and drinks;
Sydney will further support our operations
invested in technology and automation
when it commences, anticipated in the
in our supply chain and in our digital and
first quarter of next calendar year.
online platforms; and, on 1 May 2023, we
completed the sale of the Coles Express
fuel and convenience business to Viva
Energy, enabling us to focus on growing
our core omnichannel supermarket and
liquor businesses.
Albeit somewhat delayed, progress
continued on the construction of our two
Customer Fulfillment Centres (CFCs) in
Sydney and Melbourne as part of
enhancing our future online home
delivery business. These CFCs are being
Today, the Coles business is strong
developed in conjunction with our
and resilient – supported by more than
leading technology partner, Ocado.
120,000 dedicated team members,
1,800 stores, 8,000 suppliers and millions
of loyal customers every week.
The four Witron and Ocado sites are
major, long-term investments that
underscore the critical role technology
Importantly, the period since demerger
plays in our future in building speed and
has also seen solid financial
efficiency in our operations and
performance for shareholders. In FY23,
enhancing customer experience with
Coles delivered Net Profit After Tax of
better availability, selection and
$1,098 million1, Basic Earnings per Share
convenience.
of 82.3 cents and the Board declared a
fully franked final dividend of 30 cents
per share bringing the full year dividend
to 66 cents per share, representing an
80% dividend payout ratio and an
increase of 4.8% compared with FY22.
The Group’s 2019 Smarter Selling program
achieved its target of $1 billion in
cumulative benefits over four years,
including approximately $220 million in
FY23. The Group will carry forward this
initiative into our evolved strategy to
enable ongoing investment with our new
Simplify and Save to Invest program.
FY23
Total dividends per share
66c
FY23
Dividend payout ratio
80%
of milk supply and access capacity
to support product innovation. The
acquisition remains conditional upon
approval of the Australian Competition
and Consumer Commission and other
customary closing conditions, which
we are now aiming to complete by the
end of FY24.
Sustainability
Our scale puts us in a strong position to
support a sustainable and inclusive
Australia and during the past financial
year we continued to drive progress
These outcomes are indicative of the
strong programs driving our culture of
the Board and shareholders, I extend my
thanks to Steven for his significant
contribution to Coles.
diversity and inclusion at Coles as we
In February, we announced the
continue to build a workplace that
appointment of Leah Weckert as
reflects the communities we serve and
Steven’s successor as Managing Director
where everyone can achieve their
and Chief Executive Officer. Leah is an
potential.
Board and
leadership renewal
outstanding executive with deep
knowledge of Coles and the retail sector.
She has a proven track record of leading
teams and generating results across
During the year a number of changes in
many operating areas, making her the
the Board and senior management
right person to lead our business into the
occurred.
towards meeting our ambitions in energy
In October 2022, we were pleased to
and emissions, waste, plastics and
appoint Terry Bowen and Scott Price to
packaging, and sourcing and farming.
the Board, both of whom bring a great
The collapse of REDcycle was
deal of industry knowledge.
next phase of growth.
Looking ahead
As we look forward to the period
ahead, I am confident that we are
well-positioned to deliver on our
particularly disappointing for Coles and
However in September this year, Terry
vision to become the most trusted
our customers, many of whom had
advised the Board that he had been
retailer in Australia and grow long-term
diligently recycled their soft plastics in
invited to assume a full time senior
shareholder value.
the special purpose bins in our
executive role in the United States of
supermarkets. We continue to work as
America, which he intended to accept
part of the Soft Plastics Taskforce with
and as a result, with considerable regret,
government and industry towards
Terry anticipates retiring from the Coles
reintroduction of soft plastics recycling
Board around late February 2024.
for Australian consumers.
I would like to thank all our team
members, who have worked with
purpose and dedication to deliver strong
results and for their ongoing commitment
to Coles. I also want to thank our many
After five years on the Board, in June
suppliers, partners and millions of
During the year, we also made important
David Cheesewright retired as a Director
customers for their ongoing loyalty.
progress in diversity and inclusion.
and in October, Paul O’Malley who
We reached 41.5% of women in
leadership roles across the Group and a
company-wide gender pay parity gap
of less than 1 per cent. Coles was also
awarded Employer of Choice for Gender
Equality by the Workplace Gender
Equality Agency (WGEA) for its active
commitment to achieving gender
equality.
Pleasingly, 92% of our supermarkets
across Australia now employ Aboriginal
and Torres Strait Islander team members.
joined the Board in 2020 will also retire.
David and Paul have made substantial
contributions to Coles during a time of
significant progress for the Group. Both
have played an active role in supporting
the reshaping of the business and
positioning it for our next period of
development.
Also during the year, Steven Cain retired.
Steven had led the company through
the 2018 demerger, established the
strategic priorities for the Group,
Finally, thank you to you and all our
shareholders for your ongoing support as
we continue to build the future of Coles.
James Graham AM
Chairman,
Coles Group Limited
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1 On a continuing and discontinued operations basis.
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report
Managing Director and
Chief Executive Officer’s
Report
Dear Shareholder,
customers find value for money with our
I feel privileged to be leading Coles as its
new Managing Director and CEO at an
exciting time in our history.
Dropped & Locked range, everyday
trusted pricing, thousands of weekly
specials, our Flybuys program and our
exclusive brand portfolio. We also
In my first months as CEO, I travelled
launched MasterChef cookware and
around the country to listen to team
glassware continuity campaigns as well
members and customers about what’s
as the Harry Potter Magical Builders
important to them. During that time, I
collectables which proved popular with
have been reminded of our strengths, the
customers.
diversity of the local communities we
serve, the passion of our team members,
and the impact we can have on Australia.
We grew the sales and product lines
of our Exclusive to Coles range with
1,421 new products launched. The range
Since commencing, we have appointed
delivered sales revenue growth of 9.6%,
three new members to the Executive
with Q4 growth of 13.1%. Coles Own
Leadership Team: Chief Customer
Brand also won 103 product awards,
Officer, Amanda McVay; Coles Liquor
including 11 Product of the Year awards
Chief Executive, Michael Courtney; and
voted for by consumers.
Chief Commercial Officer, Anna Croft,
who joins us in January 2024. All have
strong experience in retail and will
support our teams to deliver for
customers.
The Flybuys program now reaches
approximately 80% of Australian
households, offering personalised offers
and experiences. In FY23, the program
continued to perform strongly with 9%
We have also refreshed our strategy, and
growth in active members and a 30%
our new purpose – ‘helping Australians
increase in points redemption.
eat and live better every day’ – renews
our ambition to be a great food and
drink business.
With our customers seeking greater
convenience in how they shop, we
expanded Rapid Click & Collect by
Our customers want Coles to deliver
another 151 stores and Home Delivery
value, quality, convenience, and great
Rapid by 463 stores. We enhanced our
service. They want consistency of
app and website with a range of new
availability, shopping that is increasingly
features, including opt-in substitutions at
personalised and technology-enabled,
check-out, dietary and brand filters, and
healthier food options, and products
the integration of Flybuys offers.
and services that are more sustainable.
Our purpose and strategy will focus us on
doing just that.
Strategic and business
highlights
Pleasingly, even as customer shopping
patterns have normalised, we continued
to grow eCommerce by 1.1% for the full
year. Over the past three years, our
eCommerce sales have grown by 116%.
In the 2023 financial year, we continued
We continued to invest and tailor our
to deliver for customers and
store network to better suit the needs of
shareholders.
Cost of living remains the number one
focus of our customers, and we helped
our customers. Our capital investment
supported the opening and
refurbishment of new and existing stores,
including Coles Local and our Black &
Group sales revenue –
continuing operations
$40.5bn
Group EBIT –
continuing operations
$1.9bn
8
White Liquorland renewals. We opened
and is now ahead of industry average2.
During the course of the year, we
a total of 17 new supermarkets and
The mysay engagement score was 10
achieved two incredible milestones:
renewed 46 stores. In Liquor, we opened
percentage points above our survey in
$50 million raised for RedKite over our
35 new stores and renewed 236.
FY19, showing strong improvement in our
10-year partnership to support children
We also made an important change
by phasing out soft-plastic shopping
We also recorded improvements in team
bags, which is estimated to remove
member safety with a 9.2% reduction in
the equivalent of 200 million meals
donated to SecondBite since 2011.
culture over a sustained period.
and families affected by cancer, and
approximately 230 million plastic
our Total Recordable Injury Frequency
Looking ahead
bags from circulation in one year.
Rate (TRIFR) compared to FY22.
As we look to the year ahead, I’m
Financial performance
Our team members come with a rich mix
excited about what we’ll achieve
Coles continued to demonstrate a strong
financial position and stable returns with
Group EBITDA and EBIT on a continuing
operations basis of $3,382 million and
$1,859 million respectively, and Group
NPAT of $1,098 million1.
Notwithstanding our investments in
value, inflationary cost pressures, and
major project implementation costs,
Group EBITDA and EBIT from continuing
operations increased by 3.8% and 1.8%
respectively, supported by Smarter
Selling benefits and a net reduction in
of backgrounds, perspectives and
together.
experience, and we are proud of the
growing diversity within Coles as a result
of programs to enhance representation,
develop pathways to senior leadership
and initiatives to foster a greater culture
of inclusion.
In FY23, we improved representation of
women in leadership to 41.5%, Aboriginal
and/or Torres Strait Islander self-
identification to 3.5%, and the number of
team members working with us with a
disability increased to 7.6%.
Our immediate focus is to restore
availability, reduce loss and provide a
high-quality fresh food offering. We’re
also continuing to deliver value for
customers and improving customer
experience.
With a focus on what matters most to
our customers, and prioritising our
investment accordingly, I am confident
that Coles will deliver on our vision to
become the most trusted retailer in
Australia and grow long-term
direct COVID-19 costs compared to the
We went big in our celebrations of
shareholder value.
prior year.
Supermarkets inflation was 6.7% across
FY23, but moderated during the year,
with Q4 inflation of 5.8% and some areas,
such as fresh produce, exiting the year in
Sydney WorldPride, supporting the event
as a presenting partner, as part of our
commitment to create a safe and
welcoming environment for LGBTQI+
people across our workforce and stores.
deflation. Population growth increased
One of the common things I hear from
by 2.1%, supporting sales, after a number
team members is their passion for
of years of low growth during the
supporting our local communities.
pandemic.
Team members and
community
The passion and dedication of our more
than 120,000 team members is one of
our greatest assets.
During the year we provided more
than $40 million in support to community
partners3. These organisations are
supporting health and medical research,
raising awareness of health and nutrition,
and building resilience in our communities.
In addition, we provided unsold, edible
I thank Steven Cain for his leadership of
Coles, the Board for their support, and
of course our team members for their
dedication to our customers and
communities.
I would also like to thank our suppliers
and customers.
And finally, to our shareholders, thank
you for your continued confidence
in Coles.
In FY23 we achieved our highest ever
food to rescue organisations such as
engagement score in our mysay
SecondBite and Foodbank to distribute
survey. This was an improvement of
through agencies and community
three percentage points year on year
food programs.
Leah Weckert
Managing Director and
Chief Executive Officer,
Coles Group Limited
On a continuing and discontinued operations basis.
1
2 Benchmarked by Culture Amp against Australian companies with more than 5,000 team members.
Includes Coles’ direct contribution of cash, time and management costs as well as fundraising from
3
customers, suppliers and team members (leverage).
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report Cost of living is the number
one focus for our customers
right now and we continue to
invest in delivering trusted value
to meet the needs of those who
are facing challenges.
Helping the family
budget
Hundreds of prices were
dropped and locked across the
year as part of the ‘DROPPED &
LOCKED’ value campaigns. More
than 4,200 products were placed
on everyday trusted low prices
and we saw continued
support for our weekly specials
and promotional programs.
Our operations
Supermarkets
Supermarkets sales growth was delivered through our value campaigns,
with our Exclusive to Coles range becoming increasingly important in
delivering trusted value to customers.
Key highlights
Total sales revenue
eCommerce sales1
Exclusive to Coles sales
revenue growth
$36.7bn
$2.8bn
9.6%
FY23 Supermarkets sales revenue of
eCommerce sales increased by 1.1% to
can filter by brand, dietary, allergens
$36.7 billion increased 6.1% compared
$2.8 billion with sales growth
and bought before characteristics, and
to FY22.
underpinned by 5% growth in traffic to
integration of Flybuys offers in the app.
Sales growth was delivered through the
‘DROPPED & LOCKED’ value campaigns
and the successful execution of trade
plans, including festive events such as
Coles’ digital assets, as well as network
This has driven loyalty and improved the
expansion, particularly in the immediacy
overall experience for our online
areas of Rapid Click & Collect and Home
customers.
Delivery Rapid.
For further information on Supermarkets
Easter, Christmas and Mother’s Day.
Significant enhancements were also
please refer to pages 30-31
Exclusive to Coles sales increased by
9.6% to $12.4 billion in FY23. Sales
accelerated throughout the year with
hundreds of Coles Own Brand products
included in our value campaigns. The
Coles Finest range was also expanded to
cater for customers seeking restaurant
quality products.
More than 1,400 Exclusive to Coles
products were launched during the year,
including through an expanded Coles
PerForm range, developed in partnership
with Sports Dietitians Australia, to help
customers fuel their fitness goals. To
further promote well balanced and
healthy eating for our customers, the
Joyful low-sugar snack brand was also
launched with bars containing less than
2 grams of sugar per serve.
made to the Coles app and website
during the year including the capability
to opt-in to substitutions at check-out in
the website, while key features added to
the Coles app included digital receipts,
an enhanced filter function where you
The Coles Online network was
expanded during the year,
particularly in the immediacy
areas of Rapid Click & Collect
and Home Delivery Rapid. Rapid
Click & Collect is now available
in more than 600 stores and
Home Delivery Rapid is now
available from 480 stores.
1 eCommerce gross retail sales includes Liquor sold through coles.com.au.
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Coles Group 2023 Annual Report
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Coles Group 2023 Annual Report Our operations
Liquor
Continued growth in the Exclusive Liquor Brands (ELB) portfolio and
eCommerce as customers focus on value and more immediacy offers.
Key highlights
Total sales revenue
eCommerce sales1
Exclusive Liquor Brand sales
revenue growth
$3.6bn
$203m
8.5%
FY23 Liquor sales revenue of $3.6 billion
relevant drinks specialist’, a focus on
was flat compared to FY22, as the
optimising range and space, particularly
business cycled COVID-19 related
in local products, has been a core part
on-premises closures and restrictions in
of the transformation of the Liquorland
the first half, before returning to growth
fleet.
in the second half.
During FY23, 259 new ELB and 627 new
The sales performance was driven by a
local lines were added to the portfolio. In
strong performance in the Liquorland
addition, the ELB portfolio received more
banner, supported by the completion of
than 500 awards, including the
215 Liquorland Black & White renewals as
Tasmanian Gin of the Year trophy for
well as the opening of 35 new Liquor
Pure Origin Tasmanian Dry Gin at the
stores. In line with Liquor’s strategy to ‘be
Melbourne International Spirits
a simpler, more accessible and locally
Competition and Tinnies Pale Ale being
Spotlight on Tasmania
Pure Origin Tasmanian Dry Gin won the
Tasmanian Gin of the Year trophy at the
Melbourne International Spirits Competition.
awarded the Best English Beer Pale Ale
Trophy in the Pale Ale category at the
World Beer Awards Competition.
eCommerce sales revenue of $203 million
increased by 22.6% compared to FY22
driven by on-demand delivery, which is
now available from more than 660 stores,
and the introduction of express delivery
through DoorDash and UberEats.
For further information on Liquor please
refer to page 32
Coles Liquor
Coles Liquor is a trusted retailer with three iconic trading banners, Liquorland,
First Choice Liquor Market and Vintage Cellars. Its strategy is ‘to be a simpler,
more accessible and locally relevant drinks specialist’.
Coles Liquor offers an extensive range of wines, spirits, beers and Ready-to-
Drink products.
1
eCommerce gross retail sales excludes liquor sold through coles.com.au which is reported in Supermarkets eComemerce sales, and B2B sales.
12
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report How we
create value
To achieve our strategy, we seek to be purpose-led and need to successfully manage
the environmental, social and governance risks and opportunities in our operations
and across our value chain. Ensuring the long-term sustainability of our operations is
fundamental to building trust with our customers and community and in delivering
ongoing growth and value for our shareholders.
Value creation for our stakeholders
Our value drivers
Products and services
Team members
Financial
Delivering trusted value and quality for
With more than 120,000 team members,
Strong balance sheet and disciplined
our customers via our extensive exclusive
Coles is one of Australia’s largest private
capital allocation framework.
brand portfolio and proprietary products.
sector employers.
Customers
Network and supply chain
Digital and technology
Investing in eCommerce capabilities
We manage approximately 17 million
Our extensive retail, supply and
and leveraging technology in supply
transactions across our store and digital
distribution network delivering quality
chain and stores to improve productivity.
platforms each week.
products and services for our customers
no matter how they choose to shop.
Suppliers
Customers
Team members
Communities
Investors
Environment
We engage with more than
Customer satisfaction and insights
Our team members reflect the
We are investing in partnerships
We generate strong cash flow and
We understand our responsibility
8,000 suppliers with a focus on
inform how we can deliver the best
diverse communities in which we
and programs that support the
maintain a flexible balance sheet so
to minimise our environmental
responsible and ethical sourcing
products that meet differing
operate. Our aim is to create an
physical and mental health of
that we can invest, grow and deliver
footprint, and help our suppliers
including protecting human rights
customer needs including tailored
inclusive environment where all
Australians, particularly children,
returns for our shareholders.
and customers do the same. We
and animal welfare.
product ranges, quality and value.
team members feel safe,
respected and valued.
as well as improving access to food
for the most vulnerable, conserving
our environment, and helping local
communities in times of natural
disaster.
$32.3bn
suppliers and service spend
>6,000
Exclusive to Coles Products
$5.1bn
payments and benefits
with >4,200 products on everyday
to team members
$40.7m
total community support1
$883m
dividends paid to
shareholders in FY232
trusted low prices, 1,000s of
weekly specials and 100s of
products ‘DROPPED AND LOCKED’
are committed to building the
resilience of our business against
climate change and biodiversity
impacts.
27.7%
reduction in Scope 1 and 2
emissions from FY223 and
Scope 3 target validated by
Science Based Targets initiative
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15
1
Includes Coles’ direct contribution of cash, time and management costs as well as fundraising from customers, suppliers and team members (leverage). In-kind
donations valued at $133m is not included in this number. Coles’ community support is verified by the Business for Societal Impact (B4SI) framework.
2 Comprises the FY22 final dividend of 30.0 cents per share and FY23 interim dividend of 36.0 cents per share.
3 33.5% reduction from FY20 baseline.
Coles Group 2023 Annual ReportColes Group 2023 Annual Report Sustainability
The achievement of our sustainability strategy is integral to our ability to
deliver on our vision to become the most trusted retailer in Australia and
grow long-term shareholder value.
FY23 highlights
During FY23 we have continued to make
detailed information on our progress
good progress against our sustainability
available in our 2023 Sustainability Report.
Reduction in Scope 1 and 2
emissions from FY22
strategy, particularly in relation to
introducing more sustainable
Together to zero
packaging, reducing our operational
Energy and emissions
27.7%
Improvement in TRIFR
from FY22
9.2%
Equivalent meals donated to
SecondBite and Foodbank
(20.3m kg, valued at $133m)
40.1m1
emissions, fostering diversity and
inclusion and supporting communities.
We have continued to work towards our
target of sourcing 100% renewable
Our sustainability strategy, themed under
electricity by end of FY25 through onsite
two key focus areas of ‘Together to Zero’
solar and large-scale generation
and ‘Better Together’, sets our ambition
certificate (LGC) arrangements which
to reduce our impact on the
match our consumption. In July 2022, we
environment and work together with our
commenced our agreement with
team members, suppliers, customers and
CleanCo in Queensland to purchase
community to make a real difference.
electricity and LGCs and began our
In FY24 we will be refreshing our
sustainability strategy, both to ensure we
long-term agreement with Lal Lal Wind
Farms in Victoria.
continue responding to the issues that
In addition to our renewable electricity
matter most to our stakeholders, and to
agreements, we entered into a three-
manage the sustainability risks and
year arrangement with Origin with the
opportunities we expect to emerge in
aim of installing 20 MW of solar panels on
the future. The updated strategy will
top of 100 stores, with batteries to be
reflect our recently refreshed purpose
installed at one third of the stores to
and focus our action on high impact
capture and store excess electricity
sustainability and community initiatives.
generated on-site.
We understand that if we are to effect
We have reduced our Scope 1 and 2
real change and deliver positive social
emissions from FY22 by 27.7% (33.5%
and environmental outcomes we cannot
reduction from FY20 baseline).
work in isolation – only by working
together with our team members,
customers, suppliers and other partners
will we be able to help create a more
sustainable future.
While continuing to reduce our
operational emissions, we are also
focused on reducing our Scope 3
emissions. We have recently announced
we will work in partnership with more than
A summary of our performance is
75% of our suppliers, by spend, to help
discussed on the following pages, with
them set science-based emissions
Pictured: John Said, CEO of Fresh Select Australia speaking to children as part of the ‘Explore a Farm’ program.
16
1
In addition to unsold edible food, the figure also includes additional bulk food and grocery donations to
SecondBite and Foodbank.
17
Coles Group 2023 Annual ReportColes Group 2023 Annual Report Better together
Sourcing and farming
Working together with our farmers,
suppliers and industry partners, we are
seeking to reduce negative
environmental and social impacts
associated with our business.
Ethical sourcing
Fundamental to the way we operate is our
commitment to respecting and protecting
human rights throughout our own
business, as well as in our supply chains.
More than 2,000 suppliers are in scope of
our Ethical Sourcing Program (as at end
FY23) and more than 1,100 independent
ethical audits have been conducted.
More than 4,900 ethical sourcing
audit-related non-conformances were
remediated in FY23.
Sustainable products and ingredients
We seek independent certification or
verification of Coles Own Brand products
associated with higher environmental
and labour risks.
In recognition of the impacts of food
production on nature and biodiversity,
building on work commenced in FY22 to
better understand the impacts of our
Coles Own Brand products, this year we
completed a deeper assessment on the
commodities identified as having the
highest potential environmental impacts
– this included meat, eggs and dairy, as
well as soy in livestock feed, sugar, rice
and wheat. This work has provided Coles
with valuable insights that will inform
further enhancement of our Responsible
Sourcing Program.
Supporting Australian producers
We want to build strong, multi-
generational, collaborative relationships
with Australian farmers and producers.
Their hard work and dedication enables
us to provide high-quality products to
our customers. In FY23, more than 96% of
fresh produce, by volume, was sourced
from suppliers all over Australia.
Coles’ ongoing commitment to
sustainable dairy farming is evidenced
by our ongoing offer to farmers of either
one, two or three-year agreements,
providing them with pricing transparency
Pictured: Coles team members, including store manager Jake, at the opening of the new Coles Local
Toorak Village store.
reduction targets by the end of FY27.
The Taskforce has released a Roadmap
Whether a supplier is in the early stages of
to Restart, outlining the steps needed to
planning their emission reductions, or
launch a new supermarket soft plastics
they have already made significant
collection scheme.
progress, we are committed to working
together to support the net zero transition.
Unfortunately, the cessation of the
REDcycle program had a negative
For further information on how Coles is
impact on our target to support industry
managing the risks and opportunities
to achieve 100% recyclable, reusable or
associated with climate change, see
compostable packaging by 2025. At the
pages 43-52.
Waste
As a large retailer we recognise we have
an important part to play in reducing
waste (including food waste) and
packaging in support of Australia’s
transition to a circular economy.
end of FY23, 83.8% of Coles Own Brand
packaging was recyclable, down from
94.6% in FY22.
With respect to the progress we have
made to reduce waste across our own
operations, in FY23 we diverted 84.0% of
the Group’s solid waste from landfill
(against a target of 85% by the end of
One of the most significant challenges this
FY25), compared with 82.5% in FY22 and
year was the collapse of the REDcycle soft
80.6% in FY21.
plastics recycling program in November
2022. It was disappointing not only for
Coles, but also for the thousands of
customers who were committed to
collecting and returning their soft plastics
to our stores for recycling.
While continuing to focus on reducing
food waste in store, we are also
supporting our producers by seeking to
use as much of the crop yield as possible,
for example, through our I’m Perfect fruit
and vegetable range. Unsold, edible
Since the collapse of the program and
food is also donated to our food rescue
following approval from the Australian
partners, SecondBite and Foodbank, for
Competition and Consumer Commission,
distribution through community food
Coles has been working as part of the
programs. Our partnership with
Soft Plastics Taskforce with Government
SecondBite reached a major milestone
and industry towards the reintroduction
this year – together we achieved the
of soft plastics recycling for Australian
equivalent of more than 200 million meals
consumers.
donated since 2011, helping to support
vulnerable Australians.
and income certainty. This year Coles
leadership and great development
In FY23, we introduced a new safety
also launched the Dairy Farm
opportunities.
Sustainability Accelerator Fund,
allocating $1.5 million per year for FY24
and FY25 to fund sustainability initiatives
across the Coles dairy farmer group.
This year we achieved our highest ever
employee engagement score in our
mysay engagement survey, an increase
of three percentage points from FY22.
The Coles Nurture Fund – helping
Our team members also told us that
Australian food and liquor producers
Coles is a great place to work because
innovate and grow – has now awarded
they feel a sense of belonging, and that
metric across the Group. The Safety
Index comprises ten key lead and lag
safety indicators applicable to all
business units. The Index includes TRIFR, in
addition to other metrics involving the
proactive identification and
management of safety risks, including
training and return to work programs.
more than $33 million in grants to farmers
they can make a positive difference to
Supporting communities
and producers since 2015 for initiatives to
their teams, customers and communities.
across Australia
reduce food waste, expand local
production, and protect the
A team that is better together
Coles has a long track record of
environment. In FY23, Coles invested
We are in the final year of our five-year
$3.6 million in grants to support eight new
‘A Team that is Better Together’ strategy,
projects, including a plan to develop a
which incorporated 15 performance
supporting the communities in which we
live and work, and this year contributed
$40.7 million in community support1.
carbon neutral banana range, a system
improvement targets under our five focus
We are investing in partnerships and
to divert packaged food waste from
areas of Belonging, Gender equity,
programs that support the physical and
landfill, and a new farrowing system to
Indigenous engagement, Accessibility
mental health of Australians, particularly
improve animal welfare standards in
and Pride.
pork production.
We continued to focus on gender
Protecting animal welfare
representation in the workforce, with every
children, as well as improving access to
food for the most vulnerable, supporting
farmers and producers, conserving our
environment, and helping our local
communities in times of natural disaster.
We care about how the food we sell is
produced and sourced, and we are
committed to working with farmers and
food producers over the long term, while
function across the Group now having a
gender balance plan. Pleasingly, this year
we achieved 41.5% women in leadership,
FY23 fundraising highlights include:
exceeding our target of 40%.
safeguarding animal welfare. Where
Our Aboriginal and Torres Strait Islander
possible, we source higher welfare
workforce representation increased from
meats, eggs and milk for Coles Own
3.2% to 3.5% this year. While this was short
FightMND
Redkite
Brand products.
This year we progressed our commitment
towards phasing out all caged shell eggs
in store by 2025. All Coles Own Brand
shell eggs sold nationally are cage-free.
We have had a Coles Own Brand
of our 5% target, we remain committed
to Aboriginal and Torres Strait Islander
team member representation across our
Curing Homesickness
workforce and we continue to drive
Providing relief in times
recruitment, retention and leadership
of natural disaster
programs in this area.
Coles again stepped up during the year
cage-free (barn) egg offering in Western
This year, Coles was a presenting partner
to provide aid to communities directly
Australia since 2019 and in FY23 we
of WorldPride and Sydney Gay and
affected by natural disasters.
expanded these products to the rest of
Lesbian Mardi Gras, and we launched
the states, achieving a major milestone
the ‘Everyone is welcome at our table’
of selling more than six million cartons
campaign, providing a catalyst for stores
from the newly launched range.
across the country to celebrate and
show support.
Coles Online delivered more than 7,500
essential groceries and sanitary products
to the evacuation centre at Forbes High
School, and hampers to residents in
Eugowra, New South Wales, following
$8.6m
$3.8m
$1.7m
Team and community
Great place to work
Our team members reflect the diverse
communities in which we operate, and
we pride ourselves on providing an
engaging environment, inspiring
Health, safety and wellbeing
severe flooding. In Victoria, we donated
We are committed to providing our team
members, customers and visitors with a
safe place to work and shop, and we
seek to foster a culture that supports
both physical and mental wellbeing.
44 pallets of essential groceries, nappies
and cleaning products to the local
Emergency Relief Centre in Shepparton,
and five pallets to the Njernda Aboriginal
Corporation in Echuca for residents.
For more information, please refer to the 2023 Sustainability Report,
available at www.colesgroup.com.au
18
1
Includes Coles’ direct contribution of cash, time and management costs as well as fundraising from
customers, suppliers and team members (leverage). In-kind donations valued at $133m is not included in this
number. Coles’ community support is verified by the Business for Societal Impact (B4SI) framework.
19
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
Governance
Board
of Directors
We are committed to the highest standards of corporate governance
and believe a robust and transparent corporate governance framework
is central to the success of our business.
Coles Board
Audit and Risk Committee
Nomination Committee
People and Culture Committee
Managing Director and Chief Executive Officer
Executive Leadership Team
Coles Team Members
Our corporate governance
framework
Role and
responsibilities
The Board provides leadership and
The Board has a charter that outlines its
approves the strategic direction and
responsibilities, including powers that are
objectives of the Group in the long-term
expressly reserved to the Board, and
interests of, and to maximise value to,
powers that are specifically delegated
shareholders.
to the CEO and management.
The Board and management team are
The Board has established three standing
committed to maintaining and building
committees and has delegated to each
on the confidence of our shareholders,
committee a number of duties to assist
our customers, our suppliers, our team
the Board in exercising its responsibilities
members and the broader community
and discharging its duties. Together, they
as we continue to strive to achieve our
play an important role in assisting the
vision to become the most trusted
Board’s oversight and governance of the
retailer in Australia and to grow long-
Group’s operations.
term shareholder value.
Each committee has a separate charter
that sets out the role and responsibilities
of that committee as well as the
membership and other requirements for
the operation of the committee.
The CEO, with the support of her direct
reports, is responsible for the day-to-day
management of the Group and its
business. Under the Board Charter, the
Board delegates all powers to manage
the day-today business of the Group to
the CEO, apart from the powers reserved
specifically to the Board and any
specific delegations of authority
approved by the Board.
James Graham AM
Chairman of the Board
Chairman of the Nomination Committee
and Member of the People and Culture
Committee
Leah Weckert
Managing Director and
Chief Executive Officer
Terry Bowen
Member of the Nomination Committee
and the Audit and Risk Committee
Jacqueline Chow
Member of the Nomination Committee
and the Audit and Risk Committee
Abi Cleland
Member of the Nomination Committee
and the People and Culture Committee
Richard Freudenstein
Chairman of the People and Culture
Committee and Member of the
Nomination Committee
Paul O’Malley
Chairman of the Audit and Risk
Committee and Member of the
Nomination Committee
Scott Price
Member of the Nomination Committee
and the People and Culture Committee
Wendy Stops
Member of the Nomination Committee
and the Audit and Risk Committee
Coles’ 2023 Corporate Governance Statement contains a comprehensive
overview of our corporate governance framework and highlights and is
available at www.colesgroup.com.au/corporategovernance
Biographical details of the Board of Directors can be found on pages 53-55.
20
21
Coles Group 2023 Annual ReportColes Group 2023 Annual Report Executive
Leadership Team
Operating and
Financial Review
The Operating and Financial Review
other relevant environments that will exist
Non-IFRS information
relates to Coles Group Limited (‘the
and affect the Group’s business and
Company’) and its controlled entities
operations in the future. The Group does
(together, ‘Coles’, ‘Coles Group’, or ‘the
not give any assurance that the
Group’).
Forward-looking statements
assumptions will prove to be correct. The
forward-looking statements involve
known and unknown risks, uncertainties
This report contains forward-looking
and assumptions, that could cause the
statements in relation to the Group,
actual results, performance or
including statements regarding the
achievements of the Group to be
Group’s intent, belief, goals, objectives,
materially different from the relevant
opinions, initiatives, commitments or
statements. There are also limitations with
current expectations with respect to the
respect to scenario analysis, and it is
Group’s business and operations, market
difficult to predict which, if any, of the
conditions, results of operations and
scenarios might eventuate. Scenario
financial conditions, and risk
analysis is not an indication of probable
management practices. This report also
outcomes and relies on assumptions that
includes forward-looking statements
may or may not prove to be correct or
regarding climate change and other
eventuate.
environmental and energy transition
scenarios. Forward-looking statements
can generally be identified by the use of
words such as ‘forecast’, ‘estimate’,
‘plan’, ‘will’, ‘anticipate’, ‘may’, ‘believe’,
‘should’, ‘expect’, ‘intend’, ‘outlook’,
‘guidance’ and other similar expressions.
Readers are cautioned not to place
undue reliance on forward-looking
statements. Except as required by
applicable laws or regulations, the
Group does not undertake to publicly
update, review or revise any of the
forward-looking statements or to advise
Any forward-looking statements are
of any change in assumptions on which
based on the Group’s current knowledge
any such statement is based. Past
and assumptions, including with respect
performance cannot be relied on as a
to financial, market, risk, regulatory and
guide for future performance.
This report contains International
Financial Reporting Standards (‘IFRS’)
and non-IFRS financial information. IFRS
financial information is financial
information that is presented in
accordance with all relevant
accounting standards. Non-IFRS
financial information is financial
information that is presented other than
in accordance with relevant accounting
standards and may not be directly
comparable with other companies’
information.
Any non-IFRS financial information
included in this report has been labelled
to differentiate it from statutory or IFRS
financial information. Non-IFRS measures
are used by management to assess and
monitor business performance at the
Group and segment level, and should
be considered in addition to, and not as
a substitute for, IFRS information.
Operating metrics that are prepared on
a non-IFRS basis have been included in
the segment commentary to support an
understanding of comparable business
performance. Non-IFRS information is not
subject to audit or review.
Leah Weckert
Managing Director and
Chief Executive Officer
Charlie (Sharbel Raymond) Elias
Chief Financial Officer
Matt Swindells
Chief Operations & Sustainability Officer
David Brewster
Chief Legal & Safety Officer
Michael Courtney
Chief Executive, Liquor
John Cox
Chief Technology Officer
Sally Fielke
General Manager Corporate &
Indigenous Affairs
Ben Hassing
Chief Digital Officer
Amanda McVay
Chief Customer Officer
Daniella Pereira
Group Company Secretary
Kris Webb
Chief People Officer
22
23
Coles Group 2023 Annual ReportColes Group 2023 Annual Report Business Model and Strategy
Coles is one of Australia’s leading
Financial Services. Coles is also a 50%
Inspire Customers
benefits of approximately $220 million.
Win Together
The Group’s core competencies include
with cost of living pressures through our
retailers, with an extensive national
shareholder of Flybuys, a loyalty program
supermarket and liquor store footprint
with more than nine million active
and a range of digital platforms allowing
members.
us to deliver a full service omnichannel
experience for customers. We employ
more than 120,000 team members,
engage with more than 8,000 suppliers,
have more than 430,000 direct
shareholders and we welcome millions
of customers through our store network
and digital platforms every week.
merchandising, product development
and supplier relationships, marketing,
customer service and maintaining and
operating a national store and digital
network. Coles also operates an
integrated supply chain, including
logistics, and a national distribution
Our vision is to become the most trusted
centre network.
retailer in Australia and grow long-term
shareholder value.
On 21 September 2022, the Group
entered into an agreement to sell its
The Group’s reportable segments from
Coles Express fuel and convenience
continuing operations are:
retailing operations to Viva Energy Group
• Supermarkets: fresh food, groceries
and general merchandise retailing
(includes Coles Online and Coles
Financial Services)
• Liquor: liquor retailing, including
online delivery services.
Other business operations that are not
separately reportable, such as Property
and a product supply arrangement, as
well as costs associated with enterprise
Limited (‘Viva Energy’), which resulted in
the Express business being classified as a
discontinued operation from that date.
Consequently, Express is no longer
presented in the segment disclosures
from continuing operations for the
current and prior periods. The sale
completed on 1 May 2023.
The Group’s four-year “Winning in our
second century” strategy was set in FY19
and was in place until the end of FY23. In
functions, which include Insurance and
FY23, Coles achieved several key
Treasury, are included in Other.
