Great food.
Better lives.
2024
Annual Report
Contents
Overview
Coles Group
2
Our vision, strategy and values
3
FY24 highlights
4
Delivering for our stakeholders
6
Serving Australians for more than
a century
8
Supporting our customers
and communities
10
Board of Directors
12
Executive Leadership Team
13
Operating and Financial Review
Business model and strategy
15
Group performance
18
Looking to the future
29
Risk management
30
Sustainability
38
Governance
Corporate governance overview
52
Directors’ Report
Board of Directors:
Biographical details
54
Directors’ Report
58
Remuneration Report
62
Financial Report
Consolidated Financial Statements
82
Notes to the Consolidated
Financial Statements
87
Consolidated Entity
Disclosure Statement
130
Additional Information
Shareholder information
138
Glossary of terms
140
Corporate directory
141
Our 2024 reporting suite
Our corporate reporting suite contains
detailed information on Coles’
strategy, financial and non-financial
performance, risk management
and governance frameworks.
The suite also includes our 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
colesgroup.com.au
2024 Annual Report
2024 Corporate
Governance Statement
2024 Sustainability Report
2024 Modern Slavery Statement
2024 Economic Contribution Report
Forward-looking statements
This report contains forward-looking
statements in relation to Coles Group
Limited (‘the Company’) and its controlled
entities (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 climate change and other
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’,
‘likely’, ‘aim’, ‘aspire’ and other similar
expressions. Similarly, statements that
describe objectives, plans, goals, or
expectations of the Group are forward-
looking statements.
Any forward-looking statements are
based on the Group’s current knowledge
and assumptions, including with respect
to financial, market, risk, regulatory and
other relevant environments that will
exist and affect the Group’s business
and operations in the future. The Group
does not give any assurance that the
assumptions will prove to be correct.
The forward-looking statements involve
known and unknown risks, uncertainties
and assumptions, many of which are
beyond the control of the Group, that
could cause the actual results,
performance or achievements of the
Group to be materially different from
the relevant statements. There are also
limitations with respect to scenario
analysis, and it is difficult to predict
which, if any, of the scenarios might
eventuate. Scenario analysis is not an
indication of probable outcomes and
relies on assumptions that may or may
not prove to be correct or eventuate.
Readers are cautioned not to place undue
reliance on forward-looking statements
and such statements should be
considered in conjunction with the
risks, uncertainties and assumptions
associated with the relevant statements.
All forward-looking statements contained
in this report reflect the Group’s views
held as at the date of this report, and
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 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
This report contains 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.
2024 Annual Report
Coles Group Limited
ABN 11 004 089 936
Each year, we partner with more than
8,000 suppliers to deliver Australians
value and quality across more than
40,000 product lines.
With cost-of-living pressures the
greatest concern for many households,
we continue to deliver value with
every day low prices, weekly specials,
Flybuys and our Own Brand portfolio.
Pictured: Malcom Francis from Esperance Bay Orchards in Tasmania is a
Coles Nurture Fund recipient. The orchard has been awarded a grant to
invest in Near Infrared technology that detects the internal quality of organic
fruit and limits food waste by reducing rejections.
Acknowledgement of Country
Coles Group acknowledges the Traditional Owners and Custodians
of the lands on which we live and operate. We pay our respects
to Elders past and present and acknowledge their continuing
connection to waters, skies, seas and country.
Coles Group
Our brands
Coles is one of Australia’s leading grocery retailers with an extensive national
supermarket and liquor store footprint and a range of digital platforms allowing
us to deliver a full service omnichannel experience for customers.
Key facts
856
Supermarket stores1
992
Liquor stores1
686
Regional stores2
115,000 +
Team members
770
Click & Collect sites (Supermarkets)
978
Click & Collect sites (Liquor)
1. Inclusive of regional stores.
2. Comprised of 337 Supermarket regional stores and 349 Liquor regional stores.
3. Comprised of Coles and non-Coles Distribution Centres which exclusively serve Coles.
4. Completed construction of Customer Fulfilment Centres, in NSW and Victoria, in FY24. Both commenced operations in early FY25.
ACT
WA
101
129
NT
8
10
SA
53
46
QLD
185
245
NSW
253
287
VIC
226
237
13
15
TAS
17
23
Our network
Supermarket stores
Liquor stores
Automated Distribution Centres
Customer Fulfilment Centres4
Distribution Centres3
Coles Group Store
Support Centre
2
Overview
Operating and
Financial Review
Governance
Directors’
Report
Financial
Report
Additional
Information
Our vision is to become the most trusted retailer in
Australia and grow long-term shareholder value.
Our vision, strategy and values
We are proudly Coles
Deliver for our
Customers
Have Courage to
make the right choices
Care
for each other
Create
for the future
3
Coles Group 2024 Annual Report
FY24 highlights
Group sales
$43.6 bn
Average transactions
per week
~18 m
TRIFR improvement
(from FY23)
8.8%
NPAT
$1.1 bn
New Exclusive to
Coles products
1,100+
Women in
leadership roles1
42.5%
Dividend payout ratio
81.1%
mysay team member
engagement2
Top quartile
ranking3
Reduction in combined Scope 1
and 2 emissions4 (from FY23)
1.5%
1. Leadership positions are comprised of the Executive Leadership Team, General Managers, team members pay grade eight and above and supermarket store managers.
Pay grade eight and above includes middle managers and specialist roles.
2. Based on results of our May 2024 mysay team member engagement survey, which was responded to by 71% of team members.
3. Benchmarked by Culture Amp against Australian companies with more than 5,000 team members. The median and top quartile benchmarks cover the period January
– December 2023.
4. Coles does not plan to rely on the use of carbon offsets for the achievement of our current FY30 Scope 1 and 2 emissions reduction target. FY24 Scope 1 emissions and
Scope 2 emissions include two months of estimated data (based on actual data from past years) and 10 months of actual data.
Overview
Operating and
Financial Review
Governance
Directors’
Report
Financial
Report
Additional
Information
4
1. On a normalised basis. FY24 is a 53 week year for reporting purposes consistent with the retail calendar. Normalised growth rates are non-IFRS measures and remove the
impact of the 53rd week in FY24 for comparability purposes.
Automating our operations
In recent years we have made significant investments
in simplifying our operations while enhancing the
customer experience. During FY24, we completed
construction of our second Automated Distribution Centre
(ADC) in Kemps Creek, NSW. This state-of-the-art facility
will help us ensure better availability for customers and
deliver meaningful cost efficiencies. We also invested in
developing our two Customer Fulfilment Centres (CFCs),
in NSW and Victoria; both facilities commenced
operations in early FY25. These facilities are designed
to enable us to deliver a significantly improved customer
experience for our next day home delivery orders in
Sydney and Melbourne.
Creating exceptional products
Our Coles Finest range offers premium, high-quality
products at affordable prices for those customers looking
for a restaurant-quality experience in their own home. The
range has grown to 230 products with revenue increasing
by 20.4%1 in FY24 and includes delicious food such as
our Coles Finest Carbon Neutral Beef, Coles Finest 30
Hour Recipe Stone Baked Sourdough and Coles Finest
chilled pastas.
Innovating across our fresh
food offering
We know that enjoying great produce with family and
friends is one of life’s joys. We go to great lengths to
deliver a high-quality fresh food offering. During FY24,
we innovated to bring customers a new range of delicious
tomatoes, that is exclusive to Coles, bringing back the
nostalgic taste and feel of tomatoes. Heirloom tomatoes
are now one of the highest selling varieties in France
due to their superior taste and texture profile. Following
extensive research spanning multiple European countries
and 125 varietals, through our long-term partnership with
Sundrop, we created our exclusive Grandma’s Heirloom
Tomatoes range.
Investing in trusted value
During FY24, we launched the Coles Simply range by
rebranding many of our core Coles Own Brand staples.
The new yellow packaging is a beacon for our lower price
products, across a range of categories, including pasta
sauces, dairy, meat, kitchenware and cleaning. This is just
one of the ways we are helping our customers easily
identify value in our supermarket aisles and online.
Coles Group 2024 Annual Report
5
Delivering for our stakeholders
Thousands
of promotions every week
>2 m
Flybuys members reedemed
points for the first time at Coles
$6.0 bn
paid in salaries, wages
and benefits
Coles’ Stretch
Reconcilitaion
Action Plan
launched in March 2024
$34.7 bn
supplier spend for
products and services
$36 m
awarded to farmers and
producers since 2015 through
the Coles Nurture Fund, to
support innovative projects
Customers
We serve millions of Australians every
week. We are committed to providing
customers with choice and value and
we aspire to become the most trusted
retailer in Australia.
Team members
We are one of Australia’s largest
employers. Our team members reflect
the diverse communities in which we
operate and we strive to make Coles
a great place to work.
Suppliers
We partner with more than 8,000
suppliers to deliver more than 40,000
product lines for our customers. We value
long-term partnerships and enjoy many
positive relationships with our suppliers
spanning decades.
Coles’ impact in FY24
Overview
Operating and
Financial Review
Governance
Directors’
Report
Financial
Report
Additional
Information
6
$38.5 m
in community support
to charitable causes1
#1
corporate giver in Australia
as a percentage of profit2
$1.1bn
NPAT attributable to shareholders
$884 m
paid out in dividends
to shareholders in FY24
1. Includes Coles’ direct contributions (cash and products), time and management costs as well as fundraising from
customers, suppliers and team members (leverage). In-kind donations to SecondBite and Foodbank, valued at
$158m, are not included in this number. Coles’ community support is verified by Business for Societal Impact (B4SI).
2. Based on 2023 Giving Large research, by Strive Philanthropy.
Community
We believe we have an important role
to play in the communities in which we
operate. We support a range of causes
including health and wellbeing,
nutrition, food security, and aid in
times of natural disasters.
Shareholders
We have more than 420,000
shareholders, of which many are
Australian families and companies,
including superannuation funds.
7
Coles Group 2024 Annual Report
Serving Australians for
more than a century
Dear Shareholder,
This year marks 110 years since our
founder G. J. Coles opened our first
store in Smith Street, Collingwood,
Victoria. Ever since that time we
have been focused on providing
great value, quality groceries and
essentials to our customers.
Our progress over this last year reflects
the continuation of this commitment
– working with our team, suppliers and
partners to efficiently deliver fresh food,
groceries, household items and liquor
across our network of more than 1,800
retail outlets, serving customers nearly
18 million times a week.
It has been a year of considerable
progress.
Investing for the future
To underpin our performance, we
continued to invest in new store
developments, renewals and
transformative long-term new
technology investments.
Key achievements included completing
our second Automated Distribution
Centre (ADC) in Western Sydney, with
its official opening in August 2024,
which will help us ensure better in-store
availability for customers across New
South Wales and the ACT and lower our
operating costs. Pleasingly, our first ADC
which opened in Redbank, Queensland
last year has shown the benefits of more
efficiently delivering to our 219 stores in
Queensland and northern NSW.
We are also pleased to have completed
the construction of our two Customer
Fulfilment Centres (CFCs) in Western
Sydney and Melbourne. These two CFCs
are the outcome of a decision five years
ago to establish a significant step up in
customer experience for online retail
orders, as seen in other supermarkets
using the Ocado technology around
the world.
Together, these four facilities represent
the single largest capital investment
in our history with more than $1.4 billion
invested in leading world-class
technology to improve performance
and our customer offer.
Regulatory framework
During the year against the backdrop
of global cost-of-living challenges we
have engaged constructively with
governments and regulators across
a number of inquiries and reviews.
Ensuring the operation of strong and
competitive open markets is important
in efficiently delivering quality products
at competitive prices – an objective
which we have pursued for more than
a century.
In that regard, we were pleased to
engage with Dr Emerson’s review of the
Food and Grocery Code of Conduct
and have given our support for the
recommendations of the review making
the Code mandatory. In addition, we
continue to fully engage with the ACCC
as it undertakes its 12-month review
of the business operations of the
grocery sector.
An important tenet of the Australian
business landscape has been a stable
framework in which companies have
invested to deliver long-term value for
customers, communities and
shareholders. The maintenance of a
clear and consistent framework is vital
to build our future national prosperity.
We support strong competition and
policy settings which encourage
long-term investment.
Message from
the Chairman
James Graham
Overview
Operating and
Financial Review
Governance
Directors’
Report
Financial
Report
Additional
Information
8
Contributing to
sustainability and
our community
Supporting our environment, team and
communities remains central to our
strategy and we are committed to
addressing the issues that matter most
to our stakeholders.
This year, we continued to invest in
renewable electricity, waste reduction
and recycling. We reduced our
combined Scope 1 and Scope 2
emissions by 1.5%; diverted 86.7% of solid
waste from landfill; and, as at the end
of FY24, 87.4% of Coles Own Brand and
Coles Liquor Own Brand packaging
was recyclable, up from 83.8% in FY23.
Additionally, we introduced a Scope 3
supplier engagement target during the
year with our commitment to work with
75% of our suppliers, by spend, to help
them set emissions targets by the end of
FY27. Scope 3 emissions are the indirect
emissions which occur in our value
chain and comprise more than 90%
of our emissions profile.
We also made important progress
with our team of more than 115,000,
increasing diversity and inclusion with
42.5% of leadership roles across Coles
now held by women and 3.6% of our
team identifying as Aboriginal or Torres
Strait Islander. We also launched our
refreshed Human Rights Strategy and
our Stretch Reconciliation Action Plan,
reaffirming our commitments to
advancing both human rights and
reconciliation with First Nations peoples.
Coles has a commitment to support
the communities in which we operate.
This past year we, together with our
customers, continued our longstanding
support of Redkite, FightMND, Little
Athletics and SecondBite. We also made
$3.7 million in grants through the Coles
Nurture Fund in FY24 to help Australian
farmers and producers invest in
innovative projects and sustainable
farming practices and we donated the
food equivalent of approximately 40
million meals to Australians in need.
Our financial performance
Our aim of building trust and growing
long-term shareholder value resulted in
a solid financial performance in a
challenging economic environment.
The 2024 financial year was a 53-week
year, reflecting the Group’s retail trading
calendar. As a result of a constant focus
on quality, efficiency and value we
achieved, from continuing operations,
total Group Sales Revenue of
$43.6 billion and Net Profit After Tax of
$1.1 billion. On an adjusted 52-week
comparable basis this represented an
increase of 5.7% and 2.1%, respectively,
on the prior year.
The Board declared fully franked
dividends for the year of 68 cents per
share, an increase of 3.0% on the prior
year, including the final dividend of
32 cents per share payable on
25 September 2024.
These results reflect the benefits of
implementing our long-term strategy,
investing in new technology, improving
our customer value and focusing upon
efficiency.
Board and Management
During the year Paul O’Malley retired
from the Board having made a significant
contribution to Coles and its governance
as a Director and as Chairman of the
Audit and Risk Committee.
In December last year we were pleased
to welcome Andy Penn as a Director,
bringing his substantial large corporate,
customer-facing technology expertise,
and in February, due to a change in
personal circumstances, we were
delighted that Terry Bowen, with his
deep grocery retailing and corporate
experience, was able to continue as
a Director.
Pleasingly, further adding to Board
renewal, we were able to announce
in July 2024 that Peter Allen would be
joining the Board in September of this
year, with his significant experience
in property management, especially
with large retail businesses.
Both Andy and Peter will stand for
election at our Annual General
Meeting on 12 November 2024.
Under the leadership of our Chief
Executive Officer, Leah Weckert, we have
seen a year of substantial progress in all
aspects of our business. Leah and our
Executive Leadership Team, which was
further strengthened during the year
with Anna Croft joining us, have lifted
our performance and increased levels
of engagement with suppliers and all
Coles team members.
To my fellow Directors and the
management team, I express my thanks
for their unwavering contribution.
Looking ahead
Against the backdrop of 110 years of
conducting essential retailing in
Australia and with the strength of more
than 115,000 team members we look
forward to creating long-term value
for you, our more than 420,000
shareholders.
We are committed to building upon the
essential role we play for our customers
Australia wide and contributing
positively to the communities in which
we operate.
Thank you for your ongoing support
of Coles.
James Graham AM
Chairman, Coles Group Limited
9
Coles Group 2024 Annual Report
Supporting our customers
and communities
Dear Shareholder,
This year, we continued to build
momentum through our strategy
and delivered a wide range of
achievements against our three
pillars of ‘Destination for food and
drink’, ‘Accelerated by digital’ and
‘Delivered consistently for the future’.
There have been a number of challenges
throughout the year, including changing
customer behaviour, increased external
scrutiny and cost inflation. I am proud
of how our team members have
demonstrated resilience and agility in
the face of these challenges to advance
us in our purpose of ‘Helping Australians
eat and live better every day’.
Strategic and
business highlights
The financial pressures on households
and families have been front of mind
for us this year, and we’ve endeavoured
to deliver value across our supermarket,
liquor and online offerings to help
customers balance the household
budget.
We launched several initiatives to ensure
savings across hundreds of popular
products and everyday essentials. This
included our ‘Great Value, Hands Down’
campaign, ‘Down Down’ promotions,
and thousands of weekly specials.
Additionally, we introduced more ways
for customers to earn and redeem points
through Flybuys, with more than two
million customers redeeming points
for the first time.
Our Own Brand range continued to
perform well, with our Exclusive to Coles
sales increasing 8.6% (normalised: 6.6%)
in the financial year, and more than
1,100 new Exclusive to Coles products
added to the portfolio. We launched our
new Coles Simply branding, making it
easier for customers to identify the many
great value staples across our store,
while our Coles Finest range expanded
and experienced impressive sales
growth of 20.4% (normalised).
This year, we were pleased to see
improvements in product availability, as
well as quality of fresh produce, thanks
to improvements in our supply chain and
sourcing. This included transitioning to
100% WA sourcing for Coles Own Brand
fresh beef, pork, poultry and lamb in WA
stores. We also worked to address loss by
rolling out Skip Scan, Smart Gates and
Bottom of Trolley technology to hundreds
of stores.
Our investment in digital and
eCommerce – particularly through
innovations in the Coles App, Click &
Collect and Rapid Delivery – resonated
with customers as they actively sought
value, convenience, and a more
personalised shopping experience.
As a result, we saw Supermarkets
eCommerce sales growth of 30.1%
(normalised) for the financial year,
coupled with an improvement in online
customer satisfaction.
As we looked for ways to capture new
markets through innovation, we invested
in the launch of online pet store Swaggle,
and expanded our QuiteLike meal kit
subscription service as well as the
Coles 360 retail media business. These
investments provide a platform for
growth into the future.
Pleasingly, the purchase of two Saputo
Dairy Australia milk processing plants
in Laverton North (Victoria) and Erskine
Park (NSW) was completed in June.
Each facility has the capacity to process
approximately 225 million litres of milk
a year and will improve supply security
into the future, while also enabling
product innovation.
Win Together
During the year we refreshed our values,
launching our 4Cs: Care for each other,
Have Courage to make the right choices,
Deliver for our Customers and Create for
the future. Our team has embraced these,
and I am proud of the countless daily
examples of these values in action
across every facet of our business.
We achieved our highest-ever
engagement score in our mysay survey,
placing Coles in the top quartile of
Australian companies, with a three-
percentage point improvement versus
last year and six points higher than FY22.
The diversity of backgrounds,
perspectives and experiences within
our team continued to be a focus, and
we were pleased to grow women in
leadership to 42.5%, Indigenous
representation to 3.6%, and achieve the
number one ranking on the Access and
Inclusion Index 2023. We also celebrated
Sydney World Pride, supporting the event
as a presenting partner.
Group sales revenue –
continuing operations
$43.6 bn
Group EBIT –
continuing operations
$2.1 bn
10
Overview
Operating and
Financial Review
Governance
Directors’
Report
Financial
Report
Additional
Information
We recorded an 8.8% improvement
in TRIFR and undertook training and
initiatives to improve mental health
outcomes across the business. We are
also collaborating across the industry to
address a rise in threatening situations
seen in retailers.
We remain committed to investing in
community sport, and this year we
continued to support Little Athletics
centres across Australia with equipment
grants, totalling more than $2.4 million
since 2018. The Coles Healthy Kicks
program continued to evolve and
grow, and we also announced a new
partnership with Football Australia’s
MiniRoos, the official junior grassroots
program of Australian football.
In addition to the $3.7 million in grants
we awarded through the Coles Nurture
Fund in FY24, we also launched the
Dairy Farm Sustainability Accelerator
Fund allocating approximately $1.5
million per year in FY24 and FY25
towards sustainable farming projects
across the Coles dairy farmer group.
Financial performance
Coles delivered solid financial results in
FY24 with Group EBITDA and EBIT on a
continuing operations basis of $3,659
million and $2,057 million respectively,
and NPAT on a continuing operations
basis of $1,128 million. Our NPAT margin
has remained stable against FY23 at
around 2.6%.
This was supported by the successful
execution of key events including
Christmas and Easter, a positive
customer response to our value
campaigns and a strong focus on
costs with our Simplify and Save to
Invest program realising efficiencies of
$238 million in the financial year. We are
on track to deliver $1 billion in benefits
over four years under Simplify and Save
to Invest.
Pleasingly for customers, Supermarkets
inflation continued to moderate,
with inflation across FY24 at 2.5%, a
significant reduction on 6.7% in FY23.
In the fourth quarter, total Supermarkets
price inflation further moderated to 1.5%.
The year ahead
As we look to the year ahead, we
are well positioned to deliver on our
strategic priorities.
With our two Automated Distribution
Centres now operating, and our two
automated Customer Fulflment Centres
ramping up from July, we look forward
to unlocking the full benefits of these
transformative investments and
delivering a world-class customer
experience for online orders.
With ongoing cost-of-living pressures,
we will continue responding to the needs
of our customers with a focus on value
through every day low prices, weekly
specials, Flybuys and Coles Own Brand.
Our performance this year would not
have been possible without the efforts
of our more than 115,000 team members,
and I thank them for their commitment
and ongoing work to deliver for our
stakeholders. I would also like to
thank our customers and suppliers
for their continued support, and to
our shareholders, thank you for your
continued trust and confidence in Coles.
Leah Weckert
Managing Director and Chief Executive
Officer, Coles Group Limited
Managing Director
and Chief Executive
Officer’s Report
Leah Weckert
11
Coles Group 2024 Annual Report
James Graham AM
Chairman of the Board
Chairman of the Nomination
Committee and Member of the
People and Culture Committee
Leah Weckert
Managing Director &
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
Andrew Penn AO
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
Board of Directors
Biographical details of the Board of Directors can be found on pages 54 to 57.
Overview
Operating and
Financial Review
Governance
Directors’
Report
Financial
Report
Additional
Information
12
Ben Hassing
Chief Digital Officer
Amanda McVay
Chief Customer Officer
Daniella Pereira
Group Company Secretary
Kris Webb
Chief People Officer
Leah Weckert
Managing Director &
Chief Executive Officer
David Brewster
Chief Legal & Safety Officer
Michael Courtney
Chief Executive, Liquor
John Cox
Chief Technology Officer
Sally Fielke
General Manager, Corporate
& Indigenous Affairs
Charlie (Sharbel Raymond) Elias
Chief Financial Officer
Matt Swindells
Chief Operations &
Sustainability Officer
Anna Croft
Chief Commercial Officer
Executive Leadership Team
13
Coles Group 2024 Annual Report
Overview
Operating and
Financial Review
Governance
Directors’
Report
Financial
Report
Additional
Information
14
This Operating and Financial
Review (OFR) relates to Coles Group
Limited ('the Company') and its
controlled entities (together, 'Coles',
'Coles Group', or 'the Group').
Business model
Coles is one of Australia’s leading
retailers, with an extensive national
supermarket and liquor store footprint
and a range of digital platforms
allowing us to deliver a full service
omnichannel experience for
customers. We employ more than
115,000 team members, engage
with more than 8,000 suppliers,
have more than 420,000 shareholders
and welcome millions of customers
through our store network and digital
platforms every week.
Coles’ reportable segments from
continuing operations are:
• Supermarkets: fresh food, groceries
and general merchandise retailing.
Includes Coles Online, Coles
Financial Services and Coles 360
retail media services.
• Liquor: liquor retailing, including
online services.
• Other: business operations that are
not separately reportable, including
Property, Coles’ share of the Flybuys
loyalty program and a product
supply arrangement (PSA) with
Viva Energy Group Ltd (Viva Energy),
as well as costs associated with
enterprise functions, such as
Insurance and Treasury.
Coles’ brand portfolio includes Coles
Group, Coles, Coles Local, Liquorland,
First Choice Liquor Market, Vintage
Cellars, Swaggle, QuiteLike, Coles 360
and Coles Financial Services. Coles
is also a 50% shareholder of Flybuys,
which has more than nine million
active members.
The Group’s core competencies
include 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 a
national distribution centre network.
Pictured: Athletes from West Bundaberg and Burrum District Little Athletics centres celebrate the 2023 Coles Banana A-Peel with Coles Ambassador and Olympian Sally Pearson.
Business model and strategy
15
Coles Group 2024 Annual Report
Destination for food
and drink
is why our customers come to Coles and what
we aspire to be known for. We will tailor our
product range, quality, value, merchandising
and communication to meet and surpass our
customers’ needs
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
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
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
Delivering
our strategy
Our strategy focuses on
delivering excellence in grocery
retailing and centres around our
purpose of Helping Australians
eat and live better every day.
At the start of FY24 we refreshed our
purpose and strategy, with the aim
of providing leading food, drink and
home solutions that are delicious
and healthy for our customers. This
past year marks the first year of this
new strategy.
Our new strategy is comprised of
three strategic pillars, Destination
for food and drink, Accelerated by
digital and Delivered consistently
for the future, underpinned by
Win Together and Foundations.
16
Overview
Operating and
Financial Review
Governance
Directors’
Report
Financial
Report
Additional
Information
• Continued to strengthen our value proposition through successful ‘Great Value, Hands Down’ seasonal campaigns and every
day low prices
• Well executed key events including Christmas, Easter and Mother’s Day
• Improved quality controls in fresh and launched our ‘Great Lengths for Quality’ campaign, showcasing the lengths our
team members, farmers and suppliers go to in order to source and deliver the highest quality products for our customers
• Launched more than 1,100 Exclusive to Coles and 244 Exclusive Liquor Brand products, collaborating with a team of chefs,
farmers, product developers and food specialists, along with our liquor sourcing and packaging specialists and supply
partners to create high-quality and innovative products at all price points
• Increased engagement in our Flybuys loyalty program through personalisation and national rollout of instant $10 off at point
of sale; Flybuys active members increased by 5.3%
• Increased Coles Online NPS1 driven by improved delivery and Click & Collect experience, with significantly reduced Click
& Collect wait times, release of several new digital features, increased personalisation and improvements in availability
• Grew Coles App monthly active users by 42.6% and added new features for in-store shopping and eCommerce including
launch of Coles Plus Saver membership subscription, digital receipts and shareable shopping lists
• Completed Customer Fulfilment Centre (CFC) construction at both sites, ramp up commenced in July FY25
• Invested in our Coles 360 retail media business, including the launch of Coles 360Impact and expansion into Liquor
• Expanded our range of pet products and services through the launch of a new online pet retailer, Swaggle
• Delivered $238 million in Simplify and Save to Invest benefits
• Revitalised our store network with the opening of 12 new supermarkets and 45 new liquor stores (inclusive of the acquisition
of 20 stores in Tasmania), and the renewal of 50 supermarkets and 97 liquor stores
• Improved availability and supply chain resilience, including transitioning to 100% WA sourcing of all Coles Own Brand fresh
beef, poultry, pork and lamb in WA stores
• Completed ramp up of Redbank Automated Distribution Centre (ADC) in Queensland and completed construction of our
second ADC in Kemps Creek, NSW, with first outbound delivery in July FY25
• Successfully implemented a range of initiatives to address stock loss, including the installation of Skip Scan, Smart Gates
and Bottom of Trolley technology in stores
• Continued our sustainability efforts across our four environmental focus areas of energy and emissions, waste, packaging,
and sourcing and farming
• Achieved highest-ever mysay engagement score2, ranking in the top quartile3
• Maintained 40/40/20 gender representation with 42.5% of our leadership population being women4
• Ranked #1 out of 40 organisations in the Access and Inclusion Index 2023
• Launched Coles’ Stretch Reconciliation Action Plan
• Provided $38.5 million in community support5 and donated equivalent of 39.8 million meals to SecondBite and Foodbank
(20m kgs)6
• Coles Nurture Fund awarded more than $3.7 million in grants to nine small and medium-sized businesses
• Expanded use of artificial intelligence (AI) enhancing customer and team member experience
• Partnered with a leading global AI provider to drive operational improvements, particularly rostering
• Enhanced our cloud data platform and master data management system, further enabling data-driven decisions across
the business
1. Net Promoter Score. Metric used to measure customer advocacy, derived from an externally facilitated survey with a nationally representative sample. The movement
reported represents the NPS measured over the relevant period relative to the prior corresponding period.
2. Based on results of our May 2024 mysay engagement survey, which was responded to by 71% of team members.
3. Benchmarked by Culture Amp against Australian companies with more than 5,000 team members. The median and top quartile benchmarks cover the period January –
December 2023.
4. Leadership positions are comprised of the Executive Leadership Team, General Managers, team members pay grade eight and above and supermarket store managers.
Pay grade eight and above includes middle managers and specialist roles.
5. Includes Coles’ direct contributions (cash and products), time and management costs as well as fundraising from customers, suppliers and team members (leverage). In-
kind donations to SecondBite and Foodbank, valued at $158m, are not included in this number. Coles’ community support is verified by Business for Societal Impact (B4SI).
6. In addition to unsold edible food, the figure also includes bulk food and grocery donations to SecondBite and Foodbank.
Portfolio update
In June 2024, Coles successfully completed the acquisition of two automated milk processing facilities from Saputo Dairy Australia.
This acquisition improves security of milk supply and provides access to capacity to facilitate growth through product innovation.
In June 2024, Coles also acquired 20 liquor stores in Tasmania. This acquisition significantly expands Coles Liquor’s footprint in the
region, increasing the total number of stores to 23.
FY24 key strategic highlights
17
Coles Group 2024 Annual Report
Group performance
Group sales revenue ($m)
FY24
53 weeks
FY23
52 weeks
Change
Change
normalised1
Supermarkets
39,042
36,746
6.2%
4.3%
Liquor
3,692
3,610
2.3%
0.5%
Other
837
127
n/m
n/m
Sales revenue – continuing operations
43,571
40,483
7.6%
5.7%
Express – discontinued operations
-
988
n/m
n/m
Total Group sales revenue
43,571
41,471
5.1%
3.2%
n/m denotes not meaningful.
1. FY24 is a 53 week year for reporting purposes consistent with the retail calendar. Normalised growth rates are non-IFRS measures and remove the impact of the 53rd week in FY24
for comparability purposes.
Group performance ($m)
FY24
53 weeks
FY23
52 weeks
Change
Change
normalised1
Supermarkets2
2,018
1,765
14.3%
9.6%
Liquor3
133
157
(15.3%)
(20.9%)
Other
(94)
(63)
49.2%
49.2%
EBIT – continuing operations
2,057
1,859
10.7%
5.7%
Financing costs
(442)
(394)
12.2%
11.6%
Income tax expense
(487)
(423)
15.1%
8.7%
Profit from continuing operations
1,128
1,042
8.3%
2.1%
Profit from discontinued operations, after tax
(10)
56
n/m
n/m
Net profit after tax
1,118
1,098
1.8%
(4.0%)
n/m denotes not meaningful.
1. FY24 is a 53 week year for reporting purposes consistent with the retail calendar. Normalised growth rates are non-IFRS measures and remove the impact of the 53rd week in FY24
for comparability purposes.
2. Includes major project implementation costs relating to ADCs and CFCs (FY24: $107 million; FY23: $58 million) and a provision relating to the Award covered salaried team member
review in FY23 (FY24: nil; FY23: $25 million).
3. FY24 includes a tax adjustment relating to prior years ($5 million) and a write-off of capitalised IT development costs in relation to the eCommerce business ($6 million).
Highlights
• Sales revenue growth from continuing
operations of 7.6% to $43,571 million.
• EBIT growth from continuing
operations of 10.7% to $2,057 million.
• Cash realisation of 98% and net debt
of $977 million.
• Fully franked final dividend of 32.0
cents per share declared, taking total
dividends in relation to FY24 to 68.0
cents.
Performance overview
from continuing operations
Group sales revenue from continuing
operations increased by 7.6% to $43,571
million. Normalising for the impact of the
53rd week in FY24, sales growth was
5.7%, with growth in Supermarkets sales
revenue of 4.3% and Liquor sales revenue
of 0.5%. The Other segment included
$837 million of revenue in relation to the
PSA with Viva Energy.
Group EBIT from continuing operations
increased by 10.7% to $2,057 million
which was 5.7% on a normalised basis
underpinned by strong growth in
Supermarkets earnings. During the
period major project implementation
costs of $107 million were incurred in
relation to Coles’ two ADCs and two
automated CFCs (FY23: $58 million) and
$11 million in non-recurring expenses
were recorded by the Liquor division.
Financing costs from continuing
operations increased by $48 million to
$442 million reflecting increased
borrowing costs following Coles’ $600
million bond issuance in November
2023, higher interest rates on short term
revolving debt facilities and increased
interest on lease liabilities associated
with lease renewals and new leases,
including our two ADCs.
18
Overview
Operating and
Financial Review
Governance
Directors’
Report
Financial
Report
Additional
Information
Award covered salaried
team member review
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 has paid $31 million of remediation
costs to date. In addition, at
30 June 2024, a provision of $19 million
(25 June 2023: $37 million) is reflected
in the 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. 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
intended 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 increasing the provision
reflected in the financial statements at
25 June 2023 to $37 million. During the
current year remediation payments
of $18 million were made against the
provision. The FWO matter was heard
in a seven week trial from 5 June 2023
and judgment is pending. As such, the
potential outcome, extent to which further
remediation may be necessary, and
costs associated with this matter remain
uncertain as at the date of this report.
In May 2020, a class action proceeding
was filed in the Federal Court of
Australia in relation to payment of Coles
managers employed in supermarkets.
This matter was heard in conjunction
with the FWO proceedings and
judgment has also been reserved.
The potential outcome and total costs
associated with this matter remain
uncertain as at the date of this report.
Earnings per Share and dividends
Basic Earnings per Share (EPS) from continuing operations was 84.6 cents, an 8.3% increase from the prior year.
FY24
53 weeks
FY23
52 weeks
Profit for the period
Continuing operations ($m)
1,128
1,042
Discontinued operations ($m)
(10)
56
Total profit for the period
1,118
1,098
Weighted average number of ordinary shares for basic EPS (shares, million)
1,334
1,334
Weighted average number of ordinary shares for diluted EPS (shares, million)
1,338
1,338
EPS attributable to equity holders of the Company
Basic EPS (cents)
83.8
82.3
Diluted EPS (cents)
83.5
82.1
EPS attributable to equity holders of the Company from continuing operations
Basic EPS (cents)
84.6
78.1
Diluted EPS (cents)
84.3
77.9
The Board has determined a fully franked final dividend of 32.0 cents per share (cps).
In respect of the year:
CPS
Franked amount
per security
FY24
Interim dividend
36.0 cents
36.0 cents
Final dividend
32.0 cents
32.0 cents
FY23
Interim dividend
36.0 cents
36.0 cents
Final dividend
30.0 cents
30.0 cents
19
Coles Group 2024 Annual Report
Balance Sheet
A summary of key balance sheet accounts for the Group:
$m
FY24
FY23
Change
ASSETS
Cash and cash equivalents
675
597
13.1%
Trade and other receivables
496
605
(18.0%)
Inventories
2,703
2,323
16.4%
Property, plant and equipment
5,619
4,985
12.7%
Right-of-use assets
7,048
6,507
8.3%
Intangible assets
2,203
2,035
8.3%
Deferred tax assets
717
740
(3.1%)
Other
409
500
(18.2%)
Total assets
19,870
18,292
8.6%
LIABILITIES
Trade and other payables
4,584
4,434
3.4%
Income tax payable
73
-
n/m
Provisions
1,266
1,281
(1.2%)
Interest-bearing liabilities
1,652
1,118
47.8%
Lease liabilities
8,417
7,849
7.2%
Other
261
254
2.8%
Total liabilities
16,253
14,936
8.8%
Net assets
3,617
3,356
7.8%
n/m denotes not meaningful.
Cash and cash equivalents increased to $675 million primarily reflecting timing of trade and other receivables and trade
and other payables prior to year end.
Trade and other receivables decreased to $496 million impacted by the FY24 year ending on 30 June 2024.
Inventories increased to $2,703 million primarily due to improved availability of stock on hand and impact of inflation on the cost
of goods.
Property, plant and equipment increased to $5,619 million largely reflecting the investment in the Group’s annual capital program,
partly offset by depreciation and property divestments during the year.
Right-of-use assets of $7,048 million increased by $541 million mainly driven by lease assets additions (which include the
recognition of the two CFCs and one ADC) and remeasurements of $1,392 million, partially offset by lease asset depreciation of
$830 million and impairments of $21 million.
Intangible assets increased to $2,203 million due to the Group’s ongoing investment in technology, partly offset by amortisation
for the year.
Lease liabilities of $8,417 million increased by $568 million driven by lease assets additions and remeasurements of $1,402 million,
and accretion of interest of $363 million, offset by lease payments of $1,197 million.
Capital management
Interest-bearing liabilities reflect external borrowings and debt capital funding commitments. In November 2023, Coles issued
$600 million of fixed rate Australian dollar medium term notes (Notes), comprising of $350 million 7-year Notes and $250 million
10-year Notes. The proceeds from these issuances were used for general corporate purposes.
At 30 June 2024, Coles’ average debt maturity was 5.5 years, with undrawn facilities of $2,378 million. Coles remains committed
to maintaining diversified funding sources and extending its debt maturity profile over time.
The lease-adjusted leverage ratio at the reporting date was 2.7x on a continuing basis, with current published credit ratings
of BBB+ with Standard & Poor’s and Baa1 with Moody’s.
20
Overview
Operating and
Financial Review
Governance
Directors’
Report
Financial
Report
Additional
Information
Cash Flow
Summary cash flows of the Group:
$m
FY24
53 weeks
FY23
52 weeks
Change
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
46,145
44,043
4.8%
Payments to suppliers and employees
(42,556)
(40,439)
5.2%
Interest paid
(57)
(57)
-
Interest component of lease payments
(363)
(372)
(2.4%)
Interest received
6
2
200.0%
Income tax paid
(382)
(370)
3.2%
Net cash flows from operating activities
2,793
2,807
(0.5%)
Net cash flows used in investing activities
(1,513)
(1,000)
51.3%
Net cash flows used in financing activities
(1,202)
(1,799)
(33.2%)
Net increase in cash and cash equivalents
78
8
n/m
n/m denotes not meaningful.
Net cash flows from operating activities were impacted by the FY24 year ending on 30 June 2024.
Net cash flows used in investing activities increased to $1,513 million, which reflects increased investments in property, plant, and
equipment as part of the Group’s annual capital program. In addition, the prior year included the proceeds of the sale of the
Express business. The Group paid $74 million for the acquisition of businesses including two automated milk processing facilities
acquired from Saputo Dairy Australia1 and liquor business acquisitions made during the year.
Net cash flows used in financing activities decreased to $1,202 million reflecting proceeds received from the issuance of the Notes
in November 2023.
Pictured: Newly opened Coles Box Hill, NSW.
1. The Group announced to the ASX on 3 April 2023, the acquisition of the two milk processing plants. Prior to completion, the land and buildings were sold to a third party
and leased by Coles, resulting in a decrease in consideration paid.
21
Coles Group 2024 Annual Report
Supermarkets
Key highlights
Total sales revenue
$39.0 bn
eCommerce sales1
$3.7bn
Exclusive to Coles sales
revenue growth2
6.6%
Supermarkets sales revenue of
$39,042 million increased by 6.2%
on the prior year (normalised: 4.3%).
Sales revenue growth was driven by a
positive customer response to our ‘Great
Value, Hands Down’ seasonal value
campaigns, well executed trade events
such as Christmas, Easter and Mother’s
Day, strong growth in eCommerce and
improvements in availability.
eCommerce sales grew by 30.1%
(normalised) with improvements in
customer experience, availability and
strong trade across key events including
Black Friday, Christmas, Easter and
the Coles Online 25th birthday sale.
Exclusive to Coles sales revenue
increased by 8.6% (normalised: 6.6%) to
$13.5 billion with the portfolio continuing
to resonate with customers seeking
value. The Coles Finest range delivered
particularly strong sales growth of 20.4%
(normalised) and convenience meals,
such as the Coles Kitchen range,
also grew with customers seeking
quality alternatives to eating out and
convenient meal solutions. Across the
portfolio more than 1,100 new Exclusive
to Coles products were launched with
a focus on quality, innovation and
affordable value, including more than
70 products in the Coles Finest range.
The Coles Simply value range was
launched in the first quarter with
distinctive yellow packaging to help
customers easily identify key Own
Brand value items and grew to more
than 100 products by year end.
Pictured: Coles ambassador, Courtney Roulston, with the KitchenAid ovenware range which featured in a collectable campaign designed to reward Coles’ loyal customers.
1. eCommerce gross retail sales includes Liquor sold through coles.com.au and excludes gift cards sold online.
2. Normalised growth rate.
22
Overview
Operating and
Financial Review
Governance
Directors’
Report
Financial
Report
Additional
Information
Pictured: Coles team members Chris and Katy at the Coles Tooronga store.
23
Coles Group 2024 Annual Report
Segment overview
$m
FY24
53 weeks
FY23
52 weeks
Change
Change
normalised1
Sales revenue
39,042
36,746
6.2%
4.3%
EBITDA2
3,487
3,157
10.5%
7.3%
EBIT 2
2,018
1,765
14.3%
9.6%
Gross margin (%)
26.9
26.4
49bps
49bps
Cost of doing business (CODB)(%)
(21.7)
(21.6)
12bps
25bps
EBIT margin (%)
5.2
4.8
37bps
24bps
1. FY24 is a 53 week year for reporting purposes consistent with the retail calendar. Normalised growth rates are non-IFRS measures and remove the impact of the 53rd week in FY24
for comparability purposes.
2. Includes major project implementation operating expenditure relating to ADCs and CFCs (FY24: $107 million; FY23 $58 million) and a provision relating to the Award covered
salaried team member review in FY23 (FY24: nil; FY23: $25 million).
Operating metrics (non-IFRS)
FY24
53 weeks
2H24
26 weeks
1H24
27 weeks
FY23
52 weeks
Sales growth ex-tobacco – normalised1 (%)
5.7
5.2
6.2
7.4
Gross retail sales2 ($ billions)
40.3
19.8
20.5
38.0
Gross retail sales growth – normalised1 (%)
4.2
3.3
5.0
6.6
Comparable sales growth – normalised1 (%)
3.4
2.6
4.0
5.8
eCommerce sales3 ($ billions)
3.7
1.9
1.8
2.8
eCommerce penetration3 (%)
9.4
9.6
9.1
7.5
Sales density per square metre4 (MAT $/sqm)
19,816
19,816
19,618
19,201
Inflation / (deflation) (%)
2.5
1.8
3.0
6.7
Inflation / (deflation) excl. tobacco (%)
2.2
1.5
2.9
6.9
Inflation / (deflation) excl. tobacco and fresh (%)
3.4
2.0
4.8
7.6
1. FY24 is a 53 week year for reporting purposes consistent with the retail calendar. Normalised growth rates are non-IFRS measures and remove the impact of the 53rd week in FY24
for comparability purposes.
2. Gross retail sales are comprised of retail sales on a gross basis before adjusting for concession sales and the cost of Flybuys scheme points.
3. eCommerce gross retail sales and penetration include Liquor sold through coles.com.au and excludes gift cards sold online.
4. Sales density per square metre is a moving annual total (MAT), calculated on a rolling 52-week basis.
24
Overview
Operating and
Financial Review
Governance
Directors’
Report
Financial
Report
Additional
Information
Highlights
Providing value to our customers is a
key priority for the business. This was
delivered through our seasonal value
campaigns, with price investments
made in key categories such as meat,
vegetables and pantry staples, and
thousands of weekly specials and every
day low prices. More opportunities to
earn and redeem Flybuys points were
also introduced, including the ability
for Flybuys members to redeem points
at checkout. Flybuys active members
increased by 5.3% to 9.5 million and
over 2 million members redeemed points
for the first time at Coles.
Coles 360 media income increased
by 20.5% (normalised) with strong
advertiser demand growth across
our media offerings. During the year,
we launched our retail media closed
loop measurement platform, Coles
360Impact, offering advertisers the
ability to effectively measure the sales
uplift from their digital and in-store
advertising spend. The business also
expanded the Coles 360 offering into
Liquor, developing a range of new
app and website opportunities.
Total Supermarkets price inflation for the
year was 2.5% having moderated in the
second half with continued moderation
in the fourth quarter to 1.5%.
During the year, Coles completed
50 store renewals, including 20 Format
A and three Coles Local stores. Coles
also opened 12 new stores and closed
two stores, taking the total network to
856 supermarkets.
Gross margin increased by 49 bps
(normalised). Gross margin was
supported by lower tobacco sales,
growth in Coles 360, range and
promotional optimisation and Simplify
and Save to Invest benefits. With the
rapid implementation of operational
initiatives and loss technology
throughout the year, the second
half also benefited from a 44 bps
improvement in total loss compared
to the prior corresponding period.
Cost of doing business (CODB) as a
percentage of sales increased by 25 bps
(normalised). Simplify and Save to
Invest benefits and increased operating
leverage largely offset wage and other
inflationary cost impacts. CODB
as a percentage of sales, excluding
depreciation and amortisation and a
one-off $20 million payment to team
members1, remained broadly flat.
Supermarkets EBIT of $2,018 million
increased by 9.6%, on a normalised
basis, with a 24 bps expansion in EBIT
margin, and includes major project
implementation operating expenditure
relating to ADCs and CFCs (FY24:
$107 million; FY23: $58 million) and a
provision relating to the Award covered
salaried team member review in FY23
(FY24: nil; FY23: $25 million).
Update on ADCs
During the year, ramp up of the Redbank
ADC was completed with Redbank
now servicing 219 stores in Queensland
and northern NSW. Construction and
commissioning of Coles’ second ADC in
Kemps Creek, NSW, was also completed
with the first inbound deliveries received
as part of the commissioning and testing
process in March and the first outbound
deliveries to stores commencing in July.
Following ramp up, the Kemps Creek
ADC will service 229 stores across NSW
and the ACT.
Since completion of the ramp up at
Redbank in Queensland:
• availability across Queensland and
northern NSW stores has improved;
and
• supply chain costs have reduced
in line with the business case.
In FY24 implementation costs of
$55 million were incurred in relation
to the ramp up of Redbank and
commissioning of Kemps Creek.
Update on
automated CFCs
In July 2024, Coles successfully
commenced operations at both the
Wetherill Park CFC (NSW) and the
Truganina CFC (Victoria). These
facilities will service next day home
delivery orders across metropolitan
Sydney and Melbourne.
In FY24, implementation and transition
costs of $52 million were incurred.
1. Payment to team members, in the form of gift cards, following the successful vote in favour of the Coles Retail Enterprise Agreement 2024.
Pictured: Coles has opened its second ADC using global leading Witron technology as part of its more than $1 billion
investment in technology led innovation. The site spans 187,000 square metres which is the equivalent size of around 25
rugby league fields.
25
Coles Group 2024 Annual Report
Liquor
Key highlights
Total sales revenue
$3.7bn
eCommerce sales1
$225m
Exclusive Liquor Brand awards
538
Segment overview
$m
FY24
53 weeks
FY23
52 weeks
Change
Change
normalised1
Sales revenue
3,692
3,610
2.3%
0.5%
EBITDA2
261
279
(6.5%)
(10.1%)
EBIT2
133
157
(15.3%)
(20.9%)
Gross margin (%)
23.4
23.4
8bps
9bps
Cost of doing business (CODB)(%)
(19.8)
(19.0)
81bps
101bps
EBIT margin (%)
3.6
4.3
(73bps)
(92bps)
1. FY24 is a 53 week year for reporting purposes consistent with the retail calendar. Normalised growth rates are non-IFRS measures and remove the impact of the 53rd week in FY24
for comparability purposes.
2. FY24 includes a tax adjustment relating to prior years ($5 million) and a write-off of capitalised IT development costs in relation to the eCommerce business ($6 million).
Liquor sales revenue of $3,692 million
increased by 2.3% on the prior year
(normalised: 0.5%). Sales growth
was impacted by a challenging
liquor market, as customers reduced
their discretionary spending due to
economic pressures, coupled with the
business transitioning away from less
profitable bulk sales and adjusting
promotional mix across third party
eCommerce channels (‘affiliate’
sales) throughout the year.