Coles is one of the most trusted brands1
in Australia. Coles’ brand portfolio
includes Coles Group, Coles, Coles
Local, Liquorland, First Choice Liquor
Market, Vintage Cellars and Coles
milestones against this strategy which
are detailed below. Building on these
strong foundations, we have refreshed
our strategy as set out in the Looking to
the Future section.
Our brands
Coles has continued to invest in trusted
value to ease the burden for those
households experiencing challenges
value campaigns. The continued
success of our exclusive brand offering is
supported by the launch of 1,421 new
Exclusive to Coles products and 259
Exclusive Liquor Brand (‘ELB’) products
with strong sales growth across these
portfolios. Coles received 103 Coles Own
Brand product awards and 511 Exclusive
Liquor Brand awards. In addition, we
expanded our Coles Finest premium
range to include products such as Coles
Finest Beef and Margaret River Shiraz
Sausages and the Coles Finest lamb
range. Alongside this, we launched our
‘LOCKED’ and ‘DROPPED & LOCKED’
value campaigns. These campaigns
include a range of key pantry staples
and provide certainty for customers who
are shopping to a budget. They have
proven popular, particularly in light of
the inflationary environment and rising
cost of living pressures and have been at
the centre of our commitment to deliver
trusted value to our customers.
Smarter Selling
This year, the business successfully
achieved our target of $1 billion of
cumulative Smarter Selling benefits
across our four-year program that was
established in 2019, delivering in year
These benefits have helped to offset
rising cost pressures within the business
and allowed us to reinvest in our value
proposition and in our growth drivers
such as digital.
Coles achieved a major milestone in
modernising its supply chain with the
opening of our first Automated
Distribution Centre (‘ADC’) located in
Redbank, Queensland and initial
commissioning work commencing at
the New South Wales ADC in line with
schedule. Our investment commenced
in FY19 when we entered into our
exclusive partnership with Witron, a
Coles has continued to make progress
against key areas of our sustainability
strategy. We were recognised as an
Employer of Choice for Gender Equality
by the Workplace Gender Equality
2023, we phased out soft-plastic
shopping bags in-store and online, a
move that is estimated to remove 230
million plastic bags from circulation in
one year2.
Detailed information on our sustainability
Agency. We also reached our target to
performance will be available in our
have more than 40% of our leadership
2023 Sustainability Report.
positions filled by women and have
recorded our highest ever mysay
engagement score, three percentage
points above the May 2022 survey and
10 percentage points above the FY19
survey. Coles has achieved a 9.2%
reduction in Total Recordable Injury
Frequency Rate (‘TRIFR’) compared to
Portfolio Updates
In April 2023, Coles entered into a
binding agreement to acquire two
automated milk processing facilities from
Saputo Dairy Australia, to improve the
security of milk supply and accessing
capacity to facilitate growth through
global leader in automated distribution
FY22. This was delivered through a focus
product innovation. The acquisition of
centres. We expect this investment to
on risk management, including manual
these sites is subject to Australian
deliver long-term structural cost
handling and mental wellbeing. Coles
advantage in our supply chain through
also invested in partnerships and
automation, data and technology, as
programs that support communities
Competition and Consumer Commission
(‘ACCC’) approval and other customary
closing conditions. As referenced earlier,
well as improvements in safety,
availability and sustainability.
environment.
across Australia and help conserve the
the Group also completed the
In Supermarkets, 17 new stores were
opened and 46 renewals were
Coles has maintained its focus on
reducing emissions and waste, making
completed during the year, including our
further progress towards our target to
innovation store at Southland, Victoria. In
reduce combined Scope 1 and 2
Further information can be found in the
Liquor, we opened 35 new stores and
greenhouse gas emissions by more than
Group Performance section.
renewed 236, including opening our first
75% (from an FY20 baseline) by the end
Liquorland in Tasmania and renewing our
of FY30. We also set a Scope 3 supplier
475th Black & White Liquorland store in
engagement target, validated by the
Ocean Grove, Victoria.
Science Based Targets initiative1. In June
divestment of our fuel and convenience
retailing business in May 2023, enabling
us to focus on growing our omnichannel
supermarket and liquor businesses.
Supermarkets
Liquor
1 December 2022 Roy Morgan ‘Net Trust’ rankings
2 Based on unit sales over 52 week period until 30 April 2023.
24
25
Pictured: Team members Lily and Lachlan. In FY23 Coles was recognised as an Employer of Choice for Gender Equality.
1
The Science Based Targets initiative (‘SBTi’) is a partnership between CDP, the United Nations Global Compact, World Resources Institute and the World Wide Fund
for Nature. It provides an independent assessment and validation of net-zero science-based targets in line with a 1.5°C future.
Coles Group 2023 Annual ReportColes Group 2023 Annual Report Group Performance
Group sales revenue ($m)
Supermarkets
Liquor
Other
Sales revenue – continuing operations
Express – discontinued operations1
Total Group sales revenue
n/m denotes not meaningful.
1 Express FY23 sales are for the ten months until completion on 1 May 2023.
Group EBIT ($m)
Supermarkets1
Liquor
Other
EBIT – continuing operations
Financing costs
Income tax expense
Profit from continuing operations
Profit from discontinued operations, after tax2
Net profit after tax
n/m denotes not meaningful.
FY23
36,746
3,610
127
40,483
988
41,471
FY23
1,765
157
(63)
1,859
(394)
(423)
1,042
56
1,098
FY22
34,624
3,613
-
38,237
1,132
39,369
FY22
1,715
163
(51)
1,827
(360)
(422)
1,045
3
1,048
CHANGE
6.1%
(0.1%)
n/m
5.9%
(12.7%)
5.3%
affected salaried team members
Following further consideration of the
further remediation may be necessary,
covered by the GRIA.
issues as they have evolved, Coles
and costs associated with this matter
In December 2021, the FWO filed
proceedings in the Federal Court of
Australia which include issues relating to
the interpretation and application of
various provisions of the GRIA and the
Fair Work Act 2009 (Cth). FWO alleges
that Coles is obligated to pay a further
$108 million in remediation payments to
7,687 team members for the period 1
announced on 2 June 2023 that it
remain uncertain as at the date of this
intends to conduct a further remediation
report.
relating to the reconciliation of available
records of the days and hours of work of
salaried supermarket managers. A
provision of $25 million was subsequently
recognised which is included in the
provision balance of $37 million noted in
the first paragraph of this section.
In May 2020, a class action proceeding
was filed in the Federal Court of Australia
in relation to payment of Coles
managers employed in supermarkets.
This matter was heard in conjunction
with the FWO proceedings and
judgment has also been reserved. The
CHANGE
January 2017 to 31 March 2020. This
The FWO matter was heard in a seven
potential outcome and total costs
2.9%
(3.7%)
23.5%
1.8%
9.4%
0.2%
(0.3%)
n/m
4.8%
group is a subset of the award covered
week trial that commenced on 5 June
associated with this matter remain
salaried employees which were assessed
2023 and judgment is pending. The
uncertain as at the date of this report.
as part of the 2020 review by Coles.
judgment is expected to include
Additionally, the period of time covered
consideration of threshold issues,
in the proceedings is a lesser period than
including interpretation of the GRIA and
the period covered in Coles’
Fair Work Act provisions. As such, the
remediation.
potential outcome, extent to which
1
2
Includes major project implementation operating expenditure relating to ADCs and CFCs (FY23: $58 million, FY22: $32 million).
FY23 includes impacts from the Express divestment including depreciation and amortisation ceasing from the date the assets were held for sale, transaction costs
and a $16 million loss on completion.
Earnings Per Share and dividends
Basic Earnings per Share (‘EPS’) from continuing operations was 78.1 cents, a 0.6% decrease from the prior year.
Highlights
• Sales revenue growth from continuing
Performance overview from
continuing operations
operations of 5.9% to $40,483 million.
Group sales revenue from continuing
• EBIT growth from continuing
operations of 1.8% to $1,859 million.
• Cash realisation of 102% and net debt
of $521 million.
• Fully-franked final dividend of 30.0
cents per share declared, taking total
dividends in relation to FY23 to 66.0
cents.
operations of $40,483 million increased
by 5.9% with growth in Supermarkets
sales revenue of 6.1% and Liquor sales
revenue broadly flat, due to cycling
COVID-19 elevated demand in the prior
year. Group sales revenue from
million with interest on lease liabilities
increased due to a combination of new
leases, including the Redbank ADC, and
higher borrowing costs impacting lease
renewals. Also contributing to higher
financing costs was interest on debt and
borrowings which increased as a result of
higher interest rates on the short-term
revolving debt facilities.
continuing and discontinued operations
of $41,471 million increased by 5.3%.
Award covered salaried team
member review
On 1 May 2023, the Group completed
increased by 1.8% supported by Smarter
Group EBIT from continuing operations
In February 2020, Coles announced it
was conducting a review into the pay
the sale of its fuel and convenience
Selling benefits and a net reduction in
arrangements for all team members who
retailing business to Viva Energy for $319
direct COVID-19 costs compared to the
received a salary and were covered by
Profit for the period ($m)
Continuing operations
Discontinued operations
Total profit for the period
Weighted average number of ordinary shares for basic EPS (shares, million)
Weighted average number of ordinary shares for diluted EPS (shares, million)
EPS attributable to equity holders of the Company
Basic EPS (cents)
Diluted EPS (cents)
EPS attributable to equity holders of the Company from continuing operations
Basic EPS (cents)
Diluted EPS (cents)
The Board has determined a fully franked final dividend of 30.0 cents per share (cps).
million ($300 million proceeds and $19
prior year.
million working capital adjustment) and
has assigned leases, which represented
a liability at completion, of $728 million.
This resulted in Express being classified as
a discontinued operation in the FY23
Financial Report. The divestment enables
the Group to focus on growing its
omnichannel supermarket and liquor
businesses.
Major project implementation operating
expenditure of $58 million was incurred
during the year in relation to the two
ADCs and two automated Customer
Fulfilment Centres (‘CFCs’), up from $32
million in FY22. This was lower than
previously forecast largely due to delays
in the construction and commissioning
the General Retail Industry Award 2010
(‘GRIA’). The review assessed the
remuneration paid to 15,011 team
members against the GRIA. Coles
conducted a remediation program, and
to date Coles has incurred $13 million of
remediation costs. A provision of $37
million (FY22: $12 million) is reflected in
the FY23 financial statements.
In respect of the year:
FY23
Interim dividend
Final dividend
FY22
Interim dividend
Final dividend
of the automated CFCs. Depreciation in
Following the announcement in
relation to the Redbank ADC of $15
February 2020, the Fair Work
million was also incurred during the year.
Ombudsman (‘FWO’) commenced an
Financing costs from continuing
operations increased by 9.4% to $394
investigation into Coles’ pay
arrangements for a group of the
FY23
FY22
1,042
56
1,098
1,334
1,338
82.3
82.1
78.1
77.9
1,045
3
1,048
1,330
1,331
78.8
78.7
78.6
78.5
FRANKED
AMOUNT PER
CPS
SECURITY
36.0 cents
36.0 cents
30.0 cents
30.0 cents
33.0 cents
33.0 cents
30.0 cents
30.0 cents
26
27
Coles Group 2023 Annual ReportColes Group 2023 Annual Report Balance Sheet
Cash Flow
A summary of key balance sheet accounts for the Group:
Summary cash flows of the Group:
$m
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Other
Total assets
Liabilities
Trade and other payables
Provisions
Interest-bearing liabilities
Lease liabilities
Other
Total liabilities
Net assets
Trade and other receivables increased
to $605 million largely driven by trade
Right-of-use assets decreased to $6,507
million primarily as a result of the
receivables relating to a product supply
divestment of the Express business.
arrangement and an increase in GST
receivable.
Inventories decreased to $2,323 million
largely driven by the divestment of the
Express business.
Property, plant and equipment
increased to $4,985 million largely
Intangible assets increased to $2,035
million driven by the Group’s continued
investment in technology, partly offset by
amortisation for the year.
FY23
FY22
CHANGE
$m
FY23
FY22
CHANGE
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest paid
Interest component of lease payments
Interest received
Income tax paid
Net cash flows from operating activities
Net cash flows used in investing activities
Net cash flows used in financing activities
Net increase/(decrease) in cash and cash equivalents
44,043
(40,439)
(57)
(372)
2
(370)
2,807
(1,000)
(1,799)
8
41,887
(38,309)
(41)
(363)
1
(485)
2,690
(1,142)
(1,746)
(198)
5.1%
5.6%
39.0%
2.5%
100%
(23.7%)
4.3%
(12.4%)
3.0%
n/m
Net cash flows from operating activities increased to $2,807 million reflecting an increase in EBITDA and a decrease in income tax
paid as a result of FY22 income tax refunds received.
Net cash flows used in investing activities decreased to $1,000 million, largely driven by the net proceeds from the sale of the
Express business offset by an increase in the Group’s annual capital program.
597
605
2,323
4,985
6,507
2,035
740
500
589
470
2,448
4,807
7,199
1,864
822
637
18,292
18,836
4,434
1,281
1,118
7,849
254
14,936
3,356
4,335
1,278
1,095
8,681
323
15,712
3,124
1.4%
28.7%
(5.1%)
3.7%
(9.6%)
9.2%
(10.0%)
(21.5%)
(2.9%)
2.3%
0.2%
2.1%
(9.6%)
(21.4%)
(4.9%)
7.4%
Capital management
Interest-bearing liabilities reflect
external borrowings and debt capital
funding commitments.
At 25 June 2023, Coles’ average debt
maturity was 5.0 years, with undrawn
facilities of $2,303 million. Coles remains
Lease liabilities decreased to $7,849
million as a result of the sale of the
committed to maintaining diversified
funding sources and extending its debt
Express business and the derecognition
maturity profile over time.
reflecting the investment in the Group’s
of associated lease liabilities by $728
annual capital program, partly offset by
million.
depreciation and property divestments
during the year.
The lease-adjusted leverage ratio at the
reporting date was 2.6x on a continuing
basis, with current published credit
ratings of BBB+ with Standard & Poor’s
and Baa1 with Moody’s.
28
29
Pictured: Coles Florida Beach was opened in August 2022.
Coles Group 2023 Annual ReportColes Group 2023 Annual Report Supermarkets
Segment overview
$m
Sales revenue
EBITDA
EBIT
Gross margin (%)
Cost of doing business (‘CODB’) (%)
EBIT margin (%)
Operating metrics (non-IFRS)
Gross retail sales1 ($ billions)
Gross retail sales growth (%)
Comparable sales growth (%)
eCommerce sales2 ($ billions)
eCommerce penetration (%)
FY23
36,746
3,157
1,765
26.4
(21.6)
4.8
FY22
34,624
3,022
1,715
26.3
(21.4)
5.0
CHANGE
6.1%
4.5%
2.9%
5bps
20bps
(15bps)
FY23
2H23
1H23
FY22
(52 WEEKS)
(25 WEEKS)
(27 WEEKS)
(52 WEEKS)
38.0
6.6
5.8
2.8
7.5
18.4
8.1
6.7
1.4
7.7
19.6
5.3
4.9
1.4
7.2
35.7
3.0
2.6
2.8
7.9
Sales density per square metre3 (MAT $/sqm)
19,201
19,201
18,651
18,209
Net Promoter Score (point increase/(decrease))
Inflation / (deflation) (%)
Inflation / (deflation) excl. tobacco and fresh (%)
(4.3)
6.7
7.6
(2.7)
6.0
7.7
(5.7)
7.4
7.6
(3.6)
1.7
1.6
1 Gross retail sales are comprised of retail sales on a gross basis before adjusting for concession sales and the cost of Flybuys scheme points.
2 eCommerce gross retail sales include Liquor sold through coles.com.au.
3 Sales density per square metre is a moving annual total (‘MAT’), calculated on a rolling 52-week basis.
Highlights
Supermarkets sales revenue of $36,746
million for the year increased by 6.1% on
the prior year, with growth in the second
half increasing by 7.7% over the prior
corresponding period compared to 4.6%
in the first half.
Sales growth was delivered through the
‘DROPPED & LOCKED’ value campaigns
and the successful execution of trade
plans, including festive events such as
Easter, Christmas and Mother’s Day.
More targeted and personalised
customer experiences and offers, and
collectible and continuity campaigns,
also supported sales growth throughout
the year. Excluding tobacco sales, sales
revenue increased by 7.4%.
Customer satisfaction, as measured
by Net Promoter Score (‘NPS’), was
impacted during the year, due to
availability as well as cost of living
pressures that impacted price and value
metrics. Pleasingly, improvements were
seen in some lead indicators in the fourth
quarter.
Pasta Bake and the Coles Finest lamb
During the year, Coles’ media income
range. In the growing pet segment, pet
increased by 27.0% with accelerated
treats such as the Woofin’ Good Peanut
investment in product innovation,
Butter Flavour Dog Biscuits and Elevate
technology and talent and the
Joint Support Chew Dog Treats were
rebranding of the platform to ‘Coles 360’.
launched. The Coles Own Brand
portfolio won 103 product awards
including 11 consumer-voted Product of
the Year awards for products such as our
Coles Finest Certified Carbon Neutral
Total Supermarkets price inflation for the
year was 6.7% having moderated in the
second half with continued moderation
in the fourth quarter to 5.8%.
Beef Scotch Fillet Steak, Coles Frozen
During the year, Coles completed 46
Sweet Potato Chips and Coles Salted
store renewals, including 14 Format A,
Caramel Vienna Sticks.
four Format C and four Coles Local
eCommerce sales for the full year
increased by 1.1% to $2.8 billion. Strong
sales growth of 10.1% was delivered in
stores. Coles also opened 17 new stores
and closed six stores, taking the total
network to 846 supermarkets.
the second half, while sales in the first
Gross margin of 26.4% increased by 5 bps
half declined by 6.6% as COVID-19
year-on-year despite investment in value
behaviours normalised and some
and changes in consumer spending
customers returned to shopping in store.
patterns. Gross margin was supported by
Sales growth was underpinned by 5%
reduced COVID-19 costs, the delivery of
growth in traffic to Coles’ digital assets,
Smarter Selling benefits, growth in Coles
as well as network expansion,
360 and lower tobacco sales. However,
particularly in immediacy. Rapid Click &
total loss1 increased by approximately
Collect is now available in 606 stores (151
20% year-on-year and remains an
stores were added during the year) and
industry-wide headwind, with elevated
More than 1,400 Exclusive to Coles
products were launched during the year
Home Delivery Rapid is now available in
levels of organised retail crime and
480 stores (463 stores were added during
customer theft from cost of living
including Coles Kitchen Chicken Pesto
the year).
pressures.
CODB as a percentage of sales
increased by 20 bps to 21.6%. CODB
increased as a result of underlying cost
inflation and wage increases following
the June 2022 Fair Work Commission
(‘FWC’) annual wage increase. CODB
was also impacted, particularly in the
second half, by increased depreciation,
major project implementation operating
expenditure, a $25 million provision
relating to the 2020 Award covered
salaried team member review and a
Update on ADCs
Coles delivered a significant milestone
during the year with the Redbank,
Queensland ADC commencing
outbound deliveries in March 2023. At
year end, the ADC serviced more than
100 supermarkets in Queensland with
ramp up in line with schedule. The
recruitment, induction and training of
the new Redbank team members also
continued.
processes for the Victorian CFC.
Following further engagement with
Ocado and in light of the revised hand
over date, the commissioning of the
Victorian CFC will be delayed with the
incremental ramp up period now
expected to commence in mid-FY25
(previously mid-FY24). The New South
Wales CFC is expected to be
commissioned with an incremental ramp
up period commencing at the end of
the second half of FY24 (previously
range of adverse events, such as
Construction progressed at the Kemps
second half of FY24).
additional public holiday costs and
costs associated with the collapse of
REDcycle. These costs were partially
offset by Smarter Selling benefits and
lower direct COVID-19 costs in FY23.
Further strategic investments were also
made in digital, eCommerce and
technology this year, in areas such as
Coles 360 and eCommerce platforms.
Supermarkets EBIT of $1,765 million
increased by 2.9% with an EBIT margin
of 4.8%.
Creek, New South Wales ADC. Initial
commissioning work also commenced
at the facility in line with schedule.
The impacts of the delays are likely
to increase the project capital and
operating expenditure by approximately
Update on automated CFCs
$70 million and $50 million respectively.
As announced on 18 August 2023, Coles
has received notification from Ocado
regarding delayed timing for the
handover of the Victorian CFC.
Additional works are required to rectify
construction issues with the grid
identified during quality control
Total capital expenditure is now
expected to be approximately $400
million of which 55% has been incurred
to the end of FY23, with the balance
expected to be incurred in FY24 and
FY25.
Pictured: Coles Redbank ADC commenced outbound deliveries in March 2023 and was servicing more than 100 supermarkets in Queensland at year end.
30
1
Total loss includes stock loss and waste and markdown.
31
Coles Group 2023 Annual ReportColes Group 2023 Annual Report Liquor
Segment overview
$m
Sales revenue
EBITDA
EBIT
Gross margin (%)
Cost of doing business (‘CODB’) (%)
EBIT margin (%)
Operating metrics (non-IFRS)
Gross retail sales1 ($ billions)
Gross retail sales growth (%)
Comparable sales growth (%)
eCommerce sales2 ($m)
eCommerce penetration2 (%)
eCommerce penetration (inc. COL)3(%)
Net Promoter Score4 (point increase/(decrease))
FY23
3,610
279
157
23.4
(19.0)
4.3
FY22
3,613
278
163
22.5
(17.9)
4.5
CHANGE
(0.1%)
0.4%
(3.7%)
91bps
109bps
(18bps)
FY23
2H23
1H23
FY22
(52 WEEKS)
(25 WEEKS)
(27 WEEKS)
(52 WEEKS)
3.6
(0.2)
(0.7)
203
5.7
6.9
(0.9)
1.6
2.7
1.3
95
5.8
7.0
0.5
2.0
(2.5)
(2.3)
108
5.6
6.8
(2.5)
3.6
2.4
2.1
165
4.6
5.4
(0.8)
16,354
Other
$m
Sales revenue
EBITDA
EBIT
FY23
127
(54)
(63)
FY22
CHANGE
-
(41)
(51)
n/m
31.7%
23.5%
Coles reported negative EBIT of $63 million in Other for the year.
Other includes corporate costs, the product supply arrangement with Viva Energy that was established as part of the divestment of
the Coles Express fuel and convenience retailing business, Coles’ 50% share of Flybuys’ net result and the net gain or loss generated
by Coles’ property portfolio.
Corporate costs of $91 million were incurred for the year, an increase of $9 million on the prior year, largely as a result of higher
insurance costs and store support centre costs. Coles’ 50% share of Flybuys’ net result was a $13 million loss, while earnings from
property operations were $39 million. EBIT of $2 million was also reported in relation to the product supply arrangement that was in
place from completion of the Coles Express divestment which occurred on 1 May 2023.
Sales density per square metre5 (MAT $/sqm)
16,138
16,138
16,029
1 Gross retail sales are comprised of retail sales on a gross basis before adjusting for concession sales and the cost of Flybuys scheme points.
2
eCommerce gross retail sales and penetration exclude Liquor sold through coles.com.au which is reported in Supermarkets’ eCommerce and Business to Business
sales.
3 eCommerce penetration including Liquor sold through coles.com.au.
4 Net Promoter Score is based on Liquorland NPS results.
5
Sales density per square metre is a moving annual total (MAT), calculated on a rolling 52-week basis.
Highlights
Liquor sales revenue of $3,610 million for
During the period, 259 new ELB and
Gross margin of 23.4% increased by
the year was flat compared to the prior
627 new local lines were added to the
91 bps driven by strong performance in
year, having declined in the first half by
portfolio. In addition, the ELB portfolio
ELB and local, value optimisation, mix
2.4% as the business cycled COVID-19-
received more than 500 awards,
benefits and strategic sourcing.
related on-premise closures and
including the Tasmanian Gin of the Year
restrictions before returning to growth
trophy at the Melbourne International
of 2.7% in the second half.
Spirits Competition for Pure Origin
The sales performance during the year
was driven by a strong performance in
the Liquorland banner, supported by the
completion of 215 Liquorland Black &
Tasmanian Dry Gin and Tinnies Pale Ale
being awarded the Best English Beer
Pale Ale Trophy in the Pale Ale category,
at the World Beer Awards Competition.
CODB as a percentage of sales
increased by 109 bps to 19.0%. This was
largely driven by increases in store team
member remuneration relative to the
prior year following the FWC annual
wage increase in June 2022, coupled
with the increase being paid earlier in
White renewals as well as the opening of
eCommerce sales revenue of $203
the year than prior years, and costs
35 new Liquor stores. The Ready-to-Drink
million increased by 23% compared to
(including depreciation) incurred in
category was the strongest performing
the prior year driven by on-demand
relation to the new store and the
category during the year. Growth in the
delivery which is now available in more
accelerated Black & White Liquorland
ELB portfolio continued with sales
than 660 stores, and the introduction of
renewal program, including investments
revenue increasing by 8.5% for the year
express delivery through DoorDash and
in eCommerce and core IT systems.
and penetration reaching 21% of total
UberEats.
sales as customers became more value
conscious throughout the year. Sales
revenue also benefited from strong
growth in eCommerce and inflation,
Customer satisfaction (as measured by
reflecting increased depreciation and
NPS) was also impacted by cost of living
amortisation following investment in the
pressures which impacted value metrics.
portfolio as part of the transformation
EBIT of $157 million decreased by 3.7%
driven by supplier-led cost price
During the year, 236 store renewals were
increases following the semi-annual
completed, 35 new stores were opened
excise increases.
32
and 11 stores closed across the
Liquorland, Vintage Cellars and First
Choice banners. At the end of the period
the portfolio comprised 957 stores.
program, most notably the Black & White
Liquorland renewal program and
eCommerce investments.
Pictured: Team member Dave at one of the Liquorland Black & White renewal stores.
33
Coles Group 2023 Annual ReportColes Group 2023 Annual Report Looking To the Future
Risk Management
Coles is one of Australia’s leading
We aim to deliver on our purpose by
In our first horizon of activity, we will be
Our operating environment continues to evolve, resulting in changes to the risks and uncertainties that we face. We regularly
retailers with an extensive national
focusing on three strategic pillars:
focusing on delivering value, restoring
review risks and measures to mitigate risks and support the delivery of our purpose and strategy.
footprint of circa 1,800 supermarket and
liquor stores. Approximately 17 million
transactions take place across our store
and digital platforms each week and our
Flybuys loyalty program reaches
approximately 80% of all Australian
households.
In 2019 following demerger, Coles
launched our “Winning in our second
century” strategy with targets through to
FY23. Since then, the Australian retail
environment has changed – including
COVID-19 lockdowns, bushfires and
floods, supply chain disruptions, and
persisting pressures on household cost of
living. These events have impacted all
Australians and are shaping how we
evolve our strategy.
To reflect the changing environment, we
have refreshed our purpose to Helping
Australians eat and live better every
day. Our priority is to provide leading
food, drink and home solutions that are
delicious, sustainable, and healthy for
our customers. We seek to deliver a
consistent experience for our customers
every day, both in-store and online.
• Destination for food and drink is why
our customers come to Coles and
what we aspire to be known for. We
availability, reducing loss, improving
store presentation and providing a
high-quality fresh food offering.
In FY23, Coles’ Risk Management Policy and Coles’ Risk Management Standard (previously called ‘Framework’) were reviewed,
with the Board approving amendments to the Risk Management Standard. The design of both the Risk Management Policy and
Risk Management Standard are based on ISO 31000:2018 Risk Management – Guidelines (‘ISO 31000’), an internationally
will tailor our product range, quality,
As part of this strategy, we are also
recognised set of principles for managing risks in organisations. Further information about our Risk Management Policy and Risk
value, merchandising and
launching our Simplify and Save to Invest
Management Standard is available in Coles’ Corporate Governance Statement.
communication to meet and surpass
program which forms part of the third
our customers’ needs.
strategic pillar and is designed to deliver
• Accelerated by digital is how we
intend to meet our customers’
increasing digital usage by creating
an easier, faster and more enjoyable
omnichannel shopping experience.
in excess of $1 billion in cumulative
savings over the next four years. This is an
evolution of our Smarter Selling program
which successfully concluded this year.
By focusing on what matters most to our
• Delivered consistently for the future
customers and prioritising our investment
is our focus on delighting our
accordingly, we feel well positioned to
customers with our food and drink
deliver on our vision to become the most
offering each and every day, today
and into the future.
trusted retailer in Australia and grow
long-term shareholder value.
Underpinning our strategic pillars are
building blocks which will enable us to
deliver on our refreshed purpose:
• Win Together is recognition that we
only succeed together with our team,
community and suppliers.
• Foundations of financial discipline,
technology, and data help us deliver
on our strategic pillars and enable us
to drive value for our stakeholders.
u
m
m
o
C
nicatio n
orting
p
e
& R
g
n
i
r
o
t
i
n
o
M
R i s k P o l icy & Appetite
Risk Behaviours
& Attitudes
R
e
v
i
e
w
R
i
s
k
I
d
e
n
t
i
f
i
c
a
t
i
o
n
R
i
s
k
Tr
e
at
m
ent
e s s m ent
s s
k A
s
R i
Consulta t i o n
Supported by three lines of defence
First line
Operational
responsibility
Second line
Standard
setting
Third line
Independent
assurance
A key component of the Risk Management Standard is the risk management process, which defines the process applied within
Coles’ business. Through application of our risk management process we have identified the material external, strategic,
operational, and financial risks that could adversely affect the achievement of our objectives and future financial prospects. These
risks are described in the following tables, together with key mitigations to manage them. There is a high level of interdependency
between risks, which reflects both the potential effect of external risk factors and the integrated processes across our operations.
This means an increased exposure to one material risk may affect risk levels in other areas of our risk profile.
In addition to the material risks listed, our performance may be affected by risks that apply generally to Australian businesses and
the retail industry, as well as by the emergence of new material risks.
Although no longer considered to be a material risk, we anticipate that COVID-19 will continue to affect our business and
communities. We also anticipate that the evolving geopolitical and macro-economic environment will drive continual changes to
Coles’ material and emerging risks during the next financial year and beyond. We will therefore continue to monitor and respond
to further developments as required, including ongoing review and enhancement of our risk mitigation plans.
34
35
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
External and strategic risks
1. Geopolitical and macro-economic
3. Changing consumer behaviour, competition and digital transformation
Description
Uncertainty in the global and domestic geopolitical and macro-economic environment, including as a result of relationships
Description
Consumer behaviour and expectations continue to change, driven in particular by macro-economic conditions and environmental
between governments (state, federal and international) and global conflicts, can expose Coles to inflationary pressures, supply
and climate-related factors. The competitive environment also continues to evolve, with an increased focus on digital, automation
chain disruptions, changes in consumer spending and consumption choices, and increased costs of doing business.
and e-commerce to deliver efficiency and a personalised and seamless experience for our customers across our in-store and online
Context
We expect the geopolitical and macro-economic environment
Mitigations
• Strategic and corporate planning and financial review
in which we operate to remain highly uncertain for the year
processes that incorporate scenario planning and
ahead.
consideration of future market conditions.
Consequential impacts to Coles may include:
• Maintenance of a strong balance sheet to fund operations
and maximise financial performance.
• Execution of cost efficiency programs with the aim of
offsetting inflation and reducing costs while investing in the
business.
• Proactive engagement with government stakeholders to
understand and plan for changes in policies and regulations.
• Supplier engagement processes to manage issues such as
supply disruptions and changing input costs.
• Established crisis management and business continuity
processes to manage disruptive events.
•
increases in interest rates, energy and input prices
• wage inflation
• restricted access to, and/or higher costs of funding
• third party (supplier) insolvency
• disrupted access to export markets
• disruptions to imports impacting domestic supply of goods
for resale and not for resale
• cost of living pressures resulting in reduced consumer
spending and/or changing consumption choices
• risk of recession.
Additional information about how we respond to changes in
consumer behaviour and expectations can be found in the
Changing consumer behaviour, competition, and digital
transformation risk section.
2. Climate change and environment
Description
Coles has a responsibility to reduce the effect of our operations on the environment and meet our sustainability commitments.
Inability to do so may result in negative impacts to nature and biodiversity, reputational damage, diminished access to capital,
loss in market share and enforcement action. Our operations may also be adversely affected by changes in the natural
environment including biodiversity loss and water scarcity.
Context
Climate change presents an evolving set of risks and
Mitigations (continued)
• Our Sustainability Strategy highlights Coles’ sustainability
opportunities for Coles, and has the potential to contribute to,
commitments and initiatives, and includes targets to reduce
and increase, our exposure to other material risks. This includes
our impact on the environment, waste and packaging.
risks associated with:
Progress against targets is reported in our Sustainability
• our transition to a lower carbon economy
Report. Initiatives include:
• risks arising from an increase in the frequency and intensity
of extreme weather events and chronic changes in weather
-
-
reducing food waste
sustainable packaging for our Coles Own Brand products
patterns.
- working with farmers, suppliers and industry partners to
The insolvency of REDcycle in November 2022, the provider of
reduce environmental impact
in-store soft plastics recycling capability, represented a
- continued assessment of Coles Own Brand products
challenge to our plastic packaging sustainability goals and
identified as having the highest environmental impact, to
highlighted the limited domestic recycling capabilities
help reduce future environmental impacts for these
available.
products.
Mitigations
• Reporting on our climate change strategy, governance, risk
• Completion of product certification risk assessment prior to
any Coles Own Brand product adopting a responsible
management and emissions reduction targets. Further
sourcing and sustainability-related external certification or
information on climate change including risks and
internal standard.
opportunities is provided in the Climate Change section.
• Coles sought and obtained authorisation from the ACCC to
work with other major food retailers and environmental
regulators to develop alternative soft plastics recycling
capabilities. This work is ongoing with alternative recycling
options being explored.
channels. If Coles fails to keep pace with and respond to these changes and expectations, it could result in loss of market share, and
ultimately, adverse margin impacts, reduced customer retention and impact to share price or market value.
Context
Macro-economic challenges and cost of living pressures have
Mitigations
• Monitoring of customer sentiment, best practice global
driven a customer focus on price and value. This poses a risk to
retailers, local and international retail trends and customer
customer spend, but also an opportunity through increased
insights and research, to anticipate and respond to changes
in-home consumption of food and drink.
in customer behaviours.
While customers have returned to stores as COVID-19 risks
• Delivery of trusted value to customers through everyday low
declined, customer expectations for an integrated, seamless
pricing, weekly specials, loyalty offers and exclusive product
in-store and online experience continue to grow.
Other changes in consumer behaviour include increased focus
on health, personalisation and convenience, and enhanced
consciousness about consumption choices including on
matters relating to sustainability and the environment.
ranges. Our ‘DROPPED & LOCKED’ value campaign launched
in FY23 aims to support customers to manage cost of living
pressures.
• Programs and offers to personalise the customer shopping
experience, including for Flybuys loyalty customers.
• Continued enhancement of the customer experience
through Coles Online, Click & Collect Rapid, Rapid Delivery,
and the Coles Plus subscription. During FY23, we transitioned
Coles’ customers to our unified enhanced digital platforms,
across the Coles website and app.
• Partnerships with third party providers to provide convenient,
on-demand delivery services to customers for grocery and
drinks.
4. Strategic program prioritisation and execution
Description
Compromised prioritisation and execution of key strategic and transformational programs could result in increased costs, variability
in Coles’ earnings, loss of market share, delayed timeframes, and inability to meet shareholder expectations. Changes in scope or
delays within our strategic programs and projects (e.g. Ocado), may occur due to multiple factors including program and resource
prioritisation, interproject dependencies, disruptions to third party partners or providers, or macro-economic and geopolitical
factors that may impact resource availability or cost.
Context
The execution of elements of our strategy is supported by third
Mitigations
• Planning and budgeting processes to establish priorities and
party strategic partnerships including Witron (automated
funding for programs and projects, supported by review and
distribution centres), and Ocado (online customer fulfilment
approval of business cases through capital and operational
centres). We have joint ventures with Wesfarmers (Flybuys) and
expenditure committees.
Australian Venue Co. (Queensland Venue Co. Pty Ltd).
• Governance structures and processes to oversee, manage
Ocado is a transformational program, and delays will result in
and execute strategic programs of work, including for the
additional costs, deferment of direct benefits and those
automated distribution centres and online customer fulfilment
dependent on the delivered capabilities.
centres.
We also undertake targeted acquisitions and divestments to
execute our strategy more effectively. This includes completion
of the May 2023 sale of Coles Express to Viva Energy.
During FY23 we announced the acquisition of two milk
processing facilities from Saputo Dairy Australia which (subject
to transaction completion including obtaining approval from
the ACCC) will support the security of milk supply and has
capacity to facilitate growth through further product
innovation.
Coles may undertake future acquisitions and divestments, and
enter into other third party relationships, so we can more
effectively execute our strategy.