Whilst sales revenue was particularly
subdued in the second half, the
trajectory improved throughout the
period with sales revenue declining
0.4% on a normalised basis in the fourth
quarter compared to a decline of 1.9%
in the third quarter. Excluding less
profitable bulk and affiliate sales,
sales revenue on a normalised basis
in the fourth quarter grew by 1.4%.
eCommerce sales1 revenue increased
by 9.2% (normalised). Digital platforms
continued to deliver strong growth
underpinned by on-demand delivery
which was expanded to include
Menulog to over 400 stores, in addition
to DoorDash and Uber Eats, already in
more than 600 stores.
Our Exclusive Liquor Brand (ELB)
portfolio added 244 new lines,
expanding the portfolio across key
growth categories including craft
beer and Ready-to-Drink, and offering
value across all price points. The ELB
portfolio received 538 awards during
the year, with Pure Origin Tasmanian
Gin awarded Double Gold at the
Melbourne International Wine, Beer
and Spirits Show and Tinnies Hazy Pale
Ale winning ‘Best In Show By Country’
at the London Beer Show.
1. eCommerce gross retail sales and penetration exclude Liquor sold through coles.com.au which is reported in Supermarkets’ eCommerce and Business to Business sales.
26
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Pictured: First Choice Liquor Market team member Rebeckah serves a customer in the Maroubra store.
27
Coles Group 2024 Annual Report
Highlights
Value and loyalty were areas of focus
during the year, with campaigns such
as ‘Price Match’ and ‘50 Days of Deals’
and the national rollout of Flybuys points
redemption at checkout at Liquorland
and First Choice Liquor Market stores.
Cross promotions between Coles
supermarkets and Liquorland were
also launched as part of trade events
including Valentine’s Day, Easter and
Footy Finals.
During the year, 97 store renewals
were completed, 45 new stores were
opened and ten stores closed across
the Liquorland, Vintage Cellars and
First Choice banners. This included
successfully completing the acquisition
of 20 stores in Tasmania. At the end of the
period the portfolio comprised 992 stores.
Gross margin increased by 9 bps
(normalised) benefitting from
promotional optimisation and the
transition away from less profitable
bulk and affiliate sales, offset by the
increased cost of on-demand third-
party commissions.
CODB as a percentage of sales
increased by 101 bps (normalised)
largely a result of wage growth, fixed
cost operating deleverage, investments
in core IT systems and increased
depreciation and amortisation in
relation to new stores and renewals.
During the year, a tax adjustment
relating to prior years of $5 million
and a $6 million write-off of capitalised
eCommerce IT development costs were
also incurred.
Liquor EBIT of $133 million decreased
by 20.9% on a normalised basis.
Other
$m
FY24
53 weeks
FY23
52 weeks
Change
Change
normalised1
Sales revenue
837
127
n/m
n/m
EBITDA
(89)
(54)
64.8%
64.8%
EBIT
(94)
(63)
49.2%
49.2%
n/m denotes not meaningful.
1. FY24 is a 53 week year for reporting purposes consistent with the retail calendar. Normalised growth rates are non-IFRS measures and remove the impact of the 53rd week in FY24
for comparability purposes.
Coles reported negative EBIT of $94 million in Other for the year.
Other includes corporate costs, Coles’ 50% share of Flybuys’ net result, the net gain or loss generated by Coles’ property portfolio
and the PSA with Viva Energy.
In Other, Coles reported sales revenue of $837 million in relation to the PSA. The EBIT result reflects corporate costs of $95 million,
broadly in line with the prior year and a net loss of $18 million from Coles’ 50% share of Flybuys offset by positive earnings
contributions of $8 million relating to the PSA and $11 million in property earnings.
Operating metrics (non-IFRS)
FY24
53 weeks
2H24
26 weeks
1H24
27 weeks
FY23
52 weeks
Gross retail sales2 ($ billions)
3.7
1.7
2.0
3.6
Gross retail sales growth – normalised1 (%)
0.5
(1.1)
1.8
(0.2)
Comparable sales growth – normalised1 (%)
(1.0)
(2.4)
0.2
(0.7)
eCommerce sales3 ($m)
225
101
124
203
eCommerce penetration3 (%)
6.2
6.0
6.4
5.7
eCommerce penetration (inc. COL)4 (%)
7.3
7.0
7.6
6.9
Sales density per square metre5 (MAT $/sqm)
15,860
15,860
16,134
16,138
1. FY24 is a 53 week year for reporting purposes consistent with the retail calendar. Normalised growth rates are non-IFRS measures and remove the impact of the 53rd week in FY24
for comparability purposes.
2. Gross retail sales are comprised of retail sales on a gross basis before adjusting for concession sales and the cost of Flybuys scheme points.
3. eCommerce gross retail sales and penetration exclude Liquor sold through coles.com.au which is reported in Supermarkets’ eCommerce and Business to Business sales.
eCommerce penetration is based on gross retail sales.
4. eCommerce penetration including Liquor sold through coles.com.au.
5. Sales density per square metre is a moving annual total (MAT), calculated on a rolling 52-week basis.
28
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Additional
Information
It has been one year since Coles
evolved its strategy with a purpose
of ‘Helping Australians eat and live
better every day’.
During the past year, inflation and
rising cost-of-living pressures have
had a significant impact on households
and families, shaping our priorities as
we look to the year ahead. Amidst a
changing economic climate, we remain
dedicated to our purpose and strategy,
recognising the essential role we play
in the lives of millions of Australians.
Customers are seeking delicious food
and drinks that cater to a wide range
of different needs. As a ‘Destination
for food and drink’, we will continue to
anticipate and respond to these needs
and expectations, prioritising value,
product range and quality to ensure we
provide a shopping experience that is
delicious, easy and affordable. Our
customers are also seeking digital
solutions to enrich their shopping
experience, making it easier, quicker,
and more enjoyable to shop both in-store
and online. We are ‘Accelerating our
growth through digital’, investing in our
omnichannel experience through the
Coles App and website, our automated
CFCs, our loyalty program and retail
media business. To ‘Deliver consistently
for the future’, we are simplifying our
processes through our Simplify and
Save to Invest program, focusing on
reducing total loss, including through
the rollout of technology solutions,
improving availability and revitalising
our store network. We are also focused
on reducing our impact on the
environment including working towards
our Scope 3 supplier engagement
target by supporting our suppliers
as we work together to build and scale
industry-wide action to set targets and
reduce emissions.
This will be a transformational year
for Coles as we continue to unlock the
benefits of our significant capital
investment program. We will continue
to ramp up our second ADC in Kemps
Creek, NSW. Together with the ADC in
Redbank, Queensland, these facilities
are designed to improve availability
for our customers in NSW and
Queensland while delivering structural
cost efficiencies for Coles. We will also
transition our metropolitan Sydney
and Melbourne next day home delivery
orders to our two automated CFCs in
Wetherill Park, NSW and Truganina,
Victoria. We are optimistic for the
customer benefits that we expect the
CFCs to deliver, including industry-
leading perfect order rates, improved
freshness and an expanded product
range.
The investments we are making in our
business are designed to enable us to
create a differentiated offering for our
customers, establishing the foundations
for long-term sustainable growth.
We are well-positioned to navigate
changing customer trends and to
deliver on our vision ‘to become the
most trusted retailer in Australia and
grow long-term shareholder value’.
Looking to the future
Pictured: Coles Group CEO, Leah Weckert, and Coles Group Chairman, James Graham, at the opening of the Kemps Creek ADC. This is the second of two Witron
facilities Coles has opened and is part of the company’s single biggest capital investment in its 110-year history.
29
Coles Group 2024 Annual Report
Risk management
In FY24, Coles’ Risk Management
Policy and Coles’ Risk Management
Standard 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
recognised set of principles for managing
risks in organisations.
Further information about our Risk
Management Policy and Risk
Management Standard is available in our
2024 Corporate Governance Statement.
A key component of the Risk
Management Standard is the risk
management process, which defines the
requirements for identifying, analysing,
evaluating, treating, monitoring,
communicating, and reporting risks,
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 vision and
purpose, business objectives and future
financial prospects. These risks can also
have material reputational, operational,
safety, and legal and regulatory
impacts, if they were to occur.
These risks are described in the
following tables, together with key
mitigations to manage them. The
occurrence of one or more of these risks
can potentially have a compounding
effect across the suite of material risks.
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
described in the following tables,
our performance may be affected
by other risks that apply generally to
Australian businesses and the retail
industry, as well as by the emergence
of new material risks. We will continue
to monitor and respond to further
developments as required, including
ongoing review and enhancement
of our risk mitigation plans.
Our operating environment continues to evolve, resulting in changes to the
risks and uncertainties that we face. We regularly review risks and measures
to mitigate risks and support the delivery of our purpose and strategy.
Supported by three lines of accountability
First line
Team members
and management
responsible for
managing risks
Second line
Group Risk and
Compliance team
responsible for
defining the Risk
Management Policy
and Standard
Third line
Group Internal
Audit responsible
for independent
assurance
Risk policy and appetite
Monitoring and review
Scope, context, criteria
Risk treatment
Risk assessment
Risk identification
Risk analysis
Risk evaluation
Recording and reporting
Communication and consultation
Coles Risk Management Process
(as defined by ISO 31000)
30
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External and strategic risks
1. Geopolitical and macro-economic
Context
Uncertainty in the global and domestic geopolitical and
macro-economic environment, including because of
relationships between governments (state, federal and
international) and global conflicts (e.g. Russia–Ukraine,
Middle East), can expose Coles to a range of consequential
impacts including:
• increases in input prices including energy, logistics and
packaging
• wage inflation
• restricted access to and/or higher cost of funding
• third party (supplier) insolvency
• disrupted access to export markets
• disruptions to imports impacting domestic supply
of goods for resale and goods not for resale (GNFR)
• increases in interest rates
• cost-of-living pressures resulting in reduced consumer
spending, changing consumption choices, and increased
stock loss from opportunistic theft and organised crime.
The challenging macro-economic environment has also
contributed to heightened political and regulatory scrutiny
of the retail sector, with multiple reviews and inquiries into
supermarket practices announced during FY24.
Mitigations
• Strategic and corporate planning and financial review
processes that incorporate scenario planning and
consideration of future market conditions.
• Proactive engagement with government and other key
stakeholders including industry associations and unions, 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 and practiced crisis management and business
continuity processes to prepare for disruptive events.
• 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.
• Investment in technology and processes to reduce stock loss,
including AI enabled monitoring and detection technology
at checkouts, closed-circuit television (CCTV), smart security
gates, and team member training.
• Additional information about how we are responding to
changes in consumer behaviour and expectations can be
found in the Changing consumer behaviour, competition,
and digital transformation risk section on page 32.
• Additional information about how we are responding to
external reviews, investigations and inquiries is provided
under the Legal and regulatory risk section on page 36.
2. Climate change and environment
Context
Coles has a responsibility to reduce the effect of our
operations on the environment. Inability to do so may result
in negative impacts to nature and biodiversity, reputational
damage, diminished access to capital, loss in market share,
disruption to the supply of products and services required to
operate our business and enforcement action.
Our operations may also be adversely affected by changes in
the natural environment including through biodiversity
loss and water scarcity.
Climate change presents an evolving set of risks and
opportunities for Coles, and has the potential to contribute
to, and increase, our exposure to other material risks.
This includes risks and opportunities associated with:
• our transition to a lower carbon economy
• an increase in the frequency and intensity of extreme
weather events and chronic changes in weather patterns.
Mitigations
• Refreshed sustainability strategy that highlights our
sustainability commitments and initiatives and includes our
emissions reduction targets and targets to reduce our waste
and packaging. Progress against targets is reported in our
2024 Sustainability Report.
• During FY24, we commenced development of a nature
roadmap to identify and support action for nature, which
considers a range of stakeholder views and current and
emerging disclosure requirements, including the Taskforce
on Nature-related Financial Disclosures.
• Further information on climate change including climate change
strategy, governance, risk management and emissions reduction
targets is provided in the Climate change section on page 40.
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Coles Group 2024 Annual Report
3. Changing consumer behaviour, competition and digital transformation
Context
Consumer behaviour and perceptions towards retailers
continue to change due to a number of factors including
macro-economic conditions and cost-of-living pressures
which have driven a focus on price and value.
Other changes in consumer behaviour include increased
focus on:
• online shopping and digital channels
• personalisation and convenience
• enhanced consciousness about consumption choices
including on matters relating to health, sustainability,
and the environment.
Changes in consumer behaviour and the challenging
macro-economic environment require us to remain
competitive, including with international retailers,
traditional grocery peers, independent retailers, and
e-commerce businesses.
To remain competitive and meet our customers increasing
digital usage we must also continue to transform our business
through an increased focus on digital, automation, and
e-commerce to deliver efficiency and a seamless customer
experience across our in-store and online channels.
If Coles fails to adequately respond to, and keep pace
with, these changes and expectations, it could expose us
to reputational damage and challenge our ability to deliver
on our vision ‘to become the most trusted retailer in Australia
and grow long-term shareholder value’, including through loss
of market share, adverse margin impacts, reduced customer
retention and reduced revenue.
Mitigations
• Customer listening sessions and monitoring of best practice
global retailers, local and international retail trends and
customer insights and research to anticipate and respond
to changes in customer behaviours.
• Active monitoring of customer sentiment and experience, and
customer feedback, to develop action plans for improvement.
• Execution of ‘Destination for food and drink’ strategic pillar
supported by priorities focused on tailoring product ranges,
quality, value, merchandising and communication, including
delivery of:
— every day low pricing, weekly specials, loyalty offers and
exclusive product ranges;
— other value offers such as our ‘Great Value, Hands Down’
campaign and the Coles Simply brand; and
— personalisation of offers and ease of points redemption
for Flybuys loyalty program members.
• Execution of ‘Accelerated by digital’ strategic pillar supported
by priorities, including:
— completed construction of two CFCs (NSW and Victoria), to
improve the foundations of our customer online shopping
experience and operating efficiency; and
— augmentation of the physical shopping experience through
the Coles App and website, including continued rollout of
Rapid Click & Collect and Rapid Delivery.
4. Strategic program prioritisation and execution
Context
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 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.
The execution of elements of our strategy is supported by third
party strategic partnerships including Witron (ADCs), and
Ocado (CFCs). We have joint ventures with Wesfarmers
(Flybuys) and Australian Venue Co. (Queensland Venue Co.
Pty Ltd). We also enter into targeted partnerships and joint
ventures, and undertake acquisitions and divestments to
execute our strategy more effectively. During FY24, we
acquired two milk processing facilities from Saputo Dairy
Australia, and 20 Tasmanian liquor stores.
Coles may undertake future acquisitions and divestments,
and enter into other third party relationships, so we can more
effectively execute our strategy.
Mitigations
• Planning and budgeting processes to establish priorities and
funding for programs and projects, supported by review and
approval of business cases through capital and operational
expenditure committees.
• Governance structures and processes to oversee, manage
and execute strategic programs of work, including boards,
joint working groups, processes and policies.
• Regular review of projects and programs to monitor progress
of delivery, costs and benefits, and the allocation of resources.
• Review of major projects that are in progress by the Board and
Executive Leadership Team (ELT) which provides additional
oversight at a portfolio level.
• Post-implementation reviews conducted by ELT and relevant
management and presented to internal management
governance forums and the Board with the purpose of
assessing project outcomes compared 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.
• Further information on how we manage risks from third parties
is provided in the Third party dependencies risk section on
page 33.
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Additional
Information
Operational risks
5. Third party dependencies
Context
We rely on third parties including suppliers, service providers,
and joint venture partners, to deliver on our purpose of
‘Helping Australians eat and live better every day’.
Given the challenging macro-economic and external
environment, Coles is at risk of disruptions to our suppliers
and third parties including as a result of financial insolvency,
inability to scale production, cyber events, lack of available
inputs, weather or other environmental related events and
people resources.
A critical failure or inaction of a key supplier or third party
service provider may expose Coles to risks including
compromised safety or quality standards, cyber security
threats and breaches, misalignment with Coles’ ethical and
sustainability objectives, disruptions to supply or operations,
unrealised benefits, legal and regulatory exposure,
additional costs, reduced customer satisfaction and
reputational damage.
Our suppliers and third parties are also subject to disruptions
arising from natural disasters and extreme weather events.
Mitigations
• Due diligence processes assess the adequacy and suitability
of key suppliers, service providers and strategic partners and
whether they meet our supplier and third party engagement
requirements.
• Monitoring and management of key suppliers and strategic
third parties throughout their engagement with Coles. Defined
service level and key performance indicators are in place for
key supply contracts. Risks are managed through contractual
protections.
• Third party management for GNFR suppliers is governed by
the GNFR Third Party Management Policy, which includes
requirements for sourcing, contract 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.
6. Supply chain resilience
Context
An inability of our supply chain to adapt rapidly to disruptions
while operating efficiently to meet customer expectations and
support critical business activities, can result in loss of market
share, price volatility, increased costs and reputational
damage.
During the year, we continued to manage impacts due to:
• extreme weather events
• supplier disruptions including cyber and industrial relations
events, and insolvency
• inflation and increasing cost of inputs
• geopolitical factors impacting the availability of raw
materials.
While forecast extreme heat and bushfires did not eventuate
during the FY24 summer, localised storms, floods and
cyclones had flow-on effects on fresh produce, the road
transport network and logistics operations. We expect that we
will continue to experience impacts to our supply chain and
operational resilience due to changing climate conditions
and extreme weather events.
Our supply chain and operations may also be impacted
in the future by industrial action and/or disruptions.
Mitigations
• Execution of ‘Delivered consistently for the future’ strategic
pillar supported by priorities focused on improving the
resilience of our supply chain through sourcing, automation,
and improved availability.
• Development and regular review of category, range and
supplier plans. Actions are taken where required to mitigate
medium- and longer-term supply security risks, including
geographical and supplier diversification and sourcing
of alternative supply arrangements.
• Transitioned to 100% WA sourcing of all Coles Own Brand
fresh beef, poultry, pork and lamb in WA stores.
• Established business continuity processes to plan for and
manage interruptions to our supply chain and delivery of
goods to stores during business disruptive events. Plans are
updated regularly to take account of changing internal and
external risks and conditions such as forecast weather events.
• Maintenance of our Critical Infrastructure Risk Management
Program, with the objective of managing material risks to the
distribution and supply of essential food or groceries to the
Australian community and to meet our obligations under the
Security of Critical Infrastructure Act 2018 (Cth) (SOCI Act).
• Additional information about how we manage risks related
to climate change can be found in the Climate change section
on page 40.
• Additional information about how we respond to industrial
relations risk can be found in the People risk section on
page 34.
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Coles Group 2024 Annual Report
7. IT, resilience, data management, and cyber security
Context
Coles continues to operate in an increasingly complex
technological environment which increases the potential
for impacts to systems availability and performance,
confidentiality breaches, cyber security risks, and reputational
damage. Contributing factors include:
• our growing external digital footprint and number of
third party providers
• high reliance on technology
• external threat landscape including geopolitical unrest and
high profile/high impact cyber security events in the market
such as ransomware, data theft and third party compromise
• increasing usage of data analytics and AI.
A failure, attack, inadvertent disclosure of information or
disruption to our IT applications and infrastructure, could
impede the processing of customer transactions, or limit our
ability to receive or distribute stock or funds or otherwise
impact the operations of our business.
Data and cyber security events can also result in unauthorised
disclosure of confidential, financial, or personal information
which may lead to a loss in customer trust, market share impact,
regulatory and legal action and penalties and reputational
damage.
Increased usage of data and AI could result in, for example,
the introduction of unintended bias or ethical issues, which
can adversely impact the effectiveness of outcomes for our
customers and team members, and potentially lead to legal
and regulatory exposure and reputational damage.
Additional information on the SOCI Act and Coles’ approach
to managing related risks can be found in the Legal and
regulatory risk section on page 36.
Mitigations
• Five-year rolling technology strategy which prioritises and
phases ongoing investment to enhance system stability and
resilience.
• Cyber security framework and controls which are updated
regularly and independently assessed to understand the
maturity of our cyber security controls and to identify priority
areas for enhancement and investment. Controls 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.
• Privacy and information security policies, standards and
procedures, supported by security awareness campaigns
and mandatory training for team members.
• Data Governance Council in place to deliver a group wide
consistent approach to data governance and controls,
including usage of AI.
• Coles’ ethical AI framework is aligned to Australia’s Artificial
Intelligence Ethics Framework and sets out the ethical
principles for using AI at Coles.
• Supplier due diligence processes which consider suppliers’
cyber, information security, privacy, and IT resilience
capability.
• Regular testing and reviews of IT infrastructure, systems,
processes, and resilience conducted to assess security threats,
adequacy of controls and recovery readiness.
• 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.
8. People
Context
We employ over 115,000 team members across the Coles
Group. Our team members are all unique and reflect the
diverse communities in which we operate.
Our ability to attract, retain and develop skilled team members
is imperative to the delivery of our purpose of ‘Helping
Australians eat and live better every day’.
Having the right capability and talent is also critical to
supporting the execution of our strategic programs, digital
transformation, and broader business operations and
performance.
As we execute our strategy, workforce changes (company,
industry or legislature driven) may also lead to industrial action
and/or disruptions to our operations, which can result in
increased costs, litigation, and reputational damage.
Changes in industrial relations and collective bargaining
legislation, along with planned changes in our supply chain
operations, can affect our exposure to this risk.
Mitigations
• Our ‘Win Together’ foundational building block is supported
by programs to enable performance and engage our team.
• Focus on strengthening team member engagement, which
is measured through our mysay team member engagement
survey and supported by many engagement initiatives,
including our mythanks recognition platform.
• Leadership and development programs support development
of leaders and career growth of key talent. Investment in
graduate and industry learning programs.
• Team member performance review process aligns objective
setting to strategy, provides opportunity to seek and give
feedback for learning and development, and celebrates
progress and achievements.
• 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 the People and Culture Committee.
• Proactive management of renegotiation of enterprise
agreements, maintenance, and development of strong
working relationships with unions, industry organisations; and
constructive liaison with team members, third party suppliers,
transport and logistics providers. During FY24, we successfully
negotiated our Coles Retail Enterprise Agreement, which
provided increased certainty for eligible wage-paid team
members in Supermarkets and Liquor.
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Additional
Information
9. Health, safety and wellbeing
Context
The safety of our team, customers, third parties and
contractors is paramount to Coles.
We employ and engage an extensive and diverse
workforce, including third parties, with high volumes of
people interactions involving a wide range of activities
and locations daily. This could result in risk of injury,
illness or fatality to team members, customers, suppliers,
contractors or visitors, due to accidents, incidents or unsafe
work environments.
The geographical spread of our physical operations as well
as hybrid work arrangements, also requires us to manage
physical and psychological risks faced by remote workers
or those working from home.
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.
Mitigations
• Health, Safety and Injury Management system (SafetyCARE)
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.
• Annual safety and wellbeing plan which focuses on key safety
obligations and risks.
• Management governance forums to regularly review 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 supporting team members’ mental health and
wellbeing, including through employee assistance and mental
health support programs, identification and mitigation of
psychosocial risk factors including sexual harassment, and
enabling flexible working arrangements. Our employee
assistance program is available to team members and their
immediate family members. It includes tools and resources
related to personal and work-related issues and situations,
financial wellbeing, and nutrition and lifestyle.
• During FY24, we implemented a separate Sexual Harassment
Policy and enhanced our supporting training, policies and
reporting, to help prevent workplace sexual harassment,
discrimination and victimisation, and to meet our positive
duty under the Anti-Discrimination and Human Rights
Legislation Amendment (Respect at Work) Act 2022 (Cth).
• Prevention and reduction of threatening situation risks through
theft reduction and loss prevention initiatives, partnerships
with law enforcement, targeted online and in-person training,
use of CCTV cameras and personal duress alarms, body worn
cameras and two-way communication devices for team
members in stores.
10. Product and food safety
Context
Product and food safety and quality are critical for Coles.
The risk of selling or serving a product that is unsafe may
cause serious illness, injury or death and/or result in
reputational damage or litigation.
Serious illness, injury or death are the most severe potential
risks from compromised product or food safety.
These risks may result in loss of sales and market share,
regulatory exposure, loss of customer trust and potential
litigation including class action.
Mitigations
• Product and food safety programs (including safety plans
and assurance programs for exclusive brands/products) are
in place and regularly reviewed.
• Management 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 products from our stores and supply chain.
• Quality, complaints and incident processes help identify
and drive response to product and food safety risks.