• Regular review of projects and programs to monitor progress
of delivery, costs and benefits, and the allocation of
resources.
• Post-implementation reviews to assess project outcomes
relevant to the business case, and to identify lessons-learned
to be applied for future projects.
• Assurance on the execution and governance of key projects
by Internal Audit.
• Review of major projects by the Board and Executive
Leadership Team (‘ELT’) which provides additional oversight
at a portfolio level.
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report
5. Third party dependencies
7. Information technology, resilience, data and cyber security
Description
A critical failure or inaction of a key supplier or third party service provider may expose Coles to risks including compromised safety or
Description
A failure, attack or disruption to our information technology applications and infrastructure, could impede the processing of
quality standards, cyber security threats and breaches, misalignment with Coles’ ethical and sustainability objectives, disruptions to
customer transactions, or limit our ability to receive or distribute stock or funds or otherwise impact the operations of our business.
supply or operations, unrealised benefits, legal and regulatory exposure, additional costs, reduced customer satisfaction and
Data and cyber security events can also result in unauthorised disclosure of confidential, financial, or personal information which
reputational damage.
Context
The increasing complexity of supply chains requires us to
Mitigations
• Due diligence processes to assess the adequacy and
may lead to loss in customer trust, market share impact, regulatory and legal action and penalties and reputational damage.
Context
Coles continues to operate in an increasingly complex
Mitigations (continued)
• Privacy and information security policies, standards and
actively manage third party dependencies. This includes
suitability of key suppliers, service providers and strategic
technological environment which increases the potential for
procedures, supported by security awareness campaigns
making sure we meet our stakeholders’ expectations to source
partners to meet our requirements.
impacts to system availability and performance, confidentiality
and mandatory training for team members.
products and services that are responsibly and sustainably
• Monitoring and management of key suppliers and strategic
breaches, and cyber security risks. Contributing factors include:
• Regular testing and reviews of information technology
sourced, are able to deliver goods and products to our sites,
third parties throughout their engagement with Coles.
stores and customers, support our team members and sustain
Defined service level and key performance indicators are in
operations.
place for key supply contracts. Risks are managed through
Given the challenging macro-economic environment Coles is
contractual protections.
at risk of further disruptions to our third parties including as a
• Third party management for Goods Not For Resale (‘GNFR’)
result of financial insolvency (e.g. Scott’s Refrigerated Logistics),
suppliers is governed by the GNFR Third Party Management
inability to scale production, cyber events, lack of available
Policy, which includes requirements for sourcing, contract
inputs and people resources.
Our suppliers and third parties are also subject to disruptions
arising from natural disasters and extreme weather events.
management, risk management, buying and invoicing.
Automated processes assess and monitor the financial health
of GNFR suppliers on an ongoing basis.
• Business continuity plans consider critical third parties
required to continue operating in the event of a business
disruption. We initiated contingency plans to ensure
adequate supplies of chilled and frozen product in response
to the financial insolvency of Scott’s Refrigerated Logistics in
March 2023.
6. Supply chain resilience
Description
An inability of our supply chain to adapt rapidly to disruptions while operating efficiently and sustainably to meet customer
expectations and support critical business activities, can result in loss of market share, price volatility, increased costs and
reputational damage.
Context
Mitigations
While COVID-19-related supply chain disruption declined
• Established business continuity processes to plan for and
during the year, we continued to manage impacts due to
manage interruptions to our supply chain and delivery of
extreme weather events, supplier failures and insolvency,
goods to stores during business disruptive events. Plans are
disruptive incidents, inflation, increasing cost of inputs and
updated regularly to take account of changing internal and
geopolitical factors impacting the availability of raw materials.
external risks and conditions such as forecast weather events.
La Niña weather patterns in the Eastern states, characterised by
• Strategic category planning assesses medium and longer
unseasonably cold weather, resulted in significant flooding,
term supply security risks and mitigations for domestic and
cold weather and rain/ hail events impacting fresh produce
international supply of goods for resale. Mitigations include
growing conditions, yield, quality and price. Localised flood
geographical and supplier diversification and sourcing of
events also posed challenges to our and our suppliers’ transport
alternative supply arrangements.
and logistics operations, which impacted product availability.
• During FY23 reviews were undertaken of supplier
The anticipated return of El Niño conditions may result in
concentration in key categories, and geographical risk
heatwaves and increased fire risks.
across a number of Coles’ fresh produce categories, to
Longer-term risks including changes in climate, government
(domestic and international) and policy and regulation are
considered during strategic planning and horizon scanning.
highlight mitigations in place and identify opportunities to
further reduce risk of supply disruption. Further information
about the review of geographical risk across Coles’ fresh
produce categories is provided in the Climate Change
section.
• Strategy developed around the security of our meat supply
and the 2023 acquisition of two milk processing facilities
(subject to transaction completion including obtaining
approval from the ACCC) contribute to supply chain
resilience in the key meat and dairy categories.
• our growing external digital footprint and number of third
infrastructure, systems, processes, and resilience conducted
party providers
• high reliance on technology
to assess security threats, adequacy of controls and recovery
readiness.
• external threat landscape including geopolitical unrest and
high profile / high impact cyber security events in the market
• Supplier due diligence processes which consider suppliers’
cyber, information security, privacy, and IT resilience
such as ransomware, data theft and third party compromise.
capability.
• Dual data centres and cloud services support high levels of
critical system redundancy and resiliency.
• Monitoring in place 24/7 for technology operational and
cyber incidents. IT incident response capability, disaster
recovery plans and business continuity plans guide our
response should an incident or disruption occur. Industry
experts are retained to be on-call in the event of a cyber
security incident.
Additional information on the Critical Infrastructure legislation
and Coles’ approach to managing related risks can be found
in the Legal and Regulatory risk section.
Mitigations
• Five-year rolling technology strategy which prioritises and
phases ongoing investment to enhance system stability and
resilience.
• Cyber security framework and controls library which is
updated regularly and independently assessed to
understand the maturity of our cyber security capabilities
and to identify priority areas for improvement and
investment. Capabilities are aligned to principles set out in
the Australian Cyber Security Centre Essential Eight Maturity
Model and National Institute of Standards and Technology
(‘NIST’) Cybersecurity Framework.
8. People safety
Description
We employ and engage an extensive and diverse workforce, including third parties, with high volumes of people interactions daily.
This could result in risk of fatality, injuries or illness to team members, customers, suppliers, contractors or visitors, due to accidents,
incidents or unsafe work environments. Furthermore, the challenging macro-economic environment can have adverse impacts on
team member mental health and wellbeing, and increase the risk of threatening situations faced by team members.
Context
The safety of our team, customers, third parties and contractors
Mitigations
• Health, Safety and Injury Management system (‘SafetyCARE’)
is paramount to Coles.
Although the COVID-19 pandemic is no longer assessed as a
material risk to Coles its impacts will continue to be monitored
and managed, along with the risks and impacts of future
in place that is supported by a team of experienced safety
professionals throughout our network. SafetyCARE
performance is measured, tracked and reported, and its
effectiveness independently assessed and verified.
pandemics and communicable diseases.
• Five-year safety and wellbeing plan which focusses on key
The move to hybrid work arrangements requires us to manage
physical and psychological risks faced by remote workers or
those working from home.
Preventing and equipping team members to manage
threatening situations is a priority focus.
safety obligations and risks.
• Regular review of safety risk management and consultation
processes, including for contractors and third parties.
•
Injury management and return to work programs to support
team members who suffer an injury.
• Focus on managing team members’ mental health and
wellbeing, including through identification of psychosocial
risk factors, our employee assistance program, flexible
working arrangements, training on managing threatening
situations and diversity, equity and inclusion programs.
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report 9. People retention and talent
11. Legal and regulatory
Description
Inability to retain skilled team members who are imperative to the execution and delivery of our strategic programs, digital
transformation, and broader business operations and performance.
Context
Coles is one of Australia’s largest private-sector employers. We
Mitigations
• Our Great place to work strategy focuses on strengthening
seek to be an Employer of Choice and make Coles a
team member engagement, which is measured through our
workplace in which everyone feels like they belong.
mysay team member engagement survey.
With low unemployment rates and inflation placing pressure on
• Leadership and development programs to support
wages, Coles faces competition to retain skilled team
members.
development of leaders and career growth of key talent.
Investment in graduate and industry learning programs.
• Team member performance process which aligns objective
setting to strategy, provides opportunity to seek and give
feedback for learning and development, and celebrates
progress and achievements.
• Recognition programs including our Of the Year awards and
our mythanks digital reward and recognition program which
was released in FY23.
• Commitment to flexible working to enable our team members
to manage work and personal circumstances.
• Regular discussions on talent and succession planning held
with the ELT and People and Culture Committee.
• The People and Culture Committee oversees and
recommends Board approval of people and culture, talent
management, remuneration and incentive frameworks,
policies and plans. The Board is accountable for approving
Group remuneration policies.
10. Industrial relations
Description
As we execute our strategy, workforce changes (company, industry or legislature driven) may lead to industrial action and/or
disruptions to our operations, which can result in increased costs, litigation and financial impacts from reputational damage.
Context
Mitigations
Changes in industrial relations and collective bargaining
• Dedicated Employee Relations resources who are responsible
legislation, along with planned changes in our supply chain
for monitoring and responding to industrial relations risks and
operations, can affect our exposure to this risk.
issues.
The federal government passed the Fair Work Amendment Act
•
Implementation of appropriate enterprise agreements and
in 2022 which made important changes to multi-employer
employee relations strategies. Proactive management of
bargaining, gender pay gaps, fixed term contracts and flexible
renegotiation of enterprise agreements.
rostering. Further changes are planned in late 2023 regarding
casual employment, labour hire, gig economy and wage theft.
• Maintenance and development of strong working
relationships with unions and industry organisations.
We are committed to working collaboratively with our team
Constructive liaison with team members, third party suppliers,
and external stakeholders to renew workplace agreements.
transport and logistics providers.
Description
Non-compliance with key laws and regulations, could expose Coles to loss of licence to operate, substantial financial penalties,
reputational damage, a deterioration in relationships with regulators, class action or other litigation and additional regulatory
changes that may adversely impact the execution of our strategy and result in increased cost to operate. Where Coles is a party to
litigation, it can involve reputational damage, financial costs, and high investment of Company resources and time.
Context
The diversity of our operations necessitates compliance with
extensive legislative requirements at all levels of government.
This includes:
• corporations law
• competition and consumer law
• discrimination law
• health and safety
•
industrial relations
• employment
• privacy
• product and food safety
• modern slavery
• environment and biosecurity
• council by-laws
• measurements
Mitigations
• Compliance standards, requirements and accountability to
manage compliance obligations are set out in our
Compliance Policy and Framework, which is based on AS ISO
37301:2023, Compliance Management Systems –
Requirements with guidance. The Compliance Framework is
regularly reviewed and assessed, including through internal
audit processes.
• Obligation registers in key areas help to assess compliance
with legislative obligations and identify actions to strengthen
compliance controls.
• Program in place to comply with newly introduced SOCI Act
obligations, which seeks to uplift the security and resilience of
Australia’s critical assets.
• Legal and compliance teams monitor and manage legal
issues, matters, claims and disputes. These teams are
supported by pre-agreed panel arrangements with external
• Critical Infrastructure Act 2018 (Cth) (‘SOCI Act’) including
legal firms. Potential litigation claims are assessed to
cyber security obligations.
understand loss potential.
This risk may become heightened due to the introduction of
• Relationships maintained with regulators and industry bodies
new and changing regulation and reporting requirements to
to monitor new and impending legislative and policy
which Coles must comply, or uncertainty regarding the
changes in order to respond accordingly.
interpretation or application of relevant regulatory instruments
such as modern awards.
12. Ethical sourcing
Description
Risk of modern slavery, breach of workers’ human rights or breach of laws designed to protect human rights in our own operations
or extended supply chain is a risk for Coles.
Context
Failure to source product or conduct our business in a manner
Mitigations
• Ethical Sourcing policy which is based on international
that complies with our Coles Ethical Sourcing Policy and
standards and sets out the minimum standards for our
relevant legal requirements across Australia and the countries
suppliers.
we source from, can impact worker safety, wellbeing and/or
• Ethical Sourcing Program which takes a risk-based approach
living conditions.
It can also result in material reputational damage, loss in
to define the level of due diligence, audit frequency and
monitoring that applies to suppliers. The program covers
consumer confidence and market share, regulator fines and
trade and GNFR suppliers, exclusive brands and Liquor.
penalties, and adverse financial performance.
• During FY23 we continued to focus on embedding the
• Business continuity plans in place to mitigate disruption to
operations if industrial action occurs.
Additional information on Coles’ Ethical Sourcing Program can
be found in our Modern Slavery Statement.
program across the business and building trust and
strengthening relationships with suppliers and workers,
including ongoing activities to review accommodation
standards for workers in Australia.
• Ethical Sourcing risk indicators measure timely management
action in response to supply chain ethical audit non-
conformances.
• Standard supply contract terms and conditions define
expectations of supplier conduct.
• Coles’ whistle-blower hotline and dedicated supply chain
wages and conditions hotline enable reporting of unethical,
illegal, fraudulent or undesirable conduct.
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report
13. Product and food safety
Description
The risk of selling or serving a product that is unsafe may cause serious illness, injury or death and/or result in loss of reputation or
litigation.
Context
Mitigations
Product and food safety, and quality are critical for Coles.
• Product and food safety programs (including safety plans
Serious illness, injury or death are the most severe potential risks
and assurance programs for exclusive brands/products) are
from compromised product or food safety.
These risks may result in loss of sales and market share,
regulatory exposure, and potential litigation.
Financial risks
14. Financial, treasury and insurance
in place and regularly reviewed.
• Governance forums manage and monitor emerging food
and product safety risks, food security risks and regulatory
changes.
• Food risk and hazard assessment processes are based on the
Food Standards Australia New Zealand (‘FSANZ’) Standard.
• Supplier quality management processes reduce product and
food safety risks. Training is provided to suppliers and team
members in food safety and quality management.
• Withdrawal and recall processes remove defective and
potentially unsafe product from our stores and supply chain.
• Quality, complaints and incident processes help identify and
drive response to safety risks.
Climate Change
Coles understands our responsibility to minimise our environmental footprint, as well as to mitigate the environmental and social
impacts of climate change. We are doing this by:
• building the resilience of our business, our community and our value chain against climate change impacts, both physical and
transitional (manage climate risks and opportunities);
• taking action to reduce our climate impacts (decarbonisation1); and
• constructively engaging on issues and challenges associated with climate change and climate policy (influence climate
action).
We are committed to engaging with our stakeholders and disclosing how we identify, assess and manage climate-related
financial risks and opportunities, and seek to align with the recommendations of the Task Force on Climate-related Financial
Disclosures (‘TCFD’).
Key actions taken to align with the TCFD
FY20
FY21
FY22
FY23
FY24 & beyond
Published Board
Released refreshed
Further developed
Completed a risk
Progress our Climate
approved Climate
Sustainability
scenario analysis
analysis of the
Action Roadmap.
Change Position
Strategy – including
work. This provided
physical impacts of
Statement.
Scope 1 and 2
information on future
climate change on
Three-year TCFD
Roadmap endorsed
emissions reduction
climate scenarios, as
Coles’ asset portfolio,
targets.
well as climate-
The scope of the
Develop a Climate
Transition Plan for
Coles.
Description
The availability of funding and management of capital and liquidity are important requirements to fund our business operations and
growth. In addition, we are exposed to material adverse fluctuations in interest rates, foreign exchange rates and commodity
movements that could impact business profitability.
Context
Changes in the macro-economic environment can expose us
Mitigations
• Group Treasury manages cash funding position and supports
to adverse movements in interest rates, foreign exchange rates
interest rate and foreign currency risk management.
by the Board (based
Updated assessment
on 2017 TCFD
of Coles’ climate-
recommendations).
related risks and
Formalised
governance
opportunities.
Undertook high-level
arrangements
scenario analysis on
relating to climate
the impacts of
and commodity prices, and present barriers to funding our
• Treasury and related policies govern management of our
change.
business operations.
We may also be exposed to financial loss from accidents,
financial risks, including liquidity, interest rates, foreign
currency, commodity risks and use of derivatives. Further
natural disasters and other events. Insurance is a tool used to
information is included in Note 4.2 Financial Risk
protect our customers, team members and the Group against
Management of the Financial Report.
(insurable) financial loss.
• We may choose to self-insure a significant proportion of some
insurable risks. In the event of an incident, the cost is covered
from internal premiums charged to the business, or the losses
are absorbed.
• The Group Insurance function manages self-insurance and
purchase of external insurance to optimise cover and value.
Self-insured risks are monitored and programs are in place to
help us pre-empt and mitigate losses.
• An external actuary helps determine self-insurance liabilities
recognised in the Statement of Financial Position.
climate change on
the resilience of our
strategy. Three
possible climate
change 2030
scenarios were used
(stated policies;
ambitious global
climate action; and
runaway climate
change) to test
strategic resilience.
related commodity
assessment
risks and
opportunities.
Assessed fifty-five
core commodities
encompassed the
store network,
distribution centres
and supply routes.
(covering ~60% of
Set a Scope 3
Coles’ revenue)
supplier engagement
against both physical
target validated by
and transitional
the Science Based
climate
vulnerabilities.
Subsequently
undertook a ‘deep
dive’ into 10
commodities
assessed as being
highly vulnerable to
climate risks to inform
mitigating actions.
Targets initiative.
Commenced the
development of a
Climate Action
Roadmap to meet
current and
emerging climate
disclosure
requirements.
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1
Coles currently does not purchase carbon offsets to decarbonise its operations. Carbon offsets are only purchased for the purpose of the Coles Finest carbon
neutral beef and pork products.
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
Governance
Strategy
• Flooding events drive approximately
In response, we are seeking to partner
Climate change has been identified and
Our assessment includes the following
The Board oversees and approves the
The focus this year has been on two key
strategic direction of the Group and
pieces of work – the completion of a
oversees the effectiveness of Coles’
physical risk assessment of our assets and
sustainability and governance policies
operations, and the development of a
and practices, including exposure to
Climate Action Roadmap, which will be
climate change and other
ongoing in FY24.
60% of financial losses across the
portfolio. The financial impact of
flooding events is estimated to
increase by around 23% over the next
10 years when assessing against RCP
8.5 2030 (Intergovernmental Panel on
Climate Change high-emissions
environmental and social risks, and
opportunities. The Audit and Risk
Physical risk assessment
scenario).
Committee supports the Board in fulfilling
Over recent years Coles has
its responsibilities including evaluating
experienced the physical and financial
the adequacy and effectiveness of the
impacts of extreme weather events such
Group’s identification and management
as floods, cyclones, and bushfires. These
of environmental and social
impacts include physical damage to
sustainability risks and its disclosure of
assets, inability to access assets and
any material exposures to those risks,
equipment, loss of revenue from store
including financial and non-financial
closures, and decreases in the efficiency
• The distribution network (distribution
centres and transport routes) was
found to be the area of highest risk
due to the scale of potential
downstream impacts. Resilience of
the distribution network is therefore a
critical consideration in all operations
and future asset planning.
risks.
The Chief Operations and Sustainability
Officer, a member of the ELT reporting to
the Chief Executive Officer, provides
regular updates to the Board and the
Audit and Risk Committee on
sustainability risks, issues and progress
of equipment sensitive to climate (e.g.
refrigeration, heating and cooling). For
• Coles has a high reliance on asset
integrity and function of third party
this reason, prior to finalising the location
assets, such as transport
of our new ADC in Redbank,
Queensland, we undertook extensive
analysis of potential flooding impacts as
part of the location planning process.
infrastructure, distribution centres and
shopping centres.
In FY24, we will use these findings to
inform our climate risk management
against commitments. Standardised
Climate change projections show that
approach.
quarterly reporting, with performance
the intensity and frequency of extreme
monitoring against our sustainability
weather events in Australia are only
commitments (which includes our
going to increase1, exacerbating
Managing supply chain disruption
– fresh produce
emission reduction targets) is also
impacts on our business. In FY23, we
In recent years Coles has experienced
provided to the Board.
completed an assessment of Coles’
supply chain disruptions to several fresh
During FY23 the Board was also
presented with updates on market
developments (including emerging
disclosure frameworks) in relation to
climate change and nature, as well as
information on how we are mitigating
risks associated with geographical
concentration in fresh produce
categories. The Board reviews Coles’
corporate strategy annually which
includes considering whether it is
assets and operations (including stores,
produce categories because of extreme
distribution centres, and key transport
weather events and changing weather
routes) that built on the high-level
patterns.
physical risk assessment completed in
FY22. This work involved engagement
with different parts of the business to
understand historical events and
impacts, determine an asset criticality
framework and to inform where to focus
the risk assessment and
recommendations.
During FY23, we reviewed several
categories within fresh produce
considered to be at risk from a
geographical concentration
perspective. In determining the level of
risk, we considered both the financial
loss (as a percentage of fresh produce
sales) resulting from an impact to a ‘high
responsive to the future risks and
Key findings from the assessment include:
geographically concentrated’ region,
opportunities arising from the transition
to a net zero economy.
• The financial impact of physical
climate risk in the store network is not
With the Environmental, Social and
materially significant in the context of
Governance (‘ESG’) landscape
Coles’ total portfolio, which is well
and the likelihood, after accounting for
risk mitigation factors and impacts
associated with historical weather
events.
continuing to rapidly evolve, in FY23 we
diversified across assets and regions.
While no categories were deemed high
have been working through a review of
In addition, with respect to store
risk due to the ability to source
our overall sustainability governance
design, the specifications used
alternative supply, high substitutability
arrangements. During this period, the
already take into consideration future
and the likelihood that material impacts
primary management governance
conditions to improve resilience in
of extreme weather events would be
forums for sustainability have been the
extreme weather (for example, new
industry wide, four fresh produce
quarterly business reviews, attended by
stores are designed for a one in
categories were considered to be
members of the ELT, and ELT meetings.
100-year storm event). The design
medium risk – namely, lettuce,
brief is frequently updated.
strawberries, berries and bananas.
with suppliers developing new growing
disclosed as a material risk to the Group
risks:
regions (e.g. bananas grown in regions
since FY19. Refer to the Risk
other than Far North Queensland, which
Management section for further
is prone to cyclones) or ‘spreading out’
information on Coles’ material risks.
• Transition – risks associated with the
transition to a lower carbon economy
including management of
existing regions to reduce geographical
concentration and investing in purpose
built and technologically advanced
facilities (such as covered cropping).
Climate change risk exposure, together
heightened stakeholder
with associated management plans, risk
expectations, policy, regulatory and
appetites and metrics, is reported to the
legal changes, and technological
Executive Leadership Team, the Audit
developments.
Climate Action Roadmap
and Risk Committee, and the Board
Building on work undertaken over the
past three years to align our approach
with the 2017 recommendations of the
regularly during the year, along with the
broader suite of material risks to the
Group.
TCFD, this year we commenced the
Climate change risk is supported by an
development of a Climate Action
underlying climate change risk and
Roadmap (‘the Roadmap’). It is
opportunity profile. This profile identifies
anticipated the Roadmap will include
transition and physical climate change
key actions for Coles over the short,
risks and opportunities impacting the
medium and long term to manage
Group, together with associated actions
climate-related risks and opportunities
and management plans. These risks and
effectively and respond to stakeholder
opportunities are presented in the
expectations.
following section.
The Roadmap will seek to further align
During FY23, we also incorporated the
Coles to the TCFD and other current and
management of climate change risks
emerging disclosure frameworks –
and opportunities within the Coles Risk
• Physical – risks associated with acute
event driven weather impacts, for
example increasing severity of
extreme weather events, and chronic
long-term shifts in climate patterns.
A description of Coles’ transition and
physical risks and management
response, as well as future opportunities,
is presented in the following table. Many
of the downside risks are also considered
to be material business risks to the Coles
Group. Analysis of the risk exposures
considered financial, reputational,
health and safety, legal and regulatory,
and operational consequences in the
short-term (0 to 2 years), medium-term (2
including the Transition Plan Taskforce
Management Standard. This update was
to 10 years) and long-term (10+ years).
Disclosure Framework (UK) and IFRS S2
approved by the Board in June 2023.
Climate-related Disclosures issued by the
International Sustainability Standards
Board (‘ISSB’).
Further information about our Risk
Management Policy and Risk
Potential financial impacts include:
revenue streams, operational and
capital costs, asset values, cost of
Management Standard is available in
finance and insurance premiums, and
The scenario analysis we undertook in
Coles’ Corporate Governance
market share.
FY21 and FY22 will inform the
Statement.
development of the Roadmap. Detail of
the scenario analysis undertaken in prior
Climate-related risks
years is available in our FY21 and FY22
As noted in the previous section, we
Annual Reports.
Risk management
recognise that Coles is exposed to
increasing climate-related risks.
Changing weather patterns and climate
We apply an integrated Group-wide
extremes are happening at an increased
approach to the management of risk
pace1, emphasising the need to
through the application of the Coles Risk
develop, refine and implement
Management Standard.
adaptation and mitigation actions to
address the changing nature of climate
risk now and in the future.
Consideration has also been given to
the potential financial impacts of
climate-related risks on the carrying
value of goodwill through a qualitative
review of the Group’s climate change
risk assessment. This review did not
identify any material financial reporting
impacts.
1
Source: IPCC WGII AR6 Fact Sheets – Australasia: Fact Sheets | Climate Change 2022: Impacts, Adaptation and Vulnerability (ipcc.ch)
1
Intergovernmental Panel on Climate Change (IPCC) AR6 Synthesis Report, March 2023 (AR6 Synthesis Report: Climate Change 2023 — IPCC.)
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report Transition risks
Risk 1 – Changing stakeholder expectations of acceptable climate performance
Description
Coles seeks to minimise the impact of its operations on the environment. We also
recognise the expectations and preferences of our team members, customers,
community, investors and NGOs are shifting in relation to climate change and the
environment. This includes enhanced expectations around minimising the impact of
climate-related disruptions to our customers, improving energy efficiency, offering
sustainable products and reducing greenhouse gas emissions.
Relevant TCFD risk category
Reputation
Market
Relevant TCFD financial impact category Revenue, expenditure, assets and liabilities, capital financing
Potential financial impacts
• Decreased revenue due to reduced demand for goods and services.
Our management response
• Sustainability strategy incorporating our emissions reduction targets. Refer to the
•
Increased costs due to turnover in team members or third parties with whom we
do business.
Metrics and Targets section for further information.
• Teams and processes in place to understand, monitor and respond to the
concerns and expectations of team members, customers, investors, NGOs and
the community more broadly.
• Governance arrangements to manage and monitor the development and
progress against sustainability goals and initiatives, including those related to
climate change.
Medium- and long-term considerations
• Monitoring for shifts in consumer preferences in favour of lower emissions and
fewer water-intensive products.
Risk 2 – Changing policy, regulatory and legal requirements to decarbonise and manage climate risk
Description
New and evolving climate-related policies and regulations may impose
requirements that affect the way our business operates. These may include policies
and regulations designed to limit the impacts of climate change, or transition to a
lower carbon economy. Ongoing monitoring and assessment of changing
regulations is required to determine whether action is needed to manage
Relevant TCFD risk category
compliance.
Policy & Legal
Relevant TCFD financial impact category Expenditure
Potential financial impacts
•
Increased costs to comply with changing requirements.
•
Increased costs associated with offsetting carbon-intensive operations or
products.
Risk 3 – Low emissions technology development and adoption
Description
Decarbonising, or becoming more resilient to climate impacts, can be aided by
technology. Delayed adoption of new technologies can reduce our competitiveness
and increase our exposure to energy market volatility. Delays may occur when there
are limited suppliers in the market to source new technologies; when there is
inadequate infrastructure to support technology adoption; or when there is a lack of
people trained in the installation, operation and maintenance of the technology.
Relevant TCFD risk category
Technology
Relevant TCFD financial impact category Expenditure, assets and liabilities, capital financing
Potential financial impacts
• Write-offs or early retirement of existing assets.
•
Increased costs associated with investment in the research, development and
implementation of new technology.
•
Increased costs to adopt new practices and processes, including upskilling
workforce capabilities.
Our management response
• Regularly assessing new technologies with the potential to advance how we
mitigate or adapt to climate change through literature reviews, attending
conferences, and assessing inbound requests from potential suppliers to review
their products.
• Energy purchasing, market services and energy asset strategy to manage and
orchestrate energy consumption and cost to supermarkets, including renewable
energy contracts and orchestration agreements.
• Strategies developed to replace existing refrigeration and heating, ventilation
and air conditioning assets with systems that run on lower global warming
potential gases and natural refrigerants.
Medium- and long-term considerations
• Adequacy of infrastructure to support increasing uptake of electric vehicles in
Risk 4 – Decreased access to insurance and finance
Australia.
Description
Banks and insurers may become increasingly reluctant to support businesses and
operations with significant exposure to climate risks and inadequate processes to
Relevant TCFD risk category
manage these risks.
Policy & Legal
Relevant TCFD financial impact category Expenditure, asset and liabilities, capital financing
Potential financial impacts
•
Increased cost of finance.
• Higher insurance premiums.
• Unavailability of insurance for activities or sites located in specific high-risk areas.
Our management response
• Regulatory non-compliance is one of our material business risks and is managed
Our management response
• Coles’ Sustainability Strategy (and associated metrics and targets) has facilitated
with regards to the risk appetite statements and key risk indicators agreed by the
Board. Refer to the Risk Management section for further information about risk
mitigations.
• Monitoring of new and impending legislative and policy changes, as well as
participation in policy consultations to influence change.
• Annual emissions reporting to the Clean Energy Regulator under the National
Greenhouse and Energy Reporting scheme.
• Compliance and legal teams train and support relevant teams on sustainability
related advertising and claims to make sure they are not misleading or contrary
to Australian Consumer Law.
Medium- and long-term considerations
• Managing the divergence in environmental requirements imposed by state-
based legislation in the absence of a national approach.
• Monitoring of external trends relating to climate litigation and direct claims being
made against companies internationally and domestically.
access to the sustainable finance markets. Coles has established a total of $1.425
billion bilateral bank facilities in sustainability linked loan formats (‘SLLs’). The SLLs
draw a direct line between our sustainability performance and our cost of
capital. Coles is incentivised through margin adjustments to achieve sustainability
targets linked to Scope 1 and 2 emission reductions, waste diversion from landfill,
and women in leadership.
• Transferring risk through the insurance market where it is competitive to do so and
based on exposure to the balance sheet. Coles Captive Insurance is used as a
mechanism to fund additional exposures that cannot be risk transferred to a
certain extent.
• Natural catastrophe modelling to give confidence to external insurers. This
modelling will be revisited at least every two years or earlier if there is evidence
that the modelling has become outdated.
Medium- and long-term considerations
•
Increased insurance exclusion clauses for specific regions susceptible to extreme
weather events.
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report
Physical risks
Risk 5 – People safety and wellbeing (Coles team members and broader supply chain)
Description
Increases in the frequency and intensity of extreme weather events, and changes in
weather patterns, can lead to increasing health and safety risks to Coles’ team
members, customers, and third party suppliers and providers. This includes exposure
to the risk of physical harm, as well as adverse health and wellbeing impacts
Relevant TCFD risk category
including to mental health.
Acute
Chronic
Relevant TCFD financial impact category Expenditure
Potential financial impacts
•
Increased operating costs associated with implementing plans to reduce and
mitigate the health and wellbeing impacts to our team members, customers, and
third party suppliers and providers.
•
Increased costs associated with employee leave, including disaster leave,
absenteeism and/or turnover.
Risk 7 – Operational resilience
Description
Acute and chronic weather events can result in disruption to our stores and
distribution centres through physical damage to assets and equipment, and/or the
inability to access facilities and major transport routes. There may also be more
frequent and prolonged instances of power outages, as well as decreases in the
efficiency and resilience of assets and equipment that are sensitive to climate (e.g.
refrigeration units, heating and cooling).
Relevant TCFD risk category
Acute
Chronic
Relevant TCFD financial impact category Revenue, expenditure, assets and liabilities, capital financing
Potential financial impacts
•
Increased operating and capital costs.
•
Increased costs to repair, maintain or replace assets.
• Reduced revenue and/or stock loss.
•
Increased insurance premiums.
• Write-offs or impairment of assets.
Our management response
• People safety is a material business risk and is managed with regards to the risk
Our management response
• Supply chain resilience is a material business risk and is managed with regard to
appetite statements and key risk indicators agreed by the Board. Refer to the Risk
Management section for further information about risk mitigations.
• The Coles Health, Safety and Injury Management system (SafetyCARE) and the
safety plans for each of our segments factor in the acute impacts (e.g. bushfires)
and chronic impacts (e.g. heat fatigue) of climate change.
• Every store has an emergency response plan, informed by a safety risk assessment
that factors in bushfire, flood and cyclone zones.
• Learnings from incidents and events, and opportunities for improvement, are
identified and incorporated into our safety, emergency management and
response plans and processes.
Medium- and long-term considerations
• The types of people safety and wellbeing risks are expected to be the same in the
medium and long-term, however their impact may be amplified by an increase in
the frequency and/or intensity of extreme weather events and changing weather
patterns.
Risk 6 – Food safety and quality
Description
An increase in the frequency and severity of extreme weather events and long-term
risk appetite statements and key risk indicators agreed by the Board. Refer to the
Risk Management section for further information about risk mitigations.
• Store design specifications consider their resilience in extreme conditions.
• Ongoing maintenance and asset replacement program aimed at progressively
maintaining and replacing assets when required.
• Stock planning in areas affected by cyclone activity (e.g. WA, QLD), and other
forecast weather events to ensure stores are sufficiently stocked before entering
cyclone season.
•
Insurance arrangements are in place for property and business interruption
(subject to policy terms, conditions and exclusions).
• Completion of a physical climate risk assessment to understand the potential
physical impacts of climate change on Coles’ assets and operations and identify
mitigation actions to improve climate resilience.
Medium- and long-term considerations
• Continuous increases in the frequency and/or severity of natural hazards and the
potential impact on our assets, particularly ageing assets, and third party logistics
infrastructure.
shifts in climate patterns can lead to food safety and quality risks throughout the
supply chain, including changing persistence and occurrence of pests and diseases,
food and soil contamination, and lower than expected shelf-life for fresh produce.
Risk 8 – Supply security
Description
Our ability to source products domestically and internationally can be adversely
impacted by climate change. The occurrence of extreme weather events and
longer-term changes in weather patterns can reduce supplier productivity and
Relevant TCFD risk category
availability of supply.
Acute
Chronic
Relevant TCFD risk category
Acute
Chronic
Relevant TCFD financial impact category Expenditure
Potential financial impacts
• Decreased revenue due to reduced availability of supply.
•
Increased operating costs associated with implementing plans to reduce and
Relevant TCFD financial impact category Revenue, expenditure
mitigate impacts to food and product safety and quality.
Potential financial impacts
• Decreased revenue due to reduced availability of supply.
Our management response
• Product and food safety is a material business risk and is managed with regards to
the risk appetite statements and key risk indicators agreed by the Board. Refer to
the Risk Management section for further information about risk mitigations.
• Disaster recovery checklists established to help suppliers recover from the impact
of extreme weather events on food safety.
• Developing a food safety strategy to improve the management of food safety
across the supply chain considering likely changes in climatic conditions.
Medium- and long-term considerations
• The types of food safety and quality risks are expected to be the same in the
medium and long-term, however their impact may be amplified by an increase in
the frequency and/or intensity of extreme weather events and changing weather
patterns.
Our management response
• Supply chain resilience is a material business risk and is managed with regard to
•
Increased costs to import products from overseas or diversify supplier base.
•
Increased exposure to price volatility.
the risk appetite statements and key risk indicators agreed by the Board. Refer to
the Risk Management section for further information about risk mitigations.
• During FY23 reviews were undertaken of supplier concentration in key categories,
and geographical risk across a number of Coles’ fresh produce categories, to
highlight mitigations in place and identify opportunities to further reduce risk of
supply disruption.
• Medium and longer-term supply security risks and mitigations are assessed on an
ongoing basis as part of category planning.
• Strategy developed around the security of our meat supply.
• Provision of support to suppliers through grants for climate change adaptation
and mitigation initiatives via the Coles Nurture Fund.
• Disaster relief packages are available to suppliers on an ad hoc basis.
Medium- and long-term considerations
•
Increasing frequency and/or severity of extreme weather events and changing
climate patterns may result in the risk of supplier consolidation.
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report
Climate-related opportunities
Opportunity 1 – Resource efficiency and greenhouse gas reduction
Description
We are continuing to increase our resource efficiency and reduce greenhouse gas
emissions in areas over which we have control and influence.