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Coles Group 2024 Annual Report
11. Legal and regulatory
Context
The diversity of our operations necessitates compliance
with extensive and often evolving legislative requirements
at all levels of government, including: 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, and
SOCI Act obligations including cyber security obligations.
Non-compliance with key laws and regulations could
expose Coles to substantial financial penalties, reputational
damage, a deterioration in relationships with regulators,
suppliers and other key stakeholders, class action or
other litigation.
Non-compliance may threaten Coles’ license to operate and
result in additional regulatory changes that may adversely
impact the execution of our strategy and result in increased
costs to operate.
Where Coles is a party to litigation and/or regulatory
enforcement, the outcomes are inherently uncertain and
can involve reputational damage, financial costs, and high
investment of Coles’ resources and time.
These risks may become heightened due to the introduction of
new and changing regulations and reporting requirements
with which Coles must comply. There is also uncertainty
regarding the interpretation or application of laws and
relevant regulatory instruments such as modern awards.
During FY24, there has been heightened external focus on the
retail sector, pricing of groceries and cost-of-living pressures
and general conduct of retailers, which has led to external
reviews, investigations and inquiries. We continue to actively
participate and cooperate with these reviews, investigations
and inquiries, including through ELT and CEO participation.
Mitigations
• Coles’ Code of Conduct sets out expectations of behaviour
for directors, team members, consultants, contractors and
business partners, including legal compliance and
appropriate ethical standards. The Code of Conduct is
underpinned by our Coles Group Values, and Group policies
in key areas.
• 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 for use. The Compliance Policy
and Framework is periodically reviewed and updated.
Internal Audit periodically assesses compliance obligations
as part of the annual internal audit program.
• Group-wide mandatory training on Coles’ Group Values
and workplace behaviour for directors and team members.
Mandatory training for relevant roles covering regulatory
areas including fair trading, consumer protection, safety,
privacy, food and grocery code of conduct, continuous
disclosure and information security.
• Program in place to comply with 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
law firms. Potential litigation claims are assessed to
understand loss potential.
• Relationships maintained with regulators and industry bodies
to monitor new and impending legislative and policy changes
in order to respond accordingly.
• Independent and confidential reporting lines for team
members and suppliers to raise issues and concerns.
• The Audit and Risk Committee oversees the Group’s systems for
compliance with legal and regulatory requirements. Further
information about the role of the Audit and Risk Committee
is available in our 2024 Corporate Governance Statement.
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Information
12. Ethical sourcing
Context
Coles faces the risk of modern slavery, breaches of workers’
human rights or breaches of laws designed to protect workers
in our own operations as well as our extended supply chain.
Failure to source product or conduct our business in a
manner that complies with Coles’ Ethical Sourcing Policy
and relevant legal requirements across Australia and
the countries we source from, can impact worker safety,
wellbeing and/or living conditions.
It can also result in material reputational damage,
loss of consumer and investor confidence and market
share, regulator fines and penalties, and adverse
financial performance.
Mitigations
• Coles’ Ethical Sourcing Policy, which is based on international
standards, is a condition of trade and sets out the minimum
standards for our suppliers.
• Coles’ Ethical Sourcing Program, which takes a risk-based
approach to define the level of due diligence, audit frequency
and monitoring that applies to suppliers. The program covers
specific suppliers across Coles Own Brand, Fresh Produce,
GNFR, and Coles Liquor Own Brand.
• During FY24, we continued to focus on refining and
embedding Coles’ Ethical Sourcing Program across the
business and developed relationships with suppliers and
workers. This includes ongoing activities relating to our human
rights strategy, grievance mechanisms, a focus on identifying
and managing excessive working hours, and embedding the
program in key non-trade procurement categories.
• Ethical sourcing risk indicators measure timely management
action in response to supply chain ethical audit non-
conformances.
• Ethical sourcing procedures to monitor failure to address or
provide an action plan to remediate serious ethical audit
non-conformances (such as serious safety issues or worker
underpayment) that may result in suspension of purchase
orders until resolved.
• Coles’ whistleblower hotline and dedicated supply chain
wages and conditions hotline enable reporting of unethical,
illegal, fraudulent or undesirable conduct.
• Additional information on Coles’ Ethical Sourcing Program
can be found in our annual modern slavery statement.
Financial risks
13. Financial, treasury and insurance
Context
The availability of funding and management of capital and
liquidity are important requirements to fund our business
operations and growth.
Changes in the macro-economic environment can expose
us to adverse movements in interest rates, foreign exchange
rates and commodity prices, that can present barriers to
funding our business operations and impact business
profitability.
Mitigations
• Group Treasury manages our cash funding position and
supports interest rate and foreign currency risk management.
Treasury and related policies govern management of our
financial risks, including liquidity, interest rates, foreign
currency, commodity risks and use of derivatives. Further
information is included in Note 4.2 Financial risk management
of the Financial Report.
• 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 Balance Sheet.
37
Coles Group 2024 Annual Report
Sustainability
Our approach to sustainability
continues to evolve as we seek to
respond to the environmental and
social challenges and opportunities
in our operating environment.
We continue to integrate sustainability
into our organisational strategy and are
focused on creating a sustainable future
together with our team, community
and suppliers. Delivering sustainable
outcomes requires a focus on
collaboration, and we believe shared
solutions are key to solving complex
global challenges like climate change.
In FY24, we refreshed our sustainability
strategy, directing our actions towards
high-impact sustainability initiatives
designed to drive significant and
system-based outcomes.
Following extensive internal
engagement, including with our ELT and
Board, in FY24 we consolidated our list of
environmental sustainability initiatives,
refocusing our efforts on the four areas
below, moving on from our former
strategic pillar of ‘Together to Zero’.
Energy &
emissions
Moving towards
decarbonisation1
across our value chain
and building climate
resilience.
Waste
Reducing waste from our
operations and products
and identifying
opportunities to transition
to a circular economy.
Packaging Reducing unnecessary
packaging and
redesigning, recycling,
and reusing.
Sourcing &
farming
Delivering positive
outcomes for nature
and protecting
animal welfare.
Importantly, our refreshed sustainability
strategy reflects the issues our customers
consistently tell us matter to them from a
sustainability perspective – packaging
(both reducing excessive packaging
and making recycling easier), energy
efficiency and renewable electricity
across our operations, reducing food
waste and promoting animal welfare.
Coles Group delivers a broad program
of sustainability initiatives across the
four environmental focus areas and our
sustainability strategy incorporates our
ongoing commitments to:
Protecting and promoting
human rights
Creating a diverse and
inclusive workplace
Fostering a safe working
environment
Supporting communities
across Australia
We have a suite of sustainability targets2
and commitments which help drive the
delivery of our sustainability strategy.
We have an ambitious work program
ahead of us in FY25 as we further
integrate sustainability into our own
business and continue to work with our
suppliers and other partners to improve
environmental and social outcomes.
For detailed information on our
progress please refer to our 2024
Sustainability Report, available at
colesgroup.com.au
1. Decarbonisation is the term used for implementing
measures to mitigate value chain carbon dioxide
emissions (Scope 1, Scope 2 and Scope 3). At Coles,
we use the term to describe activities or pathways that
have the effect of moving towards a state that is lower
in carbon emissions as compared to the current state.
2. Coles uses the term target to describe an intended
outcome, where Coles considers that it has
developed a suitably defined plan or pathway
to achieve that outcome.
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Sustainability
performance highlights
1.5 %
reduction in combined Scope
1 and 2 emissions from FY23
(34.5% reduction from FY20)1
86.7%
of total solid waste3
diverted from landfill
3.6 %
of team members5
identify as Aboriginal
or Torres Strait Islander
45 %
renewable electricity2
sourced for our operations
39.8m
equivalent meals
donated to SecondBite
and Foodbank (20m kgs)6
87.4%
of packaging across Coles
Own Brand and Coles Liquor
Own Brand is recyclable4
#1
in the Access and Inclusion
Index 2023 by the Australian
Disability Network
$3.7m
awarded through the
Coles Nurture Fund
1. Coles does not plan to rely on the use of carbon offsets for the achievement of our current FY30
Scope 1 and 2 emissions reduction target. FY24 Scope 1 emissions and Scope 2 emissions include two
months of estimated data (based on actual data from past years) and 10 months of actual data.
2. Renewable electricity % includes voluntary Large-scale generation certificate (LGC) surrenders,
Renewable power percentage (RPP), Jurisdictional renewable power percentage (JRPP) and onsite
solar within Coles’ operational control. FY24 electricity consumption includes two months of estimated
data (based on actual data from past years) and 10 months of actual data.
3. Excludes liquid waste except high-strength sludges (which contain a high proportion of solids)
and liquids diverted for use as food (such as donations to SecondBite and farmers).
4. Based on packaging data overlayed with unit sales over a 52-week period until June 2024.
5. Based on results of our May 2024 mysay team member engagement survey, which was responded
to by 71% of team members.
6. In addition to unsold edible food, the figure also includes bulk food and grocery donations
to SecondBite and Foodbank.
Pictured: Coles team member Daniel inspects the solar panels at First Choice Liquor Market in Werribee.
39
Coles Group 2024 Annual Report
Climate change
Climate change is a significant
environmental, social and economic
challenge facing the global
community. It is also a material risk
for our business, with the potential
to disrupt our operations, and those
of our suppliers and producers, as
well as impact our customers and
team members.
While climate change creates additional
risks for our business, it also presents
opportunities – for example, cost savings
resulting from greater resource efficiency,
building business resilience,
development of new product ranges to
meet changing consumer preferences,
and increased stakeholder collaboration
to drive positive impact at scale.
As one of Australia’s largest companies,
we want to help create a more
sustainable future. We are acting now,
working towards reducing our own
operational emissions1 and engaging
with stakeholders across our value chain
to support them to lower their emissions
and build their resilience against
climate change impacts.
In the coming year, as we commence
development of a Climate Transition
Plan for Coles, we know our approach
will need to be multi-faceted – beyond
emissions reductions, we also need to
consider nature-related risks and
opportunities and accelerate the shift
from a linear to a circular business
model. We do not underestimate the
level of complexity and resources
required to make this work happen.
It is also not something we can do on
our own – collaboration with a range
of internal and external stakeholders,
including industry, suppliers,
government, team members, customers,
investors, NGOs and the community
more broadly, will be critical.
We continue to identify, assess and
manage climate-related risks and
opportunities using the
recommendations of the Task Force on
Climate-related Financial Disclosures
(TCFD). We also recognise the need to
evolve our disclosures over time to meet
both stakeholder expectations and the
forthcoming mandatory climate-related
financial disclosure regime in Australia.
Key actions to align with the TCFD recommendations
1. Coles does not plan to rely on the use of carbon offsets for the achievement of our current FY30 Scope 1 and 2 emissions reduction target.
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.
FY20
FY21
FY22
Published Board-approved Climate
Change Position Statement.
Three-year TCFD Roadmap endorsed
by the Board (based on 2017 TCFD
recommendations).
Formalised governance arrangements
relating to climate change.
Released refreshed sustainability
strategy – including Scope 1 and
2 emissions reduction targets.
Updated assessment of Coles’
climate‑related risks and opportunities.
Undertook high-level scenario analysis
on the impacts of 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.
Further developed scenario analysis
work. This provided information on
future climate scenarios, as well as
climate‑related commodity risks and
opportunities.
Assessed 55 core commodities (covering
~60% of Coles’ revenue) against both
physical and transitional climate
vulnerabilities. Subsequently undertook
a ‘deep dive’ into 10 commodities
assessed as being highly vulnerable
to climate-related risks to inform
mitigating actions.
FY23
FY24
FY25 & BEYOND
Completed a risk analysis of the physical
impacts of climate change on Coles’
asset portfolio. The scope of the
assessment encompassed the store
network, distribution centres and
supply routes.
Set a Scope 3 supplier engagement
target validated by the Science Based
Targets initiative (SBTi)2.
Commenced the development of
our Climate Action Roadmap to
meet current and emerging climate
disclosure requirements.
Completed the development of our
Climate Action Roadmap.
Embedded a Climate Strategy team
into our Group Sustainability function.
Commenced the development of a
Group-wide decarbonisation strategy.
Refreshed climate-related scenario
analysis.
Established a Steering Committee to
oversee the Climate Action Roadmap
implementation and preparation for
compliance with the draft Australian
Sustainability Reporting Standards
under the forthcoming mandatory
climate-related financial disclosures
regime in Australia.
Continue to focus on key deliverables in
our Climate Action Roadmap – including
a Climate Data Management Plan and
Group-wide decarbonisation strategy.
Develop a Climate Transition Plan for
Coles, which will include a new suite of
climate and other sustainability-related
targets for FY30.
Continue to prepare for compliance
with the draft Australian Sustainability
Reporting Standards under the
forthcoming mandatory climate-related
financial disclosures regime in Australia.
40
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Additional
Information
Climate governance
Board oversight of
climate‑related risks
and opportunities
The Board oversees and approves the
strategic direction of the Group and
oversees the effectiveness of Coles’
sustainability and governance policies
and practices, including exposure to
climate change and other environmental
and social risks and opportunities.
The Audit and Risk Committee supports
the Board in fulfilling its responsibilities
by evaluating the adequacy and
effectiveness of the Group’s
identification and management of
environmental and social sustainability
risks and its disclosure of any material
exposures to those risks, including
financial and non-financial risks.
Climate change risk exposure, together
with associated management plans, risk
appetites and metrics, is reported to the
Audit and Risk Committee, the Board
and the ELT regularly during the year,
along with the broader suite of material
risks to the Group.
The Chief Operations & Sustainability
Officer (COSO), a member of the
ELT reporting to the Chief Executive
Officer (CEO), provides regular updates
to the Board on current and emerging
sustainability issues. Standardised
quarterly reporting, with performance
monitoring against our sustainability
commitments (including emissions
reduction targets) is provided to
the Board.
During FY24, the Board was also
presented with updates on progress
against key deliverables in our Climate
Action Roadmap (the Roadmap),
organisational preparedness for the
introduction of the draft Australian
Sustainability Reporting Standards
(ASRS), and market developments,
domestically and internationally, in
relation to climate change and nature.
Further information about our Board
and Committees, including the skills
and experience of Directors, is available
in the Board of Directors: Biographical
details section page 54.
Management’s role in
assessing and managing
climate-related risks
and opportunities
While it is the responsibility of all
areas of our business to identify
climate-related risks and opportunities,
the Risk, Strategy and Sustainability
functions lead the development of the
Group’s strategic response.
Following a review of our sustainability
governance arrangements in FY23, this
financial year we refreshed the charter
and membership of our Sustainability
Steering Committee, which is the key
management committee overseeing
Coles’ sustainability strategy and
performance, including its response to
climate change. Chaired by our COSO,
the Sustainability Steering Committee
has senior representatives from across
the business, including Company
Secretariat, Risk, Legal, Strategy,
People and Culture, Procurement,
Finance, Commercial, Coles Own Brand,
Corporate and Indigenous Affairs and
Coles Liquor. The Sustainability Steering
Committee meets bi-monthly and one
of its primary responsibilities is to advise
the CEO and ELT on Coles’ response to
its current and emerging environmental,
social and governance obligations, risks
and opportunities – including those
related to climate change. Updates are
provided to the Sustainability Steering
Committee from working groups and
other steering committees with oversight
of key sustainability issues.
A new steering committee (called the
ASRS/Climate Action Roadmap Steering
Committee) was established this year.
It will oversee the implementation of
our Roadmap activities and preparation
for the introduction of the draft ASRS
with which Coles will need to comply
from our FY26 reporting year (subject
to the forthcoming mandatory climate-
related financial disclosures regime
in Australia coming into effect). This
is a cross-functional committee with
responsibilities allocated across the
Group functions of Company Secretariat,
Risk, Finance, Strategy and
Sustainability. One of the first activities
undertaken by the ASRS/Climate Action
Roadmap Steering Committee was an
analysis of our existing climate-related
disclosures in order to identify gaps and
areas for improvement as we move from
voluntary to mandatory disclosure of
climate-related financial information.
COLES BOARD
ASRS/Climate
Action
Roadmap
Committee
Nomination
Committee
Audit
and Risk
Committee
People
and Culture
Committee
Executive Leadership Team
Sustainability Steering Committee
41
Coles Group 2024 Annual Report
Climate strategy
Impacts of climate
change on Coles
Our organisational approach to climate
change continues to develop and mature
as we build our understanding of how
climate change may impact our business
over the short (0–3 years), medium (3–10
years) and long-term (10+ years).
In FY23, we completed a physical
risk assessment of Coles’ assets and
operations – including stores, distribution
centres and key transport routes. This
assessment indicated a low financial
impact from natural hazards and climate
change in the physical store network
due to the diversified nature of Coles’
portfolio across assets and regions. In
addition, with respect to store design,
the specifications we use already take
into consideration future conditions to
strengthen resilience in extreme weather
(e.g. new stores are designed for a one
in 100-year storm event). The design
brief is frequently updated. Following
the completion of this assessment,
every Coles operated facility has been
allocated a high, medium or low rating
with respect to physical risk (e.g. flood
and bushfire risk).
The distribution network (distribution
centres and transport routes) was the
area of highest risk due to the potential
for physical climate risk to impact
performance in the supply and
distribution chains. Resilience of
the distribution network is therefore a
critical consideration in all operations
and future asset planning.
In FY24, we have focused on two key
strategic activities – completing the
development of our Roadmap and
refreshing our climate-related scenarios
to help assess and understand the risks
and opportunities relevant to the retail
sector and our business. More
information on these two key strategic
activities is detailed in the following
sections.
Climate Action Roadmap
The Roadmap outlines key actions
for Coles over the next three years
to strengthen the resilience of our
business and respond to stakeholder
expectations. In developing the
Roadmap, we considered both current
and emerging disclosure frameworks –
including the TCFD recommendations,
draft ASRS, Transition Plan Taskforce
Disclosure Framework (UK) and IFRS S2
Climate-related Disclosures issued by
the International Sustainability
Standards Board.
In summary, the Roadmap provides a
strategic pathway for Coles to manage
the risks and opportunities associated
with climate change impacts and
mandatory climate reporting
obligations, supporting the commercial
resilience of the Group. Ultimately,
implementing the Roadmap will
culminate in a Climate Transition
Plan for the Group.
There are a number of actions set out
in the Roadmap, distilled into four key
streams of work, which we commenced
in FY24 and will continue to implement
in FY25:
1. Climate data management: to
enhance our climate-related data
collection and reporting, initially
focusing on Scope 3 emissions.
2. Decarbonisation strategy: to
prioritise and coordinate emissions
reductions across our value chain.
3. Corporate and financial planning:
to provide a consistent approach to
integrating climate risk management
and emissions reduction targets in
procurement and financial and
corporate planning.
4. Climate Transition Plan: to align
all business operations with our
climate risk management and
decarbonisation strategy.
Testing the resilience
of our strategy through
climate‑related scenarios
To enhance our management of
climate-related risks and opportunities,
this year we further developed our
scenario analysis work, building on
analysis undertaken in prior years.
In FY22, we used scenario analysis to
assess 55 core commodities covering
around 60% of Coles’ revenue against
both physical and transitional climate
vulnerabilities. We subsequently
undertook a ‘deep dive’ into 10
commodities with red meat and dairy,
as well as international commodities
(such as cocoa and coffee), assessed as
being highly vulnerable to both physical
and transition climate risks. This analysis
informed the identification of actions to
help mitigate risks in these categories
of commodities, including forming
long-term relationships with smaller
suppliers and continuing to monitor
supply availability and geographic
concentration, global commodity
markets and emerging consumer trends.
Building on scenarios developed in
FY21 and FY22, this financial year we
refreshed and updated assumptions
for our four climate change scenarios
in line with the following internationally
recognised resources: the
Intergovernmental Panel on Climate
Change (IPCC) Sixth Assessment
Report on Climate Change 2021; the
TCFD recommendations; and the
Commonwealth Scientific Industrial
Research Organisation (CSIRO) (see
table on the opposite page). We
considered both the macro and retail
sector context when refreshing and
updating the assumptions for our four
climate change scenarios.
Two scenarios were selected as primary
scenarios for detailed analysis: 1.5°C
temperature increase to 2100 (SSP1:
Sustainability) and 4.4°C temperature
increase to 2100 (SSP4: Fossil-fuelled
development)1. Consideration was given
as to how risks and opportunities can
change under the different scenarios,
over the three time horizons, including
potential impacts – see the discussion in
the Climate risk management section
immediately following on page 43. This
analysis included an initial assessment
of the impact of climate-related risks
and opportunities on Coles’ strategic
pillars under each scenario.
While our focus in FY24 was primarily
on undertaking qualitative analysis
of risks, we also considered how we
will approach risk quantification as
we plan to develop our approach in
the coming year. This year, we held a
cross-functional workshop, the objective
of which was to agree and align on
definitions for key risks, material
consequences, data requirements,
key assumptions, and optimum
modelling approaches, in order to
commence and complete our next
step actions for risk quantification.
Undertaking further qualitative and
quantitative scenario analysis (in
preparation for the draft ASRS) will
be a key area of focus over FY25.
1. Shared socioeconomic pathways (SSPs) are climate change scenarios of projected socio-economic global changes up to 2100 and are aligned with the latest IPCC report.
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1. Representative Concentration Pathways (RCPs) refer to greenhouse gas concentration trajectories from the IPCC.
1. Intergovernmental Panel on Climate Change (IPCC) AR6 Synthesis Report, March 2023 (AR6 Synthesis Report: Climate Change 2023 — IPCC).
While scenario analysis is an important planning tool for Coles, there are inherent limitations with scenario analysis and
scenarios do not constitute definitive outcomes or probabilities. It is difficult to predict which, if any, of the scenarios might
eventuate and scenario analysis relies on assumptions that may or may not prove to be correct.
Climate risk management
We apply an integrated Group-wide
approach to the management of risk
through the application of the Coles
Risk Management Standard. Further
information about our Risk Management
Policy and Risk Management Standard
is available in our 2024 Corporate
Governance Statement.
Climate change is identified and
disclosed as a material risk to
the Group under the Coles Risk
Management Standard, based on the
range of potential cumulative impacts
that climate-related risks can have on
our business, including legal and
regulatory, operational, reputational
and financial impacts. We recognise
that changing weather patterns and
climate extremes are happening at an
increased pace1, emphasising the need
to develop, refine and implement
adaptation and mitigation actions to
address the changing nature of climate
risk now and in the future. We also
acknowledge that potential changes
in climate can amplify existing risks
that Coles faces, such as: health, safety
and wellbeing; product and food safety;
legal and regulatory compliance; and
supply chain resilience. Refer to the
Risk section on page 30 for further
information on Coles’ material risks.
At Coles, climate change risk is
supported by an underlying climate
change risk and opportunity profile.
This profile identifies and assesses the
following types of climate-related risks
and opportunities:
• Transition – risks and opportunities
associated with the transition to a
lower carbon economy including
management of heightened
stakeholder expectations, policy,
regulatory and legal changes,
and technological developments.
• Physical – risks and opportunities
associated with acute event-driven
weather impacts, for example
increasing severity of extreme weather
events, and chronic long-term shifts in
climate patterns.
Our climate risk exposures are analysed
using the consequence criteria outlined
in the Coles Risk Management Standard
to understand potential impacts to
Coles. This criteria considers both
financial consequences (e.g. earnings
before interest and taxes impact, capital
loss, additional unplanned cost or loss)
and non-financial consequences
(e.g. reputation, operational, legal
and regulatory, safety and injury,
environmental) to assign appropriate
consequence ratings.
In FY24, we incorporated two of the
refreshed climate change scenarios
(outlined in the Climate strategy section
on page 42) into our climate change risk
and opportunity profile, to qualitatively
assess how our exposure to climate-
related risks and opportunities may
change under different scenarios
and time horizons.
Climate scenarios
SCENARIO
KEY ASSUMPTIONS
SSP1: Sustainability
RCP1 1.9
1.5 °C to 2100
• strong environmental regulation and climate policy positions
• rapid technological development
• consumers demonstrate ‘ESG conscious’ behaviour
• extreme weather events increase at a slower rate compared to the other
selected scenarios
SSP2: Middle of the road
RCP 4.5
2.7 °C to 2100
• weak environmental regulation and climate policy positions
• medium technological development – reliance on fossil fuels
• cost remains the key driver of purchasing decisions for consumers
• extreme weather events are at a higher rate than SSP1 but lower than SSP3
SSP3: Regional rivalry
RCP 7.0
3.6 °C to 2100
• weak environmental regulation and climate policy positions
• slow technological development
• consumption affected by supply shortages and price volatility
• extreme weather events are at a higher rate than SSP2 but lower than SSP5
SSP5: Fossil-fuelled development
RCP 8.5
4.4°C to 2100
• policy and regulation focus on economic growth and development
• rapid technological development – energy intensive
• consumer demand focuses on cost and convenience
• extreme weather events have significant impacts
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Coles Group 2024 Annual Report
Climate-related risk and opportunity assessment
The following table summarises Coles’ climate-related transition and physical risks and opportunities, their potential financial
impacts based on qualitative assessment, and our management response.