Relevant TCFD opportunity category
Resource Efficiency
Energy Source
Potential financial benefits
• Reduced operating costs (e.g. through efficiency gains and cost reductions)
Our management response
• Detailed information on how we are working to increase resource efficiency and
reduce greenhouse gas emissions is provided in the following Metrics and Targets
•
Increased production capacity
section.
Opportunity 2 – Increased operational resilience, supply chain resilience and business continuity planning
Description
We are seeking to build the resilience of our business, our community and our value
chain against climate-related impacts, both physical and transitional.
Relevant TCFD opportunity category
Resilience
Potential financial benefits
• Enhanced resilience of our supply chain and ability to operate in various
conditions, increasing sales and revenue
• Enhanced resilience of our assets and infrastructure, increasing asset value
Our management response
•
In FY24, we will use the results of the physical risk assessment discussed previously
to inform the work necessary to reduce exposure to climate risk across the
portfolio.
• We will also continue to support suppliers through grants for climate
change adaptation and mitigation initiatives through the Coles Nurture Fund
(further information about this grants program will be available in our
2023 Sustainability Report).
Metrics and targets
In FY21, we announced targets to reduce
greenhouse gas emissions including the
following commitments:
• to deliver net zero greenhouse gas
emissions by 20501
• for the entire Coles Group to be
powered by 100% renewable
agreement which commenced in 2021
Wales. All three systems are expected to
with MYTILINEOS in New South Wales.
be energised in either FY24 or FY25.
We are aiming to purchase more than
Coles and Origin recently signed an
90% of our electricity in Queensland for
agreement which will see the
10 years from CleanCo, the state-owned
companies co-invest in solar, batteries
low-emissions energy generator, retailer
and flexible load controls across Coles
and developer. In addition to Clean Co’s
stores nationally. The agreement is
existing low emissions portfolio, the
expected to lower Coles’ emissions,
retailer will support Coles through
reduce electricity consumption from the
electricity by the end of FY25 (refer to
the Renewable electricity section for
further information)
agreements with Western Downs Green
grid and bring down operational costs,
Power Hub (set to be Australia’s largest
with solar to be delivered at 20 stores in
solar farm when completed) and the
FY24. Over the next three years, the
• to reduce combined Scope 1 and 2
MacIntyre Wind Farm (one of the largest
companies aim to install 20 MW of solar
greenhouse gas emissions by more
than 75% by the end of FY30 (from a
FY20 baseline). In July 2023 this target
was validated by the Science Based
Targets initiative (‘SBTi’)2 and classified
as 1.5°C aligned, currently the most
ambitious designation available
through the SBTi process.
Our main sources of Scope 1 (direct)
emissions include emissions from
refrigerant gases, natural gas and
transport fuel, with a minimal
contribution from stationary LPG and
diesel for onsite back-up generators.
Scope 2 (indirect) emissions are those
associated with our electricity use and
make up the bulk of our combined
Scope 1 and 2 emissions.
Scope 3 emissions are indirect emissions
(not included in Scope 2) that occur in
our value chain and make up the bulk of
Coles’ overall emissions profile.
Emissions data, including our Scope 3
inventory, will be available in our 2023
Sustainability Report.
Scope 1 and 2 emissions
Renewable electricity
We have made significant progress this
year towards our 100% renewable
electricity target through onsite solar
and large-scale generation certificate
(‘LGCs’) arrangements which match our
consumption. In July 2022, we
commenced our agreement with
CleanCo in Queensland to purchase
electricity and LGCs and began our
long-term LGC agreement with Lal Lal
Wind Farms in Victoria. These
agreements are in addition to our
LGC-bundled power purchase
wind farms to be built in the Southern
panels on top of 100 stores, with batteries
Hemisphere, with 180 turbines).
to be installed at one third of the stores
Our agreement with Lal Lal Wind Farms
will enable us to purchase LGCs from the
wind farms near Ballarat, Victoria until
the end of 2030. Lal Lal Wind Farms has
been exporting renewable electricity at
full capacity to the Victorian grid since
December 2020.
We are on track to meet our FY25
renewable electricity commitment
through the addition of upcoming
to capture and store excess renewable
electricity generated on-site. In addition,
Coles’ rooftop solar, batteries, and
energy assets such as in-store heating,
cooling and refrigeration systems will be
connected to Origin’s virtual power plant
to help ease pressure on the energy grid
during peak periods of demand.
Refrigeration, HVAC management
and energy efficiency
long-term LGC agreements. We have
Refrigeration is vital for maintaining and
signed these agreements with Neoen,
extending food quality and reducing
Origin Energy, ACCIONA Energía, and
waste. Coles’ refrigeration management
ENGIE to source LGCs from wind and
program includes the use of natural
solar farms across Victoria, New South
refrigerants, which have close to no
Wales, South Australia and Queensland.
global warming potential (‘GWP’)
The portfolio of generation assets
compared with older synthetic
includes several wind and solar farms,
refrigerant gases with high GWP.
which are under construction, as well as
existing sites such as Willogoleche Wind
Farm in South Australia and Mt
Gellibrand Wind Farm in Victoria.
When building new Coles supermarkets,
the majority (>90%) now use natural
refrigerants. Aligning to our store
refurbishment program where practical
In May 2023 we completed a 3.5
and commercially viable we convert
megawatt (‘MW’) solar installation and
supermarkets to lower GWP or natural
energisation at our automated dry good
refrigerants. At the end of FY23, natural
distribution centre in Oakdale, New
refrigerants were in use in 54
South Wales. The solar installation, which
supermarkets (28 in FY22) and 33 Coles
is among the largest rooftop solar
Liquor stores (15 in FY22).
solutions in the Coles network, is
comprised of 7,000 solar panels covering
16,700 square metres of roof and is
expected to supply 32% of the electricity
for the facility. Furthermore, a 300
kilowatt (‘kW’) solar system was
constructed at our Chef Fresh facility in
To reduce gas loss, we have continued
to invest in leak detection technology
and our refrigeration pipe replacement
program. We also have several energy
efficiency initiatives and trials in place
across our stores and distribution centres.
New South Wales and is expected to
Scope 3 emissions
generate 420 megawatt hours (‘MWh’)
of renewable energy per year.
Construction of two further rooftop solar
systems is underway at our chilled
distribution centres in Kewdale, Western
Australia and Eastern Creek, New South
Coles has set a supplier engagement
target requiring more than 75% of
suppliers by spend to set science-based
targets by the end of FY27. This Scope 3
target was validated by the SBTi during
the year.
1 Currently, Coles’ commitment refers only to Coles’ Scope 1 and Scope 2 emissions.
2 The SBTi is a partnership between CDP, the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature. It provides an
independent assessment and validation of net-zero science-based targets in line with a 1.5°C future.
Pictured: Team member Dwayne with Electric Yard Tug which was trialled at Truganina DC.
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report
Given most of Coles’ Scope 3 emissions
Scope 3 categories
are upstream of our operations, this
target allows us to engage high emitting
categories and work collaboratively with
our suppliers to reduce emissions. As an
organisation with an extensive supply
chain, there are a range of challenges
related to measuring and reducing
Scope 3 emissions. These include our
reliance on supplier partners for relevant
information, gaps in data, issues with
data quality and our ability to influence
suppliers’ operational and commercial
practices. With these challenges in mind,
Coles has appointed a new position of
General Manager, Sustainability Supplier
Relations, whose focus will be on
engaging with, and supporting, our
suppliers to reduce their emissions.
During FY23, we calculated our FY22 and
FY23 inventory for Scope 3 emissions
covering the following Greenhouse Gas
Protocol (‘GHG Protocol’) categories1.
We also recalculated our FY20 baseline
to account for the sale of Coles Express
fuel and convenience retailing
operations during FY23.
m
a
e
r
t
s
p
U
m
a
e
r
t
s
n
w
o
D
Category
1. Purchased goods and services
2. Capital goods
3. Fuel and energy-related activities
4. Upstream transportation and distribution
5. Waste generated in operations
6. Business travel
7. Employee commuting
11. Use of Sold Products
12. End-of-life treatment
of sold products
15. Investments and joint ventures
Further detail on how we have been working with suppliers to reduce their
emissions is available in our 2023 Sustainability Report.
Board of Directors:
Biographical details
James Graham AM
BE (Chem) (Hons), MBA, FIEAust EngExec, FTSE, FAICD, SF FIN
Leah Weckert
BEng (Hons), BSc, MBA, GAICD
Chairman and Non-executive Director, Chairman of the
Nomination Committee and Member of the People and
Managing Director and CEO
Culture Committee
Age: 75
Age: 44
James Graham has extensive business, investment, corporate
Leah Weckert became the Managing Director and Chief
and governance experience, including as a Non-executive
Executive Officer of Coles on 1 May 2023. Leah joined Coles in
Director of Wesfarmers Limited for 20 years, prior to his
2011 and has held several senior roles across the business. Most
retirement in July 2018. James is Chairman of Gresham Partners
recently, Leah was Chief Executive, Commercial and Express,
Limited, having founded the Gresham Partners Group in 1985.
leading the Supermarkets and Coles Express business units.
From 2001 to 2009, James was a Director of Rabobank Australia
Limited, initially as Deputy Chairman and then Chairman, and
was responsible for the Bank’s operations in Australia and New
Zealand. He was also Chairman of the Darling Harbour
Authority between 1989 and 1995, and was previously
Before this, Leah was Chief Financial Officer and played a
leadership role in the demerger of Coles from Wesfarmers in
2018. Leah has also held roles as Director Strategy, Director
People & Culture, State General Manager Victoria Operations,
and General Manager Merchandise, Strategy and Innovation.
Managing Director of Rothschild Australia Limited. In 2008,
Prior to joining Coles, Leah worked at McKinsey & Company,
James was made a member of the Order of Australia.
advising large private and public sector clients, and Foster’s
Group in Strategy and Business Development.
She is a Graduate of the Australian Institute of Company
Directors and a member of Chief Executive Women.
Pictured: Head of Energy Jane Mansfield and Origin Zero Executive General Manager James Magill inspect the rooftop solar panels at Coles Craigieburn Village,
following a landmark agreement to co-invest energy and battery assets.
1
Consistent with guidance in the GHG Protocol, Category 8 – Upstream leased assets and Category 9 – Downstream transportation and distribution are excluded
from our Scope 3 emissions inventory. Category 10 – Processing of sold products, 13 – Downstream leased assets and 14 – Franchises are not relevant to Coles Group.
It should also be noted that Coles has calculated a portion of emissions associated with Viva Energy’s sale of fuel through Coles Express sites in Category
15 – Investments, based on commission received through the agreement with Viva Energy.
Pictured: Managing Director & CEO, Leah Weckert, together with Coles Local store manager, Jake, and some members of the Board at the opening of Coles Local
Toorak.
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report
Terry Bowen
BAcc, FCPA, MAICD
Abi Cleland
MBA, BCom/BA
Paul O’Malley
BCom, M.AppFinance, ACA
Wendy Stops
BAppSc (Information Technology), GAICD
Non-executive Director, Member of the Nomination
Committee and the Audit and Risk Committee
Non-executive Director, Member of the Nomination
Committee and the People and Culture Committee
Non-executive Director, Chairman of the Audit and Risk
Committee and Member of the Nomination Committee
Non-executive Director, Member of the Nomination
Committee and the Audit and Risk Committee
Age: 56
Age: 49
Age: 59
Age: 62
Terry Bowen is currently a Non-executive Director of BHP Group
Abi Cleland is currently a Non-executive Director of
Paul O’Malley is the Chairman and a Non-executive Director of
Wendy Stops is the Chairman of Fitted for Work, Deputy
Limited and Transurban Group Limited. He is also Chairman of
Computershare Limited and Orora Limited. She was previously
Commonwealth Bank of Australia Limited. He was Managing
Chancellor and Council member at the University of
the Operations Group at BGH Capital.
a Non-executive Director of Sydney Airport Corporation
Director and Chief Executive Officer of BlueScope Steel Limited
Melbourne, Chairman of the Advisory Board for the Melbourne
Terry previously served as Finance Director of Coles (2007 to
2009), Finance Director of Wesfarmers Limited (2009 to 2017)
and Managing Partner and Head of the Operations Group at
BGH Capital (2018 to 2019). Terry was also formerly the Chief
Financial Officer of Jetstar Airways, Finance Director of
Wesfarmers Landmark, and before this held senior finance roles
with Tubemakers of Australia Limited.
Limited, Chairman of Planwise AU, a Director of Swimming
from 2007 to 2017, after joining the company as Chief Financial
Business School’s Centre for Business Analytics and a member
Australia and on the Lazard PE Fund advisory committee. From
Officer. Previously, Paul was the Chief Executive Officer of TXU
of the AICD’s Governance of Innovation and Technology Panel.
2012 to 2017, Abi established and ran an advisory and
Energy, a subsidiary of TXU Corp based in Dallas, Texas. He held
management business, Absolute Partners, focusing on strategy,
other senior financial management roles within TXU and
mergers and acquisitions and disruption. Before that, she held
previously worked in the investment banking and consulting
senior management roles at KordaMentha’s 333, where she
sectors. A former Director of the Worldsteel Association, Paul
was Managing Director, and at ANZ Banking Group Limited,
was Chairman of their Nominating Committee and Trustee of
Incitec Pivot Limited and Amcor Limited.
the Melbourne Cricket Ground Trust. He has also served as
Chairman for Australian Catholic Redress Ltd.
Previously, Wendy was a member of the Advisory Committee to
the Digital Technology Taskforce of the Department of Industry,
Science and Resources and a senior management executive in
the information technology and consulting sectors. This
includes her last 16 years with Accenture in various senior
management positions in Australia, Asia Pacific and globally.
Her board experience includes Blackmores Limited (where she
Directorships of listed entities, current and recent
Directorships of listed entities, current and recent
(last three years):
(last three years):
Directorships of listed entities, current and recent
was Chairman from 2022 to 2023), Commonwealth Bank of
Non-executive Director of BHP Group Limited (since October
Non-executive Director of Computershare Limited (since
2017), Transurban Group Limited (since February 2020).
February 2018), Orora Limited (since February 2014), Sydney
Airport Corporation Limited (April 2018 to March 2022).
(last three years):
Chairman of Commonwealth Bank of Australia Limited (since
August 2022) and Non-executive Director (since January 2019).
Jacqueline Chow
MBA, BSc (Hons), GAICD
Richard Freudenstein
LLB (Hons), BEc
Scott Price
BA, MBA, MA
Non-executive Director, Member of the Nomination
Committee and the Audit and Risk Committee
Non-executive Director, Chairman of the People and Culture
Committee and Member of the Nomination Committee
Non-executive Director, Member of the Nomination
Committee and People and Culture Committee
Age: 51
Age: 58
Age: 62
Jacqueline Chow is a Non-executive Director of Boral Limited,
Richard Freudenstein is the Chairman and a Non-executive
Scott Price commenced as Group Chief Executive of DFI Retail
nib Holdings Limited and Charter Hall Group. She is also a
Director of Appen Limited as well as a Non-executive Director
Group Holdings Limited on 1 August 2023, having retired in early
Director of the Australia-Israel Chamber of Commerce of New
of REA Group Limited (where he was Chairman from 2007 to
2022 as Executive Vice-President; President of UPS International.
South Wales.
2012). He is a board member of Cricket Australia and Deputy
Scott was also previously UPS’s Chief Strategy and
From 2016 to 2019, Jacqueline was a Director of Fisher & Paykel
Chancellor of the University of Sydney.
Appliances. Jacqueline previously held senior management
Richard was previously Chief Executive Officer of Foxtel (2011 to
positions, including Chief Operating Officer, Global Consumer
2016), Chief Executive Officer of The Australian and News Digital
Transformation Officer and was responsible for strategic
planning, Global Business Services and the company’s
Advanced Technology Group.
and Food Service, with Fonterra Co-operative Group, one of
Media at News Ltd (2006 to 2010), and Chief Operating Officer
From 2009 to 2017, Scott led Walmart’s Asia store business
the world’s largest dairy product producers and exporters. Prior
at British Sky Broadcasting plc (2000 to 2006). His previous board
before moving to the United States to lead global sourcing,
to that, she was in senior management with Campbell Arnott’s
positions include Ten Network Holdings Limited (2015 to 2016),
international technology, real estate and strategy. He was also
and Kellogg Company. She was also Programme Steering
Foxtel (2009 to 2011) and Astro Malaysia Holdings Berhad (2016
previously President and CEO of DHL Asia and then DHL Europe
Group Director, Ministry for Primary Industries, New Zealand and
to 2019). Richard was also a member of the Advisory Board of
and began his career at The Coca-Cola Company in Asia.
Deputy Chairman of the Global Dairy Platform Inc. She was
artificial intelligence software company, Afiniti Ltd (2017 to
Scott is a former board member of the not-for-profit World Food
previously a Senior Advisor at McKinsey Consulting RTS.
2022).
Program USA.
Directorships of listed entities, current and recent
Directorships of listed entities, current and recent
Directorships of listed entities, current and recent
(last three years):
(last three years):
(last three years):
Non-executive Director of Boral Limited (since March 2022), nib
Chairman of Appen Limited (since October 2021) and Non-
Group Chief Executive and Director of DFI Retail Group
Holdings Limited (since April 2018), Charter Hall Group (since
executive Director (since August 2021), Non-executive Director
Holdings Limited (and representative director on its affiliate,
February 2021).
of REA Group Limited (since November 2006).
Robinsons Retail Holdings Inc) (since August 2023).
Australia Limited, Altium Limited, Accenture Software Solutions
Australia and Diversiti. Currently, Wendy is a member of Chief
Executive Women, serving on their Leaders Program
Committee, and a graduate of the AICD.
Directorships of listed entities, current and recent
(last three years):
Chairman of Blackmores Limited (November 2022 to August
2023) and Non-executive Director (April 2021 to August 2023),
Non-Executive Director of Commonwealth Bank of Australia
Limited (March 2015 to October 2020).
54
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report Directors’ Report
The Directors present their report on the consolidated entity consisting of Coles Group Limited (‘the Company’) and its controlled
entities at the end of, or during, the financial year ended 25 June 2023 (collectively, ‘Coles’ or ‘the Group’).
The information referred to below forms part of and is to be read in conjunction with this Directors’ Report:
• the Operating and Financial Review
• the Remuneration Report
• Board of Directors: Biographical Details
• Note 7.3 Auditor’s remuneration to the financial statements accompanying this report
• Note 7.5 Events after the reporting period to the financial statements accompanying this report
• the Auditor’s Independence Declaration required under section 307C of the Corporations Act 2001 (Cth)
Directors
The Directors in office as at the date of this Directors’ Report are:
NAME
POSITION HELD
PERIOD AS A DIRECTOR
James Graham AM
Chairman and Independent, Non-executive Director
Appointed 19 November 2018
Leah Weckert
Terry Bowen
Managing Director and Chief Executive Officer
Appointed 1 May 2023
Independent, Non-executive Director
Appointed 1 October 2022
Jacqueline Chow
Independent, Non-executive Director
Appointed 19 November 2018
Abi Cleland
Independent, Non-executive Director
Appointed 19 November 2018
Richard Freudenstein
Independent, Non-executive Director
Appointed 19 November 2018
Paul O’Malley
Scott Price
Wendy Stops
Independent, Non-executive Director
Independent, Non-executive Director
Appointed 1 October 2020
Appointed 1 October 2022
Independent, Non-executive Director
Appointed 19 November 2018
The biographical details of the current Directors set out information about the Directors’ qualifications, experience, special
responsibilities and other directorships.
The following persons were also Directors during FY23:
NAME
Steven Cain
POSITION HELD
PERIOD AS A DIRECTOR
Managing Director and Chief Executive Officer
Appointed Chief Executive Officer
17 September 2018 and
Managing Director 2 November 2018
Retired as Managing Director and Chief
Executive Officer on 30 April 2023
David Cheesewright
Independent, Non-executive Director
Appointed 19 November 2018
Directors’ meetings
The number of Directors’ meetings (including meetings of committees of Directors) and the number of meetings attended by each
of the Directors of the Company during the financial year are listed below:
DIRECTOR - CURRENT1,2
Held
Attended
Held
Attended
Held
Attended
Held
Attended
AUDIT AND RISK
PEOPLE AND
NOMINATION
BOARD
COMMITTEE
CULTURE COMMITTEE
COMMITTEE
James Graham
Leah Weckert3
Terry Bowen4
Jacqueline Chow
Abi Cleland
Richard Freudenstein
Paul O’Malley
Scott Price5
Wendy Stops
DIRECTOR - FORMER
Steven Cain6
David Cheesewright7
12
2
9
12
12
12
12
9
12
10
12
12
2
9
12
12
12
12
9
12
10
10
3
5
5
5
3
5
5
5
5
5
5
3
5
5
5
5
3
3
4
2
4
4
4
4
2
4
4
4
2
4
4
4
4
2
4
4
1
‘Held’ indicates the number of meetings held during the period that the Director was a member of the Board or Committee.
2
‘Attended’ indicates the number of meetings attended during the period that the Director was a member of the Board or Committee.
3
Leah Weckert commenced as Managing Director and Chief Executive Officer of Coles Group Limited on 1 May 2023.
4 Terry Bowen was appointed as a Non-executive Director of Coles Group Limited and a member of the Nomination Committee with effect from 1 October 2022.
Terry Bowen was appointed as a member of the Audit and Risk Committee with effect from 1 November 2022.
5 Scott Price was appointed as a Non-executive Director of Coles Group Limited and a member of the Nomination Committee with effect from 1 October 2022.
Scott Price was appointed as a member of the People and Culture Committee with effect from 1 November 2022.
6 Steven Cain retired as Managing Director and Chief Executive Officer of Coles Group Limited on 30 April 2023.
7 David Cheesewright retired as a Non-executive Director of Coles Group Limited on 15 June 2023.
Directors’ shareholdings in the Company
Details of Directors’ shareholdings in the Company as at the date of this Directors’ Report are shown in the table below. All Directors
have met the minimum shareholding requirement under the Board Charter.
DIRECTOR
James Graham
Leah Weckert2
Terry Bowen
Jacqueline Chow
Abi Cleland
Richard Freudenstein
Paul O’Malley
Scott Price
Wendy Stops
NUMBER OF SHARES HELD1
500,188
257,829
16,545
20,000
19,816
25,000
3,809
1,000
35,000
Retired 15 June 2023
1
The number of shares held refers to shares held either directly or indirectly by Directors as at 22 August 2023. Refer to the Remuneration Report tables for total shares
held by Directors and their related parties directly, indirectly or beneficially as at 25 June 2023.
2 As at 22 August 2023, Leah Weckert also holds 12,994 STI Shares and 266,039 Performance Rights.
Company secretary
Daniella Pereira LLB (Hons), BA
Daniella Pereira was appointed the Company Secretary of Coles Group Limited on 19 November 2018. Daniella has an extensive
career in legal, governance and company secretariat, including a 14-year career with ASX-listed industrial chemicals company,
Incitec Pivot Limited. Daniella began her career as a lawyer with Ashurst (formerly Blake Dawson).
Principal activities
The principal activities of Coles during the financial year were providing customers with everyday products, including fresh food,
groceries, general merchandise, liquor and financial services through its store network and online platforms.
On 1 May 2023, the Group completed the sale of its fuel and convenience retailing business to Viva Energy. Accordingly, the
principal activities of Coles also included fuel and convenience retailing up to the date of completion.
56
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report
State of affairs
Sale of fuel & convenience business
As noted above, the Group sold its fuel and convenience retailing business during the year with completion on 1 May 2023. Refer to
Note 5.3 Discontinued operations for further information.
CEO transition
Indemnification and insurance of officers
The Company’s Constitution requires the Company to indemnify any person who is, or has been, an officer of the Company,
including the Directors, the Company Secretary and other executive officers, against the liabilities incurred while acting as such
officers to the extent permitted by law.
As permitted by the Company’s Constitution, the Company has entered into a Deed of Indemnity, Insurance and Access with
each of the Company’s Directors, Company Secretary, Chief Financial Officer and certain executives. No Director or officer of the
On 21 February 2023, Coles announced the appointment of Leah Weckert as Managing Director and Chief Executive Officer of
Company has received benefits under an indemnity from the Company during or since the end of the financial year.
Coles with effect from 1 May 2023, upon the retirement of Steven Cain.
Review and results of operations
A review of the operations of the Group during the financial year, the results of those operations and the Group’s financial position
are contained in the Operating and Financial Review (‘OFR’).
Business strategies and prospects for future financial years
The OFR sets out information on the business strategies and prospects for future financial years and refers to likely developments in
Coles’ operations and the expected results of those operations in future financial years. Information in the OFR is provided to
enable shareholders to make an informed assessment about the business strategies and prospects for future financial years of the
Group.
The Company has paid a premium in respect of a contract insuring current and former directors, company secretaries and
executives of the Company and its subsidiaries against liability that they may incur as an officer of the Company or any of its
subsidiaries, including liability for costs and expenses incurred by them in defending civil or criminal proceedings involving them as
such officers, with certain exceptions. It is a condition of the insurance contract that no details of the premiums payable or the
nature of the liabilities insured are disclosed.
Indemnification of auditors
Pursuant to the terms of engagement the Company has with its auditor, Ernst & Young (‘EY’ or ‘Auditor’), the Company has agreed
to indemnify EY to the extent permitted by law and professional regulations, against any losses, liabilities, costs or expenses
incurred by EY where they arise out of or occur in relation to any negligent, wrongful or wilful act or omission by the Company. No
payment has been made to EY by the Company pursuant to this indemnity, either during or since the end of the financial year.
Information that could give rise to any likely unreasonable prejudice or material detriment to the Group, for example, information
that is commercially sensitive, confidential or could give a third party a commercial advantage, has not been included. Other
Non-audit services and auditor’s independence
than the information set out in the OFR, information about other likely developments in the Group’s operations and the expected
Details of the non-audit services undertaken by, and amounts paid to, EY are detailed in Note 7.3 Auditor’s remuneration to the
results of these operations in future financial years has not been included.
financial statements.
Events after the reporting date
On 22 August 2023, the Directors determined a final dividend of 30.0 cents per fully paid ordinary share to be paid on 27 September
The Board is satisfied that the provision of non-audit services during the year by the Auditor is compatible with, and did not
compromise, the auditor independence requirements of the Corporations Act 2001 (Cth) for the following reasons:
2023, fully franked at the corporate tax rate of 30%. The aggregate amount of the final dividend to be paid out of profits, but not
• all non-audit services provided by EY were reviewed and approved to ensure they would not impact the integrity and
recognised as a liability at 25 June 2023, is expected to be $402 million.
objectivity of the Auditor; and
Dividends
Dividends since Coles’ last Annual Report:
PAID DURING THE YEAR
2022 final dividend
2023 interim dividend
TO BE PAID AFTER END OF YEAR
2023 final dividend
CENTS PER SHARE
$m
PERCENTAGE
DATE OF PAYMENT
TOTAL AMOUNT
FRANKED
30.0
36.0
30.0
401
482
402*
100%
100%
28 September 2022
30 March 2023
100%
27 September 2023
DEALT WITH IN THE FINANCIAL REPORT AS
Dividends paid
NOTE
3.3
$m
883
*
Estimated final dividend payable, subject to variations in the number of shares up to the record date.
Environmental regulations
The activities of the Company are subject to a range of environmental regulations under the law of the Commonwealth of
Australia and its states and territories. The Group is also subject to various state and local government food licensing requirements,
and may be subject to town-planning regulations. While the Group has not incurred any significant liabilities under any significant
environmental regulation during the financial year, the NSW EPA issued a Clean Up Notice relating to stockpiled plastics collected
by REDcycle, which Coles is in the process of satisfying.
• the non-audit services provided did not undermine the general principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants as they did not involve reviewing or auditing the Auditor’s own work, acting in a
management or decision-making capacity of the Company, acting as an advocate of the Company or jointly sharing risks or
rewards.
A copy of the Auditor’s Independence Declaration forms part of this Directors’ Report.
Proceedings on behalf of the Company
No application has been made under section 237 of the Corporations Act 2001 (Cth) in respect of the Company, and there are no
proceedings that a person has brought or intervened in on behalf of the Company under that section as at the date of this
Directors’ Report.
Rounding
The amounts shown in this Directors’ Report and in the financial statements have been rounded off, except where otherwise stated,
to the nearest one million dollars, with the Company being in a class specified in the ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191.
Signed on behalf of the Board in accordance with a resolution of the Directors of the Company.
James Graham AM
Chairman
22 August 2023
Leah Weckert
Managing Director and Chief Executive Officer
22 August 2023
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report
Remuneration Report
Letter to shareholders from the Chair of the People and Culture Committee
Looking ahead
Dear Shareholder,
The Board regularly reviews the remuneration and incentive frameworks, so that they continue to strongly align to our remuneration
strategy and principles in support of delivering our Group strategy. For FY24, the Board has made three changes to STI metrics within
On behalf of the Board, I am pleased to present the FY23 Remuneration Report for Coles Group Limited (‘the Company’) and its
the Managing Director and CEO’s balanced scorecard. Firstly, Coles Online Sales will be removed as a financial metric and the
controlled entities (together, ‘Coles’, ‘Coles Group’ or ‘the Group’). The Remuneration Report provides information on the
weighting will be re-distributed between Group Sales and EBIT. This reflects our focus on growing Group Sales and EBIT through omni
remuneration arrangements for our Key Management Personnel (KMP), which include the Managing Director and Chief Executive
channel customers. Secondly, we will evolve the Customer Net Promoter Score (NPS) to become a two-stream metric including
Officer (‘Managing Director and CEO’), Other Executive KMP and Non-executive Directors of the Company.
Company Performance
both Strategic NPS and Store NPS. Strategic NPS was the measurement used in FY23 and provides a strategic measure of brand
and experiences over time to identify opportunities to build stronger customer loyalty. Store NPS provides a localised measure of
the customer experience at specific touch points to identify opportunities for operational improvement. The Board determined that
In FY23, Coles has continued to deliver trusted value for its customers, with value campaigns and an exclusive brand portfolio
a two-stream NPS metric has many benefits that will importantly lead to improved customer outcomes. Finally, a sustainability
delivering a solid sales result and EBIT growth. Group sales revenue from continuing and discontinued operations increased by
customer perception metric will replace the team member engagement metric (mysay). This metric will measure the percentage
5.3% to $41.5 billion. Group EBIT from continuing and discontinued operations increased by 5.4% to $1,970 million supported by
of customers who strongly agree that Coles undertakes environmentally sustainable practices. In FY23, the uplift in team member
Smarter Selling benefits and a net reduction in direct COVID-19 costs. Group EBIT from continuing operations increased by 1.8%
engagement was exceptional and positioned Coles above the benchmark for organisations of our size. Therefore, the Board
to $1,859 million.
Outcomes for FY23
determined the requirement for Executive KMP to drive our desired company culture should be reflected within the ‘Quality and
Behaviour’ overlay within the STI framework, rather than remaining a standalone metric. The Board determined this reprioritisation
of the Managing Director and CEO scorecard will appropriately shift focus to the Group’s refreshed purpose – ‘to help all
The Board assessed the performance of the Executive KMP against their individual balanced scorecard. The Board determined to
Australians eat and live better every day’.
exclude the Coles Express sale and transaction impacts from the FY23 STI calculation as the approved targets were set prior to the
divestment. If the Board had determined not to exclude these impacts, the Executive KMP STI outcomes would have been higher.
No further changes were made to the Executive remuneration framework for FY24.
Section 4.4 details the FY23 STI payments and includes a summary of the Board’s approach in determining the final STI payable to
On behalf of the Board, I would like to thank all Coles team members for their commitment and contribution this year.
Executive KMP, which ranged between 62.1% to 73.4% of the maximum STI opportunity.
The FY21 LTI, which covered performance between FY21 and FY23, will vest on 30 August 2023. Based on performance against the
two equally weighted LTI metrics, Cumulative Return on Capital (‘ROC’) and Relative Total Shareholder Return (‘RTSR’), 50% of the
performance rights allocated to Executive KMP will vest. Cumulative ROC was measured as 109.3% of target with all performance
rights aligned to this metric approved to vest. This result also excludes the impact of the Coles Express sale and transaction impacts,
which did not change the vesting outcome. Relative TSR was below threshold at the 38th percentile against the comparator
group, therefore no performance rights aligned to this metric will vest.
Executive KMP transition
Steven Cain retired from the role of Managing Director and CEO on 30 April 2023. On behalf of the Board, I would like to
acknowledge Steven Cain’s leadership since re-joining Coles in 2018 to lead us through the demerger from Wesfarmers,
establishing us as a standalone ASX listed organisation. On 1 May 2023, Leah Weckert succeeded Steven Cain as Managing
Director and CEO. Leah’s appointment was the result of our executive succession planning process. This enabled Leah to grow and
develop across many cross-functional portfolios at Coles, including in her previous roles as Chief People Officer, Chief Financial
Officer, and Chief Executive, Commercial and Express. Leah is an outstanding executive with a proven track record of leadership
and change within Coles, and the right person to lead our business into this next phase of growth.
Leah has taken the opportunity to review the structure of her Executive Leadership Team, which has resulted in several portfolio
changes. This has notably expanded the portfolios for both SR (Charlie) Elias and Matthew Swindells. Charlie now leads Group
Transformation and Procurement in addition to his current Chief Financial Officer portfolio. Matthew, our Chief Operations and
Sustainability Officer, is now accountable for the opening and operation of our new Customer Fulfilment Centres in partnership with
Ocado. All manufacturing portfolios have also been consolidated under Matthew’s leadership.
Richard Freudenstein
Chair of the People and Culture Committee
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report Introduction
The Directors of Coles Group Limited (the Company) present the Remuneration Report for the Company and its controlled entities
(together, ‘Coles’, ‘Coles Group’ or ‘the Group’) for the financial year ended 25 June 2023 (FY23). This Remuneration Report forms
part of the Directors’ Report and has been prepared in accordance with section 300A of the Corporations Act 2001 (Cth) and is
audited.
This Remuneration Report covers the period from 27 June 2022 to 25 June 2023.
Structure of this report
The Remuneration Report is divided into the following sections:
SECTION
(1) Key Management Personnel
(2) Remuneration governance
(3) Remuneration policy and structure overview
(4) FY23 Executive KMP remuneration outcomes
(5) FY23 Non-executive Director remuneration
(6) Ordinary Shareholdings
Section 1: Key Management Personnel
We have prepared this Remuneration Report in respect of the Group’s Key Management Personnel (‘KMP’), being the people who
have the authority and responsibility for planning, directing and controlling the Group’s activities, either directly or indirectly. This
includes the Board of Directors and Executive KMP.
The ‘Executive KMP’ consists of the Managing Director and CEO, and all other executives considered to be KMP. References to
‘Other Executive KMP’ means the Executive KMP excluding the Managing Director and CEO.
Table 1 shows the people who were considered KMP of the Group during FY23.
Table 1: KMP
Non-executive Directors
NAME
Current
POSITION HELD
TERM
James Graham AM
Chairman and Non-executive Director
Full Year
Terry Bowen
Non-executive Director
Jacqueline Chow
Non-executive Director
Abi Cleland
Non-executive Director
Richard Freudenstein
Non-executive Director
Paul O’Malley
Scott Price
Wendy Stops
Former
Non-executive Director
Non-executive Director
Non-executive Director
Appointed 1 October 2022
Full Year
Full Year
Full Year
Full Year
Appointed 1 October 2022
Full Year
David Cheesewright
Non-executive Director
Retired 15 June 2023
Executive KMP1
NAME
Current
POSITION HELD
TERM
Leah Weckert2
Managing Director and Chief Executive Officer from
Full Year
1 May 2023 Chief Executive, Commercial and Express
to 30 April 2023
SR (Charlie) Elias
Chief Financial Officer
Matthew Swindells
Chief Operations and Sustainability Officer
Full Year
Full Year
Former
Steven Cain
Managing Director and
Chief Executive Officer
Retired 30 April 2023
1 Anna Croft will commence in the role of Chief Commercial Officer in January 2024.
2
Leah Weckert has retained accountability for the Chief Executive Commercial portfolio for the period the role is vacant.
Section 2: Remuneration Governance
2.1 Governance framework
The following infographic provides an overview of the remuneration governance framework that has been established by the Group.
Further information regarding the membership and meetings of the People and Culture Committee is provided in the Directors’
Report.
The Board
The Board maintains overall accountability for oversight of the Group’s remuneration policies to ensure they are aligned with
the Group’s vision, values, strategic objectives and risk appetite. The Board approves all remuneration and benefit
arrangements as they relate to the Managing Director and CEO, and executive-level direct reports to the Managing Director
and CEO (‘Executive Direct Reports’), and the Non-executive Directors, having regard to the recommendations made by the
People and Culture Committee. The Board maintains absolute discretion to either positively or negatively adjust the
remuneration outcomes for the Managing Director and CEO, and Executive Direct Reports. The Board will use its discretion
based on the provision of supporting data and its assessment of performance aligned to the Group’s values and LEaD
behaviours, risk, compliance, reputational, safety and sustainability considerations as well as the quality of earnings delivered.
Audit and
Risk Committee
People and Culture Committee
External advisors
The role of the Committee is to assist the Board in fulfilling its
The People and Culture
The Audit and Risk
responsibilities to shareholders and regulators in relation to
Committee may seek
Committee advises the
the Group’s remuneration policies. The Committee does
advice from independent
Board and People and
this by reviewing and making recommendations to the
remuneration consultants
Culture Committee on
Board on matters including, but not limited to:
any risk, conduct and
compliance matters that
may relate to executive
remuneration outcomes
and/or financial targets
and results.
• setting remuneration arrangements of Non-executive
Directors, the Managing Director and CEO, and
Executive Direct Reports
• the annual performance review of the Managing
Director and CEO and Executive Direct Reports
in determining appropriate
remuneration policies for
the Group, and specifically
remuneration
arrangements for the
Managing Director and
CEO, and Executive Direct
• assessing remuneration outcomes for the Managing
Reports.
Director and CEO and Executive Direct Reports.
The Committee delegates authority for the operation and
administration of all Group incentive and equity plans to
management.
Shareholders and other stakeholders
Management
The People and Culture Committee may consult with
Management makes recommendations to the People and
shareholders, proxy advisors and other relevant
Culture Committee on matters including, but not limited to:
stakeholders, in determining appropriate remuneration
policies for the Group, including remuneration
arrangements for the Managing Director and CEO, and
Executive Direct Reports.
• remuneration arrangements of Executive Direct Reports,
including the establishment of any new incentive and
equity plans, or amendments to the terms of existing
arrangements
• annual performance review of Executive Direct Reports
• changes to the Group’s remuneration policies.
External advisors may be engaged either directly by the People and Culture Committee or through management, to provide
information on remuneration-related issues, including benchmarking information and market data.
During FY23, Mercer provided independent benchmarking in relation to executive remuneration to management and the People
and Culture Committee. No remuneration recommendations were made by external consultants. The People and Culture
Committee is satisfied that the information provided was free from undue influence by any executive.
62
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report 2.2 Corporate governance policies related to remuneration
Executive KMP remuneration is delivered using both fixed and variable (at-risk) components as outlined in the following graphic.
Our robust remuneration framework is supported by several corporate governance polices related to remuneration including those
following.
2.2.1 Securities Dealing Policy
Our Executive KMP remuneration is delivered through a simple,
three element structure using both fixed and variable (at-risk) components.
Fixed elements
Variable elements
Coles has adopted a Securities Dealing Policy that applies to all Group team members including Non-executive Directors and
Executive KMP and their connected persons, as defined within the policy. This policy sets out the insider trading laws all Group team
1. Total Fixed Compensation (TFC)
2. Short-term incentive (STI)
3. Long-term incentive (LTI)
members must comply with, including specific restrictions with which KMP must comply. This includes obtaining approval prior to
trading in the Group’s securities and not trading within Blackout Periods, other than with approval in exceptional circumstances as
detailed within the policy. The policy aims to protect the reputation of the Group and maintain confidence in trading in the Group’s
securities. It prohibits specific types of transactions being made that are not in accordance with market expectations or may
otherwise give rise to reputational risk. In accordance with the policy, all directors, the Managing Director and CEO, Executive
Direct Reports and their connected persons are prohibited from hedging their exposure to Company securities.
2.2.2 Minimum Shareholding Policy
The Group’s Minimum Shareholding Policy is a key means by which the interests of the KMP are aligned with those of the
shareholders. The policy requires both Non-executive Directors and Executive KMP to build and maintain a significant shareholding
in the Group.
Non-executive Directors
Non-executive Directors are required to hold at least 1,000 ordinary shares in the Company within six months of their appointment.
The shares may be held by a Non-executive Director either in their own name, or indirectly in the name of a custodian, depository,
or an entity controlled by the Non-executive Director or a closely related party. As at the date of this Remuneration Report, each
Non-executive Director satisfies this requirement.
Within five years of appointment, each Non-executive Director is expected to increase their shareholding to an amount equivalent
to 100% of their annual base fee at that time. The details of each Non-executive Director’s shareholding are summarised in Table 10.
Executive KMP
Executive KMP are required to achieve a minimum shareholding equivalent to 100% of Total Fixed Compensation (TFC) by the latter
of five years from the date they commence, or five years from the introduction of the policy on 1 July 2019. The details of each
Executive KMP shareholding are summarised in Table 11.
In addition to Executive KMP, this policy also applies to all other Executive Direct Reports.
Section 3: Executive remuneration policy and structure overview
3.1 Executive remuneration policy for FY23
Our remuneration framework is aligned with our Group strategy and is guided by our remuneration principles. The People and
Culture Committee determined the framework is appropriately aligned with our strategy and the interests of our shareholders.
How it is delivered
Cash
Cash
Equity (Shares)
Equity (Performance Rights)
How it works:
TFC consists of base salary and
The STI is paid as part cash, part deferred
The LTI is delivered in Performance Rights,
superannuation.
equity ‘STI Shares’ as follows:
subject to a 3-year Performance Period.
Our target position is the 50th
• Managing Director and CEO 50%
The opportunity levels are:
percentile of the ASX 10–40
deferred into STI Shares and restricted for
• Managing Director and CEO 175%
comparator group (plus
2 years
of TFC
reference to local and
international retailers, as
required)
• Other Executive KMP 25% deferred into
• Other Executive KMP 150% of TFC
STI Shares and restricted for 1 year
The STI opportunity level for all Executive
KMP is:
• 80% of TFC at target
• 120% of TFC at maximum
The LTI is measured against:
• 50% Relative Total Shareholder Return
(RTSR) (ASX 100 comparator group)
• 50% cumulative Return on Capital (ROC)
A dividend equivalent payment is made in
The STI is measured against an individual
shares upon vesting.
balanced scorecard consisting of:
• 60% financial measures
• 40% strategic and non-financial
measures
The STI scorecard includes a mixture of
group and functional strategic measures.
What it does
Allows us to attract and retain
key talent through competitive
and fair fixed remuneration.
Incentivises strong individual and Company
performance, based on strategically
Aligns reward with creation of sustainable,
aligned deliverables, through variable,
long-term shareholder value.
at-risk payments.
FY23
FY24
FY25
What are the time horizons of the awards?
Market competitive
Performance-based
Creates long-term value
Fit for purpose
Retail is a globally
A strong link to
competitive industry.
performance-based pay
We need to be able to
to support the
for shareholders
Ensuring there is a
common interest
Designed to be relevant
to how the Group
operates. It needs to
attract, motivate and
achievement of strategy
between executives
be simple to articulate,
C
F
T
Performance Period (1 year)
Salary paid during the year
Performance Period (1 year)
retain high-calibre
aligned with short,
and shareholders by
drive the right behaviours
MD & CEO – 50% paid in cash
executives from both
medium-and long-term
aligning reward with
and ensure we deliver
on our strategy.
I
T
S
Other Executive KMP – 75% paid in cash
1-year vesting period
the local and global
financial targets.
talent market.
the achievement
of sustainable
shareholders returns.
Specific performance measures and outcomes for FY23 are included in section 4. Details of prior years’ remuneration, including
performance measures and outcomes, are set out in the Remuneration Reports of prior Annual Reports, which are available on the
Coles website.
64
Other Executive KMP - 25% deferred in Shares held in restriction for 1 year
MD & CEO - 50% deferred into Shares held in restriction for 2 years
2-year vesting period
I
T
L
3-year vesting period, vesting occurs post FY25 results
Performance Period (3 years)
Performance Rights vest subject to performance hurdles being met
65
Coles Group 2023 Annual ReportColes Group 2023 Annual Report 3.2 FY23 target remuneration mix for Executive KMP
3.5 Former Managing Director and CEO entitlements
The FY23 total target remuneration mix for the Executive KMP is in Graph 1.
Steven Cain retired as Managing Director and CEO on 30 April 2023. Steven Cain will receive his contractual entitlements and
Graph 1 – Total target remuneration mix
Managing Director and CEO
Other Executive KMP1
50%
28%
11%
11%
46%
30%
18%
6%
1 Matthew Swindells’ remuneration also includes an Medium Term Incentive (refer section 4.5)
3.3 Executive KMP employment agreements
TFC
STI Cash
STI Equity
LTI
benefits outlined below:
• Payment of his TFC up to and including 20 February 2024 (‘employment end date’);
• Payment of statutory accrued leave entitlements;
• A pro-rated FY23 STI award calculated up until 30 April 2023 and paid/allocated in the ordinary course with all other terms of the
STI plan continuing to apply;
• STI Shares held at the time of retirement were retained and will be released in accordance with the terms of the applicable STI
plan; and
• Performance Rights held at the time of retirement will be pro-rated based upon the employment end date with vesting subject
to the original performance and vesting conditions in the applicable LTI plan.
As required by the Accounting Standards, all expenses relating to the period 1 May 2023 to the employment end date have been
recognised in FY23. Therefore, the total compensation for Steven Cain in Table 6 includes: payment of TFC for the period 26 June
2023 to the employment end date (not paid in FY23) and expensing of pro-rated unvested Performance Rights that would ordinarily
have been recognised in future years.
Section 4: FY23 Executive KMP remuneration outcomes
Executive KMP employment terms are formalised in employment contracts that have no fixed term. Specific information relating to
4.1 Company performance
the terms of the Executive KMP’s employment contracts is in Table 2.
Table 2: Executive KMP employment contracts
NAME
Current
Leah Weckert
SR (Charlie) Elias
Matthew Swindells2
Former
Steven Cain3
NOTICE PERIOD1
RESTRAINT OF TRADE
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
1
Executive KMP can be terminated without notice if they are found to have engaged in serious or willful misconduct, are seriously negligent in the performance of
their duties, commit a serious or persistent breach of their employment contract, or commit an act, whether at work or otherwise, that would bring the Group into
disrepute. The Group may also make a payment in lieu of notice.
2 Matthew Swindells’ notice period increased from 6 months to 12 months on 1 October 2022 aligned to the date of his annual remuneration review.
3
Steven Cain’s entitlements on ceasing employment are in accordance with his employment contract, and the terms of the STI and LTI plans that Steven Cain
participated in as Executive KMP.
3.4 Current Managing Director and CEO remuneration arrangements
Leah Weckert commenced as Managing Director and CEO on 1 May 2023. Leah Weckert’s remuneration as disclosed to the ASX
on 21 February 2023 is outlined below.
COMPONENT
Total Fixed Compensation (TFC)
Short Term Incentive (STI)
AMOUNT
$2,000,000 per annum (including superannuation)
Target Opportunity – 80% of TFC
Maximum Opportunity – 120% of TFC
50% of the STI outcome will be deferred into STI Shares which will
be restricted for a period of two years and granted subject to
shareholder approval at the Coles Annual General Meeting.
Long Term Incentive (LTI)
Target Opportunity – 175% of TFC
Performance Rights will be granted under the LTI subject to
shareholder approval at the Coles Annual General Meeting.
The remuneration framework has been designed to reward Executive KMP for their contribution to the collective performance of
the Company, and to support the alignment between the remuneration of Executive KMP and shareholder returns.
The following graphs and table represent the relationship between remuneration of Executive KMP and the Group’s financial
performance over the last five financial years (including FY23).
Short-term measures
Long-term measures
Sales Revenue1, 2
($m)
Coles Online Sales1, 3
($m)
EBIT2
($m)
TSR4
(%)
ROC5
(%)
5
8
5
8
3
,
9
6
3
9
3
,
1
7
4
1
4
,
8
0
4
7
3
,
1
0
0
5
3
,
8
9
9
1
,
1
0
3
1
,
1
0
1
1
,
6
1
8
2
,
7
4
8
2
,
2
6
7
1
,
7
6
4
1
,
3
7
8
1
,
9
6
8
1
,
0
7
9
1
,
.
7
1
3
ROC
(ROC pre AASB16)
.
1
9
3
.
1
8
3
.
2
5
3
.
9
2
3
.
8
0
3
6
9
.
9
3
.
2
7
.
9
6
.
.
2
5
1
.
0
6
1
.
4
6
1
.
5
6
1
FY19
FY20
FY21
FY22 FY23
FY19
FY20
FY21
FY22 FY23
FY19
FY20
FY21
FY22 FY23
FY19
FY20
FY21
FY22 FY23
FY19
FY20
FY21
FY22
FY23
STI outcomes (AVG Executive KMP % of maximum)
LTI outcomes (% of maximum)
Dividends determined in respect of the financial year (cents)6
Closing share price (at end of financial year)7
FY19
39.0%
n/a
35.5
$13.35
FY20
97.4%
n/a
57.5
$16.79
FY21
88.2%
97.6%
61.0
$16.83
FY22
73.1%
100%
63.0
$17.81
FY23
67.3%
50%
66.0
$18.40
1
2
FY21 Sales revenue and online sales have been restated to reflect a reclassification of fulfilment income to Sales revenue (previously reported within Other Income).
FY23 Sales revenue and EBIT includes continuing and discontinued operations.
3 Coles Online Sales comprises retail sales on a gross basis before adjusting for concession sales and the cost of Flybuys scheme points.
4
Total Shareholder Return (TSR) is calculated as the change in share price during the financial measurement period plus dividends reinvested on the respective
ex-dividend dates.
5 ROC is Group EBIT divided by capital employed. Capital employed is calculated on a rolling average basis (seven months in FY19).
6
7
The dividends determined in respect of the financial year reflect the dividends determined for the financial year irrespective of the dividend payment date.
The opening share price on listing on the ASX on 21 November 2018 was $12.49.
4.2 Board oversight of remuneration outcomes
The Board maintains absolute discretion to ensure remuneration outcomes are appropriate in the context of the Company’s
performance, our customer experience and shareholder expectations. The Board has discretion in evaluating the achievement
against performance measures, including to adjust for unusual factors. The steps undertaken by the Board to inform their decisions
with respect to remuneration outcomes for FY23 is further outlined in sections 4.3 to 4.6.
66
67
Coles Group 2023 Annual ReportColes Group 2023 Annual Report 4.3 Total Fixed Compensation (TFC)
TFC is designed to be competitive to attract, motivate and retain the right talent. The TFC for Executive KMP is compared to the ASX
10–40 (based on market capitalisation) benchmark group, as well as local and international retailers. We target TFC at the 50th
percentile of this peer group for comparable roles. This approach to benchmarking has remained unchanged since FY19.
The Board reviewed Executive KMP TFC and total remuneration packages against the comparator group during FY23. This review
was informed by a detailed benchmarking exercise conducted by Mercer. The Board determined that there would be no increase
to the former Managing Director and CEO’s TFC, however it was appropriate to award TFC increases ranging between 3.5% and
4.0% to each of the other Executive KMP, effective 1 October 2022.
Following the retirement of Steven Cain, and the subsequent appointment of Leah Weckert to the role of Managing Director and
CEO, several leadership and portfolio changes occurred across the Coles Executive Leadership Team. This included an expanded
leadership portfolio for SR (Charlie) Elias and Matthew Swindells. As a result, the Board decided to bring forward the FY24 fixed
remuneration review for both. A TFC increase of 11.7% was awarded to SR (Charlie) Elias and a TFC increase of 7.8% was awarded to
Matthew Swindells both effective 1 May 2023. The Board determined this level of increase was appropriate to better position their
total remuneration packages against the detailed benchmarking provided by Mercer.
4.4 Short-term incentive (STI)
The Group’s STI rewards Executive KMP for the achievement of key short-term performance measures.
The FY23 STI payable for the Executive KMP was assessed against individual balanced scorecards consisting of Financial, Strategic
and Non- financial metrics. The scorecards include a mix of group and functional strategic metrics. The balanced scorecard
approach for Executive KMP provides a simple and transparent approach to highlighting performance priorities, measuring
performance outcomes against each weighted metric, and gives clarity regarding the connection between the performance
assessment and reward outcomes.
Group EBIT: EBIT from continuing operations increased by 1.8% supported by Smarter Selling benefits and a net reduction in direct
COVID-19 costs. This was delivered despite investments in value and the major project implementation operating expenditure for
the Witron and Ocado projects. Discontinued operations contributed $111 million in EBIT.
Group Sales: Sales revenue growth from continuing operations increased by 5.9%. This was delivered through the ‘Dropped &
Locked’ value campaigns and the successful execution of trade plans, including festive events. Discontinued operations
contributed $988 million in Sales revenue.
Coles Online Sales: Online sales for the full year increased by 1.1% and did not meet threshold performance. Strong online sales
growth of 10.1% was delivered in the second half of FY23 following a decline in online sales of 6.6% in the first half as COVID-19
behaviours normalised and some customers returned to shopping in store.
Transformation Ocado Program: The CFC in Victoria will be delayed with the incremental ramp up period expected to
commence mid-FY25. The New South Wales CFC is expected to be commissioned with an incremental ramp up period
commencing end 2H FY24. The impacts of the delays are likely to increase the project capital and operating expenditure by
approximately $70 million and $50 million respectively. Total capital expenditure is now expected to be approximately $400 million
of which 55% has been incurred to the end of FY23, with the balance expected to be incurred in FY24 and FY25.
Safety Index: Team member safety as measured by the Group safety index improved by 11.7% across FY23. TRIFR performance also
reduced by 9.2%.
People mysay: Achieved our highest ever team member engagement score which increased by 3 percentage points.
Customer NPS: NPS was impacted during the year from availability challenges and did not meet threshold performance.
Pleasingly, NPS began to improve in the fourth quarter of FY23, driven by improved availability and range.
The Board determined to exclude the Coles Express sale and transaction impacts from the FY23 STI calculation as the approved
targets were set prior to the divestment. If the Board had determined not to exclude these impacts, the Executive KMP STI outcomes
The scorecards include a ‘Quality and Behaviour’ overlay that considers;
would have been higher.
• how the Executive KMP achieved performance aligned with the Group’s values and LEaD behaviours;
Other Executive KMP shared the same financial measures as the Managing Director and CEO, except that:
• risk, compliance and reputational matters; and
• the quality of earnings delivered.
The Executive KMP had an at target STI opportunity of 80% of TFC. The maximum STI opportunity for Executive KMP is 120% of TFC,
which is equivalent to 150% of the target STI opportunity. The FY23 Group Financial performance measures contributed to a
• the Chief Financial Officer had a Group cash realisation metric which was achieved in full for FY23 instead of an Online Sales
metric, and
• the Chief Executive, Commercial and Express had an Own Brand Sales metric which was achieved in full for FY23 instead of an
Online Sales metric and was of the same weighting.
maximum weighting of 110% of the STI opportunity for all Executive KMP (60% weighting at target). The Strategic and Non-financial
Strategic and Non-financial measures for Other Executive KMP are also aligned to the Managing Director and CEO with variations
measures contribute up to 40% of the target STI opportunity for all Executive KMP.
relevant to their portfolio. For FY23, achievement against Strategic and Non-financial measures for Other Executive KMP ranged
Details of the performance measures for the Managing Director and CEO’s calculated balanced scorecard for FY23 are set out in
from not achieved to fully achieved. The outcomes are set out in Table 4 in section 4.4.1.
Table 3. The same balanced scorecard also applied to the former Managing Director and CEO.
4.4.1 FY23 STI award
Table 3: FY23 Performance measures for the Managing Director and CEO
Maximum
Actual STI
Weighting
Weighting
Target
Outcome
Outcome
Measures
Financial
Performance
(60% weighting)
Group EBIT
Group Sales
Coles Online Sales
Strategic
Transformation
Performance
Ocado Program
(40% weighting)
35%
15%
10%
10%
70%
30%
10%
10%
$1,886m
$40,744m
$3,328m
On time, budget
and strategy
$1,970
Above Target
$41,471
Above Target
2,847
Below Threshold
Not achieved
Below Threshold
New Index
11.7% index
Baseline
improvement
Safety Index
10%
10%
including
5% TRIFR
improvement
People mysay
10%
10%
1pp improvement
9.2% TRIFR
improvement
Above Target
3pp
improvement
Above Target
Customer NPS
10%
10%
3.6 point
improvement
4.3 point
decrease
Below Threshold
Overall
Performance
68
43.1%
30%
0%
0%
10%
10%
0%
93.1%
(74.5% of TFC)
The Board assessed performance against the calculated balanced scorecards of the Managing Director and CEO, and the Other
Executive KMP, to determine any STI award payable. The Board also considered the appropriate application of the ‘Quality and
Behaviour’ overlay to determine the final Executive KMP STI outcomes for FY23 as detailed in Table 4.
Table 4: FY23 Executive KMP STI outcomes
STI OPPORTUNITY1
TARGET
MAXIMUM
80%
120%
$
NAME
Current
Leah Weckert5
$953,688
$1,430,532
SR (Charlie) Elias
Matthew Swindells
$784,708
$752,026
$1,177,062
$1,128,039
$947,315
$864,160
$760,487
STI AWARDED
STI
FORFEITED4
% OF
TFC
79.5%
88.1%
80.9%
CASH2
EQUITY3
(%)
$473,658
$648,120
$570,366
$473,657
$216,040
$190,121
33.8%
26.6%
32.6%
Former
Steven Cain6
$1,432,548
$2,148,822
$1,334,061
74.5%
$667,031
$667,030
37.9%
1
The minimum STI opportunity was nil. The value of target and maximum STI opportunities are pro-rated and reflect changes to TFC in FY23 for Leah Weckert, SR
2
3
(Charlie) Elias and Matthew Swindells.
The FY23 cash component of the STI will be paid on or about 15 September 2023.
The FY23 equity component of the STI will be granted in STI Shares following the Coles’ 2023 AGM, using a 10-day Volume Weighted Average Price (VWAP) for the
period up to, and including, 25 June 2023 of $18.18. Shareholder approval will be sought for the grant of equity to the Managing Director and CEO at the Coles’
2023 AGM.
4 As a percentage of STI maximum opportunity.
5
Leah Weckert’s total STI award represents an amount of $698,301 related to her role of Chief Executive, Commercial & Express up until 30 April 2023 and $249,014
related to her role of Managing Director and CEO from 1 May 2023.
6
Steven Cain’s STI cash and equity values represent the pro-rata amount earned up to 30 April 2023.
69
Coles Group 2023 Annual ReportColes Group 2023 Annual Report 4.4.2 Other terms of the FY23 Short term incentive (STI)
4.6 Long-term incentive (LTI)
What was the Performance Period?
27 June 2022 to 25 June 2023.
Why were the performance conditions chosen?
The Financial measures align with the Company’s strategy and the commitments made to shareholders. In particular, Group EBIT
focuses on delivering strong earnings through the business cycle and ensuring strong returns for shareholders. Including sales
The LTI rewards Executive KMP for the achievement of long-term sustainable returns for shareholders.
For FY23, the LTI component of Executive KMP remuneration was delivered in Performance Rights. The Performance Period for the
FY23 LTI runs from 27 June 2022 to 29 June 2025 (FY23–FY25).
Performance Rights will vest subject to the satisfaction of the following performance conditions measured over the Performance
Period:
metrics as well as Group EBIT ensures a strong focus on our capability to deliver sustainable returns for shareholders in the long
• 50% of Performance Rights are subject to a cumulative return on capital (ROC) hurdle (‘ROC component’)
term.
The Strategic and Non-financial metrics aligned to the Coles Group strategy.
• 50% of Performance Rights are subject to a relative total shareholder return (RTSR) performance hurdle. Coles’ RTSR will be
compared to companies in the S&P ASX100 (Comparator Group) at 26 June 2022.
The Board replaced the TRIFR safety metric for all Executive KMP with a broader Safety index, which goes beyond TRIFR and has
The Board chose these performance conditions because they provide a direct link between Executive KMP reward and sustained
a greater focus on lead indicators. The Safety Index includes TRIFR and various safety leading measures that will help measure
shareholder returns, to promote further alignment with shareholders.
how well incidents and injuries are being prevented from occurring in the first place, as well as strengthen other health and safety
outcomes in the workplace.
How were the performance conditions assessed?
Performance against the balanced scorecard metrics was assessed by the Board based on the Company’s annual audited
results, financial statements and other data provided to the Board. The Board determined this method is the most appropriate
way to assess the true performance of the Company’s and the Executive KMP’s contributions to determine remuneration
outcomes.
What portion of the STI component was deferred into equity?
The equity deferred amount is determined once the individual balanced scorecard calculation has been completed and the
total STI award is determined (see Table 4). Fifty per cent of the total STI award for the Managing Director and CEO, is deferred
into equity, and 25% of the total STI award for the Other Executive KMP is deferred into equity.
4.6.1 ROC component
Vesting of the Performance Rights in the ROC component is subject to achievement of at least 95% of the Cumulative ROC target
over the Performance Period.
Cumulative ROC measures the Company’s average annual return on capital over the Performance Period against targets set by
the Board. Cumulative ROC is calculated based on the Company’s audited financial information. The Board will assess Cumulative
ROC after the end of the Performance Period.
In assessing achievement against the Cumulative ROC performance condition, the Board may have regard to any matters that it
considers relevant and retains discretion to review outcomes to ensure the results are appropriate.
The number of Performance Rights in the ROC component that vest, if any, will then be based on the Group’s Cumulative ROC
performance determined over the Performance Period by reference to the following vesting schedule:
The number of STI Shares that will be granted and subject to deferral is calculated by using the 10-day VWAP up to and including
GROUP CUMULATIVE ROC OVER THE PERFORMANCE PERIOD
% OF PERFORMANCE RIGHTS THAT VEST
the final day in the Performance Period (i.e. 25 June 2023). STI Shares are unable to be traded during the restricted period, being
one year for the Other Executive KMP and two years for the Managing Director and CEO. Once the restricted period ends, the
Executive KMP may trade these shares subject to Coles’ Securities Dealing Policy.
When will the FY23 STI award be paid?
Equal to or below 95% of the Cumulative ROC target is achieved
0%
Between 95% and 105% of the Cumulative ROC target is achieved
Straight-line pro rata vesting between 0% and100%
Equal to 105% or above of the Cumulative ROC target is achieved
100%
The ROC targets are considered by Coles to be commercially sensitive. However, the Board will disclose the relevant vesting
The cash component of the STI award will be paid in September 2023.
outcomes following the end of the Performance Period.
The equity component of the STI award will be allocated following the Coles 2023 AGM, where shareholder approval will be
4.6.2 RTSR component
sought for the grant to Leah Weckert, Managing Director and CEO.
The number of Performance Rights in the RTSR component that vest, if any, will be based on Coles’ RTSR ranking within the
What happens if an Executive KMP leave the organisation prior to payment?
Comparator Group over the Performance Period, as set out in the following vesting schedule:
In the event of resignation or dismissal for cause or significant underperformance prior to payment of the STI, an Executive KMP
will not be eligible for any STI award, unless the Board determines otherwise.
What happens if an Executive KMP leaves the organisation before their STI Shares vest?
During the restricted period, if an Executive KMP leaves the organisation in the event of resignation or dismissal for cause or
significant underperformance, all STI Shares will be forfeited unless the Board determines otherwise.
In any other circumstances (including by reason of redundancy, permanent disability, death or ill health) the shares will continue
on foot until the relevant vesting date, unless the Board determines otherwise.
COLES RTSR RANK IN THE COMPARATOR GROUP
% OF PERFORMANCE RIGHTS THAT VEST
Below the 50th percentile
Equal to the 50th percentile
0%
50%
Between 50th percentile and 75th percentile
Straight-line pro rata vesting between 50% and 100%
Equal to the 75th percentile or above
100%
Following testing, any Performance Rights that do not vest will lapse. There is no re-testing of awards. The Board has discretion to
adjust the comparator group to take account of events such as takeovers, mergers and demergers.
Can the Board amend the STI program?
4.6.3 FY23 LTI outcomes
The Board retains discretion to suspend or terminate the program at any time and amend all or any elements of the program up
Performance Rights granted under the FY23 LTI will be tested following the end of FY25 (the end of the Performance Period). Details
until the date of payment.
4.5 Other Executive KMP remuneration
At the time of the leadership transition from Steven Cain to Leah Weckert, the Board approved a Medium-Term Incentive (MTI) for
Matthew Swindells with the opportunity to earn up to $1 million. The Board determined this incentive was appropriate to retain
of the number of Performance Rights granted under the FY23 LTI are included in section 4.7. Details of equity awards granted to
Executive KMP in prior years (including applicable performance conditions and vesting dates) have been disclosed in previous
Remuneration Reports.
4.6.4 Other terms of the FY23 LTI
Matthew Swindells following the expansion of his portfolio to include the opening and operations of the new Customer Fulfilment
How was the LTI award delivered?
Centres and the consolidation of manufacturing operations. The MTI is split into two tranches. The first tranche of up to 40% of the
total opportunity is payable in cash in FY24. The second tranche of up to 60% of the total opportunity is payable in cash in FY25. Any
payment made to Matthew Swindells will be assessed against achievement of the successful build and go-live for the new
Customer Fulfilment Centres in NSW and Victoria and the successful integration of the milk processing plants, subject to transaction
The LTI award was delivered in Performance Rights. Each Performance Right entitles the Executive KMP to one ordinary share in
the Company on vesting. The Board retains a discretion to make a cash equivalent payment in lieu of an allocation of shares.
Performance Rights vest subject to achievement of relevant performance conditions and were allocated at no cost to the
completion. The MTI is subject to a service condition whereby Matthew Swindells cannot have resigned or left employment with
Executive KMP, and no amount is payable on vesting.
Coles at the time of each payment, to be eligible.
70
71
Coles Group 2023 Annual ReportColes Group 2023 Annual Report When were Performance Rights allocated?
The Performance Rights for all Executive KMP under the FY23 LTI plan were allocated on 30 November 2022, following the Coles’
2022 AGM (at which the grant made to the former Managing Director and CEO was approved for the purposes of ASX Listing
Rule 10.14 and details of which are published in this FY23 Remuneration Report).
How were Performance Rights allocated?
The number of Performance Rights allocated to the Executive KMP was determined by dividing each Executive KMP’s LTI
opportunity by the VWAP of Coles shares trading on the ASX over the 10 trading days up to and including 26 June 2022, rounded
up to the nearest whole number.
How are the performance conditions assessed?
4.6.5 FY21 LTI vesting outcome
On 23 November 2020, Executive KMP were granted Performance Rights relating to their FY21 LTI award. The Performance Period for
the award was 29 June 2020 to 25 June 2023.
The Performance Rights were subject to two vesting conditions (as well as a service condition):
• 50% of the Performance Rights were subject to the Group’s cumulative return on capital (ROC) performance over the
Performance Period (ROC Component); and
• the remaining 50% of the Performance Rights were subject to a relative total shareholder return (TSR) condition, measured over
the Performance Period (TSR Component). The Company’s TSR was compared to a comparator group of companies,
comprising the ASX100 (Comparator Group) as at 28 June 2020.
RTSR performance is independently assessed over the Performance Period against the constituents of the Comparator Group.
Table 5: Testing of performance hurdles
ROC is calculated using Coles’ audited financial results.
These assessment methods are designed to safeguard the integrity of the performance assessment process and ensure the
accuracy of underlying information.
When does vesting occur?
Following testing, the Board will determine the number of Performance Rights to vest, which is expected to occur in late August
2025. Details regarding the vesting of the Performance Rights will be included in the FY25 Remuneration Report.
If the anticipated vesting date falls within a Blackout Period (as defined within the Company’s Securities Dealing Policy), vesting
will be delayed until the end of that period.
Following testing, any Performance Rights that do not vest will lapse. No re-testing of the performance conditions is permitted.
What happens if an Executive KMP ceases employment?
In the event of resignation or dismissal for cause or significant underperformance, all unvested Performance Rights will lapse,
unless the Board determines otherwise.
In any other circumstances (including by reason of redundancy, permanent disability, death or ill health), a pro rata number of
Performance Rights (based on the proportion of the Performance Period that has been served) will remain on foot and subject
to the original terms of offer, as though the Executive KMP had not ceased employment, unless the Board determines otherwise.
Do Performance Rights have voting rights?
No. Prior to vesting, Performance Rights do not entitle Executive KMP to voting rights.
Are dividends paid on Performance Rights?
Executive KMP do not have an entitlement to dividends prior to vesting.
After testing against the performance conditions, Executive KMP will receive a dividend equivalent amount related to the vested
Performance Rights only. The dividend equivalent amount will be delivered in additional shares, equal in value to that of
dividends that would have been paid on the vested Performance Rights had the Executive KMP been the owner of Coles shares
during the period from the Performance Rights grant date to the vesting date. There is no dividend payable on any Performance
Rights that do not vest. The Board retains a discretion to settle the dividend equivalent amount in cash.
How can the Board apply discretion to claw back outcomes?
The Board has broad claw back powers to determine that any Performance Rights may lapse, any shares allocated on vesting
are forfeited, or that the Executive KMP is required to pay as a debt the net proceeds of the sale of shares or dividends in certain
circumstances. For example, circumstances include where the Executive KMP has acted fraudulently or dishonestly, has
engaged in gross misconduct, brought the Group into disrepute, or breached their obligations to the Group.
This protects Coles against the payment of benefits where participants have acted inappropriately.
What happens if there is a change of control?
Under the Offer terms, the Board may determine in its absolute discretion that some or all the Executive KMP’s Performance
Rights will vest or cease to be subject to restrictions on a likely change of control.
Where there is an actual change in control of the Company, unless the Board determines otherwise, unvested Performance
Rights will vest on a pro rata basis (based on the proportion of the Performance Period that has elapsed).
What restrictions are there on dealing in the Performance Rights?
Executive KMP must not sell, transfer, encumber, hedge or otherwise deal with Performance Rights. Executive KMP will be free to
deal with the shares allocated on vesting of the Performance Rights, subject to the requirements of Coles’ Securities Dealing
Policy.
72
Based on testing of each performance hurdle, the following vesting will occur on 30 August 2023 in relation to the FY21 LTI award.
Measures
Cumulative ROC
RTSR
Overall Vesting
Threshold
Target
Maximum
Weighting
0% Vest
50% Vest
100% Vest
95% 100% of Target 105% of Target
50%
50%
n/a 50th percentile 75th percentile
percentile
Result
109.3%
38.6th
%
Vest
50%
0%
50%
As a result of the overall vesting outcome, the following number of shares will be allocated to each of the Executive KMP on 30
August 2023. The total number of shares includes both the conversion of Performance Rights to shares, and shares allocated in
consideration of the dividend equivalent amount.
NAME
Current1
Leah Weckert
Matthew Swindells
Former
Steven Cain
NUMBER OF SHARES
47,069
42,114
121,386
1
SR (Charlie) Elias was not eligible for the FY21 LTI Plan.
Further details regarding each performance hurdle in Table 5 is provided as follows:
Cumulative ROC (pre-AASB16): The ROC exceeded the stretch targets set by the Board on a cumulative basis over the three-year
Performance Period resulting in 100% of this component of the FY21 LTI vesting as shown below:
ROC
% of target achieved
FY21
115.1%
FY22
112.0%
FY23
100.3%
CUMULATIVE
PERFORMANCE
109.3%
The ROC result excluded the Coles Express sale and transaction impacts which did not change the vesting outcome.
RTSR: The company performed below threshold at 38.6 percentile against the Comparator Group which resulted in no vesting of
this component of the FY21 LTI award.
73
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
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a
r
o
t
c
e
r
i
i
D
g
n
g
a
n
a
M
s
a
d
e
c
n
e
m
m
o
c
t
r
e
k
c
e
W
h
a
e
L
1
2
3
4
5
6
4.8 Summary of Executive KMP shareholding and Performance Rights
Table 7.1 and 7.2 show the movements of Performance Rights and STI Shares, held beneficially, by each Executive KMP during FY23.
No other shares were acquired as remuneration during the year. STI Shares are time-based only. Details of Executive KMP holdings
of ordinary shares are provided in Table 11.
Table 7.1: STI Shares
MOVEMENTS DURING THE FINANCIAL PERIOD
VESTED/
ADDITIONAL
INFORMATION
ACCOUNTING
FAIR VALUE OF
GRANTED
RELEASED
LAPSED
CLOSING
GRANT YET
DURING
THE YEAR
DURING
THE YEAR
DURING
BALANCE AT
THE YEAR
25 JUNE 20232
TO VEST
($)1
BALANCE
OF SHARES
HELD AT
27 JUNE 2022
15,734
-
13,261
12,994
7,096
11,580
(15,734)
-
(13,261)
140,380
51,785
(75,866)
-
-
-
-
12,994
7,096
11,580
222,847
121,696
198,597
116,299
-
NAME
Current
Leah Weckert
SR (Charlie) Elias
Matthew Swindells
Former
Steven Cain3
1
The fair value of STI Shares was $17.15 per share at grant date of 30 November 2022 for Executive KMP including Leah Weckert. The fair value of STI Shares is an
estimate of the total maximum value of grants in future financial years. STI Shares are subject to the satisfaction of conditions and, therefore, the minimum total
value of the awards for future financial years is nil.