Medium and long-term considerations have been identified for each risk.
1. Currently, Coles’ commitment refers only to Coles’ Scope 1 and Scope 2 emissions.
The following three time horizons were
selected over which to apply scenario
analysis to our climate-related risks and
opportunities:
TIME HORIZONS
Short-term
0–3 years (FY28) aligned
with our short-term
planning horizon
Medium-term 3–10 years (FY35)
Long-term
10+ years (2050)
aligned with our net
zero emissions target1
Further detail on our exposure to
climate-related risks and opportunities,
and management response, is presented
in the following section.
The Group’s assessment of the potential
financial impact of climate-related risk
continues to mature as we build our
understanding of how climate change
will impact our business in the short,
medium, and long-term.
Climate-related risks were considered
in assessing the potential financial
impacts of climate change on the
Group’s CGU impairment testing,
through the inclusion of committed
initiatives. This review did not indicate
any impairment due to the current
headroom in each of the Group’s CGUs
and scenario analysis. Refer to Note 4.1
of the Notes to the Consolidated
Financial Statements. Management
will continue to monitor and assess
the financial impact of this risk.
Transition risks and opportunities
1. Changing stakeholder expectations of acceptable climate performance
Description
Risks
• Increased external scrutiny of climate change
disclosures and the robustness of action plans
to achieve emissions reduction targets
(e.g. transition and decarbonisation plans).
• Increased expectations and scrutiny from lenders,
financiers and insurers regarding management
of climate risks.
Opportunities
• Enhanced ability to transition to a lower carbon
economy, innovate, and access new markets
through collaboration with stakeholders including
our team members, customers, investors, NGOs,
community groups, and partners.
Relevant
TCFD risk/
opportunity
category
Transition risk
Reputation
Opportunity
Market
Potential
financial
impacts
• Impact to share price.
• Increased costs and staff time required to meet changing expectations.
• Increased cost of self-insurance; higher insurance premiums; increased cost of finance.
• Increased sales and revenue from entry into new markets.
• Reduced operational costs/improved efficiencies from partnerships with stakeholders and third parties.
• Ability to access insurance and sustainable finance markets (e.g. green bonds, sustainability linked loans).
Management
response
• Sustainability strategy incorporating our emissions reduction targets. Refer to the Climate metrics and targets
section on page 50 for further information.
• Teams and processes in place to understand, monitor and respond to the concerns and expectations
of our team members, customers, investors, NGOs, community groups, and partners.
• Governance arrangements in place to manage and monitor the development and progress of
climate‑related goals and initiatives.
• Roadmap developed to guide Coles’ climate change response, including development of our
decarbonisation strategy and Climate Transition Plan. Refer to the Climate strategy section on page 42
for further information.
Medium and
long-term
considerations
• Increased scrutiny from community partners (e.g. fundraising and sponsorship partners) in relation to Coles’
management of climate change.
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2. Changing policy, regulatory and legal requirements to decarbonise and manage climate risk
Description
Risks
• Increased volume and complexity of mandatory climate-related disclosure requirements.
• International or domestic regulations impose obligations on how we operate (e.g. carbon tax).
• Increased scrutiny and action from regulators on climate-related issues, such as greenwashing.
Relevant
TCFD risk/
opportunity
category
Transition risk
Policy and Legal
Potential
financial
impacts
• Increased costs to comply with changing climate-related requirements that impact Coles.
Management
response
• Monitoring new and impending legislative and policy changes.
• Participation in policy consultations and direct engagement with policy makers.
• Compliance and Legal teams train and support relevant teams on sustainability-related advertising
and claims to check they are not misleading or contrary to Australian Consumer Law.
Medium and
long-term
considerations
• Evolution of the Taskforce on Nature-related Financial Disclosures leading to mandatory nature-related
disclosure requirements.
3. Changing customer behaviour and preferences driven by environmental and climate‑related factors
Description
Risks
• Inability to respond to changing customer
behaviour and preferences in favour of products
and services that are considered more sustainable
and seek to reduce the impact to the environment
(e.g. lower carbon, less water-intensive, use of
recycled packaging).
Opportunities
• Potential entry into new markets and development
of new lower carbon or more sustainable products
and services.
Relevant
TCFD risk/
opportunity
category
Transition risk
Reputation
Opportunity
Market
Products/Services
Potential
financial
impacts
• Increased costs to source lower carbon or more sustainable products and obtain product certifications.
• Decreased revenue/loss of market share if customer preferences are not met.
• Increased sales/revenue from climate conscious customers.
• Increased opportunity from substitution or move into higher margin products.
Management
response
• Teams and processes in place to anticipate and respond to changes in customer behaviour and
preferences, including those driven by climate-related factors.
• Partnership with Planet Ark to educate customers on sustainability topics.
• Offering certified carbon neutral range of beef and pork products to customers.
• Independent responsible sourcing certification or verification on a range of Coles Own Brand products.
• Continued development of emissions reduction plans for high emissions categories including beef
and dairy.
• Ongoing trial by beef suppliers of methane-reducing feed supplement Bovaer.
Medium and
long-term
considerations
• Increased expectations in relation to the transparency of sourcing practices and reduction of environmental
impacts for products within our Coles Own Brand and Coles Liquor Own Brand ranges.
• Increased demand for plant-based food and drink offerings to meet needs of customers seeking
diverse diets.
• Changes to the way customers shop driven by environmental considerations, e.g. a preference to shop where
electric vehicle charging is available.
• Customer acceptance of variable product availability due to impacts from weather and climate, as well
as product innovations that seek to reduce environmental impact, e.g. lab-grown meat and milk.
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Coles Group 2024 Annual Report
4. Low emissions technology development and adoption
Description
Risks
• Delayed adoption of new technologies and/or
inadequate infrastructure to support our transition
and decarbonisation plans.
• Inability to source renewable energy assets, such
as solar panels and batteries, due to increased
global demand and ethical considerations.
Opportunities
• Increased resource efficiency and reduced
greenhouse gas emissions1 in areas over which
we have control and influence.
Relevant
TCFD risk/
opportunity
category
Transition risk
Technology
Opportunity
Energy Source
Resource Efficiency
Potential
financial
impacts
• Write-offs or early retirement of existing inefficient assets, e.g. refrigeration assets which may need to be
retired early due to a switch to natural refrigerants.
• Increased costs associated with investment in the research, development and implementation of new
technology and supporting practices and processes.
• Exposure to increased and/or more volatile energy costs.
• Increased costs to run and maintain existing inefficient assets.
• Financial benefits from reduced operating costs (e.g. through energy efficiency gains and cost reductions,
and increased production capacity).
Management
response
• 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.
• Alliance with Origin Energy to support our energy strategy and investment in renewable electricity.
• 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.
• Introduction of our first fully electric delivery van to our Coles Online fleet, and continued trial of electric
refrigeration vans (in which the refrigeration system runs off the vehicle’s battery) with our partner,
Custom Fleet.
• Information on how we are working to increase resource efficiency and reduce greenhouse gas emissions
is provided in the Climate metrics and targets section on page 50.
Medium and
long-term
considerations
• Higher risk of gas shortages affecting our gas intensive manufacturing facilities, which may result in the
need to source gas at a higher cost.
• Increased pressure to decarbonise our heavy vehicle fleet (e.g. through hydrogen fuel cell solutions).
5. Access to insurance and finance
Description
Risks
• Decreased access to insurance (or increased
cost of insurance) for sites and operations that
are vulnerable to climate events, such as floods.
• Decreased access to finance (or increased cost of
finance) if Coles cannot demonstrate adequate
management of climate risks.
Opportunities
• Increased access to diverse financial assets
(e.g. sustainability linked products) if Coles can
demonstrate enhanced management of climate
risk commitments.
Relevant
TCFD risk/
opportunity
category
Transition risk
Market
Opportunity
Market
Potential
financial
impacts
• Increased cost of self-insurance; higher insurance premiums.
• Unavailability of insurance for sites and operations that are vulnerable to climate events.
• Increased cost of finance.
• Lack of funds for investment.
• Ability to access alternative financing products.
1. These are the aggregate anthropogenic carbon dioxide equivalent emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), ozone (O3), perfluorinated carbons
(PFCs), hydrofluorocarbons (HFCs) and sulphur hexafluoride (SF6), categorised as Scope 1, Scope 2 and Scope 3 emissions. Nitrogen trifluoride (NF3) GHG emissions are not
currently relevant for Coles reporting purposes because they are specific to the electronics industry.
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5. Access to insurance and finance (continued)
Management
response
• Coles has established bilateral bank facilities in sustainability linked loan formats (SLLs). The SLLs draw
a direct line between our sustainability performance and our cost of capital.
• 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, which is revisited at least every two years or earlier if there is evidence that
it has become outdated.
Medium and
long-term
considerations
• Increased exclusion clauses in insurance policies for certain regions susceptible to extreme weather events.
Physical risks and opportunities
6. People health, safety and wellbeing (Coles’ team members and broader supply chain)
Description
Risks
• Risk of physical harm to Coles’ team members, and third-party suppliers and providers due to increases
in the frequency and intensity of extreme weather events and chronic weather impacts including:
— Fatigue, heat stroke, heart and kidney failure associated with more extreme hot days.
— Slips, trips and falls from increased wet weather or humidity.
— Injury resulting from weather-related damage to infrastructure (e.g. falling objects) or transport hazards.
• Increased mental health and psychosocial challenges, such as anxiety and stress from experiencing severe
weather events.
Relevant
TCFD risk/
opportunity
category
Physical risk
Acute
Chronic
Potential
financial
impacts
• Increased operating costs associated with implementing plans to reduce and mitigate health and
wellbeing impacts to our team members, and third-party suppliers and providers.
• Increased costs associated with employee leave, absenteeism or turnover.
• Increased workers compensation claims/costs.
Management
response
• SafetyCARE and the safety plans for each of our segments factor in acute and chronic climate change
impacts that may result in operational hazards.
• Emergency response plans are in place for every store and supply chain site, and factor in bushfire, flood
zones and cyclone zones.
• Learnings from incidents/events and opportunities for improvement are identified and incorporated into
our safety and emergency response plans.
Medium and
long-term
considerations
• Safety risks relating to the journey between supply chain sites and stores become increasingly difficult
to manage, particularly where the resilience of rail, road and sea infrastructure is out of Coles’ control.
• Increased frequency and severity of safety incidents/mental health and psychosocial challenges.
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Coles Group 2024 Annual Report
7. Food safety and quality
Description
Risks
• Risks to food safety and quality including:
— Environmental contamination and biological and chemical hazards in foods.
— Changing persistence and occurrence of pests, diseases and bacteria due to increased temperatures.
• Increased risk to the quality of fresh produce due to changing growing conditions.
Relevant
TCFD risk/
opportunity
category
Physical risk
Acute
Chronic
Potential
financial
impacts
• Decreased revenue due to reduced availability of supply or poor product quality.
• Increased exposure to price volatility.
• Increased costs associated with implementing plans to manage food safety and quality risks
(e.g. temperature controls).
Management
response
• Group product and food safety controls, including food and product safety plans, storage and handling
protocols and product surveillance programs.
• Management governance forums in place to manage and monitor emerging food and product safety risks.
• Disaster recovery checklists established to help suppliers recover from the impact of extreme weather events.
• Supplier product specifications which are reviewed annually and adjusted in the case of significant
weather events.
Medium and
long-term
considerations
• Persistent safety and quality issues may result in certain products becoming unsaleable.
• Increased frequency and severity of product and food safety and quality risks and issues.
8. Operational resilience
Description
Risks
• Risk of disruptions to our operations including:
— Disruption or damage to the store or supply
chain network.
— Disruption or damage to major transport routes
(including rail, road and sea), affecting access
to stores and supply chain sites.
— Power, water and communication network
outages impacting site operations and
digital connectivity.
Opportunities
• Enhanced resilience of our supply chain
and our assets and infrastructure.
Relevant
TCFD risk/
opportunity
category
Physical risk
Acute
Chronic
Opportunity
Resilience
Potential
financial
impacts
• Increased investment required to strengthen operational resilience.
• Decreased revenue due to reduced availability of supply or closure of stores/distribution centres.
• Increased product waste and mark-downs.
• Write-offs or impairment of assets.
• Increased costs to repair, maintain or replace assets (e.g. stores, store support sites, distribution centres,
and connecting transportation routes).
• Increased insurance premiums.
• Enhanced ability to operate in various conditions, increasing sales and revenue.
• Increased asset value.
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8. Operational resilience (continued)
Management
response
• Crisis management, business continuity and emergency response plan in place to manage potential
disruptions during extreme weather events and natural disasters.
• Maintenance of our Critical Infrastructure Risk Management Program, with the objective of managing
material risks to the distribution and supply of essential food or groceries, including risks relating to
extreme weather events and natural disasters.
• Store design specifications consider their resilience in extreme weather events and natural disasters.
• Insurance arrangements in place for property and business interruption (subject to policy terms, conditions
and exclusions).
• Completion of a physical climate risk assessment to inform location planning. Refer to the Climate strategy
section on page 42 for more details.
Medium and
long-term
considerations
• Natural hazards continue to increase in frequency and intensity, and result in more frequent and severe
disruptions to our operations.
• Disruption to transport routes may become increasingly difficult to manage, particularly where the
resilience of rail, road and sea infrastructure is out of Coles’ control.
9. Supply security
Description
Risks
• Risks to the supply of goods including:
— Increased offer variation, including product
availability and price, due to the impact
of extreme weather events and unseasonal
weather patterns on growing conditions
and productivity.
— Supplier unavailability, reduced capacity
or productivity due to the impact of climate
change on their operations, and costs
associated with building climate resilience.
Opportunities
• Supporting our suppliers to strengthen their
climate resilience.
• Enhanced resilience of our supply chain.
Relevant
TCFD risk/
opportunity
category
Physical risk
Acute
Chronic
Opportunity
Resilience
Potential
financial
impacts
• Decreased revenue due to reduced availability of supply.
• Increased costs to import products from overseas or diversify supplier base.
• Increased sourcing costs.
• Increased exposure to price volatility.
• Enhanced availability of supply leading to increased sales and revenue.
• Increased opportunity from substitution or move into higher margin products.
Management
response
• Reviews undertaken of supplier concentration in key categories, and geographical risk across a number
of Coles’ fresh produce categories.
• Geographically distributed growing regions for categories such as meat and fresh produce.
• Supporting farmers to reduce their emissions and improve resilience through the Coles Nurture Fund,
Dairy Farm Sustainability Accelerator Fund and Carbon Neutral Program.
• Development of Scope 3 supplier engagement program to support suppliers to reduce their emissions.
Medium and
long-term
considerations
• Supplier consolidation (e.g. due to costs associated with building climate resilience).
• Higher risk of availability gaps including products sourced internationally.
• Land previously suitable for agricultural horticulture may be no longer suitable due to
increasing temperatures.
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Coles Group 2024 Annual Report
Climate metrics and targets
We outline the metrics and targets
we use to assess our sustainability
performance, including climate,
in our 2024 Sustainability Report
available at colesgroup.com.au.
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.
Below is a summary of our climate-
related targets – further detail on target
performance, in addition to Scope 1,
Scope 2 and Scope 3 emissions data,
is available in our 2024 Sustainability
Report and 2024 Sustainability Data
Pack at colesgroup.com.au.
1. Renewable electricity % includes voluntary large-scale generation certificate (LGC) surrenders, Renewable power percentage (RPP), Jurisdictional renewable power percentage
(JRPP) and onsite solar within Coles’ operational control. FY24 electricity consumption includes two months of estimated data (based on actual data from past years) and 10
months of actual data.
2. An LGC is a tradeable certificate created by eligible large-scale renewable energy power stations. Each certificate represents one megawatt hour of renewable electricity
generated or displaced by a power station.
3. Coles does not plan to rely on the use of carbon offsets for the achievement of our current FY30 Scope 1 and 2 emissions reduction target.
4. FY24 Scope 1 and Scope 2 emissions include two months of estimated data (based on actual data from past years) and 10 months of actual data.
5. Targets are considered science-based if they are in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement.
TARGET
FY24 PERFORMANCE
FY25 PLANNED ACTIONS
Source 100% renewable electricity
by the end of FY25
45% renewable electricity1
sourced for our operations.
Coles remains on track to meet our
target to source 100% renewable
electricity by FY25 through onsite solar
and large-scale generation certificate
(LGC)2 arrangements which match our
consumption.
Coles will continue to install solar
systems at our sites nationally, including
as part of our partnership with Origin
Reduce combined Scope 1 and 2
emissions by more than 75%
(FY20 baseline) by the end of FY303
1.5% emissions reduction from
FY23 (34.5% emissions reduction
from FY20)4.
Coles will continue to source renewable
electricity for our operations. We will
also continue to roll out refrigeration
and energy efficiency initiatives.
Deliver net zero Scope 1 and 2
greenhouse gas emissions by 2050
We have a FY30 Scope 1 and 2
emissions reduction target
validated by the Science Based
Targets initiative (SBTi) (see
progress in the row above).
Coles will continue to deliver the actions
set out in the Roadmap (discussed in the
Climate strategy section starting on
page 42), which will culminate in a
Climate Transition Plan for the Group.
Scope 3 supplier engagement target:
75% of suppliers, by spend, covering
purchased goods and services,
and upstream transportation and
distribution, will have science-based5
emissions reduction targets by the
end of FY27
35.5% of suppliers have set Scope 1
and 2 science-based emissions
reduction targets.
Coles will continue to develop and
deliver our supplier engagement
program, working together with
suppliers to build and scale industry-
wide action to set targets and reduce
emissions.
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Pictured: Avocado growers Rod and Karen from Prada Farms, were awarded a Coles Nurture Fund grant to introduce all-electric machinery for its harvesting system that runs on
renewable energy.
Coles Group 2024 Annual Report
51
Corporate governance overview
The Board and management are
committed to high standards of
corporate governance and consider
a robust corporate governance
framework to be central to the
success of our business.
The role of the Board
The Board provides leadership and
approves the strategic direction and
objectives of the Group in the long-term
interests of, and to maximise value to,
shareholders.
The Board has a charter that outlines its
responsibilities, including powers that
are expressly reserved to the Board, and
powers that are specifically delegated
to the CEO and management. The
CEO is responsible for the day-to-day
management of the Group and its
businesses.
The Board has established three
standing committees and has delegated
to each committee a number of duties
to assist the Board in exercising its
responsibilities and discharging
its duties. Together, they play an
important role in assisting the Board’s
oversight and governance of the
Group’s operations.
Board focus areas
and activities in FY24
The Board and Committee programs
include the following recurring items:
strategy, safety, operations and
performance, people and culture,
financial management and external
reporting, risk and sustainability.
Directors receive in-depth briefings
from management and subject matter
experts on material issues, as well as
deep dives on areas of particular focus.
Directors also attend store and site
visits throughout the year.
In FY24, the Directors participated in
workshops and meetings with retail
industry participants covering a number
of broad areas of focus including
consumer trends, automation and
developments in digital and technology.
Further, as part of the launch of Coles’
Stretch Reconciliation Action Plan
2024–27, Directors and management
participated in a First Nations cultural
immersion on Wonnarua Country,
engaging with Elders to better
understand First Nations knowledge
systems and how these can be further
embedded into our business and
ways of working.
Board composition, skills
and experience
The size of the Board, the skills and
experience of the directors and
diversity of thought are some of the
factors considered by the Board, with
the assistance of the Nominations
Committee, in overseeing its
composition. In FY24, the review of the
Board’s mix of skills and experience
was undertaken with the assistance of
an external consultant. The current mix
of skills and experience represented on
the Board is set out in the Board Skills
Matrix opposite.
Coles’ 2024 Corporate Governance
Statement contains a comprehensive
overview of our corporate governance
framework and is available at
colesgroup.com.au/
corporategovernance
Independent
advice and
assurance
Managing Director and Chief Executive Officer
COLES GROUP SHAREHOLDERS
Executive Leadership Team
Coles Team Members
COLES GROUP BOARD
Nomination
Committee
Audit and
Risk Committee
People and
Culture Committee
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BOARD SKILLS
AND EXPERIENCE
DESCRIPTION OF SKILLS
AND EXPERIENCE
NUMBER OF DIRECTORS
Corporate
Governance
Expertise in corporate governance, including in
implementing high standards of governance in a large
organisation, in particular a publicly listed entity, and
assessing the effectiveness of senior management.
Leadership and
Commercial
Acumen
Expertise and demonstrated success in senior executive
roles in large, complex organisations and/or publicly
listed companies. Expertise in successfully leading
organisational transformation and delivering sustained
business success.
Financial Acumen
Expertise in financial accounting and reporting, internal
financial and risk controls, corporate finance and/or
restructuring and corporate transactions.
Strategic Thinking
Expertise in critically identifying and assessing strategic
opportunities and threats; setting and executing strategic
objectives and monitoring implementation of strategy,
including bringing global perspectives and insights.
People, Culture
and Remuneration
Expertise in assessing and overseeing a company’s
culture, remuneration and people management
framework, including talent and succession planning.
Risk Management
Expertise in identifying and monitoring key risks to an
organisation and overseeing the implementation of
appropriate risk management frameworks, procedures
and controls.
Retail and
FMCG Expertise
Expertise in the retail and/or fast-moving consumer
foods (FMCG) industry, particularly in food and
liquor, including merchandising, marketing, product
development, exporting, logistics and consumer strategy.
Supply Chains
Expertise in managing or overseeing the operation
of complex supply chains and distribution models.
Property
Development
and Asset
Management
Experience in property development and
asset management.
Digital Technology
and Innovation
Expertise in the implementation of new technologies,
and experience responding to digital disruption through
the use of digital technologies, data, analytics and
innovation, particularly in retail industry.
Sustainability
and Environment
Expertise in managing and driving environmental
management and social responsibility initiatives and
reporting (including in relation to sustainability, climate
change and human rights), as well as experience in
overseeing sustainability-related risks, opportunities
and trends (including emerging regulations and global
sustainability reporting standards).
Health and Safety
Expertise in workplace health and safety issues, including
management of workplace safety, and mental and
physical health.
Regulatory and
Public Policy
Expertise in regulatory and public policy, particularly
in relation to retail and FMCG industry.
High level of skill/extensive experience
Practised/relevant experience
Aware
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Coles Group 2024 Annual Report
Board of Directors:
Biographical details
James Graham AM
BE (Chem) (Hons), MBA, FIEAust EngExec, FTSE, FAICD, SF FIN
Chairman and Non-executive Director, Chairman of the Nomination Committee and Member of the People
and Culture Committee
Age: 76
James Graham has extensive business, investment, corporate
and governance experience, including as a Non-executive
Director of Wesfarmers Limited for 20 years, prior to his
retirement in July 2018. James is Chairman of Gresham Partners
Limited, having founded the Gresham Partners Group in 1985.
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 Managing Director of Rothschild Australia Limited.
In 2008, James was made a member of the Order of Australia.
James contributes depth of experience to the Coles Board,
with expertise in business strategy, risk management, property
development and finance and brings a deep understanding
of regulatory and public policy across diverse and highly-
regulated industries.
Leah Weckert
BEng (Hons), BSc, MBA, GAICD
Managing Director and Chief Executive Officer
Age: 45
Leah Weckert became the Managing Director and Chief
Executive Officer of Coles on 1 May 2023.
Leah joined Coles in 2011 and has held several senior roles
across the business. Most recently, Leah was Chief Executive,
Commercial & Express, leading the Supermarkets and Coles
Express business units. 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.
Prior to joining Coles, Leah worked at McKinsey & Company,
advising large private and public sector clients, and Foster’s
Group in Strategy and Business Development.
Leah has a deep understanding of the retail and FMCG
industry with experience across strategy, product
merchandising, sourcing and development, supply chain,
marketing, supplier relationships and sustainability initiatives.