2
STI Shares are time-based only. No STI Shares were held nominally by Executive KMP or their related parties as at 25 June 2023. Steven Cain’s closing balance is
reflective of the balance at the date of retirement as KMP.
3
Approval from shareholders for the issue of the STI Shares to Steven Cain during the year was obtained for the purpose of ASX Listing Rule 10.14 at the Coles 2022
AGM.
Table 7.2: Performance Rights
MOVEMENTS DURING THE FINANCIAL PERIOD
RIGHTS
FORFEITED/
BALANCE OF
RIGHTS
RIGHTS HELD AT
ALLOCATED AS
RIGHTS
VESTED
DURING
LAPSED
CLOSING
GRANT YET
DURING
BALANCE AT
NAME
Current
Leah Weckert
SR (Charlie) Elias
Matthew Swindells
Former
Steven Cain2,3
27 JUNE 2022
REMUNERATION
THE YEAR
THE YEAR
25 JUNE 2023
283,143
83,334
247,911
89,878
83,945
80,978
(106,982)
-
(90,091)
725,010
218,878
(275,901)
-
-
-
-
266,039
167,279
238,798
667,987
1
The fair value of Performance Rights is an estimate of the total maximum value of grants in future financial years. The fair value of the Executive KMP including Leah
Weckert’s FY23 Performance Rights at the grant date of 25 November 2022 was $7.60 for RTSR component and $15.39 for the ROC component. The Performance
Rights are subject to the satisfaction of conditions and, therefore, the minimum total value of the awards for future financial years is nil.
2
Steven Cain’s closing balance reflects the balance at the date of retirement as KMP. Approval from shareholders for the issue of these Performance Rights to Steven
Cain was obtained for the purpose of ASX Listing Rule 10.14 at the Coles 2022 AGM. While Steven Cain’s Performance Rights held at the time of retirement will be
pro-rated to the employment end date (as outlined in section 3.5).
3
In accordance with the accounting standards, 125,634 Performance Rights included in the closing balance have been deemed forfeited upon retirement as a
KMP.
ADDITIONAL
INFORMATION
ACCOUNTING
FAIR VALUE OF
TO VEST
($)1
3,297,842
2,051,627
2,959,785
-
74
75
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
Section 5: FY23 Non-executive Director remuneration
5.1 Non-executive Director remuneration framework
Non-executive Director remuneration is designed to ensure the Company can attract and retain suitably qualified and
experienced Non-executive Directors.
Non-executive Directors receive a base fee for their service as a Director of the Company, and other than the Chairman, an
additional fee for membership of, or for chairing a Board committee. Non-executive Directors do not receive shares or any
performance-related incentives as part of their remuneration from the Company. A minimum shareholding policy applies to
Non-executive Directors (see section 2.2.2).
Non-executive Directors are reimbursed for travel and other expenses reasonably incurred when attending meetings of the Board
or conducting the business of the Company.
The People and Culture Committee reviews and makes recommendations to the Board with respect to Non-executive Directors’
fees and Board committee fees.
5.2 Current Non-executive Director remuneration policy
The non-executive director remuneration policy enables the Company to attract and retain high-quality Non-executive directors
with relevant experience. The remuneration policy is reviewed annually by the People and Culture Committee. Non-executive
Director fees are set after consideration of fees paid by companies of comparable size, complexity, industry and geography. They
reflect the qualifications and experience necessary to discharge the Board’s responsibilities.
The maximum aggregate fee limit is $3.6 million. This was approved by the shareholders of the Company at the 2018 AGM, prior to
listing. There were no increases to Board and Committee fees in FY23. Table 8 sets out the Board and committee fees (inclusive of
superannuation) for FY23.
Table 8: Board and committee fees (inclusive of superannuation) for FY23
BOARD AND COMMITTEE FEES
Board
Audit and Risk Committee
People and Culture Committee
Nomination Committee
1
The Chairman of the Board does not receive Committee fees in addition to his Board fee.
CHAIR
$695,0001
$55,000
$55,000
No fee
MEMBER
$220,000
$27,000
$27,000
No fee
5.3 FY23 Non-executive Director remuneration
Table 9 outlines the remuneration for the Non-executive Directors of Coles during FY23. There were no transactions or loans
between Non-executive Directors and the Company, or any of its subsidiaries during FY23.
Table 9: FY23 Non-executive Director remuneration
BASE AND
COMMITTEE FEES
(EXCLUDING
SUPER-
ANNUATION
TOTAL
SUPERANNUATION)
OTHER BENEFITS5
BENEFITS
COMPENSATION
NAME
Current
James Graham
Terry Bowen1
Jacqueline Chow
Abi Cleland2
Richard Freudenstein2
Paul O’Malley
Scott Price3
Wendy Stops
Former
David Cheesewright4
TOTAL
TOTAL
FINANCIAL YEAR
$
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
669,708
671,432
167,647
-
223,529
224,267
241,132
247,000
275,000
269,108
249,708
251,432
185,250
-
223,529
224,267
246,639
246,655
2,482,142
2,134,161
$
242
215
212
-
582
434
895
497
-
-
-
-
-
-
678
1,498
-
-
2,609
2,644
$
$
25,292
23,568
17,603
-
23,471
22,733
5,868
-
-
5,892
25,292
23,568
-
-
23,471
22,733
695,242
695,215
185,462
-
247,582
247,434
247,895
247,497
275,000
275,000
275,000
275,000
185,250
-
247,678
248,498
361
345
121,358
98,839
247,000
247,000
2,606,109
2,235,644
1
2
3
4
Terry Bowen was appointed to the Board on 1 October 2022.
Approval was obtained from the ATO by individual Non-executive Directors to be exempt from making superannuation contributions due to superannuation
obligations being met by other employers.
Scott Price was appointed to the Board on 1 October 2022. As Scott Price resided in the US during FY23, no superannuation contributions were payable.
As David Cheesewright resided in Canada during FY22 and FY23, superannuation contributions were only payable for time worked in Australia. David Cheesewright
retired as a Non-executive Director on 15 June 2023.
5 Other benefits include costs associated with directorships (including any applicable fringe benefits tax).
76
77
Coles Group 2023 Annual ReportColes Group 2023 Annual Report Section 6: Ordinary shareholdings
6.1 Non-executive Director Ordinary Shareholdings
Table 10 shows the shareholdings and movements in shares held directly, or indirectly, by each Non-executive Director, including
their related parties during FY23. No shares held by any Non-executive Directors were held nominally.
Table 10: Non-executive Director Ordinary Shareholdings
BALANCE OF
SHARES HELD AT
27 JUNE 2022
SHARES
ACQUIRED
SHARES
AS AT
REQUIREMENT
DISPOSED
25 JUNE 2023
ACHIEVED
CLOSING
MINIMUM
BALANCE
SHAREHOLDING
500,188
-
20,000
19,816
19,000
3,809
-
25,000
20,000
607,813
-
16,545
-
-
6,000
-
1,000
10,000
-
33,545
-
-
-
-
-
-
-
-
-
-
500,188
16,545
20,000
19,816
25,000
3,809
1,000
35,000
20,000
641,358
✔
✔
✔
✔
✔
✔
✔
✔
✔
NAME
Current
James Graham
Terry Bowen
Jacqueline Chow
Abi Cleland
Richard Freudenstein
Paul O’Malley
Scott Price
Wendy Stops
Former
David Cheesewright1
TOTAL
1 David Cheesewright retired as a Non-executive Director on 15 June 2023 therefore his closing balance is as at 15 June 2023.
6.2 Executive KMP Ordinary Shareholdings
Table 11 shows the shareholdings and movements in shares held directly, or indirectly, by each KMP, including their related parties
during FY23. No shares held by any Executive KMP were held nominally.
Table 11: Executive KMP Ordinary Shareholdings
NAME
Current
Leah Weckert
SR (Charlie) Elias
Matthew Swindells
Former
Steven Cain1
TOTAL
BALANCE OF
SHARES HELD AT
27 JUNE 2022
125,684
-
80,918
218,115
424,717
SHARES
ACQUIRED
SHARES
AS AT
REQUIREMENT
DISPOSED
25 JUNE 2023
ACHIEVED
CLOSING
MINIMUM
BALANCE
SHAREHOLDING
132,145
8,633
111,292
376,083
628,153
-
-
257,829
✔
8,633
Not Yet Achieved
(50,000)
142,210
-
(50,000)
594,198
1,002,870
✔
✔
1
Steven Cain retired as Managing Director and CEO and ceased to be a KMP on 30 April 2023 therefore his closing balance is as at 30 April 2023.
78
Coles Group 2023 Annual Report
79
Coles Group 2023 Annual Report Financial Report
Income Statement
for the 52 weeks ended 25 June 2023
Consolidated Financial Statements
Notes To the Consolidated Financial Statements
Income Statement
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Basis of preparation and accounting policies
Section 1: Performance
1.1 Segment reporting
1.2 Earnings per share
1.3 Sales revenue
1.4 Administration expenses
1.5 Financing costs
1.6 Income tax
Section 2: Assets and Liabilities
2.1 Cash and cash equivalents
2.2 Trade and other receivables
2.3 Other assets
2.4 Inventories
2.5 Property, plant and equipment
2.6 Intangible assets
2.7 Leases
2.8 Trade and other payables
2.9 Provisions
Section 3: Capital
3.1 Interest-bearing liabilities
3.2 Contributed equity and reserves
3.3 Dividends paid and proposed
Section 4: Financial Risk
4.1 Impairment of non-financial assets
4.2 Financial risk management
4.3 Financial instruments
Section 5: Group Structure
5.1 Equity accounted investments
5.2 Assets held for sale
5.3 Discontinued operations
5.4 Subsidiaries
5.5 Parent entity information
Section 6: Unrecognised Items
6.1 Commitments
6.2 Contingencies
Section 7: Other Disclosures
7.1 Related party disclosures
7.2 Employee share plans
7.3 Auditor’s remuneration
7.4 New accounting standards and interpretations
7.5 Events after the reporting period
Directors’ Declaration
Independent Auditor’s Report
Continuing operations
Sales revenue
Other operating revenue
Total operating revenue
Cost of sales
Gross profit
Other income
Administration expenses
Share of net loss from equity accounted investments
Earnings before interest and tax (EBIT)
Financing costs
Profit before income tax
Income tax expense
Profit for the period from continuing operations
Discontinued operations
Profit for the period from discontinued operations, after tax
Profit for the period
Profit attributable to:
Equity holders of the parent entity
Earnings per share (EPS) attributable to equity holders of the Company:
Basic EPS (cents)
Diluted EPS (cents)
EPS attributable to equity holders of the Company from continuing operations:
Basic EPS (cents)
Diluted EPS (cents)
Other comprehensive income
Items that may be reclassified to profit or loss:
Net movement in the fair value of cash flow hedges
Income tax effect
Other comprehensive income which may be reclassified to profit or loss in
subsequent periods
Total comprehensive income attributable to:
Equity holders of the parent entity
The accompanying notes form part of the consolidated financial statements.
NOTES
1.3
1.4
5.1
1.5
1.6
5.3
1.2
1.2
1.2
1.2
1.6
2023
$m
40,483
108
40,591
(30,034)
10,557
163
(8,848)
(13)
1,859
(394)
1,465
(423)
1,042
56
1,098
2022
$m
38,237
104
38,341
(28,396)
9,945
86
(8,197)
(7)
1,827
(360)
1,467
(422)
1,045
3
1,048
1,098
1,048
82.3
82.1
78.1
77.9
14
(4)
10
78.8
78.7
78.6
78.5
31
(9)
22
1,108
1,070
80
81
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
Balance Sheet
As at 25 June 2023
Statement of Changes in Equity
For the 52 weeks ended 25 June 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Assets held for sale
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Equity accounted investments
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Lease liabilities
Other
Total current liabilities
Non-current liabilities
Interest-bearing liabilities
Provisions
Lease liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
The accompanying notes form part of the consolidated financial statements.
NOTES
2.1
2.2
2.4
5.2
2.3
2.5
2.7
2.6
1.6
5.1
2.3
2.8
2.9
2.7
3.1
2.9
2.7
3.2
2023
$m
597
605
2,323
4
127
96
2022
$m
589
470
2,448
42
82
120
3,752
3,751
4,985
6,507
2,035
740
220
53
14,540
18,292
4,434
905
820
249
6,408
1,118
376
7,029
5
8,528
14,936
3,356
1,644
104
1,608
3,356
4,807
7,199
1,864
822
219
174
15,085
18,836
4,335
854
914
312
6,415
1,095
424
7,767
11
9,297
15,712
3,124
1,636
95
1,393
3,124
SHARE-
SHARES
BASED
CASH FLOW
SHARE
HELD IN
PAYMENTS
HEDGE
RETAINED
CAPITAL
TRUST
RESERVE
RESERVE
EARNINGS
$m
$m
2023
Balance at beginning of period
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Dividends paid
Issue of shares to satisfy the dividend
reinvestment plan
Issue of shares to Trust
Issue of shares to satisfy the employee share
purchase plan
Transfer of shares to employees under the
employee equity incentive plan
Purchase of shares to satisfy the employee
equity incentive plan
Share-based payments expense
$m
1,695
-
-
-
-
18
18
2
-
-
-
Balance at end of period
1,733
$m
(59)
-
-
-
-
-
(18)
-
38
(50)
-
(89)
2022
Balance at beginning of period
1,655
(70)
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Dividends paid
Issue of shares to satisfy the dividend
reinvestment plan
Issue of shares to Trust
Transfer of shares to employees under the
employee equity incentive plan
Share-based payments expense
Transfers
-
-
-
-
16
24
-
-
-
-
-
-
-
-
(24)
21
-
14
Balance at end of period
1,695
(59)
The accompanying notes form part of the consolidated financial statements.
$m
92
-
-
-
-
-
-
-
(38)
-
37
91
88
-
-
-
-
-
-
(21)
25
-
92
TOTAL
$m
3,124
1,098
10
1,108
1,393
1,098
-
1,098
(883)
(883)
-
-
-
-
-
-
18
-
2
-
(50)
37
3
-
10
10
-
-
-
-
-
-
-
13
1,608
3,356
(19)
-
22
22
-
-
-
-
-
-
3
1,159
1,048
-
1,048
2,813
1,048
22
1,070
(814)
(814)
-
-
-
-
-
16
-
-
25
14
1,393
3,124
82
83
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
Cash Flow Statement
For the 52 weeks ended 25 June 2023
Notes to the Consolidated Financial Statements
Net cash flows from operating activities
2.1
2,807
2,690
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest paid
Interest component of lease payments
Interest received
Income tax paid
Cash flows used in investing activities
Purchase of property, plant and equipment and intangibles
Proceeds from sale of property, plant and equipment
Proceeds from the sale of a business net of transaction costs
Net investments in joint venture and associate
Net cash flows used in investing activities
Cash flows used in financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of principal component of lease payments
Dividends paid
Purchase of shares to satisfy the DRP
Purchase of shares to satisfy the employee equity incentive plan
NOTES
2023
$m
2022
$m
The Financial Report of Coles Group Limited (‘the Company’) in respect of the Company and the entities it controlled at the reporting
date or during the 52-week period ended 25 June 2023 (collectively, ‘Coles’ or ‘the Group’) was authorised for issue in accordance
with a resolution of the Directors on 22 August 2023. The comparative period is for the 52-week period ended 26 June 2022.
44,043
(40,439)
41,887
(38,309)
(57)
(372)
2
(370)
(41)
(363)
1
(485)
(1,514)
248
280
(14)
(1,272)
136
-
(6)
5.1
Reporting entity
The Company is a for-profit company limited by shares which is incorporated and domiciled in Australia and listed on the Australian
Securities Exchange (‘ASX’).
The nature of the operations and principal activities of the Group are described in Note 1.1 Segment Reporting.
Basis of preparation and accounting policies
The Financial Report is a general purpose financial report, which has been prepared in accordance with Australian Accounting
Standards issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001 (Cth). The Financial Report
also complies with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board.
The consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments
measured at fair value as explained in the notes to the consolidated financial statements (‘the Notes’).
The accounting policies adopted are consistent with those of the previous period. Refer to Note 7.4 New accounting standards and
(1,000)
(1,142)
interpretations.
10,812
(10,789)
(907)
(844)
(21)
(50)
5,082
(5,129)
(901)
(798)
-
-
This Financial Report presents reclassified comparative information where required for consistency with the current year’s
presentation. In accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations, the Group has presented
the profit or loss from discontinued operations separately from its continuing operations in its Consolidated Statement of Profit or
Loss in the current period with the prior period restated. Refer to Note 5.3 Discontinued Operations for further details.
Key judgements, estimates and assumptions
The preparation of the financial statements requires judgement and the use of estimates and assumptions in applying the Group’s
accounting policies, which affect amounts reported for assets, liabilities, income and expenses.
Net cash flows used in financing activities
(1,799)
(1,746)
Judgements, estimates and assumptions are continuously evaluated and are based on the following:
Net increase/(decrease) in cash and cash equivalents
Cash at beginning of period
Cash at end of the period
The Consolidated Statement of Cash Flows includes both continuing and discontinued operations.
The accompanying notes form part of the consolidated financial statements.
8
589
597
(198)
787
589
• historical experience
• current market conditions
• reasonable expectations of future events
Actual results may differ from these judgements, estimates and assumptions. Uncertainty about these judgements, estimates and
assumptions could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities in future
periods.
The key areas involving judgement or significant estimates and assumptions are set out below:
Note
Note 2.7 Leases
Judgements
Determining the lease term
Note 5.1 Equity accounted investments
Control and significant influence
Note
Note 2.4 Inventories
Note 2.7 Leases
Note 2.9 Provisions
Estimates and Assumptions
Net realisable value, Commercial income
Incremental borrowing rate
Employee benefits, Self-insurance, Restructuring
Note 4.1 Impairment of non-financial assets
Assessment of recoverable amount
Note 6.2 Contingencies
Note 7.2 Employee share plans
Contingent liabilities
Valuation of share-based payments
Detailed information about each of these judgements, estimates and assumptions is included in the Notes together with
information about the basis of calculation for each affected line item in the financial statements.
84
85
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
Basis of preparation and accounting policies (continued)
1. Performance
The Notes
The Notes include information which is required to understand the consolidated financial statements and is material and relevant
to the operations, financial performance and position of the Group.
Information is considered material and relevant if, for example:
• the amount in question is significant because of its size or nature
•
it is important for understanding the results of the Group
•
it helps to explain the impact of significant changes in the Group’s business
•
it relates to an aspect of the Group’s operations that is important to its future performance
The Notes are organised into the following sections:
1.
Performance: this section provides information on the performance of the Group, including segment results, earnings per
share and income tax.
This section provides information on the performance of the Group, including segment results, earnings per share and
income tax.
1.1 Segment reporting
The Group has identified its operating segments based on internal reporting to the Managing Director and Chief Executive Officer
(the chief operating decision-maker). The Managing Director and Chief Executive Officer regularly reviews the Group’s internal
reporting to assess performance and allocate resources across the operating segments. The segments identified offer different
products and services and are managed separately. The Group’s reportable segments from continuing operations are set out
below:
REPORTABLE SEGMENT
DESCRIPTION
Supermarkets
Fresh food, groceries and general merchandise retailing (includes Coles Online and
Coles Financial Services)
2. Assets and Liabilities: this section details the assets used in the Group’s operations and the liabilities incurred as a result.
Liquor
Liquor retailing, including online delivery services
3. Capital: this section provides information relating to the Group’s capital structure and financing.
Other comprises Property and a product supply arrangement that are not separately reportable, as well as costs associated with
4. Financial Risk: this section details the Group’s exposure to various financial risks, explains how these risks may impact the
Group’s financial performance or position, and details the Group’s approach to managing these risks.
5. Group Structure: this section provides information relating to subsidiaries and other material investments and divestments
of the Group.
6. Unrecognised Items: this section provides information about items that are not recognised in the consolidated financial
statements but could potentially have a significant impact on the Group’s financial performance or position in the future.
7.
Other Disclosures: this section provides other disclosures required by Australian Accounting Standards that are considered
relevant to understanding the Group’s financial performance or position.
Basis of consolidation
In preparing these consolidated financial statements, subsidiaries are consolidated from the date the Group gains control until
the date on which control ceases. The Group’s share of results of its equity accounted investments is included in the consolidated
financial statements from the date that significant influence or joint control commences until the date that significant influence
or joint control ceases. All intercompany transactions are eliminated.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent
accounting policies.
Foreign currency
These consolidated financial statements are presented in Australian dollars, which is the functional currency of the Group. Foreign
currency transactions are translated into the functional currency using the exchange rates at the transaction date. Foreign
exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and
liabilities denominated in foreign currencies at reporting date exchange rates are generally recognised in profit or loss. They are
deferred in equity if they relate to qualifying cash flow hedges.
Accounting policies
Accounting policies that summarise the classification, recognition and measurement basis of financial statement line items and
that are relevant to the understanding of the consolidated financial statements are provided throughout the Notes.
Rounding of amounts
The amounts contained in the Financial Report have been rounded to the nearest million dollars (unless specifically stated to
be otherwise) under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. The Company is an entity to which this legislative instrument applies.
enterprise functions which include Insurance and Treasury.
As a result of Express being classified as a discontinued operation, it is no longer presented in the segment disclosures from
continuing operations for the current and prior period.
There are varying levels of integration between operating segments. This includes the common usage of property, services and
administration functions. Financing costs and income tax are managed on a Group basis and are not allocated to operating
segments.
EBIT is the key measure by which management monitors the performance of the segments.
The Group does not have operations in other geographic areas or economic exposure to any individual customer that is in excess
of 10% of sales revenue.
SUPERMARKETS
LIQUOR
OTHER
OPERATIONS
TOTAL
CONTINUING
2023
Sales revenue
Segment EBIT
Financing costs
Profit before income tax
Income tax expense
Profit for the period from continuing operations
Share of net loss from equity accounted investments
included in EBIT
2022
Sales revenue
Segment EBIT
Financing costs
Profit before income tax
Income tax expense
Profit for the period from continuing operations
Share of net loss from equity accounted investments
included in EBIT
$m
36,746
1,765
$m
3,610
157
$m
127
(63)
34,624
1,715
3,613
163
-
(51)
$m
40,483
1,859
(394)
1,465
(423)
1,042
(13)
38,237
1,827
(360)
1,467
(422)
1,045
(7)
86
87
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
1.2 Earnings Per Share (‘EPS’)
Employee benefits expense
2023
2022
The Group’s accounting policy for liabilities associated with employee benefits is set out in Note 2.9 Provisions. The policy relating to
EPS attributable to equity holders of the Company
Basic EPS (cents)
Diluted EPS (cents)
EPS attributable to equity holders of the Company from continuing operations
Basic EPS (cents)
Diluted EPS (cents)
Profit for the period ($m)
Continuing operations
Discontinued operations
Total
Weighted average number of ordinary shares for basic EPS (shares, million)
Weighted average number of ordinary shares for diluted EPS (shares, million)
Calculation methodology
82.3
82.1
78.1
77.9
1,042
56
1,098
1,334
1,338
78.8
78.7
78.6
78.5
1,045
3
1,048
1,330
1,331
EPS is profit for the period attributable to ordinary equity holders of the Company, divided by the weighted average number of
ordinary shares on issue, adjusted to exclude shares held in trust during the period.
Diluted EPS is calculated on the same basis except it includes the impact of any potential commitments the Group has to issue
shares in the future.
Between the reporting date and the issue date of the Financial Report, there have been no transactions involving ordinary shares
or potential ordinary shares that would impact the calculation of EPS disclosed in the table above.
1.3 Sales revenue
Sale of goods
The Group operates a network of supermarkets, retail liquor stores and convenience stores (prior to the divestment of the Express
business on 1 May 2023, refer note 5.3 Discontinued operations), as well as online platforms. Revenue is recognised by the Group
when it is the principal in the sales transaction. Revenue from the sale of goods is recognised when control of the goods has
transferred to the customer. For goods purchased in-store, control of the goods transfers to the customer at the point of sale. For
goods purchased online, control of the goods transfers to the customer upon delivery, or when collected by the customer.
Revenue comprises the fair value of consideration received or receivable for the sale of goods and is recorded net of discounts
and goods and services tax (‘GST’).
1.4 Administration expenses
Employee benefits expense
Occupancy and overheads
Depreciation and amortisation1
Marketing expenses
Net impairment reversal
Other store expenses
Other administration expenses
Total administration expenses
2023
$m
5,118
774
1,461
234
(11)
668
604
2022
$m
4,804
701
1,385
230
(11)
551
537
8,848
8,197
1
Total depreciation and amortisation from continuing operations is $1,523 million (2022: $1,432 million from continuing operations), the remaining depreciation and
amortisation is included within cost of sales.
Employee benefits expense is comprised of:
Remuneration, bonuses and on-costs
Superannuation expense
Share-based payments expense
Total employee benefits expense
2023
$m
4,673
408
37
5,118
2022
$m
4,396
384
24
4,804
share-based payments is set out in Note 7.2 Employee share plans.
Retirement benefit obligations
The Group contributes to a number of superannuation funds on behalf of its employees, and the Group’s legal or constructive
obligation is limited to these contributions. Contributions payable by the Group are recognised as an expense in the Income
Statement when incurred.
1.5 Financing costs
Interest on debt and borrowings
Interest on lease liabilities
Other finance related costs
Total financing costs
Financing costs
2023
2022
$m
28
343
23
394
$m
16
325
19
360
Financing costs directly attributable to the acquisition, construction or production of an asset, that necessarily takes more than 12
months to get ready for its intended use or sale, are capitalised as part of the cost of the asset. All other financing costs are
expensed in the period in which they are incurred.
1.6 Income tax
The major components of income tax expense in the Income Statement are set out below:
Current income tax expense
Adjustment in respect of current income tax of previous periods
Deferred income tax relating to origination and reversal of temporary differences
Adjustment in respect of deferred income tax of previous periods
Income tax expense is attributable to:
Profit from continuing operations
Profit from discontinued operations
NOTE
5.3
2023
$m
443
(34)
17
25
451
423
28
451
The components of income tax expense recognised in Other Comprehensive Income (‘OCI’) are set out below:
Deferred tax related to items recognised in OCI during the period:
Net profit on revaluation of cash flow hedges
Deferred income tax charged to OCI
2023
$m
(4)
(4)
2022
$m
391
(8)
39
3
425
422
3
425
2022
$m
(9)
(9)
The tax expense included in the Income Statement consists of current and deferred income tax.
Current Income Tax is:
Deferred Income Tax is:
• the expected tax payable on taxable income for the period
• recognised using the liability method
• calculated using tax rates enacted or substantively enacted
• based on temporary differences between the carrying
at the reporting date
•
inclusive of any adjustment to income tax payable or
amounts of assets and liabilities for financial reporting
purposes and the amounts for taxation purposes
recoverable in respect of previous periods
• calculated using the tax rates that are expected to apply in
the period when the liability is settled or the asset realised,
based on the tax rates that have been enacted or
substantively enacted by the reporting date
Both current and deferred income tax are charged or credited to the Income Statement. However, when it relates to items
charged or credited directly to the Statement of Changes in Equity or Other Comprehensive Income, the tax is recognised in
equity, or OCI, respectively.
88
89
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
1.6 Income tax (continued)
Reconciliation of the Group’s applicable tax rate to the effective tax rate
Profit before tax from continuing operations
Profit before tax from discontinued operations
Profit before income tax
At Australia’s corporate tax rate of 30.0% (2022: 30.0%)
Adjustments in respect of income tax of previous periods
Share of results of joint venture
Non-deductible expenses for income tax purposes
Non-assessable income for income tax purposes
Utilisation of previously unrecognised capital losses
Taxable gain on sale of Express business
Income tax expense reported in the Income Statement1
1
At an effective income tax rate of 29.1% (2022: 28.9%).
Tax consolidation
2023
$m
1,465
84
1,549
465
(9)
4
6
(13)
(8)
6
451
2022
$m
1,467
6
1,473
442
(5)
2
2
(11)
(5)
-
425
The Company and its 100% owned Australian resident subsidiaries formed an income tax consolidated group with effect from 31
December 2018.
The Company is the head entity of the tax consolidated group. Members of the group have entered into a tax sharing agreement
which operates to manage joint and several liability for group tax liabilities amongst group members as well as enable group
1.6 Income tax (continued)
2022
Provisions
Employee benefits
Trade and other payables
Inventories
Property, plant and equipment
Intangible assets
Lease Liabilities
Cash flow hedges
Other individually insignificant balances
Deferred tax assets
Accelerated depreciation for tax purposes
Right-of-use assets
Other assets
Other individually insignificant balances
Deferred tax liabilities
Net deferred tax assets
Tax assets and liabilities
CHARGED TO
OPENING
PROFIT OR
CREDITED
CLOSING
BALANCE
LOSS
TO OCI
OTHER
BALANCE
$m
61
257
50
45
153
18
2,627
9
12
3,232
116
2,186
9
48
2,359
873
$m
6
(27)
(22)
8
18
(18)
(268)
(1)
(6)
(310)
9
(271)
(1)
(5)
(268)
(42)
$m
$m
-
-
-
-
-
-
-
(9)
-
(9)
-
-
-
-
-
(9)
-
-
-
-
-
-
245
-
-
245
-
245
-
-
245
-
$m
67
230
28
53
171
-
2,604
(1)
6
3,158
125
2,160
8
43
2,336
822
members to leave the group clear of future group tax liabilities. Members of the group have also entered into a taxation funding
Deferred tax assets are recognised to the extent it is probable that taxable profits will be available against which deductible
agreement which provides that each member of the tax consolidated group pay a tax equivalent amount to or from the parent in
temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced
accordance with their notional current tax liability or current tax asset. Such amounts are reflected in amounts receivable from or
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be
payable to the parent company in their accounts and are settled as soon as practicable after lodgement of the consolidated tax
recovered.
return and payment of the tax liability.
Deferred income tax balances recognised in the Balance Sheet
CHARGED
OPENING
TO PROFIT
CREDITED
ACQUISITIONS
CLOSING
BALANCE
OR LOSS
TO OCI
/(DISPOSALS)
OTHER
BALANCE
2023
Provisions
Employee benefits
Trade and other payables
Inventories
Property, plant and equipment
Lease Liabilities
Other individually insignificant balances
Deferred tax assets
Accelerated depreciation for tax
purposes
Intangible assets
Right-of-use assets
Other assets
Cash flow hedges
Other individually insignificant balances
Deferred tax liabilities
Net deferred tax assets
$m
67
230
28
53
171
2,604
6
3,159
125
-
2,160
8
1
43
2,337
822
$m
11
3
6
-
16
(273)
5
(232)
5
44
(258)
(1)
-
20
(190)
(42)
$m
$m
$m
-
-
-
-
-
-
-
-
-
-
-
-
4
-
4
(4)
-
(8)
-
(1)
(7)
(218)
(1)
(235)
-
(7)
(192)
-
-
-
(199)
(36)
-
-
-
-
-
242
-
242
-
-
242
-
-
-
242
-
$m
78
225
34
52
180
2,355
10
2,934
130
37
1,952
7
5
63
2,194
740
Deferred tax assets and liabilities are offset against each other when there is a legally enforceable right to set off current taxation
assets against current taxation liabilities and it is the intention to settle these on a net basis.
The Group has unrecognised deferred tax assets relating to temporary differences arising from its investments in Loyalty Pacific Pty
Ltd (operator of the Flybuys loyalty program) and Queensland Venue Co. Pty Ltd (‘QVC’), and capital losses from disposal of
capital gains tax assets. Deferred tax assets have not been recognised in relation to these amounts as the Group has determined
that at the reporting date, it is not probable that capital gains will be available against which the Group can utilise these benefits.
The unrecognised deferred tax asset is $169 million (2022: $107 million).
An uncertain tax treatment is any tax treatment applied by the Group where there is uncertainty over whether it will be accepted
by the relevant tax authority. If it is not probable that the treatment will be accepted, the effect of the uncertainty is reflected in the
period in which that determination is made (for example, by recognising an additional tax liability). The Group measures the
impact of the uncertainty using the method that best predicts the resolution of the uncertainty: either the most likely amount
method or the expected value method. The judgements and estimates made to recognise and measure the effect of uncertain
tax treatments are reassessed whenever circumstances change or when there is new information that affects those judgements.
The Group determined, based on its tax compliance, that it is probable that its tax treatments applied at 25 June 2023 will be
accepted by the taxation authorities.
Goods and Services Tax (‘GST’)
Revenue, expenses and assets are recognised net of GST, except:
• when the GST incurred on the sale or purchase of assets or services is not payable to or recoverable from the taxation authority,
in which case GST is recognised as part of the revenue or the expense item or as part of the cost of acquisition of the asset; or
• when receivables are stated with the amount of GST included.
The net amount of GST recoverable from or payable to the taxation authority is included as part of receivables or payables in the
Balance Sheet. Commitments and contingencies are disclosed net of the amount of GST recoverable from or payable to the
taxation authority.
Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing
and financing activities where recoverable or payable to the taxation authority is classified as part of operating cash flows.
90
91
Coles Group 2023 Annual ReportColes Group 2023 Annual Report 2. Assets and Liabilities
This section details the assets used in the Group’s operations and the liabilities incurred as a result.
2.2 Trade and other receivables
Trade and other receivables are comprised of the following:
2.1 Cash and cash equivalents
Cash and cash equivalents are comprised of the following:
Cash on hand and in transit
Cash at bank and on deposit
Total cash and cash equivalents
2023
2022
$m
511
86
597
$m
559
30
589
Trade receivables1
Other receivables
Allowance for expected credit losses
Total trade and other receivables
1
Includes commercial income due from suppliers of $149 million (2022: $117 million).
Trade receivables and other receivables are classified as financial assets held at amortised cost.
Trade receivables
2023
2022
$m
470
154
624
(19)
605
$m
386
95
481
(11)
470
All receivables from EFT, credit card and debit card point of sale transactions during the period are classified as cash and cash
Trade receivables are initially recognised at the amount due and subsequently at amortised cost using the effective interest
equivalents.
For the purpose of the Cash Flow Statement, cash and cash equivalents includes cash on hand and in transit, at bank and on
method, less an allowance for expected credit losses (impairment provision). The carrying value of trade and other receivables,
less impairment provisions, is considered to approximate fair value, due to the short-term nature of the receivables.
deposit, net of outstanding bank overdrafts which are repayable on demand.
Impairment of trade receivables
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits earn interest at the respective
The collectability of trade and other receivables is reviewed on an ongoing basis. Individual debts which are known to be
short-term deposit rates.
uncollectable are written off when identified.
Reconciliation of profit for the period to net cash flows from operating activities
Profit for the period
Adjustments for:
Depreciation and amortisation
Net impairment reversal
Net loss on disposal of non-current assets
Net loss on disposal of business
Share of net loss of equity accounted investments
Share-based payments expense
Other
Changes in assets and liabilities net of the effects of acquisitions and disposals of businesses:
Decrease / (increase) in inventories
Increase in trade and other receivables
Decrease in prepayments
Decrease / (increase) in other assets
Decrease in deferred tax assets
Decrease / (increase) in income tax receivable
Increase in trade and other payables
Increase / (decrease) in provisions
(Decrease) / increase in other liabilities
Net cash flows from operating activities
2023
$m
1,098
1,558
(11)
-
16
13
37
1
39
(135)
11
33
46
38
102
30
(69)
2022
$m
1,048
1,571
(10)
14
-
7
25
5
(341)
(102)
4
(64)
51
(102)
675
(130)
39
2,807
2,690
The Group recognises an impairment provision based upon anticipated lifetime losses of trade receivables. The anticipated
lifetime losses are determined with reference to historical experience and are regularly reviewed and updated.
The amount of the impairment loss is recognised in the Income Statement within ‘Administration expenses’.
2.3 Other assets
Other assets are comprised of the following:
Prepayments
Other assets
Total other current assets
Prepayments
Other assets
Total other non-current assets
2023
2022
$m
82
14
96
3
50
53
$m
83
37
120
15
159
174
92
93
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
2.4 Inventories
Inventories comprise goods held for resale and are valued at the lower of cost and net realisable value, which is the estimated
selling price less estimated costs to sell.
The cost of inventory is based on purchase cost, after deducting certain types of commercial income and including logistics and
store remuneration incurred in bringing inventories to their present location and condition.