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Terry Bowen
BAcc, FCPA, MAICD
Non-executive Director, Member of the Nomination Committee and the Audit and Risk Committee
Age: 57
Terry Bowen is currently a non-executive director of global
technology ecommerce business, Rokt Inc., and is also Chair
of the Operations Group at Australian private equity company
BGH Capital. He is a former non-executive director of BHP
Group Limited and Transurban Group Limited.
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 Managing
Director of Wesfarmers Industrial and Safety, Chief Financial
Officer of Jetstar Airways, Finance Director of Wesfarmers
Landmark, and before this held senior finance roles with
Tubemakers of Australia Limited.
As well as financial, retail, strategic and operational expertise
from his leadership roles in some of Australia’s leading
businesses, Terry brings significant risk management
and governance experience to the Coles Board.
Directorships of listed entities, current and recent
(last three years):
Non-executive Director of BHP Group Limited (October 2017 to
November 2023), Transurban Group Limited (February 2020
to October 2023).
Jacqueline Chow
MBA, BSc (Hons), FAICD
Non-executive Director, Member of the Nomination Committee and the Audit and Risk Committee
Age: 52
Jacqueline Chow is a Non-executive Director of nib Holdings
Limited and Charter Hall Group. Jacqueline is also a Director
of the Australia-Israel Chamber of Commerce of New South
Wales and a Senior Advisor at McKinsey Consulting RTS.
From 2016 to 2019, Jacqueline was a Director of Fisher & Paykel
Appliances. Jacqueline previously held senior management
positions, including Chief Operating Officer, Global Consumer
and Food Service, with Fonterra Co-operative Group, one of
the world’s largest dairy product producers and exporters.
Prior to that, Jacqueline was in senior management with
Campbell Arnott’s and Kellogg Company. She was also
Programme Steering Group Director, Ministry for Primary
Industries, New Zealand and Deputy Chairman of the
Global Dairy Platform Inc.
Jacqueline’s background and experience in the FMCG industry
brings operational insights in relation to managing complex
supply chains as well as customer experience, brand
reputation and sustainability.
Directorships of listed entities, current and recent
(last three years):
Non-executive Director of Boral Limited (March 2022
to July 2024), nib Holdings Limited (since April 2018),
Charter Hall Group (since February 2021).
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Coles Group 2024 Annual Report
Abi Cleland
MBA, BCom/BA
Non-executive Director, Member of the Nomination Committee and the People and Culture Committee
Age: 50
Abi Cleland is currently a Non-executive Director of Bendigo
and Adelaide Bank Limited, Computershare Limited and
Orora Limited (until 30 September 2024). She was previously a
Non-executive Director of Sydney Airport Corporation Limited,
Chairman of Planwise AU, a Director of Swimming Australia
and on the Lazard PE Fund advisory committee. From 2012 to
2017, Abi established and ran an advisory and management
business, Absolute Partners, focusing on strategy, mergers
and acquisitions and disruption. Before that, she held senior
management roles at KordaMentha’s 333, where she was
Managing Director, and at ANZ Banking Group Limited,
Incitec Pivot Limited and Amcor Limited.
Abi brings significant experience in the areas of strategy,
digital and M&A across a range of sectors, as well as insights
in relation to assessing opportunities in technology, digital
disruption and innovation.
Directorships of listed entities, current and recent
(last three years):
Non-executive Director of Bendigo and Adelaide Bank Limited
(since April 2024), Computershare Limited (since February
2018), Orora Limited (February 2014 until her retirement
effective 30 September 2024), Sydney Airport Corporation
Limited (April 2018 to March 2022).
Richard Freudenstein
LLB (Hons), BEc
Non-executive Director, Chairman of the People and Culture Committee and Member of the Nomination Committee
Age: 59
Richard Freudenstein is the Chairman and a Non-executive
Director of Appen Limited as well as a Non-executive Director
of REA Group Limited (where he was Chairman from 2007 to
2012). He is a board member of Cricket Australia and is Deputy
Chancellor of the University of Sydney.
Richard was previously Chief Executive Officer of Foxtel (2011
to 2016), Chief Executive Officer of The Australian and News
Digital Media at News Ltd (2006 to 2010), and Chief Operating
Officer at British Sky Broadcasting plc (2000 to 2006). His
previous board positions include Ten Network Holdings
Limited (2015 to 2016), Foxtel (2009 to 2011) and Astro
Malaysia Holdings Berhad (2016 to 2019).
Richard has extensive leadership experience in global
media and digital businesses, and brings a deep
understanding of managing complex businesses
operating in regulated industries.
Directorships of listed entities, current and recent
(last three years):
Chairman of Appen Limited (since October 2021) and
Non-executive Director (since August 2021), Non-executive
Director of REA Group Limited (since November 2006).
Andrew Penn AO
MBA, AMP, FCCA, HFAIPM
Non-executive Director, Chairman of the Audit and Risk Committee and Member of the Nomination Committee
Age: 61
Andy Penn is a Senior Advisor with McKinsey & Company
and TPG Capital Asia and a Special Advisor to Quintessence
Labs. He is a member of the Advisory Board of REDSPICE of
the Australian Signals Directorate and of the Advisory Board
of Glow Financial Services, a member of the Quad Investors
Network of the American Frontier Fund and the Council of
Trustees of the National Gallery of Victoria. Andy is also a Life
Governor of Very Special Kids and a member of the Advisory
Boards of The Big Issue Home for Homes and JDRF. Andy was
formerly the Chair of the Expert Advisory Board for Australia’s
National Cyber Security Strategy.
From 2015 to 2022, Andy was Chief Executive Officer and
Managing Director of Telstra and was also previously Telstra’s
Chief Financial Officer and Group Executive International.
Prior to joining Telstra, Andy spent 23 years with AXA.
From 2006 to 2011, he was the Group Chief Executive Officer
and Chief Financial Officer AXA Asia Pacific Holdings.
Andy has had an extensive career across telecommunications
and technology and financial services and brings deep
understanding of the risks and opportunities arising from
technology, digital disruption and cyber security.
Directorships of listed entities, current and recent
(last three years):
Executive Director of Telstra Corporation Limited (May 2015
to August 2022).
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Scott Price
BA, MBA, MA
Non-executive Director, Member of the Nomination Committee and the People and Culture Committee
Age: 63
Scott Price commenced as Group Chief Executive of DFI
Retail Group Holdings Limited on 1 August 2023, having
retired in early 2022 as Executive Vice-President; President
of UPS International.
Scott was also previously UPS’s Chief Strategy and
Transformation Officer and was responsible for strategic
planning, Global Business Services and the company’s
Advanced Technology Group. From 2009 to 2015, Scott led
Walmart’s Asia store business before moving to the United
States to lead global sourcing, international technology,
real estate and strategy until 2017. He was also previously
President and CEO of DHL Asia and then DHL Europe and
began his career at The Coca-Cola Company in Asia.
Scott is a director of the Consumer Goods Forum and is also
a former board member of the not-for-profit World Food
Program USA.
Scott’s extensive retail and FMCG experience provides
valuable insights and a global perspective, particularly in
relation to complex supply chains, business transformation
and sustainability initiatives.
Directorships of listed entities, current and recent
(last three years):
Group Chief Executive and Director of DFI Retail Group
Holdings Limited (since August 2023) (and representative
director on its affiliates, Robinsons Retail Holdings Inc (since
August 2023) and Yonghui Superstores Co. Limited (since
September 2023)).
Wendy Stops
BAppSc (Information Technology), GAICD
Non-executive Director, Member of the Nomination Committee and the Audit and Risk Committee
Age: 63
Wendy Stops is the Chairman of Fitted for Work, Deputy
Chancellor and Council member at the University of
Melbourne, Chairman of the Advisory Board for the Melbourne
Business School’s Centre for Business Analytics, a member of
Kearney’s ANZ Advisory Board and a member of the AICD’s
Governance of Innovation and Technology Panel.
Previously, Wendy was a member of the Expert 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 leadership positions in Australia,
Asia Pacific and globally.
Wendy’s board experience includes Blackmores Limited
(where she was Chairman from 2022 until its sale in 2023),
Commonwealth Bank of 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.
Wendy brings to the Board expertise in large-scale
technology transformations and innovation, as well as
experience in designing and implementing comprehensive
risk management frameworks.
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).
57
Coles Group 2024 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 30 June 2024 (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 as at the date of this Directors’ Report are:
Current Directors
Position held
Period as a Director
James Graham AM
Chairman and Independent, Non-executive Director
Appointed 19 November 2018
Leah Weckert
Managing Director and Chief Executive Officer
Appointed 1 May 2023
Terry Bowen
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
Andrew Penn AO
Independent, Non-executive Director
Appointed 1 December 2023
Scott Price
Independent, Non-executive Director
Appointed 1 October 2022
Wendy Stops
Independent, Non-executive Director
Appointed 19 November 2018
Peter Allen has been appointed as an Independent Non-executive Director, effective 1 September 2024.
The Board of Directors: Biographical details section on pages 54 to 57 sets out information about the current Directors’ qualifications,
experience, special responsibilities and other directorships.
The following person was also a Director during the financial year:
Former Director
Position held
Period as a Director
Paul O’Malley
Independent, Non-executive Director
Appointed 1 October 2020
Retired 31 October 2023
Group 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).
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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:
Board
Audit and
Risk Committee
People and
Culture Committee
Nomination
Committee
Director − Current 1,2
Held
Attended
Held
Attended
Held
Attended
Held
Attended
James Graham
12
12
6
6
6
6
Leah Weckert
12
12
Terry Bowen
12
12
6
6
6
6
Jacqueline Chow
12
12
6
6
6
6
Abi Cleland
12
12
6
6
6
6
Richard Freudenstein
12
12
6
6
6
6
Andrew Penn3
6
6
4
4
3
3
Scott Price
12
12
6
6
6
6
Wendy Stops
12
12
6
6
6
6
Director − Former1,2
Paul O’ Malley4
5
5
2
2
2
2
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. Andrew Penn commenced as a Non-executive Director of Coles Group Limited, the Chairman of the Audit and Risk Committee and a member of the Nomination Committee on
1 December 2023.
4. Paul O’Malley retired as a Non-executive Director of Coles Group Limited on 31 October 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
Number of shares held1
James Graham
500,188
Leah Weckert2
317, 892
Terry Bowen
16,545
Jacqueline Chow
20,000
Abi Cleland
19,816
Richard Freudenstein
25,000
Andrew Penn
25,000
Scott Price
21,000
Wendy Stops
35,000
1. The number of shares held refers to shares held either directly or indirectly by Directors as at 27 August 2024. Refer to the Remuneration Report tables for total shares held by
Directors and their related parties directly, indirectly or beneficially as at 30 June 2024.
2. As at 27 August 2024, Leah Weckert also holds 26,054 STI Shares and 372,038 Performance Rights.
59
Coles Group 2024 Annual Report
Principal activities
The principal activities of Coles during the financial year were providing customers with everyday products (including fresh food,
groceries, general merchandise and liquor) as well as financial and retail media services through its store network and online
platforms. No significant changes have occurred in the nature of these activities during the financial year.
State of affairs
There have been no significant changes in Coles’ state of affairs during the financial year.
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.
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
than the information set out in the OFR, information about other likely developments in the Group’s operations and the expected
results of these operations in future financial years has not been included.
Events after the reporting date
On 27 August 2024, the Directors determined a final dividend of 32.0 cents per fully paid ordinary share to be paid on 25
September 2024, fully franked at the corporate tax rate of 30%. The aggregate amount of the final dividend to be paid out
of profits, but not recognised as a liability at 30 June 2024, is expected to be $429 million.
Dividends
Dividends since Coles’ last Annual Report:
Cents per share
Total amount
$m
Franked
percentage
Date of payment
PAID DURING THE YEAR
2023 final dividend
30.0
402
100%
27 September 2023
2024 interim dividend
36.0
482
100%
27 March 2024
TO BE PAID AFTER END OF YEAR
2024 final dividend
32.0
429*
100%
25 September 2024
Dealt with in the Financial Report as
Note
$m
Dividends paid
3.3
884
* Estimated final dividend payable, subject to variations in the number of shares up to the record date.
Environmental regulations
The activities of the Group 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. During the financial year, Coles continued to be in the process of satisfying the Clean Up
Notice relating to stockpiled plastics collected by REDcycle issued by the NSW EPA in March 2023.
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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 Company has received benefits under an indemnity from the Company during or since the end of the financial year.
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.
Non-audit services and auditor’s independence
Details of the non-audit services undertaken by, and amounts paid to, EY are detailed in Note 7.3 Auditor’s remuneration to the
financial statements.
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:
• all non-audit services provided by EY were reviewed and approved to ensure they would not impact the integrity and objectivity
of the Auditor; and
• 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.
Leah Weckert
Managing Director and Chief Executive Officer
27 August 2024
James Graham AM
Chairman
27 August 2024
61
Coles Group 2024 Annual Report
Dear Shareholder,
On behalf of the Board, I am pleased
to present the FY24 Remuneration
Report for Coles Group Limited (‘the
Company’) and its controlled entities
(together, ‘Coles’, ‘Coles Group’ or ‘the
Group’). The Remuneration Report
provides information on the
remuneration arrangements for our
Key Management Personnel (KMP),
which include the Managing Director
and Chief Executive Officer
(Managing Director and CEO), Other
Executive KMP and Non-executive
Directors of the Company.
Company performance
Coles Group’s continued focus on
delivering value for customers,
particularly through seasonal value
campaigns, our Exclusive to Coles
portfolio and Flybuys loyalty program,
has helped deliver a solid FY24 financial
result. Group EBIT from continuing
operations increased by 10.7% to
$2.1 billion (5.7% increase on a
normalised basis), underpinned by
strong growth in Supermarkets earnings
with Supermarkets EBIT up 14.3%,
(normalised: 9.6%). Group sales revenue
from continuing operations increased by
7.6%, (normalised: 5.7%), with growth in
Supermarkets sales revenue of 6.2%
(normalised: 4.3%).
Outcomes for FY24
The Board assessed the performance of
the Executive KMP against their short-
term incentive (STI) individual balanced
scorecards and in the context of overall
Company performance. All targets were
set on a 53-week basis aligned to the
FY24 retail calendar year. Section 4.4
details the FY24 STI payments and
includes a summary of the Board’s
approach in determining the final STI
payable to Executive KMP. STI payments
to Executive KMP ranged between 71.5%
to 76.2% of the maximum STI opportunity.
Individual balanced scorecards are
heavily weighted to Group financial
performance measures at 60% (at
target). Group EBIT is the primary
financial measure weighted at 40% (at
target) and performance was between
target and stretch. Whilst Group sales
revenue increased by 5.7% on a
normalised basis, performance was
between threshold and target. Above
target STI payments can only be
achieved through outperformance
on either Group EBIT or Group sales.
With respect to the achievement of
Strategic and Non-financial measures
weighted at a total of 40% (at target),
pleasingly, the CFCs in NSW and in
Victoria were completed during the year
and both sites commenced operations
in July FY25. The delivery of the NSW and
Victoria CFCs, mark a significant
milestone for this program and will
enable Coles to offer a differentiated
customer experience for next day home
delivery orders across metropolitan
Sydney and Melbourne.
The safety of our team members and
customers remains a key priority. Our
Group Safety Index exceeded our FY24
target, supported by improvements in
both our Group safety index (13.7%
improvement) and our Total Recordable
Injury Frequency Rate (TRIFR) (8.8%
improvement). Customer perception on
sustainability improved by 2pp achieving
threshold performance, driven by a
refreshed strategic direction. Customer
Net Promoter Score (NPS), measured by
both Strategic and Store NPS, did not
achieve threshold performance despite
positive improvements in Store NPS,
particularly across Q4.
The FY22 long-term incentive (LTI), which
covered performance between FY22
and FY24, will vest on 30 August 2024.
Based on performance against the two
equally weighted LTI components,
Cumulative Return on Capital (ROC)
and Relative Total Shareholder Return
(RTSR), 76.1% of the Performance Rights
allocated to Executive KMP will vest. As
detailed in section 4.5, Cumulative ROC
was measured as 104.8% of target with
97.8% of Performance Rights aligned to
this component approved to vest. The
ROC result excluded the Coles Express
sale and transaction impacts and was
adjusted for changes in phasing of
capital investments related to major
projects (ADCs and CFCs), which
reduced the final vesting outcome.
Remuneration Report
Letter to shareholders from
the Chairman of the People
and Culture Committee
Richard Freudenstein
62
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RTSR was above threshold at the 52nd
percentile against the LTI Comparator
Group, with 54.4% of the Performance
Rights aligned to this component
approved to vest. This reflects strong
returns for shareholders over the 3-year
performance period of 16.0%.
Aligned to the two new CFCs
commencing operations, the Board
determined that Matthew Swindells met
the performance conditions relating to
both the first tranche, and the portion
relating to the CFCs in the second
tranche of his Medium Term Incentive
(MTI), which was put in place during
FY23. A total payment of $800,000
(being 80% of the total MTI opportunity)
will therefore be made to Matthew in
September 2024 as detailed in section
4.6. The final 20% of the MTI relating to
the successful integration of Coles’ milk
processing plants will be considered for
payment by the Board during FY25.
There were no total fixed compensation
(TFC) increases provided to Executive
KMP during FY24.
Executive KMP changes
Anna Croft was appointed to the role
of Chief Commercial Officer on 22
January 2024. Following an extensive
global search, we were pleased to
welcome Anna back to Coles. Anna
brings 20 years of experience in global
retail across leading brands both in
Australia and the United Kingdom.
Anna’s remuneration arrangements
are detailed in section 3.4.
Non-executive
Director fees
Effective from 1 January 2024, the
Board determined to increase Non-
executive Director fees for the first time
since Coles was listed on the ASX in
2018 as detailed in section 5.2. The
increase in fees ranged from 3.6% to
5.0%, with no increase applied to the
Board Chair fee. These increases were
within the current Non-executive
Director fee pool limit approved by
shareholders at the 2018 annual
general meeting (AGM) prior to listing
and were guided by appropriate
market benchmarking.
Looking ahead
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 our Group strategy.
For FY25, the Board has made two
changes to the Managing Director and
CEO’s STI balanced scorecard. Firstly,
Customer NPS will be measured wholly
on Store NPS. Strategic NPS is impacted
by external market conditions often
outside of the control of executives,
such as supply issues, inflation, and
changes in consumer confidence.
Executives have greater accountability
for Store NPS, which provides a
localised measure of the customer
experience at specific touch points to
identify opportunities for operational
improvement. Secondly, the Board has
determined to evolve the sustainability
objective into a broader assessment
of progress against the refreshed
sustainability strategy of ‘creating
a more sustainable future’.
This assessment will continue to include
customer perception, as well as FY25
deliverables aligned to our external
commitments. These important
adjustments align to the Board’s
expectations of the Managing Director
and CEO to continue improving the
experience of Coles customers every
day and ensuring we deliver on our
sustainability commitments to our
shareholders and the Australian
community, and strengthens the
alignment between company
performance and executive reward.
We have also expanded the ‘Quality
and Behaviour’ overlay within the STI
framework in FY25 to specifically include
compliance with the Grocery Code.
Importantly it continues to consider
any reputation impacts.
Finally, the Board determined to
increase the minimum shareholding
requirement for the Managing Director
and CEO to 200% of TFC as detailed in
section 2.2. This further aligns the
interests of the Managing Director and
CEO with shareholders and more closely
aligns to current market practice
regarding the minimum shareholding
requirement for a CEO.
No further changes were made to the
Executive remuneration framework
for FY25.
Conclusion
The Board considers the remuneration
outcomes for FY24 to be appropriate
in the context of strong returns for
shareholders across the last three years,
strong in year sales revenue and EBIT
growth, and significant strategic
achievements in year aligned to our
Group strategy. These include our ADC
and CFC programs reaching key
milestones following the successful
ramp up of our Queensland ADC,
commencement of operations of the
NSW ADC and our two new CFCs in
NSW and Victoria.
On behalf of the Board, I would like to
thank all Coles team members for their
contribution across FY24 ‘to help
Australians eat and live better every day’.
Richard Freudenstein
Chairman of the People and
Culture Committee
63
Coles Group 2024 Annual Report
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 30 June 2024 (‘FY24’).
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 26 June 2023 to 30 June 2024.
The Remuneration Report is divided into the following sections:
1. Key Management Personnel
2. Remuneration governance
3. Executive remuneration policy and structure overview
4. FY24 Executive KMP remuneration
5. FY24 Non-executive Director remuneration
6. Ordinary Shareholdings
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 FY24.
Table 1: KMP
NON-EXECUTIVE DIRECTORS
Name
Position held
Term
Current
James Graham AM
Chairman and Non-executive Director
Full Year
Terry Bowen
Non-executive Director
Full Year
Jacqueline Chow
Non-executive Director
Full Year
Abi Cleland
Non-executive Director
Full Year
Richard Freudenstein
Non-executive Director
Full Year
Andrew Penn AO
Non-executive Director
Appointed 1 December 2023
Scott Price
Non-executive Director
Full Year
Wendy Stops
Non-executive Director
Full Year
Former
Paul O’Malley
Non-executive Director
Retired 31 October 2023
EXECUTIVE KMP
Name
Position held
Term
Leah Weckert
Managing Director and Chief Executive Officer
Full Year
SR (Charlie) Elias
Chief Financial Officer
Full Year
Matthew Swindells
Chief Operations and Sustainability Officer
Full Year
Anna Croft
Chief Commercial Officer
Appointed 22 January 2024
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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 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 maintains absolute
discretion to either positively or
negatively adjust the remuneration
outcomes for the Managing Director and
CEO, and Executive-level 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 behaviours,
risk, compliance, reputational, safety
and sustainability considerations as
well as the quality of earnings delivered.
The People and Culture Committee
assist the Board in fulfilling its
responsibilities to shareholders and
regulators in relation to the Group’s
remuneration policies. The Committee
does this by reviewing and making
recommendations to the Board on
matters including, but not limited to:
• setting remuneration arrangements of
Non-executive Directors, the
Managing Director and CEO, and
Executive-level Direct Reports
• the annual performance review of the
Managing Director and CEO, and
Executive-level Direct Reports
• assessing remuneration outcomes for
the Managing Director and CEO, and
Executive-level Direct Reports.
The Committee delegates authority for
the operation and administration of all
Group incentive and equity plans to
management.
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
2023, Mercer provided independent
benchmarking in relation to executive
remuneration. 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.
COLES BOARD
Review and approve all remuneration and benefit arrangements recommended by the People and Culture Committee
for the Managing Director and CEO, Non-executive Directors and Executive-level Direct Reports.
Shareholders & other stakeholders
Management
People and Culture Committee
Oversees the remuneration
framework and assists the
Board by reviewing and
making recommendations on
remuneration arrangements,
Group incentives, and equity
plans based on Group
performance.
Audit and Risk Committee
Advises the Board and People and
Culture Committee on any risk,
conduct and compliance matters
that may relate to executive
remuneration outcomes and/or
financial targets and results.
External Advisors
May be engaged directly by the
People and Culture Committee and
management when determining
appropriate remuneration policies
for the Group, and specifically
remuneration arrangements for
the Managing Director and CEO,
and Executive-level Direct Reports.
We may consult with shareholders, proxy advisors, management, and other stakeholders to determine
remuneration policies for the Group, including remuneration arrangements for the Managing Director and CEO,
Non-executive Directors and Executive-level Direct Reports.
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Coles Group 2024 Annual Report
2.2 Corporate
governance policies
related to remuneration
Our robust remuneration framework
is supported by several corporate
governance polices related to
remuneration including the following.
2.2.1 Securities Dealing Policy
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 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 specified periods (known
as '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-level 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.
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. As at the
date of this Remuneration Report, each
current Non-executive Director satisfies
this requirement. 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).
Achievement of the minimum
shareholding is by the later of five years
from the date they commence, or five
years from the introduction of the policy
on 1 July 2019. The Board has determined
to increase this requirement for the
Managing Director and CEO, who will
be required to achieve a minimum
shareholding equivalent to 200% of TFC
within five years from the date of
commencement in the role on 1 May
2023. 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-level Direct Reports.
3. Executive remuneration policy
and structure overview
3.1 Executive remuneration policy for FY24
Coles’ vision and strategy remains the primary driver of our remuneration framework and is guided by our remuneration
principles. Our broader remuneration principles for all team members are set out in our Remuneration Policy as part of our
commitment to fair and equitable remuneration outcomes across reward programs and practices.
The People and Culture Committee determined the framework is appropriately aligned with our strategy and the interests of
our shareholders. Specific performance conditions and outcomes for FY24 are included in section 4. Details of prior years’
remuneration, including performance conditions and outcomes, are set out in the Remuneration Reports of prior Annual Reports,
which are available at colesgroup.com.au.
Retail is a globally
competitive industry.
We need to be able to
attract, motivate and retain
high-calibre executives
from both the local and
global talent market.
A strong link to
performance-based
pay to support the
achievement of strategy
aligned with short-,
medium- and long-term
financial targets.
Ensuring there is a common
interest between executives
and shareholders by
aligning reward with the
achievement of sustainable
shareholder returns.
Designed to be relevant to
how the Group operates.
It needs to be simple to
articulate, drive the right
behaviours and ensure
we deliver on our strategy.
MARKET
COMPETITIVE
PERFORMANCE –
BASED
FIT FOR
PURPOSE
CREATES LONG-
TERM VALUE FOR
SHAREHOLDERS
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Executive KMP remuneration is delivered through a simple three element structure using both fixed and variable (at-risk)
components as outlined in the following graphic.
Variable remuneration is subject to the Board’s ongoing
discretion based on performance results, in-year adjustments,
and clawbacks.
Incentivises strong individual
and Company performance,
based on strategically
aligned deliverables, through
variable, at-risk payments.
Allows us to attract and
retain key talent through
competitive and fair fixed
remuneration.
Aligns reward with creation
of sustainable, long-term
shareholder value.
Total Fixed
Compensation (TFC)
Long Term
Incentive (LTI)
Short Term
Incentive (STI)
Purpose
Cash
Cash
Equity
(Shares)
Equity
(Performance Rights)
Delivery
Performance 1 Year
Performance 1 Year
Salary Paid
Year 1: Cash 75%
Performance 3 Years
150% of TFC over 3-year
vesting period
Year 2: 25% deferred in
Shares held in restriction
for 1 year
Other
Executive
Time
Horizons
TFC consists of base salary
and superannuation.
Our target position is the
50th percentile of the ASX
10–40 Comparator Group
(plus reference to local
and international retailers,
as required)
The STI is measured against an
individual 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.
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 shares upon vesting.
FY24
Structure
MD & CEO
Time Horizons
Performance 1 Year
Performance 1 Year
Salary Paid
Year 1: Cash 50%
Performance 3 Years
175% of TFC over 3-year
vesting period
Year 3: 50% deferred into
Shares held in restriction
for 2 years
80% of TFC at target
120% of TFC at maximum
175% of TFC (MD & CEO)
150% of TFC
(Other Executive KMP)
Target &
Maximum
Opportunity
N/A
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Coles Group 2024 Annual Report
3.3 Executive KMP employment agreements
Executive KMP employment terms are formalised in employment contracts that have no fixed term. Specific information relating to
the terms of the Executive KMP’s employment contracts is in Table 2.
Table 2: Executive KMP employment contracts
Name
Notice period1
Restraint of trade
Leah Weckert
12 months
12 months
SR (Charlie) Elias
12 months
12 months
Matthew Swindells
12 months
12 months
Anna Croft
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.
3.4 Chief Commercial Officer remuneration arrangements
Anna Croft commenced as Chief Commercial Officer on 22 January 2024. Anna Croft has over 20 years’ experience in global
retail, specialising in strategic leadership, cultural and business transformation across the United Kingdom and Australia, with
leading retailers WHSmith, Tesco, Coles, and MECCA Brands. The Board set Anna Croft’s TFC taking into consideration her
experience, capability and market positioning relative to the ASX10-40 (based on market capitalisation), as well as local and
international retailers.
Total Fixed
Compensation
(TFC)
$850,000 per annum (including superannuation)
Short Term
Incentive (STI)
Target Opportunity – 80% of TFC
Maximum Opportunity – 120% of TFC
Long Term
Incentive (LTI)
Maximum Opportunity – 150% of TFC
Other payments
for incentives
foregone
As part of Anna Croft’s employment agreement, the Board agreed to compensate her for short and long-term
incentives that were forfeited or forgone with her prior employer, as a result of her acceptance of the role with
Coles. This has been structured to include 50% cash and 50% equity.
A total of $1,000,000 will be paid in cash to Anna Croft. This has been split into two tranches. The first tranche
included a $250,000 gross payment which was paid on commencement, and the second tranche will include
a $750,000 gross payment in September 2024. Both cash payments are subject to a 12-month clawback
period and continued employment.
A total of $1,000,000 will be allocated in equity to Anna Croft on 2 December 2024. This will be delivered as
FY24 STI Shares, which will be restricted until September 2025 under the normal terms of the STI deferred
equity component. As a result, Anna Croft did not participate in the standard FY24 STI and will instead be
provided with this allocation of STI Shares.
3.2 FY24 target remuneration mix for Executive KMP
The FY24 total target remuneration mix for the Executive KMP is in Graph 1.
Graph 1 – Total target remuneration mix
28%
30%
11%
50%
46%
11%
18%
6%
STI Cash
STI Equity
LTI
TFC Cash
Other
Executive
KMP
Managing
Director and
CEO
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4. FY24 Executive KMP remuneration
4.1 Company performance
The remuneration framework has been designed to reward Executive KMP for their contribution to the collective performance
of the Company, and to support the alignment between the remuneration of Executive KMP and shareholder returns.
The following graphs and table represent the relationship between remuneration of Executive KMP and the Group’s financial
performance over the last five financial years (including FY24).
Sales Revenue ($m)1,2,3
37,408
FY20
41,471
FY23
43,571
FY24
39.369
FY22
38,585
FY21
EBIT ($m)2,3
FY20
FY23
FY24
FY22
FY21
1,762
1,970
2,057
1,869
1,873
TSR (%)3,4
31.7
15.2
FY20
16.5
17.4
FY23
16.4
FY22
7.2
-3.6
9.6
3.9
16.0
FY21
FY24
ROC (%)3,5
FY20
FY23
FY22
FY21
FY24
Name
FY20
FY21
FY22
FY23
FY24
STI outcomes (AVG Executive KMP % of maximum)
97.4%
88.2%
73.1%
67.3%
73.3%
LTI outcomes (% of maximum)
n/a
97.6%
100%
50%
76.1%
LTI absolute TSR (3 year performance period)
n/a
58.1%
43.8%
23.2%
16.0%
LTI relative TSR (3 year performance period)
n/a
72.6%ile
84.3%ile
38.6%ile
52.2%ile
Dividends determined in respect of the financial year (cents)6
57.5
61.0
63.0
66.0
68.0
Closing share price (at end of financial year)7
$16.79
$16.83
$17.81
$18.40
$17.03
1. Sales revenue and online sales for FY21 have been restated to reflect a reclassification of fulfilment income to Sales revenue (previously reported within Other Income).
2. Sales revenue and EBIT for FY23 include continuing and discontinued operations. Sales revenue and EBIT for FY24 includes continued operations only. There are no sales from
discontinued operations for FY24.
3. The Group reports results on a retail calendar. FY20 through to FY23 Sales revenue, EBIT, TSR and ROC reflect a 52-week period. FY24 includes a 53rd week for reporting purposes in
accordance with our retail calendar.
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.
6. The dividends determined in respect of the financial year reflect the dividends determined for the financial year irrespective of the dividend payment date.
7. The closing share price for FY19 was $13.35.
4.2 Board oversight of remuneration outcomes
Board discretion is a key element of the design of our remuneration programs. The Board maintains absolute discretion to ensure
remuneration outcomes are appropriate in the context of Coles’ 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 FY24 is
further outlined in sections 4.3 to 4.6.
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 benchmarked
against the ASX 10–40 (based on market capitalisation), 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.
SHORT-TERM MEASURES
LONG-TERM MEASURES
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Coles Group 2024 Annual Report
The Board reviewed Executive KMP TFC and total remuneration packages against the peer group during FY24. This review was
informed by a detailed benchmarking exercise conducted by Mercer. No TFC increases were provided to any of the Executive KMP
in FY24. Anna Croft commenced as Chief Commercial Officer during FY24, on 22 January 2024, and her remuneration package is
detailed in section 3.4.
4.4 Short-term incentive (STI)
The table below outlines the key features of the FY24 STI plan for the Executive KMP.
Purpose
The STI rewards Executive KMP for the achievement of key Financial, Strategic and Non-financial measures
relevant in the financial year to the Coles Group strategy.
Eligibility
All Executive KMP are eligible to participate.
Opportunity
The STI target opportunity for Executive KMP is 80% of TFC. Up to 120% of TFC can be achieved for maximum
performance, which is equivalent to 150% of the target STI opportunity. Above target STI payments can only
be achieved through outperformance on either Group EBIT or Group sales.
Delivery and
timing
The STI award is delivered in two parts, a cash component, and a deferred equity component.
50% of the total STI award for the Managing Director and CEO is deferred into equity for two years, and 25%
of the total STI award for the Other Executive KMP is deferred into equity for one year. The remainder of the STI
award for all Executive KMP will be paid in cash in September 2024.
The number of STI Shares that will be granted and subject to deferral was calculated by using the 10-day
Volume Weighted Average Price (VWAP) up to and including the final day in the Performance Period (i.e. 30
June 2024). The deferred equity component of the STI award will be allocated following the 2024 AGM, where
shareholder approval will be sought for the grant to the Managing Director and CEO.
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.
Performance
period
26 June 2023 to 30 June 2024.
Performance
conditions
The individual balanced scorecard for each of the Executive KMP is weighted 60% (at target) for financial
performance measures and weighted 40% (at target) for Strategic and Non-financial measures.
All measures chosen for FY24 align with the Company’s strategy and the commitments made to shareholders.
With respect to Financial measures, Group EBIT focuses on delivering strong earnings through the business
cycle and ensuring strong returns for shareholders. By also including a Group sales measure, it ensures a
strong focus on our capability to deliver sustainable returns for shareholders in the long term.
The Strategic and Non-financial measures chosen for the Managing Director and CEO represent a balanced
set of priorities for the Company across Customer, People and Safety, Sustainability and Transformation.
The Strategic and Non-financial measures for each of the Executive KMP balanced scorecards equally
include measures across these broad categories which best reflect their direct accountability. These
measures represent the highest strategic priorities in year for the organisation in support of sustainable
value creation and the commitments made to shareholders aligned to our strategy.
Setting
performance
conditions and
targets
When setting performance measures and targets for the STI, the Board considers;
• Appropriate measures and targets aligned to our strategy, risk framework and commitments to
shareholders;
• Targets that represent strong earnings through the business cycle that are also sustainable for shareholders;
• Macro economic conditions and forecast market growth, as well as our competitive environment and
consumer and retail trends; and
• Striking the right balance between achievability and an appropriate level of stretch.
The Board procures a range of external benchmarks to inform target setting, including information from the
Australian Bureau of Statistics, economists, investment banks, top tier international consulting firms,
academics, and equity market research analysts.
Performance
assessment
Performance against the individual balanced scorecard measures were assessed by the Board based
on the Company’s annual audited 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 and
the Executive KMP’s contribution for FY24 to determine remuneration outcomes.
Quality and
Behaviour
overlay
The assessment also includes a ‘Quality and Behaviour’ overlay that considers:
• how the Executive KMP achieved performance aligned to Coles’ values and their contribution to driving an
appropriate company culture;
• risk, compliance, safety, sustainability and reputational considerations; and
• the quality of earnings delivered in the year and impact on future earnings.
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Leaver
provisions
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.
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
STI Shares will continue on foot until the relevant vesting date, unless the Board determines otherwise.
Board
discretion
The Board retains discretion to suspend or terminate the program at any time and amend all or any elements
of the program up until the date of payment. The Board consider the formulaic outcomes of the STI in the
context of the Company’s overall performance, wider customer and shareholder experience and non-
financial considerations. Where appropriate the Board may use discretion to adjust the formulaic outcomes.
Details of the performance measures for the Managing Director and CEO’s calculated balanced scorecard for FY24 are set out in
Table 3. All FY24 targets and outcomes in Table 3 reflect a 53-week retail calendar year.
Table 3: FY24 Performance measures for the Managing Director and CEO
Measures
Target
weighting
Maximum
weighting Threshold
Target
Stretch
Outcome
Actual
STI
outcome
Financial
Performance
(60% weighting) Group EBIT
40%
75%
$1,925m
$2,025m
$2,066m
$2,057
Between
Target &
Stretch
67.3%
Group Sales
20%
35%
$43,311m
$43,748m
$44,186m
$43,571
Between
Threshold &
Target
16.0%
Strategic
Performance
(40% weighting)
Strategic
Transformation
Ocado Program
10%
10%
On time, budget & strategy N/A
Target
Achieved
10.0%
Safety Index
10%
10%
Maintain
10% index
improvement N/A
13.7% index
improvement
Above Target
10.0%
Sustainability –
Customer Perception
10%
10%
2pp
improvement
3pp
improvement N/A
2pp
improvement
At Threshold
5.0%
Customer NPS
5% Strategic
5% Store
10%
10%
0.6 point
improvement
1.9 point
improvement
1.1 point
improvement
2.7 point
improvement
N/A
9.6 point
decrease
0.4 point
improvement
Below
Threshold
0%
Overall
Performance
100%
150%
108.3%
(86.6% of
TFC)
As FY24 is a 53-week year for reporting
purposes consistent with the retail
calendar, normalised growth rates
remove the sales and earnings impact of
the 53rd week to allow for comparability
across reporting periods.
Group EBIT: Group EBIT for the purposes
of the FY24 STI target and actual
outcomes is based on continuing
operations. EBIT from continuing
operations increased by 10.7% to
$2.1 billion which was a 5.7% increase on
a normalised basis, underpinned by
strong growth in Supermarkets earnings
with Supermarkets EBIT up 14.3%,
(normalised: 9.6%). EBIT growth was
delivered despite major project
implementation costs in relation to the
ADCs and CFCs of $107 million.
Group Sales: Group sales revenue from
continuing operations increased by
7.6%, (normalised: 5.7%), with growth in
Supermarkets sales revenue of 6.2%
(normalised: 4.3%). Sales revenue growth
was driven by a positive customer
response to our ‘Great Value, Hands
Down’ seasonal value campaigns, well
executed trade events such as
Christmas, Easter and Mother’s Day,
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Coles Group 2024 Annual Report
4.4 SHORT-TERM INCENTIVE (STI) (CONTINUED)
strong growth in eCommerce and
loyalty programs and improvements
in availability.
Strategic Transformation Ocado
Program: During the year both CFCs in
NSW and Victoria were completed and
both sites commenced operation in July
FY25. These facilities will service next
day home delivery orders across
metropolitan Sydney and Melbourne
and are expected to significantly
improve customer experience. In
addition, by reducing congestion and
improving customer experience at some
of Sydney and Melbourne’s highest
trading stores, they will also allow for
in-store growth and create additional
capacity for same day, immediacy and
Click & Collect orders which will
continue to be fulfilled from stores.
Safety Index: Team member safety as
measured by the Group safety index
improved by 13.7% across FY24. In
addition, the safety gateway was met
with TRIFR being below the FY23 result
with an 8.8% improvement.
Sustainability – Customer Perception:
Coles’ Sustainability perception
measure is determined by the proportion
of respondents who ‘strongly agree’ that
Coles follows environmentally
sustainable practices. The data is
collected via the Market Experience
Tracker (MET), which is conducted by an
independent research agency with an
annual sample of ~60,000 Australians.
The survey question measures
perception across Coles, Woolworths,
Aldi, and IGA. In FY24, sustainability
perception improved by 2pp achieving
threshold. This improvement has been
driven by a refreshed strategic direction
for sustainability in Coles, by ‘creating a
more sustainable future’.
Customer NPS: Strategic NPS measures
brand and omnichannel experiences
over time and is also impacted by
factors including customer perception of
the brand, value and reputation. Coles
Strategic NPS did not achieve threshold
and was impacted by continued supply
issues, inflation, and declining consumer
confidence. Store NPS is a localised
measure of the customer experience
and for FY24 achieved a 0.4 point
improvement, however this was still
below threshold.
Other Executive KMP shared the same
financial measures as the Managing
Director and CEO, except that:
• the Chief Financial Officer also had a
Group cash realisation measure; and
• the Chief Operations and
Sustainability Officer also had a
Simplify and Save to Invest measure.
Strategic and Non-financial measures
for Other Executive KMP are aligned to
the Managing Director and CEO with
variations relevant to each of their
portfolios.
For FY24, achievement against the
Financial, Strategic and Non-financial
measures for Other Executive KMP
ranged from not achieved to fully
achieved. The outcomes are set out
in Table 4 in section 4.4.1.
4.4.1 FY24 STI award
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 and their overall discretion to determine the final Executive KMP STI outcomes for FY24 as detailed in Table 4.
After reviewing the operations and performance of the Managing Director and CEO, and the Other Executive KMP, the Board
determined no adjustments were required based on the ‘Quality and Behaviour’ overlay or as part of its overall discretion.
Table 4: FY24 Executive KMP STI outcomes
STI opportunity1
STI awarded
STI forfeited4
Name
Target
80%
Maximum
120%
$
% of TFC
Cash2
Equity3
(%)
Leah Weckert
$1,600,000
$2,400,000
$1,732,000
86.6%
$866,000
$866,000
27.8%
SR (Charlie) Elias
$860,000
$1,290,000
$922,350
85.8%
$691,763
$230,587
28.5%
Matthew Swindells
$800,000
$1,200,000
$914,000
91.4%
$685,500
$228,500
23.8%
Anna Croft5
N/A
N/A
$1,000,000
N/A
-
$1,000,000
N/A
1. The minimum STI opportunity was nil.
2. The FY24 cash component of the STI will be paid on or about 16 September 2024.
3. The FY24 equity component of the STI will be granted in STI Shares following the 2024 AGM, using a 10-day VWAP for the period up to, and including, 30 June 2024 of
$17.16. Shareholder approval will be sought for the grant of equity to the Managing Director and CEO at the 2024 AGM.
4. The STI forfeited is calculated as a percentage of maximum STI opportunity.
5. Anna Croft was awarded a grant of $1 million delivered as STI shares to compensate her for incentives forgone on leaving her prior employer. The STI shares will be restricted until
September 2025 under the normal terms of the STI deferred equity component.
4.5 Long-term incentive (LTI)
The table below outlines the key features of the FY24 LTI plan for the Executive KMP.
Purpose
The LTI rewards Executive KMP for the achievement of long-term sustainable returns for shareholders.
Eligibility
All Executive KMP are eligible to participate.
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Opportunity
The maximum LTI opportunity is 175% of TFC for the Managing Director and CEO, and 150% of TFC for Other
Executive KMP.
Delivery
The LTI is delivered in Performance Rights. Each Performance Right entitles the Executive KMP to one ordinary
share in the Company on vesting. The Board retains 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 Executive KMP, with no amount payable on vesting.
The Performance Rights for Executive KMP under the FY24 LTI plan were allocated on 1 December 2023,
following the 2023 AGM (at which the grant made to the Managing Director and CEO was approved for the
purposes of ASX Listing Rule 10.14) details of which are published in this FY24 Remuneration Report.
Number of
Performance
Rights
The number of Performance Rights allocated to the Executive KMP was determined by dividing each Executive
KMP’s maximum LTI opportunity by the VWAP of Coles shares trading on the ASX over the 10 trading days up to
and including 25 June 2023, rounded up to the nearest whole number.
Performance
Period
26 June 2023 to 28 June 2026 (FY24–FY26).
Summary of
Performance
Conditions
Performance Rights will vest subject to the satisfaction of the following performance conditions measured over
the Performance Period:
• 50% of Performance Rights are subject to a Cumulative return on capital (ROC) hurdle (ROC component)
• 50% of Performance Rights are subject to a relative total shareholder return (RTSR) performance hurdle.
Coles’ RTSR was compared to companies in the S&P ASX100 (LTI Comparator Group) at 25 June 2023.
The Board chose these performance conditions as they provide a direct link between Executive KMP reward
and sustainable shareholder returns.
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 ROC 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:
Group cumulative ROC over the performance period % of Performance Rights that vest
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% and 100%
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 outcomes following the end of the Performance Period.
RTSR COMPONENT
The number of Performance Rights in the RTSR component that vest, if any, will be based on Coles’ RTSR ranking
within the LTI Comparator Group over the Performance Period, as set out in the following vesting schedule:
Coles RTSR rank in the LTI Comparator Group
Coles RTSR rank in the LTI Comparator Group
Below the 50th percentile
0%
Equal to the 50th percentile
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 LTI Comparator Group to take account of events such as takeovers, mergers
and demergers.
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Coles Group 2024 Annual Report
4.5 LONG-TERM INCENTIVE (LTI) (CONTINUED)
Setting
performance
conditions and
targets
When setting performance measures and targets for the LTI, the Board considers:
• Appropriate measures and targets aligned to our strategy (including projected impacts from known major
capital projects), risk framework and commitments to shareholders;
• Targets that represent strong sustainable returns for shareholders;
• Macro economic conditions as well as our competitive environment and consumer and retail trends; and
• Striking the right balance between achievability and an appropriate level of stretch.
The Board procures a range of external benchmarks to inform target setting including information from the
Australian Bureau of Statistics, economists, investment banks, top tier international consulting firms,
academics, and equity market research analysts.
Performance
assessment and
vesting
RTSR performance is independently assessed over the Performance Period against the constituents of the LTI
Comparator Group. 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.
Following testing, the Board will determine the number of Performance Rights to vest, which is expected to
occur in late August 2026. Details regarding the vesting of the Performance Rights will be included in the FY26
Remuneration Report. Any Performance Rights that do not vest will lapse. No re-testing of the performance
conditions is permitted.
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.
Voting Rights
Prior to vesting, Performance Rights do not entitle Executive KMP to voting rights.
Dividends
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.
Restrictions on
Dealing
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.
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).
Leaver
Provisions
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.
Board
Discretion and
Clawback
The Board has broad clawback 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.
The Board also considers the formulaic outcomes of the LTI in the context of the Company's overall
performance, wider customer and shareholder experience and non-financial considerations. Where
appropriate the Board may use discretion to adjust the formulaic outcomes.
4.5.1 FY24 LTI outcomes
Performance Rights granted under the FY24 LTI will be tested following the end of FY26 (the end of the Performance Period).
Details of the number of Performance Rights granted under the FY24 LTI are included in section 4.8. 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 and a summary of Performance Rights currently on foot are detailed in Table 7.2.
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4.5.2 FY22 LTI vesting outcome
On 15 December 2021, Executive KMP were granted Performance Rights relating to their FY22 LTI award. The Performance
Period for the award was 28 June 2021 to 30 June 2024.
The Performance Rights were subject to two performance conditions (as well as a service condition):
• 50% of the Performance Rights were subject to the Group’s Cumulative ROC performance over the Performance Period
(ROC Component); and
• the remaining 50% of the Performance Rights were subject to a relative TSR condition, measured over the Performance
Period (TSR Component). The Company’s TSR was compared to a LTI Comparator Group of companies, comprising the
ASX100 (LTI Comparator Group) as at 27 June 2021.
Table 5: Testing of performance hurdles
Based on testing of each performance hurdle, the following vesting will occur on 30 August 2024 in relation to the FY22 LTI award.
Measures
Weighting
Threshold
0% Vest
Target
50% Vest
Maximum
100% Vest
Result
% Vest
Cumulative ROC
50%
95%
100% of Target
105% of Target
104.8%
48.9%
RTSR
50%
n/a
50th percentile
75th percentile
52.2nd percentile
27.2%
Overall outcome
76.1%
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 2024. The total number of shares includes both the conversion of Performance Rights to shares, and shares allocated in
consideration of the dividend equivalent amount.
Name1
Number of shares
Leah Weckert
74,776
SR (Charlie) Elias
69,516
Matthew Swindells
67,073
1. Anna Croft was not eligible for the FY22 LTI Plan.
Further details regarding each performance hurdle in Table 5 is provided as follows:
Cumulative ROC: ROC performance was between the target and maximum set by the Board on a cumulative basis over the three-
year Performance Period resulting in 97.8% (48.9% out of a possible 50%) of this component of the FY22 LTI vesting as shown below:
ROC
FY22
FY23
FY24
Cumulative performance
% of target achieved
100.9%
104.5%
109.3%
104.8%
ROC targets are set by the Board
across the three-year Performance
Period reflective of the incremental
capital investments required to grow
long term shareholder value. Such
investments, which include new stores,
ADCs and CFCs, will not always
generate benefits within the same
three-year period given the time
required for implementation and ramp
up. Consequently, ROC targets do not
always follow a linear progression. The
ROC result excluded the Coles Express
sale and transaction impacts, and was
adjusted for changes in phasing of
capital investments related to major
projects (ADCs and CFCs), which
reduced the final vesting outcome.