Volume-related supplier rebates, and supplier promotional rebates where they exceed spend on promotional activities, are
accounted for as a reduction in the cost of inventory and recognised in the Income Statement when the inventory is sold.
Key estimate: Net realisable value
An inventory provision is recognised where the realisable value from sale of inventory is estimated to be lower than
the inventory’s carrying value. Inventory provisions for different product categories are estimated based on various
factors, including expected sales profile, prevailing sales prices, seasonality and expected losses associated with
slow-moving inventory items.
Commercial income
Commercial income represents various discounts or rebates provided by suppliers. These include:
• settlement discounts for the purchase of inventory
• discounts based on purchase or sales volumes
• contributions towards promotional activity for a supplier’s product
Depending on the type of arrangement with the supplier, commercial income will either be deducted from the cost of inventory
(where it relates to the purchase of inventory) or recognised as a reduction in related expenses (where it relates to the sale of
goods).
Amounts due from suppliers are recognised within trade receivables, except in cases where the Group has the legal right and the
intention to offset, in which case only the net amount receivable or payable is presented. Refer to Note 4.3 Financial instruments for
details of amounts offset in the Balance Sheet.
Key estimate: Commercial income
The recognition of certain types of commercial income requires the following estimates:
• the volume of inventory purchases that will be made during a specific period
• the amount of the related product that will be sold
• the balance remaining in inventory at the reporting date.
Estimates are based on historical and forecast sales and inventory turnover levels
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94
95
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
2.6 Intangible assets
The Group’s intangible assets comprise licences, software and goodwill.
Licences and software
Licences and software are measured initially at acquisition cost or costs incurred to develop the asset. Intangible assets acquired
in a business combination are recognised at fair value at the acquisition date. Following initial recognition, intangible assets with
finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. They are amortised on a
straight-line basis over their estimated useful lives. Intangible assets with indefinite useful lives are not amortised. Instead, they are
tested for impairment annually or more frequently if events or changes in circumstances indicate they may be impaired.
Licences have been assessed as having indefinite lives on the basis that the licences are expected to be renewed in line with
business continuity requirements.
For internally generated software, research costs are expensed as incurred. Development expenditure is capitalised when
management has the intention to develop the asset, it is probable that future economic benefits will flow to the Group and the
cost can be reliably measured.
In respect to cloud computing arrangements, the Group assesses whether the arrangement contains a lease and if not, whether
the arrangement provides the Group with a resource that it can control. Costs associated with implementation are then assessed
as to whether they can be capitalised in accordance with relevant accounting standards.
Goodwill
Goodwill recognised by the Group has arisen as a result of business combinations and represents the future economic benefits that
arise from assets that are not capable of being individually identified and separately recognised.
Goodwill is initially measured as the amount the Group has paid in acquiring a business over and above the fair value of the
individual assets and liabilities acquired. Goodwill is considered to have an indefinite useful economic life. It is therefore not
amortised but is instead tested annually for impairment, or more frequently if events or changes in circumstances indicate that it
might be impaired. Goodwill is carried at cost less any accumulated impairment losses and, for the purpose of impairment testing,
is allocated to cash generating units.
Refer to Note 4.1 Impairment of non-financial assets for further details on impairment testing.
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97
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
2.7 Leases
The Group has lease agreements for properties and various items of machinery, vehicles and other equipment used in its
operations.
2.7 Leases (continued)
Extension options
Extension options are included in the majority of property leases across the Group. Where practicable, the Group seeks to include
Set out below are the carrying amounts of recognised right-of-use assets and movements during the period:
extension options when negotiating leases to provide flexibility and align with business needs. Leases may contain multiple
2023
NON-
2022
NON-
PROPERTY
PROPERTY
PROPERTY
PROPERTY
LEASES
LEASES
TOTAL
LEASES
LEASES
At beginning of period
Additions
Other remeasurements1
Continuing operations
Discontinued operations
Depreciation expense
Continuing operations
Discontinued operations
Sale of business
At end of period
$m
7,096
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344
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6,409
$m
103
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435
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(28)
(640)
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$m
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183
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Includes reasonably certain options and remeasurements, net of leases terminated.
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At beginning of period
Additions
Other remeasurements1
Continuing operations
Discontinued operations
Accretion of interest
Continuing operations
Discontinued operations
Payments
Continuing operations
Discontinued operations
Sale of business
At end of period
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Non-current
1
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2023
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435
352
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29
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7,849
820
7,029
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208
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587
31
325
38
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914
7,767
extension options and are exercisable only by the Group and not by the lessors.
Extension options are only reflected in the lease liability when it is reasonably certain they will be exercised. When assessing if an
option is reasonably certain to be exercised, a number of factors are considered including the option expiry date, whether formal
approval to extend the lease has been obtained, store trading performance and the strategic importance of the site. Where a
lease contains multiple extension options, only the next option is considered in the assessment. Option periods range from 1 to 15
years.
Of the Group’s lease portfolio, 92% of leases have extension options (2022: 70%). Of those leases, 8%1 have an extension option
included in the calculation of the lease liability at 25 June 2023 (2022: 30%).
The following amounts have been recognised in the Income Statement relating to continuing operations:
Depreciation of right-of-use assets
Interest expense on lease liabilities
Expenses relating to short-term leases (included in administration expenses)
Variable lease payments based on sales (included in administration expenses)
Other variable lease payments (included in administration expenses)
2023
$m
819
343
5
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6
2022
$m
784
325
2
47
3
Total amount recognised in the Income Statement
1,243
1,161
The Group recognised a total gain of $8 million relating to two sale and leaseback transaction during the period (2022: $17 million).
Group as lessee
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for consideration.
The Group applies a single recognition and measurement approach for all leases, except for short-term leases (leases with a term
of 12 months or less) and leases of low-value assets. The Group recognises lease liabilities to make future lease payments and
right-of-use assets representing the right to use the underlying assets from the date the leased asset is available for use by the
Group.
Each lease payment is apportioned between the liability and financing costs. Financing costs are recognised in the Income
Statement over the lease term so as to produce a constant periodic rate of interest on the remaining liability.
The right-of-use asset is depreciated on a straight-line basis over the shorter of the asset’s useful life and the lease term (which
includes options that are considered ‘reasonably certain’). Payments associated with short-term leases and leases of low-value
assets are expensed when incurred in the Income Statement.
Cash payments for the principal portion of the lease liability are presented within financing activities in the Cash Flow Statement,
while payments relating to short-term leases, low-value assets and variable lease components not included in the measurement
of the lease liability are presented within cash flows from operating activities.
The maturity analysis of lease liabilities is disclosed in Note 4.2 Financial risk management.
Lease liabilities are initially measured at net present value and comprise the following:
Variable lease payments based on sales
A number of the Group’s retail property lease agreements contain variable payment terms that are linked to sales. These lease
payments are based on a percentage of sales recorded by a particular store. The specific percentage rent adjustment
mechanism varies by individual lease agreement. Variable payment terms are used for a variety of reasons, including minimising
the fixed costs base for newly established stores. Variable lease payments are recognised in profit or loss in the period in which the
• fixed payments (including in-substance fixed payments), less any lease incentives
• variable lease payments based on an index or rate, using the index or rate at the commencement date
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option
• payment of termination penalties if the lessee is reasonably certain to terminate the lease and incur penalties.
condition that triggers those payments occurs and are generally payable for future periods in the lease term.
If the interest rate implicit in the lease cannot be readily determined, the lease payments are discounted using the lessee’s
The following provides information on the Group’s variable lease payments, including the magnitude in relation to fixed payments:
incremental borrowing rate at the lease commencement date.
2023
2022
FIXED
VARIABLE
FIXED
VARIABLE
PAYMENTS
PAYMENTS
TOTAL
PAYMENTS
PAYMENTS
$m
614
$m
70
$m
684
$m
587
$m
47
TOTAL
$m
634
Leases with lease payments
based on sales
98
1 75% of these leases contain one or more future extension options not included in the lease liability (2022: 54%).
99
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
2.7 Leases (continued)
Group as lessee (continued)
Right-of-use assets are measured at cost and comprise the following:
• the initial measurement of the lease liability
• any lease payments made at or before the commencement date, less any lease incentives received
• any initial direct costs
• any restoration costs
2.8 Trade and other payables
Trade and other payables are comprised of the following:
Trade payables
Other payables
Total trade and other payables
2023
$m
3,281
1,153
4,434
2022
$m
3,211
1,124
4,335
Trade payables are non-interest-bearing and are recognised initially at fair value and subsequently measured at amortised cost
Right-of-use assets are also subject to impairment testing. Refer to the accounting policies in Note 4.1 Impairment of non-financial
using the effective interest method.
assets.
Key estimate: Incremental borrowing rate
If the Group cannot readily determine the interest rate implicit in the lease, it uses its incremental borrowing rate (IBR)
to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar
term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a
similar economic environment.
The IBR requires estimation when no observable rates are available or when adjustments need to be made to reflect
the terms and conditions of the lease. The Group estimates the IBR using observable market inputs when available
and is required to make certain estimates specific to the Group (such as credit risk).
Key judgement: Determining the lease term
Extension options are included in the majority of property leases across the Group. In determining the lease term, all
facts and circumstances that create an economic incentive to exercise an extension option are considered.
2.9 Provisions
Current
Employee benefits
Restructuring provision
Self-insurance liabilities
Other
Total current provisions
Non-current
Employee benefits
Restructuring provision
Self-insurance liabilities
Extension options are only included in the lease term if the lease is reasonably certain to be exercised. The assessment
Total non-current provisions
2023
$m
2022
$m
736
37
110
22
905
65
52
259
376
716
6
114
18
854
72
96
256
424
is reviewed if a significant event or change in circumstance occurs which affects this assessment and is within the
control of the Group.
Changes in the assessment of the lease term are accounted for as a reassessment of the lease liability at the date of
the change.
Group as lessor
The Group leases out some of its freehold properties and sub-leases some of its right-of-use assets. The Group has classified these
leases as operating leases because they do not transfer all of the risks and rewards incidental to ownership of the assets.
The undiscounted lease payments to be received are set out below:
Within one year
Between one and five years
More than five years
Total
2023
$m
18
46
35
99
2022
$m
29
59
37
125
Rental income is accounted for on a straight-line basis over the lease term and is included in ‘Other operating revenue’ in the
Income Statement. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount
of the leased asset and recognised over the lease term on the same basis as rental income. Variable lease income not dependent
on an index or rate is recognised as revenue in the period in which it is earned. The Group recognised income of $20 million for the
period with respect to subleasing of its right-of-use assets (2022: $19 million).
Movements in restructuring, self-insurance, and other provisions
At beginning of period
Arising during the period
Utilised
Unused amounts reversed
Unwind / changes in discount rate
At end of period
Current
Non-current
RESTRUCTURING
INSURANCE
OTHER
TOTAL
SELF-
$m
102
1
(14)
-
-
89
37
52
$m
370
120
(103)
(22)
4
369
110
259
$m
18
5
(1)
-
-
22
22
-
$m
490
126
(118)
(22)
4
480
169
311
100
101
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
2.9 Provisions (continued)
Provisions are:
3. Capital
• recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that cash will be
This section provides information relating to the Group’s capital structure and financing.
required to settle the obligation and the amount can be reliably estimated;
• measured at the present value of the estimated cash outflow required to settle the obligation.
Where a provision is non-current, and the effect is material, the nominal amount is discounted. The discount is recognised as a
financing cost in the Income Statement.
PROVISION
Employee benefits
Provisions for employee entitlements to annual leave, long service leave and
employee incentives (where the Group does not have an unconditional right
KEY ESTIMATES
Employee benefits provisions are based
on a number of estimates including, but
not limited to:
to defer payment for at least twelve months after the reporting date) are
• expected future wages and salaries
recognised within the current provision for employee benefits and represent
the amount which the Group has a present obligation to pay, resulting from
employees’ services up to the reporting date.
All other short-term employee benefit obligations are presented as payables.
• attrition (applicable to long service
leave provisions only)
• discount rates
• expected salary related payments,
Liabilities for long service leave where the Group has an unconditional right
interest and on-costs following a
to defer payment for at least twelve months after the reporting date are
review of the pay arrangements for
recognised within the non-current provision for employee benefits.
award-covered salaried team
Self-insurance
The Group is self-insured for workers compensation and certain general
liability risks. The Group seeks external actuarial advice in determining
members
Self-insurance provisions are based on a
number of estimates including, but not
limited to:
self-insurance provisions. Provisions are discounted and are based on claims
• discount rates
reported and an estimate of claims incurred but not reported.
These estimates are reviewed bi-annually, and any reassessment of these
estimates will impact self-insurance expense.
Restructuring
Restructuring provisions are recognised when restructuring has either
commenced or has raised a valid expectation in those affected, and the
Group has a detailed formal plan identifying:
• the business or part of the business impacted
• the location and approximate number of employees impacted
• an estimate of the associated costs
• the timeframe for restructuring activities
• future inflation
• average claim size
• claims development
• risk margin
Restructuring provisions are based on a
number of estimates including, but not
limited to:
• number of employees impacted
• employee tenure and costs
• restructure timeframes
• discount rates
The Group’s capital management strategy aims to ensure the Group has continued access to funding for current and future
business activities by maintaining a mix of equity and debt financing, while maximising returns to shareholders.
The Group’s objective is to maintain investment grade credit metrics to optimise the weighted average cost of capital over the
long term, enable access to long term debt capital markets and build investor confidence.
The Directors consider the capital structure at least twice a year and provide oversight of the Group’s capital management.
Capital is managed through the following:
• repaying or raising debt in line with ongoing business requirements and growth opportunities aligned with the Group’s strategic
objectives
• amount of ordinary dividends paid to shareholders
• raising and returning capital.
3.1 Interest-bearing liabilities
Non-current
Bank debt
Capital market debt
Total non-current interest-bearing liabilities
2023
$m
72
1,046
1,118
2022
$m
50
1,045
1,095
Interest-bearing loans and borrowings are initially recorded at fair value, net of attributable transaction costs. Subsequent to initial
recognition, interest-bearing loans and borrowings are measured at amortised cost using the effective interest method. Gains and
losses are recognised in the Income Statement when the liabilities are derecognised.
3.2 Contributed equity and reserves
Contributed equity
Contributed equity represents the number of ordinary shares on issue less shares held in trust by the Group. Ordinary shares on
issue are fully paid and carry one vote per share and the right to dividends. Shares held in trust are ordinary shares that have
been repurchased by the Group and are being held to satisfy employee equity incentive plans.
Incremental costs directly attributable to the issue of new shares are recognised as a deduction from equity, net of any related
income tax benefit.
The following reconciliation shows the total number of ordinary shares on issue less the shares held in trust:
Share Capital
At beginning of period
Issue of shares to satisfy the dividend reinvestment plan
Issue of shares to satisfy the employee equity incentive plans
Issue of shares to satisfy the employee share purchase plan
2023
m
$m
2022
m
$m
1,336.1
1,695
1,333.9
1,655
1.1
1.0
0.2
18
18
2
0.9
1.3
-
16
24
-
At end of period
1,338.4
1,733
1,336.1
1,695
Shares held in trust
At beginning of period
Purchase of shares to satisfy the employee equity incentive
plans
Issue of shares to satisfy the employee equity incentive plans
Transfer of shares to employees under the employee equity
incentive plan
Transfers
At end of period
Total contributed equity
(3.5)
(2.8)
(1.0)
2.3
-
(5.0)
1,333.4
(59)
(50)
(18)
38
-
(3.7)
-
(1.3)
1.5
-
(89)
1,644
(3.5)
1,332.6
(70)
-
(24)
21
14
(59)
1,636
102
103
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
3.2 Contributed equity and reserves (continued)
Cash flow hedge reserve
The hedging reserve records the portion of the gain or loss on a cash flow hedging instrument that is determined to be in an
effective hedge relationship. The effective portion of the gain or loss on the hedging instrument is recognised in Other
Comprehensive Income within the cash flow hedge reserve, while any ineffective portion is recognised immediately in the Income
Statement.
Share-based payments reserve
The share-based payments reserve reflects the fair value of awards recognised as an expense in the Income Statement.
3.3 Dividends paid and proposed
The Company considers current earnings, future cash flow requirements, targeted credit metrics and availability of franking credits
in determining the amount of dividends to be paid.
Dividends are recognised as a liability in the Balance Sheet in the period in which they are determined by the Board.
Fully franked dividends determined and paid during
the period
Paid final dividend
Paid interim dividend
Fully franked dividends proposed and unrecognised at
reporting date1
Final dividend proposed
CENTS PER SHARE
TOTAL $m
2023
2022
2023
2022
30.0
36.0
66.0
30.0
30.0
28.0
33.0
61.0
30.0
30.0
401
482
883
4021
4021
373
441
814
401
401
1 Estimated final dividend payable, subject to variations in the number of shares up to the record date.
The Company operates a Dividend Reinvestment Plan (‘DRP’) under which eligible holders of ordinary shares are able to reinvest
all or part of their dividend payments into additional fully paid Coles Group Limited shares.
Franking account
Total franking credits available for subsequent periods based on a tax rate of 30% (2022: 30%)
2023
$m
549
2022
$m
558
4. Financial Risk
This section details the Group’s exposure to various financial risks, explains how these risks may impact the Group’s
financial performance or position, and details the Group’s approach to managing these risks.
4.1 Impairment of non-financial assets
The Group tests property, plant and equipment and intangible assets for impairment to ensure they are not carried above their
recoverable amounts:
• at least annually for goodwill
• where there is an indication that assets may be impaired (which is assessed at least at each reporting date).
These tests are performed by assessing the recoverable amount of each individual asset or, if this is not possible, the recoverable
amount of the cash generating unit (‘CGU’) to which the asset belongs. CGUs are the lowest levels at which assets are grouped
and generate separately identifiable cash inflows. The recoverable amount, measured at the asset or CGU level, is the higher of
fair value less costs of disposal (‘FVLCOD’), or value in use (‘VIU’). A discounted cash flow model is used to determine the
recoverable amount under both FVLCOD and VIU. FVLCOD is based on a market participant approach and is estimated using
assumptions that a market participant would use when pricing the asset or CGU. VIU is determined by discounting the future cash
flows expected to be generated from the continuing use of an asset or CGU.
Key estimate: Assessment of recoverable amount
FVLCOD valuations are considered Level 3 in the fair value hierarchy due to the use of unobservable inputs in the
calculation. The assumptions represent management’s assessment of future trends in the relevant industry and have
been based on historical data from both external and internal sources. VIU calculation represent management’s
best estimate of the economic conditions that will exist over the remaining useful life of the asset or CGU in its current
condition.
Both FVLCOD and VIU calculations use judgements and estimates. In particular, significant judgements and
estimates are made in relation to the following:
Forecast future cash flows
Forecast future cash flows are based on the Group’s latest Board approved internal five-year forecasts and reflect
management’s best estimate of income, expenses, capital expenditure and cash flows for each asset or CGU.
Internal forecasts have considered the ongoing impacts of the cost of living on income and expenses. Changes in
selling prices and direct costs are based on past experience and management’s expectation of future changes in
the markets in which the Group operates.
In addition, consideration has been given to the potential financial impacts of climate change related risks on the
carrying value of goodwill through a qualitative review of the Group’s climate change risk assessment. This review did
not identify any material financial reporting impacts.
When calculating the FVLCOD of an asset or CGU, future forecast cash flows also incorporate reasonably available
market participant assumptions such as enhancement capital expenditure.
Discount rates
Estimated future cash flows are discounted to their present value using discount rates that reflect the Group’s
weighted average cost of capital, adjusted for risks specific to the asset or CGU. The rates have been calculated in
conjunction with independent valuation experts.
Expected long-term growth rates
Cash flows beyond the five-year period are extrapolated using estimated long-term growth rates. The growth rates
are based on historical performance as well as expected long-term market operating conditions specific to each
asset or CGU and with reference to long-term average industry growth rates. Growth rates have been calculated
with the assistance of independent valuation experts.
The judgements and estimates used in assessing impairment are best estimates based on current and forecast
market conditions and are subject to change in the event of shifting economic and operational conditions. Actual
cash flows may therefore differ from forecasts and could result in changes to impairment recognised in future
periods.
104
105
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
4.1
Impairment of non-financial assets (continued)
4.2 Financial risk management (continued)
Net impairment reversal for the current and prior period is included in ‘Administration expenses’ in the Income Statement as it
In the normal course of business, the Group is exposed to various risks as set out below:
relates to the day-to-day management of the Group’s freehold property portfolio and other non-financial assets.
2023
OTHER
NON-
FINANCIAL
2022
OTHER
NON-
FINANCIAL
PROPERTY
ASSETS
TOTAL
PROPERTY
ASSETS
TOTAL
$m
(32)
46
14
$m
(3)
-
(3)
$m
(35)
46
11
$m
(4)
24
20
$m
(10)
1
(9)
$m
(14)
25
11
Impairment
Reversal
Net impairment reversal/
(impairment)
Recognised impairment
RISK
Market risks
EXPOSURE
MANAGEMENT
Interest rate risk
The Group’s exposure to interest rate
The Group manages interest rate risk by having access to both
risk relates primarily to interest-
fixed and variable debt facilities. In line with the Policy, this risk is
bearing liabilities where interest is
further managed by hedging a portion of the variable rate debt
charged at variable rates.
exposures with derivative financial instruments to convert floating
rate debt obligations to fixed rate obligations.
Foreign exchange risk
The Group has exposure to foreign
To manage foreign currency transaction risk, the Group hedges
exchange risk principally arising
material foreign currency denominated expenditure at the time
from purchases of inventory and
of the commitment and hedges a proportion of foreign currency
capital equipment denominated in
denominated forecast exposures (mainly relating to the purchase
foreign currencies.
of inventory) through the use of forward foreign exchange
contracts.
An impairment loss is recognised in the Income Statement if the carrying amount of an asset or a CGU exceeds its recoverable
Commodity price risk
The Group is exposed to changes in
To mitigate the variability of wholesale electricity prices, the
amount. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill
commodity prices in respect to the
Group utilises Power Purchase Arrangements (‘PPAs’) and
allocated to the CGU and then to reduce the carrying amount of other assets in the CGU.
price of electricity.
electricity swaps.
Reversal of impairment
Where there is an indication that previously recognised impairment losses may no longer exist or may have decreased, the asset is
re-tested for impairment. The impairment loss is reversed only to the extent that the carrying amount of the asset does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment been recognised.
Impairments recognised for goodwill are not reversed.
Goodwill impairment testing
For the purpose of impairment testing, goodwill is allocated to CGUs or groups of CGUs according to the level at which
management monitors goodwill. The FVLCOD valuation methodology was applied to determine the recoverable amount of CGUs.
The following table presents a summary of the goodwill allocation and the key assumptions used in determining the recoverable
amount of each CGU:
Goodwill allocation ($m)
Indefinite life intangible assets ($m)
Post-tax discount rate (%)
Terminal growth rate (%)
2023
2022
SUPERMARKETS
LIQUOR SUPERMARKETS
LIQUOR
EXPRESS
986
-
7.5%
2.0%
129
31
7.5%
2.0%
986
-
7.6%
2.8%
129
29
7.6%
2.8%
45
-
7.9%
nil
Sensitivity analysis is performed to determine the point at which the recoverable amount is equal to the carrying amount for each
CGU. For the Group’s CGUs, based on current economic conditions and CGU performance, no reasonably possible change in a
key assumption used in the determination of the recoverable value is expected to result in a material impairment.
4.2 Financial risk management
The following note outlines the Group’s exposure to and management of financial risks. These arise from the Group’s
requirement to access financing (bank debt, capital market debt and overdrafts), from the Group’s operational
activities (cash, trade receivables and payables) and from instruments held as part of the Group’s risk management
activities (derivative financial instruments).
The Group’s financial risk management is carried out by the Group Treasury function and governed by the Board-approved
Treasury Policy (‘the Policy’). The Policy strictly prohibits speculative positions to be taken.
Management of financial risks is undertaken by the Group in line with its risk management principles and includes the following key
steps: risk identification, risk measurement, setting risk tolerances and hedging objectives, strategy design and strategy
implementation.
The Policy requires periodic reporting of financial risks to the Board, and its application is subject to oversight from the Chief
Financial Officer and the Chairman of the Audit and Risk Committee.
The Policy allows the use of various derivatives to hedge financial risks and provides guidance in relation to volume and tenor of
these instruments.
106
Liquidity risk
The Group is exposed to liquidity
Liquidity risk is measured under both normal market operating
and funding risk from operations
conditions and under a crisis situation which curtails cash flows for
and external borrowings.
an extended period. This approach is designed to ensure that the
Liquidity risk is the risk that
unforeseen events cause pressure
Group’s funding framework is sufficiently flexible to ensure liquidity
under a wide range of market conditions.
on, or curtail, the Group’s cash flows.
The Group regularly reviews its short, medium and long-term
Funding risk is the risk that sufficient
funds will not be available to meet
the Group’s financial commitments
in a timely manner.
funding requirements. The Policy requires that sufficient
committed funds are available to meet medium term
requirements, with flexibility and headroom in the event a
strategic opportunity should arise. The Group maintains a liquidity
reserve in the form of undrawn facilities of at least $1 billion.
Credit risk
The Group is exposed to credit risk
The majority of the Group’s sales are on a cash basis, and the
from its financing activities,
Group’s exposure to credit risk from customer sales is minimal.
including deposits with financial
institutions and other financial
instruments.
With respect to credit risk arising
from cash and cash equivalents,
trade and other receivables and
certain derivative instruments, the
Group’s exposure arises from default
of the counterparty.
The Group’s trade and other receivables relate largely to
commercial income due from suppliers and other receivables
from creditworthy third parties.
Counterparty limits, credit ratings and exposures are actively
managed in accordance with the Policy. The Group’s exposure to
bad debts is not significant, and default rates have historically
been very low. The credit quality of trade and other receivables
neither past due nor impaired has been assessed as high on the
basis of credit ratings (where available) or historical information
Credit risk for the Group also arises
about counterparty default.
from various financial guarantees in
which members of the Group act as
guarantor.
Since the Group trades only with recognised creditworthy third
parties, there is no requirement for collateral by either party.
The carrying amount of trade and other receivables and other
financial assets in the Balance Sheet represents the Group’s
maximum exposure to credit risk.
There is also exposure to credit risk where members of the Group
have entered into guarantees, however the probability of being
required to make payments under these guarantees is considered
remote. Refer to Note 6.2 Contingencies for further details.
107
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
4.2 Financial risk management (continued)
Foreign exchange risk
4.2 Financial risk management (continued)
Interest rate risk
The Group is primarily exposed to foreign exchange risk in relation to the United States dollar (USD), the Euro (EUR) and the British
At the reporting date, the Group has the following financial assets and liabilities exposed to variable interest rate risk that, with the
Pound (GBP). The Group considers its exposure to USD, EUR and GBP arising from purchases to be a long-term and ongoing
exception of interest rate swaps, are not designated as cash flow hedges:
exposure that is highly probable.
The table below sets out the total forward exchange contracts at the reporting date and the carrying value of the derivative asset
/ (liability) positions:
NOTIONAL VALUE
CARRYING VALUE
HEDGE RATE
WEIGHTED AVERAGE
BUY / SELL
USD / AUD
EUR / AUD
GBP / AUD
AUD / USD
2023
2022
$m
103
197
38
(8)
$m
82
208
37
(3)
2023
$m
2
5
1
(0)
At the reporting date, the Group has the following exposures to USD, EUR and GBP:
USD
$m
EUR
€m
2022
2023
2022
$m
3
(10)
(1)
-
0.72
0.61
0.54
0.71
0.68
0.62
0.54
0.67
GBP
£m
Financial assets
Cash and cash equivalents
Trade receivables
Forward exchange contracts
Financial liabilities
Trade and other payables
Forward exchange contracts
Net exposure
2023
2022
2023
2022
2023
2022
5
10
71
(68)
(6)
12
3
13
59
(65)
(2)
8
-
-
1231
(28)
-
95
-
-
127
(33)
-
94
-
-
21
(3)
-
18
-
-
20
(6)
-
14
1
EUR forward exchange contracts of $56 million (2022: $86 million) relate to capital commitments. The remaining contracts hedge current and future trade payables
denominated in EUR.
Foreign exchange rate sensitivity
At the reporting date, had the Australian dollar moved against the USD, EUR and GBP (with all other variables held constant), the
Group’s post-tax profit and OCI would have been affected by the change in value of its financial assets and financial liabilities.
The following sensitivities are based on the foreign exchange risk exposures in existence at the reporting date and the
determination of reasonably possible movements based on management’s assessment of reasonable fluctuations:
RATE
CHANGE
AUD / USD
AUD / EUR
AUD / GBP
+10%
-10%
+10%
-10%
+10%
-10%
POST-TAX PROFIT
POST-TAX OCI
INCREASE/(DECREASE):
INCREASE/(DECREASE):
2023
$m
2022
$m
1
(1)
-
-
-
-
2
(2)
1
(1)
-
-
2023
2022
$m
(2)
3
(10)
12
(2)
3
$m
(2)
3
(10)
13
(2)
2
Financial assets
Cash at bank and on deposit
Financial liabilities
Bank debt
Capital market debt
Less: interest rate swaps (notional principal amount)
Net exposure to cash flow interest rate risk
Interest rate sensitivity
2023
2022
WEIGHTED
AVERAGE
WEIGHTED
AVERAGE
EXPOSURE
INTEREST RATE
EXPOSURE
INTEREST RATE
$m
86
(75)
(150)
150
11
%
3.4
(5.5)
(4.9)
(2.0)
$m
30
(50)
(150)
150
(20)
%
0.5
(2.1)
(2.1)
1.3
A 100 basis point increase represents management’s assessment of the reasonably possible change in interest rates. Based on the
variable interest rate exposures in existence at the reporting date, if interest rates increased by 100 basis points, with all other
variables held constant, the impact would be:
Impacts of reasonably possible movements:
+1.0% (100 basis points)
Liquidity risk
POST-TAX PROFIT
POST-TAX OCI
INCREASE/(DECREASE):
INCREASE/(DECREASE):
2023
$m
2022
$m
2023
$m
2022
$m
-
-
2
3
The Group aims to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank
debt with a variety of counterparties.
The committed facilities of the Group are set out below:
Financing facilities available:
Bank overdrafts
Revolving multi-option facilities
Financing facilities utilised:
Revolving multi-option facilities
Guarantees issued1
Financing not utilised:
Bank overdrafts
Revolving multi-option facilities1
2023
$m
13
2,715
2,728
75
350
425
13
2,290
2,303
2022
$m
13
2,715
2,728
50
333
383
13
2,332
2,345
1
As of 25 June 2023, bank guarantees totalling $350 million (2022: $333 million) have been issued on behalf of the Group through the revolving multi-option facilities.
While the Company has entered into these guarantees, the probability of having to make payments under these guarantees is considered remote.
The Group holds $597 million cash and cash equivalents at the reporting date (2022: $589 million).
Maturity analysis
The table below sets out the Group’s financial liabilities across the relevant maturity periods based on their contractual maturity
date. At the reporting date, the remaining undiscounted contractual maturities of the Group’s financial liabilities and their carrying
amounts are as follows:
108
109
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
4.2 Financial risk management (continued)
< 12 MONTHS
1-2 YEARS
2-5 YEARS
> 5 YEARS
CASH FLOWS
AMOUNT
$m
$m
$m
$m
$m
$m
TOTAL
CONTRACTUAL
CARRYING
4.3 Financial instruments
Financial assets and liabilities measured at fair value
The following table sets out the fair value measurement hierarchy of the Group’s derivative financial instruments:
4,427
125
1,188
10,978
11
4,427
74
1,050
7,849
10
Cash flow hedges
Forward exchange contracts
Interest rates swaps
Electricity swaps
Power Purchase Arrangement
16,729
13,410
Total
FAIR VALUE
HIERACHY
Level 2
Level 2
Level 2
Level 3
2023
2022
ASSET
LIABILITY
ASSET
LIABILITY
$m
8
7
-
21
36
$m
(1)
-
-
(10)
(11)
$m
4
7
15
48
74
$m
(11)
-
(13)
(38)
(62)
2023
Trade and other payables
(less accrued interest)
Bank debt (principal and interest)
Capital market debt (principal and interest)
Lease liabilities
Power Purchase Arrangement
Total
2022
Trade and other payables
(less accrued interest)
Bank debt (principal and interest)
Capital market debt (principal and interest)
Lease liabilities
Interest rate swaps
Forward exchange contracts
Electricity swaps
Power Purchase Arrangement
4,427
16
28
1,175
6
5,652
4,330
12
24
-
16
28
1,178
5
1,227
-
11
24
-
93
504
3,299
-
3,896
-
59
512
1,288
1,285
3,653
2
7
13
18
2
1
-
12
1
-
-
8
-
-
628
5,326
-
5,954
-
-
642
5,599
-
-
-
-
4,330
82
1,202
11,825
5
8
13
38
4,330
52
1,049
8,681
(7)
8
13
38
Total
5,694
1,335
4,233
6,241
17,503
14,164
For variable rate instruments, the amount disclosed is determined by reference to the interest rate at the last re-pricing date.
Contractual cash flows are undiscounted and as such will not necessarily agree with their carrying amounts.
Changes in liabilities arising from financing activities
AT
BEGINNING
CHANGES IN
LEASES
AT END
OF PERIOD
CASH FLOWS
FAIR VALUE
RECOGNISED
OTHER
OF PERIOD
NOTE
$m
The Group measures certain financial instruments, such as derivatives, at fair value at each reporting date. Fair value is the price
that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the
measurement date.
The fair value of an asset or liability is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic interest. The Group uses valuation techniques that are
appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value
hierarchy based on the lowest level input that is significant to the fair value measurement as a whole.
LEVEL 1
LEVEL 2
LEVEL 3
Fair value is calculated using quoted prices in active markets for identical assets or liabilities
Fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices)
Fair value is estimated using inputs for the asset or liability that are not based on observable market data
(unobservable inputs)
For financial instruments that are carried at fair value on a recurring basis, the Group determines whether transfers have occurred
between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.
2023
Bank debt
Capital market debt
Lease liabilities
Derivatives
Total liabilities from
financing activities
2022
Bank debt
Capital market debt
Lease liabilities
Derivatives
Total liabilities from
financing activities
3.1
3.1
2.7
4.3
3.1
3.1
2.7
4.3
$m
23
-
(1,279)
-
50
1,045
8,681
62
9,838
(1,256)
98
1,044
8,756
42
(50)
-
(1,264)
(22)
9,940
(1,336)
$m
-
-
-
(51)
(51)
-
-
-
42
42
$m
-
-
793
-
$m
$m
Derivatives
(1)
1
(346)
-
72
1,046
7,849
11
The Group enters into derivative financial instruments with various counterparties, principally financial institutions with investment
grade credit ratings. Foreign exchange forward contracts, interest rate swap contracts, electricity swap contracts and power
purchase agreements are valued using forward pricing techniques. This includes the use of market observable inputs, such as
foreign exchange spot and forward rates, yield curves of the respective currencies, interest rate curves and electricity futures. In
addition, the valuation of the power purchase arrangement includes an unobservable input relating to forward electricity price
793
(346)
8,978
-
-
826
-
826
2
1
363
-
50
1,045
8,681
62
366
9,838
assumptions.
Carrying amounts versus fair values
The carrying amount and fair value of financial assets and liabilities recognised in the financial statements are materially the same
unless stated below:
Financial liabilities
Capital market debt
CARRYING AMOUNT
FAIR VALUE
2023
$m
2022
$m
2023
$m
2022
$m
1,046
1,045
913
892
110
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report
4.3 Financial Instruments (continued)
Offsetting of financial assets and liabilities
5. Group Structure
The Group presents its financial assets and liabilities on a gross basis except where there is an enforceable legal right to offset and
This section provides information relating to subsidiaries and other material investments of the Group.
there is an intention to settle on a net basis.
Commercial income due from suppliers is recognised within trade receivables, except in cases where the Group has a legally
enforceable right of set-off and the intention to settle on a net basis, in which case only the net amount receivable or payable is
5.1 Equity accounted investments
recognised.
OWNERSHIP INTEREST
The following table sets out the Group’s financial assets and financial liabilities which have been offset in the Balance Sheet at the
NAME OF COMPANY
PRINCIPAL ACTIVITY
PLACE OF
TYPE
2023
2022
reporting date:
2023
Trade and other receivables
Trade and other payables
2022
Trade and other receivables
Trade and other payables
Hedge accounting
GROSS FINANCIAL
ASSETS / (LIABILITIES)
NET FINANCIAL
GROSS FINANCIAL
(LIABILITIES) / ASSETS
ASSETS / (LIABILITIES)
$m
740
(4,569)
605
(4,470)
SET-OFF
$m
(135)
135
(135)
135
PRESENTED IN THE
BALANCE SHEET
$m
605
(4,434)
470
(4,335)
Where the Group undertakes a hedge transaction it documents at the inception of the transaction the type of hedge, the
relationship between hedging instruments and hedged items and its risk management objective and strategy for undertaking the
hedge. The documentation also demonstrates, both at hedge inception and on an ongoing basis, that the hedge has been, and
is expected to continue to be, highly effective.
The Group uses derivative financial instruments for cash flow hedging purposes and designates them as such.
Loyalty Pacific Pty Ltd
Operator of the Flybuys
Australia
Joint Venture
loyalty program
Queensland Venue
Operator of Spirit Hotels
Australia
Associate
50%
50%
50%
50%
INCORPORATION
Co. Pty Ltd (‘QVC’)
and Queensland retail
liquor business
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net
assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require the unanimous consent of the parties sharing control. An associate is an entity that is
not controlled or jointly controlled by the Group, but over which the Group has significant influence.
The Group accounts for its investments in joint ventures and associates using the equity method of accounting. Under the equity
method, the investment in a joint venture or associate is initially recognised at cost. Thereafter, the carrying amount of the
investment is adjusted to recognise the Group’s share of profit after tax of the joint venture or associate, which is recognised in profit
or loss. The Group’s share of OCI is recognised within Other Comprehensive Income. Dividends received from a joint venture or
associate reduce the carrying amount of the investment.
After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss for its
investment in a joint venture or associate. At each reporting date, the Group determines whether there is objective evidence that
the investment in the joint venture or associate is impaired. If there is such evidence, the Group calculates the amount of
impairment as the difference between the recoverable amount of the joint venture or associate and its carrying value. Any
impairment loss will be recognised within ‘share of net profit of equity accounted investments’ in the Income Statement.
Cash flow hedge
Derivatives or other financial instruments that hedge the exposure to variability in cash flows
attributable to a particular risk associated with an asset, liability or forecast transaction.
Key judgement: Control and significant influence
The Group uses cash flows hedges to mitigate the risk of variability of:
• future cash flows attributable to foreign currency fluctuations over the hedging period where
the Group has highly probable purchase or settlement commitments denominated in foreign
currencies;
The Group has a number of management agreements relating to its joint venture and associate investments which it
considers when determining whether it has control, joint control or significant influence. The Group assesses whether it
has the power to direct the relevant activities of the investee by considering the rights it holds to appoint or remove
key management and the decision-making rights and scope of powers specified in the agreements.
•
interest rate fluctuations over the hedging period where the Group has variable rate debt
Loyalty Pacific Pty Ltd
obligations; and
Recognition date
Measurement
• energy commodity price fluctuations over the hedging period.
The date the hedging instrument is entered into.
Fair value.
A reconciliation of the carrying amount of the Group’s investment in Loyalty Pacific Pty Ltd is set out below:
Changes in fair value
Changes in the fair value of derivatives designated as cash flow hedges are recognised directly
in OCI and accumulated in equity in the hedging reserve to the extent that the hedge is highly
effective. To the extent that the hedge is ineffective, changes in fair value are recognised
immediately in the Income Statement.
At beginning of period
Additions
Loss for the period
At end of period
2023
$m
18
14
(13)
19
2022
$m
19
6
(7)
18
112
113
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
5.1 Equity accounted investments (continued)
Queensland Venue Co. Pty Ltd
5.3 Discontinued operations
The Group presents as discontinued operations any component of the Group that has either been disposed of or is classified as
In FY19, the Company entered into an incorporated joint venture with Australian Venue Co. (‘AVC’) for the operation of Spirit Hotels
held for sale, and:
(the ‘Hotel business’) and the retail liquor stores linked to Spirit Hotels venues (collectively the ‘Retail Liquor business’). An
• represents a separate major line of business or geographical area of operations;
incorporated joint venture company, QVC was established. Under the joint venture documents, the Company holds all R-shares in
QVC and operates the Retail Liquor business through its wholly-owned subsidiary, Liquorland (Australia) Pty. Ltd. (‘LLA’).
•
is part of a single coordinated plan to dispose of a separate major line of business, or geographical area of operations; or
•
is a subsidiary acquired exclusively with a view to resale.
For accounting purposes, LLA is considered the principal in relation to retail liquor sales due to its exposure to the economic risks
and benefits associated with the Retail Liquor business. Accordingly, LLA recognises revenue from retail liquor sales by QVC directly
Express discontinued operation
in its Income Statement. Revenue recognised by QVC relates solely to Spirit Hotels.
Furthermore, due to the application of service fees and cost recoveries between the Company and QVC, net profit relating to the
Retail Liquor business as recognised by QVC is nominal.
A reconciliation of the carrying amount of the Group’s investment in QVC is set out below:
At beginning of period
Additions
Profit for the period
At end of period
5.2 Assets held for sale
2023
$m
201
-
-
201
2022
$m
201
-
-
201
At 25 June 2023, four of the Group’s properties with a total carrying value of $127 million have been classified as held for sale (2022:
four of the Group’s properties with a total carrying value of $82 million).
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally
through a sale transaction rather than through continuing use. They are measured at the lower of their carrying amount and fair
value less costs to sell.
The criteria for held for sale classification is met only when the sale is highly probable, and the asset or disposal group is available
On 1 May 2023, the Group completed the sale of its fuel and convenience retailing business to Viva Energy Group Limited for $319
million (proceeds of $300 million and working capital adjustment of $19 million). The agreement allows the Group to focus on
growing its omnichannel supermarket and liquor businesses. The business disposed of was previously presented as the Express
reportable segment.
Analysis of profit from discontinued operations
The profit/loss from discontinued operations for the reporting period to 1 May 2023 are set out below:
Sales revenue
Other operating revenue
Total operating revenue
Expenses
Depreciation and Amortisation1
Earnings before interest and tax (EBIT) before sale of business
Loss on sale of Express business
Earnings before interest and tax (EBIT)
Financing costs
Profit before income tax
Income tax expense
2023
$m
988
246
1,234
(1,070)
(35)
129
(18)
111
(27)
84
(28)
56
4.2
4.2
2022
$m
1,132
273
1,405
(1,224)
(139)
42
-
42
(36)
6
(3)
3
0.2
0.2
for immediate sale in its present condition. A sale is considered highly probable when actions required to complete the sale
Profit for the period from discontinued operations
indicate that it is unlikely significant changes to the sale will be made or that the decision to sell will be withdrawn, and where
EPS attributable to equity holders of the Company from discontinued operations:
management is committed to a plan to sell the asset and the sale is expected to be completed within one year from the date of
the classification.
Basic EPS (cents)
Diluted EPS (cents)
1
Depreciation and amortisation ceased from the date the assets were held for sale, including the depreciation on right of use assets. Depreciation and amortisation
not recognised in FY23 up to the date of sale was $83 million of which $66 million relates to the right of use assets.
Cash flows from/(used in) discontinued operations
The condensed cash flows from/(used in) discontinued operations during the period to 1 May 2023 are set out below:
Net cash inflow from operating activities
Net cash inflow/(outflow) from investing activities
Net cash outflow from financing activities
Net increase in cash and cash equivalents from discontinued operations
1
Includes $319 million consideration for the sale of the Express business.
Loss on sale
Total consideration
Book value of net assets disposed
Transaction costs
Loss on sale before income tax1
Income tax benefit
Loss on sale after tax
2023
2022
$m
113
2671
(104)
276
$m
142
(15)
(121)
6
1 MAY 2023
$m
319
(321)
(16)
(18)
2
(16)
1 Depreciation and amortisation ceased from the date the assets were held for sale, including the depreciation on right of use assets. Depreciation and amortisation
not recognised in FY23 up to the date of sale was $83 million of which $66 million relates to the right of use assets.
114
115
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
5.4 Subsidiaries
5.4 Subsidiaries (continued)
The ultimate parent of the Group is Coles Group Limited, a company incorporated in Australia. Subsidiaries are consolidated from
Deed of Cross Guarantee
the date of acquisition, being the date Coles Group Limited obtains control, and continue to be consolidated until the date
control ceases. Control exists where the Group has the power to govern the financial and operating policies of the entity in order to
obtain benefits from its activities.
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (‘ASIC Instrument’) the wholly-owned subsidiaries
listed on the previous page (*) are relieved from the Corporations Act 2001 (Cth) requirements for preparation, audit and
lodgement of financial reports, and Directors’ Reports. Together with Coles Group Limited, the entities represent a ‘Closed Group’
Set out below are the subsidiaries of the Group. All entities were incorporated in Australia and wholly-owned unless stated
for the purposes of the ASIC Instrument.
As a condition of the ASIC Instrument, the Company and the subsidiaries listed on the previous page (*) have entered into a Deed
of Cross Guarantee (‘the Deed’). The effect of the Deed is that the Company guarantees to pay any deficiency in the event of
winding up any controlled entity in the Closed Group, or if they do not meet their obligations under the terms of any overdrafts,
loans, leases or other liabilities subject to the guarantee. The controlled entities in the Closed Group have also given a similar
guarantee in the event that the Company is wound up or if it does not meet its obligations under the terms of any overdrafts, loans,
leases or other liabilities subject to the guarantee.
An Income Statement and retained earnings and a Balance Sheet, comprising the Company and controlled entities which are a
party to the Deed at the reporting date, after eliminating all transactions between the parties to the Deed, for the period are set
otherwise.
Andearp Pty Ltd
Australian Liquor Group Ltd *
Coles Group Superannuation Fund Pty Ltd
Coles Group Supply Chain Pty Ltd *
BetaElementCo Pty Ltd (formally CSA Retail (Finance) Pty Ltd)
Coles Group Treasury Pty Ltd
(formerly Coles Group Payments Pty Ltd) *
Coles Online Pty Ltd *
Coles Property Management Pty Ltd
Coles Supermarkets Australia Pty Ltd *
Bi-Lo Pty. Limited *
Charlie Carter (Norwest) Pty Ltd
Chef Fresh Pty Ltd *
CMPQ (CML) Pty Ltd
CNSCE Pty Ltd
CNSCV Pty Ltd
Coles Ansett Travel Pty Ltd (97.5%)
Coles Trading (Shanghai) Co. Limited (incorporated in China)
out below:
Coles WFS Pty Ltd (formerly Wesfarmers Finance Pty Ltd)
Eureka Operations Pty Ltd *
GBPL Pty Ltd
Income Statement and retained earnings
Coles Captive Insurance Pte. Ltd. (incorporated in Singapore)
Grocery Holdings Pty Ltd *
Coles Environmental Services Pty Ltd
Katies Fashions (Aust) Pty Limited
(formerly Richmond Plaza Shopping Centre Pty Ltd)
Coles Export Asia Limited (incorporated in Hong Kong)
Liquorland (Australia) Pty. Ltd *
Coles Export Australia Pty Ltd
(formerly Tooronga Holdings Pty Ltd) *
Coles Financial Services Pty Ltd
Newmart Pty Ltd
Procurement Online Pty Ltd
Coles FS Holding Company Pty Ltd (formerly Wesfarmers
Retail Ready Operations Australia Pty. Ltd *
Finance Holding Company Pty Ltd)
Coles Group Deposit Services Pty Ltd
Coles Group Finance Limited *
Coles Group Properties Holdings Ltd *
Coles Group Property Developments Ltd *
Tickoth Pty Ltd
WFPL Funding Co Pty Ltd
WFPL SPV Pty Ltd
Entities formed/incorporated or acquired during the financial year
CGBV1 Pty Ltd1
Coles Supply Services Pty Ltd*1
Coles Fresh Milk Co. Pty Ltd2
Coles Group Business Venture Pty Ltd1
Property Structures Pty Ltd1
Continuing operations
Sales revenue
Other operating revenue
Total operating revenue
Cost of sales
Gross profit
Other income
Administration expenses
Share of net loss from equity accounted investments
Earnings before interest and tax
Financing costs
Profit before income tax
Income tax expense
Profit for the period from continuing operations
Discontinued Operations
*
1
2
These entities are parties to the Deed of Cross Guarantee (DOCG) and are members of the Closed Group as at 25 June 2023, Coles Supply Services Pty Ltd joined
Profit for the period from discontinued operations, after tax
the Closed Group on 20 June 2023.
Incorporated 21 December 2022
Incorporated 24 March 2023
Profit for the period
Items that may be reclassified to profit or loss:
Net movement in the fair value of cash flow hedges
Income tax effect
Other comprehensive income/ (loss) which may be reclassified to profit or loss
in subsequent periods
Total comprehensive income for the period
Retained earnings
Retained earnings at beginning of period
Chef Fresh retained earnings in opening balance now in Closed Group
Profit for the period
Dividends paid
Retained earnings at end of period
CLOSED GROUP
2023
$m
40,483
108
40,591
(30,034)
10,557
163
(8,839)
(13)
1,868
(394)
1,474
(425)
1,049
56
1,105
14
(4)
10
1,115
1,468
-
1,105
(883)
1,690
2022
$m
38,237
103
38,340
(28,395)
9,945
86
(8,196)
(7)
1,828
(360)
1,468
(422)
1,046
3
1,049
31
(9)
22
1,071
1,245
(12)
1,049
(814)
1,468
116
117
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
5.4 Subsidiaries (continued)
Balance Sheet
5.5 Parent entity information
Summary financial information for the Company is set out below:
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Assets held for sale
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Investment in subsidiaries
Investment in joint venture
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Lease liabilities
Other
Total current liabilities
Non-current liabilities
Interest-bearing liabilities
Provisions
Lease liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
CLOSED GROUP
2023
$m
2022
$m
592
616
580
459
2,323 2,448
4
127
96
42
82
121
3,758
3,732
4,980
6,507
2,035
737
190
220
52
14,721
18,479
4,542
903
820
249
6,514
1,118
375
7,029
5
8,527
15,041
3,438
1,644
104
1,690
3,438
4,799
7,194
1,864
820
190
219
174
15,260
18,992
4,425
851
913
312
6,501
1,095
424
7,762
11
9,292
15,793
3,199
1,636
95
1,468
3,199
Profit for the period
Dividends received
Profit for the period (after dividends)
Other comprehensive income
Total comprehensive income for the period
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2023
2022
$m
316
-
316
-
316
2023
$m
2,371
5,057
7,428
937
2,769
3,706
1,644
100
1,978
3,722
$m
327
-
327
-
327
2022
$m
3,045
5,088
8,133
1,080
2,778
3,858
1,630
100
2,545
4,275
As at 25 June 2023, the Company has no guarantees in relation to the debts of its subsidiaries (2022: $nil).
As at 25 June 2023, the Company has no contingent liabilities (2022: $nil). As at 25 June 2023, the Company has bank guarantees
totalling $346 million (2022: $328 million).
As at 25 June 2023, the Company has contractual commitments for the acquisition of property, plant and equipment totalling $162
million (2022: $235 million).
118
119
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
6. Unrecognised Items
6.2 Contingencies
This section provides information about items that are not recognised in the consolidated financial statements but
could potentially have a significant impact on the Group’s financial performance or position in the future.
6.1 Commitments
A commitment represents a contractual obligation to make a payment in the future. The Group’s commitments relate to capital
expenditure and certain operating leases not recognised. Commitments are not recognised in the Balance Sheet but are
disclosed.
Capital expenditure commitments of the Group at the reporting date are set out below:
Within one year
Between one and five years
More than five years
Total capital commitments for expenditure
2023
2022
$m
268
52
2
322
$m
233
121
-
354
The commitment amounts disclosed above represent the maximum amounts that the Group is obliged to pay.
In February 2020, Coles announced it was conducting a review into the pay arrangements for all team members who received a
salary and were covered by the General Retail Industry Award 2010 (‘GRIA’). The review assessed the remuneration paid to 15,011
team members against the GRIA. Coles conducted a remediation program, and to date Coles has incurred $13 million of
remediation costs. A provision of $37 million (2022: $12 million) is reflected in the FY23 financial statements.
Following the announcement in February 2020, the Fair Work Ombudsman (‘FWO’) commenced an investigation into Coles’ pay
arrangements for a group of the affected salaried team members covered by the GRIA.
In December 2021, the FWO filed proceedings in the Federal Court of Australia which include issues relating to the interpretation
and application of various provisions of the GRIA and the Fair Work Act 2009 (Cth). FWO alleges that Coles is obligated to pay a
further $108 million in remediation payments to 7,687 team members for the period 1 January 2017 to 31 March 2020. This group is a
subset of the award covered salaried employees which were assessed as part of the 2020 review by Coles. Additionally, the period
of time covered in the proceedings is a lesser period than the period covered in Coles’ remediation.
Following further consideration of the issues as they have evolved, Coles announced on 2 June 2023 that, it intends to conduct a
further remediation relating to the reconciliation of available records of the days and hours of work of salaried supermarket
managers. A provision of $25 million was subsequently recognised which is included in the provision balance of $37 million noted
above.
The FWO matter was heard in a seven week trial from 5 June 2023 and judgment is pending. The judgment is expected to include
consideration of threshold issues, including interpretation of the GRIA and Fair Work Act provisions. As such, the potential outcome,
extent to which further remediation may be necessary, and costs associated with this matter remain uncertain as at the date of
At 25 June 2023, the Group also has commitments relating to lease agreements that have not yet commenced. The commitments
this report.
relate to lease agreements associated with new stores, the Supply Chain Modernisation program and online fulfilment centres. The
future lease payments (undiscounted) for non-cancellable periods are set out below:
In May 2020, a class action proceeding was filed in the Federal Court of Australia in relation to payment of Coles managers
employed in supermarkets. This matter was heard in conjunction with the FWO proceedings and judgment has also been reserved.
2023
2022
The potential outcome and total costs associated with this matter remain uncertain as at the date of this report.
Within one year
Between one and five years
More than five years
Total commitments for lease agreements not yet commenced (undiscounted)
$m
57
469
1,259
1,785
$m
41
491
1,613
2,145
From time to time, entities within the Group are party to various legal actions as well as inquiries from regulators and government
bodies that have arisen in the ordinary course of business. Consideration has been given to such matters and it is expected that
the resolution of these contingencies will not have a material impact on the financial position of the Group, or are not at a stage to
support a reasonable evaluation of the likely outcome.
Key estimate: Contingencies
Contingent liabilities are possible obligations whose existence will be confirmed only on the occurrence or non-
occurrence of uncertain future events outside the Group’s control, or present obligations that are not recognised
because it is not probable that a settlement will be required or the value of such a payment cannot be reliably
estimated.
120
121
Coles Group 2023 Annual ReportColes Group 2023 Annual Report
7. Other Disclosures
Restricted share offer
This section provides other disclosures required by Australian Accounting Standards that are considered relevant
employment provisions. During the trading restriction period, Restricted Shares are held in trust by the Trustee on behalf of the
Restricted Shares are subject to a continued service condition, a three-year trading restriction period and cessation of
to understanding the Group’s financial performance or position.
7.1 Related party disclosures
Joint ventures and associates
Loyalty Pacific Pty Ltd
Sale of goods to members of Flybuys
Payments for loyalty program to Loyalty Pacific Pty Ltd
Amounts owing to Loyalty Pacific Pty Ltd
Queensland Venue Co. Pty Ltd
Service fees paid to QVC
Amounts receivable from QVC
Transactions with Key Management Personnel (KMP)
Compensation of KMP of the Group:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
Total compensation paid to key management personnel
Terms and conditions of transactions with related parties
2023
$m
268
378
240
55
29
2022
$m
199
359
251
56
21
2023
$
2022
$
11,418,519
10,903,690
222,526
389,219
193,111
118,652
9,459,571
8,855,257
21,489,835
20,070,710
Sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions.
Outstanding balances at the reporting date are unsecured and interest free and settlement occurs in cash. There have been no
guarantees provided or received for any related party receivables or payables.
The Group has not recognised a provision for expected credit losses relating to amounts owed by related parties (2022: $nil).
7.2 Employee share plans
The Group operates an Equity Incentive Plan (the ‘Plan’) which provides equity instruments to employees as a component of their
remuneration.
Long Term Incentive (LTI) program
Refer to the Remuneration Report for the terms and conditions of the LTI program.
employee. The number of Restricted Shares to be granted is determined based on the currency value of the achieved Restricted
Share offer divided by the volume weighted average price (VWAP) at which the Company’s shares are traded on the Australian
Stock Exchange over the period outlined in the offer letter. The value of Restricted Shares granted is recognised as an employee
expense (with a corresponding increase in equity) over the vesting period.
Restricted Shares carry the same dividend and voting rights as other fully paid Ordinary Shares in the Company.
Performance rights (number)
Movements in Performance Rights granted under the LTI program that existed during the current or prior period are:
GRANT DATE
26 JUNE 2022
GRANTED
FORFEITED
VESTED
25 JUNE 2023
25 JUNE 2023
BALANCE AT
BALANCE AT
EXERCISABLE AT
2023
Nov 2019
May 2020
Nov 2020
Nov 2020
Nov 2021
Dec 2021
Nov 2022
Nov 2022
955,866
89,528
223,133
716,279
225,976
797,696
-
-
3,008,478
-
-
-
-
-
-
218,878
667,283
886,161
-
-
-
(5,169)
(26,960)
(63,314)
(98,674)
(82,636)
(874,784)
(89,528)
-
-
-
-
-
-
81,082
-
223,133
711,110
199,016
734,382
120,204
584,647
(276,753)
(964,312)
2,653,574
-
-
-
-
-
-
-
-
-
GRANT DATE
28 JUNE 2021
GRANTED
FORFEITED
VESTED
26 JUNE 2022
26 JUNE 2022
BALANCE AT
BALANCE AT
EXERCISABLE AT
2022
Nov 2019
May 2020
Nov 2020
Nov 2020
Nov 2021
Dec 2021
962,246
89,528
223,133
772,930
-
-
-
-
-
-
225,976
877,925
2,047,837
1,103,901
(6,380)
-
-
(56,651)
-
(80,229)
(143,260)
-
-
-
-
-
-
-
955,866
89,528
223,133
716,279
225,976
797,696
3,008,478
-
-
-
-
-
-
-
Fair value of equity instruments
The assumptions underlying the fair value measurement of the performance rights are:
EXPECTED
SHARE PRICE AT
VOLATILITY IN
EXPECTED
RISK FREE
FAIR VALUE PER
GRANT DATE
SHARE PRICE1
DIVIDEND YIELD
INTEREST RATE2
INSTRUMENT
$
16.26
15.02
18.26
17.95
17.63
17.85
16.48
17.15
%
25.0
25.0
25.0
25.0
20.0
20.0
20.0
20.0
%
3.90
4.20
3.68
3.68
3.56
3.53
3.92
3.92
%
0.65
0.25
0.10
0.11
0.89
0.95
3.35
3.22
$
12.58
12.92
13.52
12.67
12.61
13.04
11.00
11.50
The fair value of Performance Rights under each performance measure is determined at grant date by an independent valuation
GRANT DATE
EXPIRY DATE
expert and takes into account the terms and conditions upon which they were granted. The fair value is recognised as an
employee expense (with a corresponding increase in equity) over the vesting period.
For the relative total shareholder return (‘RTSR’) measure, the fair value is recognised as an expense irrespective of whether the
Performance Rights vest to the holder, and a reversal of the expense is only recognised in the event the instruments lapse due to
cessation of employment within the vesting period. For the return on capital (‘ROC’) measure, the amount expensed is based on
the expected number of Performance Rights vesting, with the ultimate expense reflecting the actual Performance Rights that vest.
Short Term Incentive (STI) program
Nov 2019
May 2020
Nov 2020
Nov 2020
Nov 2021
Dec 2021
Nov 2022
Nov 2022
Aug 2022
Aug 2022
Aug 2023
Aug 2023
Aug 2024
Aug 2024
Aug 2025
Aug 2025
For Executives, 25% of their STI is deferred into Restricted Shares (50% for the Managing Director and Chief Executive Officer) and
1 Reflects the assumption that the historical volatility is indicative of future trends.
are subject to a one-year service condition (two years for the Managing Director and Chief Executive Officer). The cost of the
2
Represents the zero coupon interest rate derived from government bond market interest rates on the valuation date and vary according to each maturity date.
deferred STI is based on the market price at grant date and is recognised as an employee expense (with a corresponding increase
in equity) over the vesting period.
Further explanation of the deferred STI is disclosed in the Remuneration Report.
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report
7.2 Employee share plans (continued)
Additional Information on Award Schemes
Details of grants made under the Plan during the period are set out in the Remuneration Report.
Directors’ Declaration
Key estimate: Share-based payments
The fair value of share-based payment transactions has been determined by an independent valuation expert.
Estimating the fair value of share-based payment transactions requires the determination of the most appropriate
valuation model, which depends on the terms and conditions of the grant. Assumptions regarding the most
appropriate inputs to the valuation model must be made. This includes, but is not limited to, share price volatility,
discount rate and dividend yield.
1. The directors of Coles Group Limited (the Company) declare that, in the directors’ opinion:
(a) the financial statements and the Notes are in accordance with the Corporations Act 2001 (Cth), including:
(i) complying with the accounting standards and Corporations Regulations 2001; and
(ii) giving a true and fair view of the financial position and performance of the Company and its consolidated entities;
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
In measuring the fair value of awards issued under the Long-Term Incentive (‘LTI’) plan subject to the relative total
and payable.
2.
A statement of compliance with the International Financial Reporting Standards is included in the Basis of Preparation and
Accounting Policies in the Notes to the consolidated financial statements.
3.
The directors have been given the declaration required by section 295A of the Corporations Act 2001 (Cth) from the Managing
Director and Chief Executive Officer and Chief Financial Officer for the financial year ended 25 June 2023.
4.
As at the date of this declaration, there are reasonable grounds to believe that the members of the closed group identified in
Note 5.4 Subsidiaries to the financial statements will be able to meet any obligations or liabilities to which they are, or may
become, subject by virtue of the Deed of Cross Guarantee described in Note 5.4 Subsidiaries.
Signed in accordance with a resolution of the directors.
James Graham AM
Chairman
22 August 2023
Leah Weckert
Managing Director and Chief Executive Officer
22 August 2023
shareholder return (‘RTSR’) vesting condition, an adjusted form of the Black-Scholes Model that includes a Monte
Carlo Simulation Model has been utilised. The Monte Carlo Simulation Model has been modified to incorporate an
estimate of the probability of achieving the RTSR hurdle. In measuring the fair value of awards subject to non-market
based vesting conditions, the Black-Scholes Model has been utilised.
7.3 Auditor’s remuneration
Fees to Ernst & Young (Australia):
Audit services:
Audit or review of the Financial Report of the Group
Assurance related
Non-audit services:
Tax compliance services
Other compliance services
Total fees to Ernst & Young (Australia)
Fees to overseas member firms of Ernst & Young:
Audit services:
Audit or review of the Financial Report of any controlled entities
Total fees to overseas member firms of Ernst & Young
Total auditor’s remuneration
2023
$000
2022
$000
2,899
1,084
120
80
4,183
2,825
822
133
-
3,780
55
55
49
49
4,238
3,829
The auditor of the Group is Ernst & Young (‘EY’). Fees charged by EY for ‘Assurance related services’ are for services that are
reasonably related to the performance of the audit or review of financial reports, for other assurance engagements (such as
assurance over the Group’s Sustainability Report) and for other assurance related engagements which are appropriate for our
external auditor to perform.
The total fees for non-audit services of $200,000 represent 4.7% (2022: 3.5%) of the total fees paid or payable to EY and related
practices for the period.
7.4 New accounting standards and interpretations
There are amendments and interpretations that apply for the first time in this period. These did not have a material impact on the
consolidated financial statements of the Group.
New and revised Australian accounting standards and interpretations on issue but not yet effective
Subsequent to year end, on 26 June 2023, the International Sustainability Standards Board (‘ISSB’) issued its inaugural global
sustainability disclosure standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and
IFRS S2 Climate-related Disclosures. The Group has not early adopted these standards that are effective for annual reporting
periods beginning on or after 1 January 2024.
There are no other standards issued but are not yet effective that would be expected to have a material impact on the Group in
the current or future reporting periods.
7.5 Events after the reporting period
Other than events disclosed elsewhere in this report, the Group is not aware of any matter or circumstance that has occurred since
the reporting date that has significantly affected or may significantly affect the Group’s operations, the results of those operations
or the Group’s state of affairs in subsequent reporting periods.
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Coles Group 2023 Annual Report Shareholder information
Listing information
Coles Group Limited is listed, and our issued shares are quoted on the Australian Securities Exchange (ASX) under the code: COL.
Substantial shareholdings in Coles Group Limited as at 23 August 2023
The number of shares to which each substantial holder and the substantial holders’ associates have a relevant interest, as disclosed
in substantial holding notices given to Coles, are as follows:
Holder
Vanguard Group
BlackRock Group
State Street Corporation
Twenty largest ordinary fully paid shareholders as at 23 August 2023
BNP Paribas Noms Pty Ltd
BNP Paribas Nominees Pty Ltd
Coles Group Limited
1 HSBC Custody Nominees (Australia) Limited
2
J P Morgan Nominees Australia Pty Limited
3 Citicorp Nominees Pty Limited
4 National Nominees Limited
5
6
7 HSBC Custody Nominees (Australia) Limited
8 Australian Foundation Investment Company Limited
9 Argo Investments Limited
10 Citicorp Nominees Pty Limited
11 Netwealth Investments Limited
12 Washington H Soul Pattinson and Company Limited
13 Mutual Trust Pty Ltd
14 HSBC Custody Nominees (Australia) Limited - A/C 2
15 BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
16 BNP Paribas Noms (NZ) Ltd
17 IOOF Investment Services Limited
18 BNP Paribas Noms Pty Ltd
19 Mr Peter Alexander Brown
20 Djerriwarrh Investments Limited
Number of fully paid shares
66,814,399
83,226,846
67,541,898
Number of fully
paid shares
386,759,617
187,846,800
124,600,132
43,293,753
29,746,870
28,383,201
9,076,420
8,677,500
5,290,027
4,894,569
4,749,711
4,483,378
2,859,498
2,598,186
2,580,351
2,231,198
2,213,891
2,044,570
1,552,825
1,490,505
% of issued
capital
28.90
14.04
9.31
3.23
2.22
2.12
0.68
0.65
0.40
0.37
0.35
0.33
0.21
0.19
0.19
0.17
0.17
0.15
0.12
0.11
Distribution of shareholders and shareholdings as at 23 August 2023
Size of holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Number of shareholders
341,881
80,770
10,234
4,953
131
437,969
Number of shares
103,287,456
173,402,826
71,413,929
99,211,644
891,075,679
1,338,391,534
% of issued capital
7.72
12.96
5.34
7.41
66.58
There were 30,761 shareholders holding less than a marketable parcel ($500).
Voting rights
Votes of shareholders are governed by the Company’s Constitution. In broad summary, but without prejudice to the provisions of
these rules, the Constitution provides for votes to be cast:
(a) on a show of hands, one vote for each shareholder; and
(b) on a poll, one vote for each fully paid share.
Unquoted equity securities
As at 23 August 2023, 2,904,570 performance rights with 14 holders were on issue pursuant to Coles’ equity incentive plan.
On-market share acquisitions
During FY23, 3,320,084 Coles ordinary shares were purchased on market at an average price of $17.38 per share for the purposes of
various Coles employee incentive schemes.
There is no current on-market buy-back of the Company’s shares.
Corporate Governance Statement
A copy of the Corporate Governance Statement can be found on our website at www.colesgroup.com.au/corporategovernance.
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Coles Group 2023 Annual ReportColes Group 2023 Annual Report Glossary of terms
ADC: Automated distribution centre
DRP: Dividend reinvestment plan
bps: Basis points. One basis point is
equivalent to 0.01%
Cash realisation: Calculated as
operating cash flow excluding interest
and tax, divided by EBITDA (excluding
significant items)
EBIT: Earnings before interest and tax
EBITDA: Earnings before interest, tax,
depreciation and amortisation
Exclusive brands: refers to the portfolio
of product brands consisting of Exclusive
to Coles in Coles supermarkets and
CFC: Customer fulfilment centre
Exclusive Liquor Brands in Coles Liquor
CODB: Costs of doing business. These are
expenses which relate to the operation
of the business below gross profit and
above EBIT
Coles Own Brand: refers to the portfolio
of product brands owned by Coles. It
includes grocery, fresh produce, meat
stores.
Exclusive to Coles: refers to the portfolio
of product brands available in Coles
supermarkets that are exclusively
available at Coles, and consists of Coles
Own Brand and Exclusive Proprietary
Brand products.
and non-food products that are
available in Coles supermarkets under
Exclusive Liquor Brands (‘ELB’): refers to
the portfolio of product brands
Coles Brands (e.g. Coles Finest, Coles
exclusively available in Coles Liquor
Nature’s Kitchen) and Exclusive Own
stores, including brands that are owned
Brands (e.g. Koi, Daley St)
by Coles (e.g. James Busby, Mr Finch)
Coles Liquor Own Brand: the portfolio
of brands owned by Coles Liquor. It
includes liquor products that are sold in
Coles Liquor stores under Coles Liquor
Brands (e.g. Vintage Cellars
Exclusive Proprietary Brands: refers to
the portfolio of products where the
Collaborations) and Private Label Brands
brands are owned by suppliers but are
(e.g. Pensilva)
Comparable sales: A measure which
excludes stores that have been opened
exclusively available in Coles
supermarkets (e.g. La Espanola, Great
Ocean Road)
or closed in the last 12 months and
EPS: Earnings per share
excludes demonstrable impact on
existing stores from store disruption
because of store refurbishment or new
store openings
Gross margin: The residual income
remaining after deducting cost of goods
sold, total loss and logistics from sales,
divided by sales revenue
IFRS: International Financial Reporting
Standards
Leverage ratio: Gross debt less cash at
bank and on deposit add lease
liabilities, divided by EBITDA
MAT: Moving Annual Total
Net Promoter Score (‘NPS’): Metric used
to measure customer advocacy, derived
from an externally facilitated survey with
a nationally representative sample. The
point movement reported represents the
NPS measured over the relevant period
relative to the prior corresponding
period. Liquor NPS is based on
Liquorland NPS results
Sales density: Calculated as sales
divided by net selling area. Both sales
and net selling area are on a MAT basis,
calculated on a rolling 52-week basis.
Significant items: Large gains, losses,
income, expenditure or events that are
not considered part of the core
operations of the business
TCFD: Taskforce on Climate-related
Financial Disclosures
TRIFR: Total Recordable Injury Frequency
Rate. The number of lost time injuries,
medically treated injuries and restricted
duties injuries per million hours worked,
calculated on a rolling 12-month basis.
TRIFR includes all injury types including
musculoskeletal injuries
and brands that are owned by suppliers
but exclusive to Coles Liquor (e.g. Coal
not in the ordinary course of business.
Pit, Abbey Vale)
They typically arise from events that are
Corporate directory
Registered office
800-838 Toorak Road
Hawthorn East
VIC 3123 Australia
Telephone
+61 3 9829 5111
Website
www.colesgroup.com.au
Chairman
Mr James Graham AM
Managing Director and Chief Executive Officer
Ms Leah Weckert
Non-executive Directors
Mr James Graham AM
Mr Terry Bowen
Ms Jacqueline Chow
Ms Abi Cleland
Mr Richard Freudenstein
Mr Paul O’Malley
Mr Scott Price
Ms Wendy Stops
Company Secretary
Ms Daniella Pereira
Auditor
Ernst & Young
8 Exhibition Street
Melbourne
VIC 3000 Australia
Coles Share Registry
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street Abbotsford
VIC 3067 Australia
Postal address
GPO Box 2975
Melbourne
VIC 3001 Australia
Telephone
1300 171 785 (within Australia)
+61 3 9415 4078 (outside Australia)
Online
www.investorcentre.com/contact
Website
www.computershare.com.au
Shareholder Calendar*
Event
Record date for final dividend
Final dividend payment date
Coles Group Limited Annual
General Meeting
Half-year end
Year-end
*Timing of events is subject to change.
Annual General Meeting
Date
4 September 2023
27 September 2023
3 November 2023
31 December 2023
30 June 2024
The 2023 Annual General Meeting of Coles Group Limited will
be held as a hybrid meeting on Friday 3 November 2023,
commencing at 10:30am (AEDT) at Melbourne Convention and
Exhibition Centre, Melbourne Room, 1 Convention Centre
Place, South Wharf, Melbourne, Victoria, Australia. Information
on how shareholders and proxyholders can view and
participate in the meeting can be found on the Company’s
website and in the Notice of Annual General Meeting.
Coles’ Notice of Annual General Meeting has been released
on the ASX Market Announcements Platform.
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ABN 11 004 089 936
800-838 Toorak Road
Hawthorn East
VIC 3123 Australia