3yr TSR
Coles
3 year TSR
Comparator Group
3 year TSR
7.2%
18.0%
16.0%
15.6%
(4.2%)
36.3%
25
30
40
35
20
15
10
5
0
-5
-10
26-Jun-22
1yr TSR
2yr TSR
25-Jun-23
3yr TSR
30-Jun-24
ASX
25th %ile
ASX
50th %ile
ASX
75th %ile
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Coles Group 2024 Annual Report
4.5 LONG-TERM INCENTIVE (LTI) (CONTINUED)
RTSR: The company performed at 52.2 percentile against the LTI Comparator Group which resulted in 54.4% (27.2% out of
a possible 50%) of this component of the LTI vesting. Over the three-year performance period this represented absolute TSR
performance of 16.0% as shown in the graph.
4.6 Other Executive KMP remuneration
As outlined in Coles’ 2023 Remuneration Report, Matthew Swindells is participating in a Medium Term Incentive (MTI). This
provides him with the opportunity to earn a cash payment of up to $1 million depending on the achievement of performance
hurdles related to the successful build and go-live for Coles’ CFCs in NSW and Victoria and the successful integration of Coles’
milk processing plants across FY24 and FY25. Payments are also contingent on continued employment.
Aligned to the new CFCs commencing operations, the Board determined that Matthew Swindells met the performance
conditions relating to both the first tranche, and the portion relating to the CFCs in the second tranche of his MTI. A total
payment of $800,000 (being 80% of the total MTI opportunity) will therefore be made to Matthew in September 2024. The final
20% of the MTI relating to the successful integration of Coles’ milk processing plants will be considered for payment by the
Board during FY25.
4.7 Summary of remuneration received by Executive KMP (statutory remuneration)
Table 6 details the nature and amount of each element of remuneration of the Executive KMP. There were no transactions or
loans between Executive KMP and the Company or any of its subsidiaries during FY24.
Table 6: Executive KMP remuneration
Short-term
Long-term
Post-
employment
Value of share-
based payments2
Name
Year
Base
salary
$
Other
benefits1
$
Cash
STI
$
Accrued
leave
benefits
$
Super-
annuation
benefits
$
Performance
Rights
$
Shares
$
Total
compen-
sation
$
Leah Weckert3
2024
1,972,601
1,144
866,000
69,351
27,399
1,339,651
416,523
4,692,669
2023
1,157,624
1,146
473,658
251,840
25,292
1,109,275
283,744
3,302,579
SR (Charlie) Elias
2024
1,047,601
452
691,763
(8,487)
27,399
863,538
202,949
2,825,215
2023
946,291
373
648,120
75,575
25,292
699,877
158,965
2,554,493
Matthew Swindells4
2024
972,601
802,129
685,500
79,528
27,399
920,797
204,689
3,692,643
2023
905,833
1,725
570,366
85,835
25,292
994,294
201,917
2,785,262
Anna Croft5
2024
349,006
304,324
-
31,761
13,699
106,204
252,211
1.057,205
Former
Steven Cain6
2023
1,766,374 1,795,227
667,031
(24,031)
25,292
4,225,605 1,785,894 10,241,392
Total
2024
4,341,809 1,108,049 2,243,263
172,153
95,896
3,230,190 1,076,372
12,267,732
Total
20234
4,776,122
1,798,471 2,359,175
389,219
101,168
7,029,051 2,430,520 18,883,726
1. Other benefits include costs associated with employment (including any applicable fringe benefits tax).
2. The amounts represent the accounting fair value of the grants of Performance Rights and STI Shares. If the performance conditions are not met, the Executive KMP will not be
entitled to the shares. Refer to sections 4.6 and 4.4 for further details for the grants, their performance conditions and Performance Periods.
3. Leah Weckert commenced as Managing Director and CEO on 1 May 2023 having previously held the position of Chief Executive, Commercial and Express.
4. Short term other benefits for Matthew Swindells includes the first tranche and part of the second tranche of the MTI cash award. Refer section 4.6.
5. Anna Croft commenced as Chief Commercial Officer on 22 January 2024. Short term other benefits include an amount for the compensation of incentives foregone from her
prior employer. As required by the accounting standards, this compensation is recognised from her commencement up until the end of the 12-month clawback period on each
payment. As outlined in section 3.4, the first tranche of $250,000 was paid to Anna Croft during FY24.
6. Steven Cain ceased being a KMP from 30 April 2023.
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4.8 Summary of Executive KMP shareholding and Performance Rights
Tables 7.1 and 7.2 show the movements of STI Shares and Performance Rights, held beneficially, by each Executive KMP during
FY24. No other shares were acquired as remuneration during the year. STI Shares are time-based only. Details of Executive KMP
holdings of ordinary shares are provided in Table 11.
Table 7.1: STI Shares
Movements during the financial period
Additional
information
Name
Balance of
shares held at
25 June 2023
Granted
during
the year
Vested/
released
during
the year
Lapsed
during
the year
Closing
balance at
30 June 20241
Accounting fair
value of grant
yet to vest ($)2
Leah Weckert3
12,994
26,054
(12,994)
-
26,054
402,534
SR (Charlie) Elias
7,096
11,884
(7,096)
-
11,884
181,469
Matthew Swindells
11,580
10,458
(11,580)
-
10,458
159,694
Anna Croft
-
-
-
-
-
-
1. STI Shares are time-based only. No STI Shares were held nominally by Executive KMP or their related parties as at 30 June 2024.
2. The fair value of STI Shares was $15.45 per share at the grant date of 3 November 2023 for Leah Weckert. For Other Executive KMP, the fair value of STI Shares was $15.27 per share
at the grant date of 24 November 2023. The fair value of STI Shares is an estimate of the total maximum value of grants in future financial years. STI Shares are subject to the
satisfaction of conditions and, therefore, the minimum total value of the awards for future financial years is nil.
3. Approval from shareholders for the issue of the STI Shares to Leah Weckert during the year was obtained for the purpose of ASX Listing Rule 10.14 at the 2023 AGM.
Table 7.2: Performance Rights
Movements during the financial period
Additional
information
Name
Balance of
shares held at
25 June 2023
Rights
allocated as
remuneration
Rights
vested during
the year
Rights
forfeited/
lapsed during
the year
Closing
balance at
30 June 2024
Accounting fair
value of grant
yet to vest ($)1
Leah Weckert2
266,039
192,520
(43,261)
(43,260)
372,038
4,050,245
SR (Charlie) Elias3
167,279
88,697
-
-
255,976
2,882,722
Matthew Swindells3
238,798
82,509
(38,707)
(38,707)
243,893
2,786,559
Anna Croft4
-
70,133
-
-
70,133
620,682
1. The fair value of Performance Rights is an estimate of the total maximum value of grants in future financial years. 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. The fair value of FY24 Performance Rights for Leah Weckert at the grant date of 3 November 2023 was $5.47 for the RTSR component and $13.73 for the ROC component.
Approval from shareholders for the issue of the Performance Rights to Leah Weckert during the year was obtained for the purpose of ASX Listing Rule 10.14 at the 2023 AGM.
3. The fair value of FY24 Performance Rights for Charlie Elias and Matthew Swindells at the grant date of 24 November 2023 was $5.13 for the RTSR component and $13.61 for the
ROC component.
4. The fair value of FY24 Performance Rights for Anna Croft at the grant date of 25 January 2024 was $3.72 for the RTSR component and $13.98 for the ROC component.
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Coles Group 2024 Annual Report
5. FY24 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. This 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. The Board benchmarks fees annually against the ASX 10–40 (based on market capitalisation). Having regard to the
benchmarking undertaken, the Board determined to increase the Board and Committee fees ranging from 3.6% to 5.0% with effect
1 January 2024 noting that there would not be an increase to the Board Chair fee. This is the first increase to Director fees since
Coles was listed on the ASX in 2018. Table 8 sets out the Board and Committee Fees (inclusive of superannuation) for FY24.
Table 8: Board and Committee Fees (inclusive of superannuation) for FY24
To 31 December 2023
From 1 January 2024
Board and committee fees
Chair
Member
Chair
Member
Board
$695,0001
$220,000
$695,0001
$231,000
Audit and Risk Committee
$55,000
$27,000
$57,000
$28,000
People and Culture Committee
$55,000
$27,000
$57,000
$28,000
Nomination Committee
No fee
No fee
No fee
No fee
1. The Chairman of the Board does not receive Committee fees in addition to his Board fee.
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5.3 FY24 Non-executive Director remuneration
Table 9 outlines the remuneration for the Non-executive Directors of Coles during FY24. There were no transactions or loans
between Non-executive Directors and the Company, or any of its subsidiaries during FY24.
Table 9: FY24 Non-executive Director remuneration
Name
Financial
year
Base and
committee fees
(excluding
superannuation)
$
Other
benefits1
$
Superannuation
benefits
$
Total
compensation
$
Current
James Graham
2024
667,601
619
27,399
695,619
2023
669,708
242
25,292
695,242
Terry Bowen2
2024
227,928
680
25,072
253,680
2023
167,647
212
17,603
185,462
Jacqueline Chow
2024
227,928
680
25,072
253,680
2023
223,529
582
23,471
247,582
Abi Cleland3
2024
246,881
464
6,119
253,464
2023
241,132
895
5,868
247,895
Richard Freudenstein3
2024
274,687
-
6,813
281,500
2023
275,000
-
-
275,000
Andrew Penn4
2024
150,946
-
15,970
166,916
Scott Price2, 5
2024
237,871
-
15,129
253,000
2023
185,250
-
-
185,250
Wendy Stops
2024
227,928
1,644
25,072
254,644
2023
223,529
678
23,471
247,678
Former
Paul O’Malley6
2024
82,583
-
9,084
91,667
2023
249,708
-
25,292
275,000
David Cheesewright7
2023
246,639
-
361
247,000
Total
2024
2,344,353
4,087
155,730
2,504,170
Total
2023
2,482,142
2,609
121,358
2,606,109
1. Other benefits include costs associated with directorships (including any applicable fringe benefits tax).
2. Terry Bowen and Scott Price were appointed to the Board on 1 October 2022.
3. 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.
4. Andrew Penn was appointed to the Board on 1 December 2023.
5. As Scott Price resided in the US during FY23, no superannuation contributions were payable. During FY24 Scott Price moved to Hong Kong. The superannuation contributions in
FY24 relate to the proportion of meetings he attended in Australia.
6. Paul O’Malley retired as Non-executive Director on 31 October 2023.
7. David Cheesewright retired as a Non-executive Director on 15 June 2023.
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Coles Group 2024 Annual Report
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 FY24. No shares held by any Non-executive Directors were held nominally.
Table 10: Non-executive Director Ordinary Shareholdings
Name
Balance of
shares held at
25 June 2023
Shares
acquired
Shares
disposed
Closing
balance as at
30 June 2024
Minimum
shareholding
requirement
achieved1
Current
James Graham
500,188
-
-
500,188
Yes
Terry Bowen
16,545
-
-
16,545
Yes
Jacqueline Chow
20,000
-
-
20,000
Yes
Abi Cleland
19,816
-
-
19,816
Yes
Richard Freudenstein
25,000
-
-
25,000
Yes
Andrew Penn
-
25,000
-
25,000
Yes
Scott Price
1,000
20,000
21,000
Yes
Wendy Stops
35,000
-
-
35,000
Yes
Former
Paul O’Malley2
3,809
-
-
3,809
Yes
Total
621,358
45,000
-
666,358
1. All current Non-executive Directors have achieved the minimum shareholding requirement for the relevant six-month and five-year period.
2. The closing balance is reflective of the balance at the date Paul O’Malley retired as a Non-executive Director on 31 October 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 FY24. No shares held by any Executive KMP were held nominally.
Table 11: Executive KMP Ordinary Shareholdings
Name
Balance of
shares held at
25 June 2023
Shares
acquired
Shares
disposed
Closing
balance as at
30 June 2024
Minimum
shareholding
requirement
achieved
Leah Weckert
257,829
60,063
-
317,892
Yes
SR (Charlie) Elias1
8,633
13,246
-
21,879
In progress
Matthew Swindells
142,210
53,694
(60,000)
135,904
Yes
Anna Croft1
-
-
-
-
In progress
Total
408,672
127,003
(60,000)
475,675
1. Executive KMP are required to meet the minimum shareholding requirement of 100% of TFC by no later than five years from their date of commencement. This will be by
1 December 2026 for Charlie Elias and 22 January 2029 for Anna Croft.
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Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Auditor’s independence declaration to the Directors of
Coles Group Limited
As lead auditor for the audit of the financial report of Coles Group Limited for the financial year ended
30 June 2024, I declare to the best of my knowledge and belief, there have been:
a.
No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b.
No contraventions of any applicable code of professional conduct in relation to the audit; and
c.
No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of Coles Group Limited and the entities it controlled during the financial
year.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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Coles Group 2024 Annual Report
Financial Report
Consolidated Financial Statements
Income Statement
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Notes to the Consolidated Financial Statements
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
Consolidated Entity Disclosure Statement
Directors’ Declaration
Independent Auditor’s Report
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Income Statement
For the 53 weeks ended 30 June 2024
2024
53 weeks
2023
52 weeks
Notes
$m
$m
CONTINUING OPERATIONS
Sales revenue
1.3
43,571
40,483
Other operating revenue
113
108
Total operating revenue
43,684
40,591
Cost of sales
(32,299)
(30,034)
Gross profit
11,385
10,557
Other income
165
163
Administration expenses
1.4
(9,475)
(8,848)
Share of net loss from equity accounted investments
5.1
(18)
(13)
Earnings before interest and tax (EBIT)
2,057
1,859
Financing costs
1.5
(442)
(394)
Profit before income tax
1,615
1,465
Income tax expense
1.6
(487)
(423)
Profit for the period from continuing operations
1,128
1,042
DISCONTINUED OPERATIONS
(Loss)/profit for the period from discontinued operations, after tax
5.3
(10)
56
Profit for the period
1,118
1,098
Profit attributable to:
Equity holders of the parent entity
1,118
1,098
Earnings per share (EPS) attributable to equity holders of the Company:
Basic EPS (cents)
1.2
83.8
82.3
Diluted EPS (cents)
1.2
83.5
82.1
EPS attributable to equity holders of the Company from continuing operations:
Basic EPS (cents)
1.2
84.6
78.1
Diluted EPS (cents)
1.2
84.3
77.9
Other comprehensive income
Items that may be reclassified to profit or loss:
Net movement in the fair value of cash flow hedges
(4)
14
Income tax effect
1.6
1
(4)
Other comprehensive income which may be reclassified to profit or loss in
subsequent periods
(3)
10
Total comprehensive income attributable to:
Equity holders of the parent entity
1,115
1,108
The accompanying notes form part of the consolidated financial statements.
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Coles Group 2024 Annual Report
Balance Sheet
As at 30 June 2024
2024
2023
Notes
$m
$m
ASSETS
CURRENT ASSETS
Cash and cash equivalents
2.1
675
597
Trade and other receivables
2.2
496
605
Inventories
2.4
2,703
2,323
Income tax receivable
-
4
Assets held for sale
5.2
3
127
Other assets
2.3
109
96
Total current assets
3,986
3,752
NON-CURRENT ASSETS
Property, plant and equipment
2.5
5,619
4,985
Right-of-use assets
2.7
7,048
6,507
Intangible assets
2.6
2,203
2,035
Deferred tax assets
1.6
717
740
Equity accounted investments
5.1
225
220
Other assets
2.3
72
53
Total non-current assets
15,884
14,540
Total assets
19,870
18,292
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
2.8
4,584
4,434
Income tax payable
73
-
Provisions
2.9
943
905
Lease liabilities
2.7
911
820
Other
260
249
Total current liabilities
6,771
6,408
NON-CURRENT LIABILITIES
Interest-bearing liabilities
3.1
1,652
1,118
Provisions
2.9
323
376
Lease liabilities
2.7
7,506
7,029
Other
1
5
Total non-current liabilities
9,482
8,528
Total liabilities
16,253
14,936
Net assets
3,617
3,356
EQUITY
Contributed equity
3.2
1,672
1,644
Reserves
103
104
Retained earnings
1,842
1,608
Total equity
3,617
3,356
The accompanying notes form part of the consolidated financial statements.
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Statement of Changes in Equity
For the 53 weeks ended 30 June 2024
Share capital
Shares
held in trust
Share-based
payments
reserve
Cash flow
hedge
reserve
Retained
earnings
Total
$m
$m
$m
$m
$m
$m
2024
Balance at beginning of period
1,733
(89)
91
13
1,608
3,356
Profit for the period
-
-
-
-
1,118
1,118
Other comprehensive income
-
-
-
(3)
-
(3)
Total comprehensive income for the
period
-
-
-
(3)
1,118
1,115
Dividends paid
-
-
-
-
(884)
(884)
Issue of shares to satisfy the dividend
reinvestment plan
17
-
-
-
-
17
Transfer of shares to employees under
the employee equity incentive plan
-
26
(26)
-
-
-
Transfer of shares to employees under
the employee share purchase plan
-
11
-
-
-
11
Purchase of shares to satisfy the
employee equity incentive plan
-
(24)
-
-
-
(24)
Purchase of shares to satisfy the
employee share purchase plan
-
(2)
-
-
-
(2)
Share-based payments expense
-
-
28
-
-
28
Balance at end of period
1,750
(78)
93
10
1,842
3,617
2023
Balance at beginning of period
1,695
(59)
92
3
1,393
3,124
Profit for the period
-
-
-
-
1,098
1,098
Other comprehensive income
-
-
-
10
-
10
Total comprehensive income for the
period
-
-
-
10
1,098
1,108
Dividends paid
-
-
-
-
(883)
(883)
Issue of shares to satisfy the dividend
reinvestment plan
18
-
-
-
-
18
Issue of shares to Trust
18
(18)
-
-
-
-
Issue of shares to satisfy the employee
share purchase plan
2
-
-
-
-
2
Transfer of shares to employees under
the employee equity incentive plan
-
38
(38)
-
-
-
Purchase of shares to satisfy the
employee equity incentive plan
-
(50)
-
-
-
(50)
Share-based payments expense
-
-
37
-
-
37
Balance at end of period
1,733
(89)
91
13
1,608
3,356
The accompanying notes form part of the consolidated financial statements.
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Coles Group 2024 Annual Report
Cash Flow Statement
For the 53 weeks ended 30 June 2024
2024
53 weeks
2023
52 weeks
Notes
$m
$m
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
46,145
44,043
Payments to suppliers and employees
(42,556)
(40,439)
Interest paid
(57)
(57)
Interest component of lease payments
(363)
(372)
Interest received
6
2
Income tax paid
(382)
(370)
Net cash flows from operating activities
2.1
2,793
2,807
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property, plant and equipment and intangibles
(1,671)
(1,514)
Proceeds from sale of property, plant and equipment
255
248
Proceeds from the sale of a business net of transaction costs
-
280
Net investments in joint venture and associate
5.1
(23)
(14)
Payments for acquisition of businesses, net of cash acquired1
(74)
-
Net cash flows used in investing activities
(1,513)
(1,000)
CASH FLOWS USED IN FINANCING ACTIVITIES
Proceeds from borrowings
600
-
Net (repayments of)/proceeds from revolving facilities
(75)
23
Payment of principal component of lease payments
(834)
(907)
Dividends paid
(853)
(844)
Purchase of shares to satisfy the dividend reinvestment plan
(14)
(21)
Purchase of shares to satisfy the employee equity incentive plan
(26)
(50)
Net cash flows used in financing activities
(1,202)
(1,799)
Net increase in cash and cash equivalents
78
8
Cash at beginning of period
597
589
Cash at end of the period
2.1
675
597
The Consolidated Statement of Cash Flows includes both continuing and discontinued operations.
The accompanying notes form part of the consolidated financial statements.
1. Acquisition of businesses includes two automated milk processing facilities acquired from Saputo Dairy Australia and liquor business acquisitions made during the year.
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Notes to the Consolidated Financial Statements
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 53-week period ended 30
June 2024 (collectively, ‘Coles’ or ‘the
Group’) was authorised for issue in
accordance with a resolution of the
Directors on 27 August 2024. The
comparative period is for the 52-
week period ended 25 June 2023.
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 interpretations.
This Financial Report presents
reclassified comparative information
where required for consistency with the
current year’s presentation.
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.
Judgements, estimates and assumptions
are continuously evaluated and are
based on the following:
• 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
JUDGEMENTS
Note 2.7 Leases
Determining the lease term
Note 5.1 Equity accounted investments
Control and significant influence
NOTE
ESTIMATES AND ASSUMPTIONS
Note 2.4 Inventories
Net realisable value, Commercial
income
Note 2.7 Leases
Incremental borrowing rate
Note 2.9 Provisions
Employee benefits, Self-insurance,
Restructuring
Note 4.1 Impairment of non-financial
assets
Assessment of recoverable amount
Note 6.2 Contingencies
Contingent liabilities
Note 7.2 Employee share plans
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.
87
Coles Group 2024 Annual Report
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.
2. Assets and Liabilities: this section
details the assets used in the Group’s
operations and the liabilities incurred as
a result.
3. Capital: this section provides
information relating to the Group’s
capital structure and financing.
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.
BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)
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1. Performance
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, Coles Financial Services and Coles 360 retail media
services)
Liquor
Liquor retailing, including online services
Other comprises Property, Coles’ share of the Flybuys loyalty program and a product supply arrangement that are not separately
reportable, as well as costs associated with enterprise functions which include Insurance and Treasury.
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
Total continuing
operations
$m
$m
$m
$m
2024 (53 WEEKS)
Sales revenue
39,042
3,692
837
43,571
EBITDA
3,487
261
(89)
3,659
Depreciation and amortisation
(1,469)
(128)
(5)
(1,602)
Segment EBIT
2,018
133
(94)
2,057
Financing costs
(442)
Profit before income tax
1,615
Income tax expense
(487)
Profit for the period from continuing operations
1,128
Share of net loss from equity accounted investments
included in EBIT
(18)
2023 (52 WEEKS)
Sales revenue
36,746
3,610
127
40,483
EBITDA
3,157
279
(54)
3,382
Depreciation and amortisation
(1,392)
(122)
(9)
(1,523)
Segment EBIT
1,765
157
(63)
1,859
Financing costs
(394)
Profit before income tax
1,465
Income tax expense
(423)
Profit for the period from continuing operations
1,042
Share of net loss from equity accounted investments
included in EBIT
(13)
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Coles Group 2024 Annual Report
1.2 Earnings Per Share (‘EPS’)
2024
53 weeks
2023
52 weeks
EPS ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Basic EPS (cents)
83.8
82.3
Diluted EPS (cents)
83.5
82.1
EPS ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY FROM CONTINUING
OPERATIONS
Basic EPS (cents)
84.6
78.1
Diluted EPS (cents)
84.3
77.9
PROFIT/(LOSS) FOR THE PERIOD
Continuing operations ($m)
1,128
1,042
Discontinued operations ($m)
(10)
56
Total
1,118
1,098
Weighted average number of ordinary shares for basic EPS (shares, million)
1,334
1,334
Weighted average number of ordinary shares for diluted EPS (shares, million)
1,338
1,338
Calculation methodology
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’).
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1.4 Administration expenses
2024
53 weeks
2023
52 weeks
$m
$m
Employee benefits expense
5,512
5,118
Occupancy and overheads
882
774
Depreciation and amortisation1
1,517
1,461
Marketing expenses
233
234
Net impairment expense/(reversal)
55
(11)
Other store expenses
655
668
Other administration expenses
621
604
Total administration expenses
9,475
8,848
1. Total depreciation and amortisation from continuing operations is $1,602 million (2023: $1,523 million from continuing operations), the remaining depreciation and amortisation is
included within cost of sales.
Employee benefits expense is comprised of:
2024
53 weeks
2023
52 weeks
$m
$m
Remuneration, bonuses and on-costs
5,499
5,180
Superannuation expense
506
437
Share-based payments expense
28
37
Total employee benefits expense
6,033
5,654
Employee benefits expense included in:
Cost of sales
521
536
Administration expenses
5,512
5,118
Employee benefits expense
The Group’s accounting policy for liabilities associated with employee benefits is set out in Note 2.9 Provisions. The policy relating
to share-based payments is set out in Note 7.2 Employee share plans. All employee benefits expense is included in administration
expense with the exception of logistics which is contained in cost of sales.
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
2024
53 weeks
2023
52 weeks
$m
$m
Interest on debt and borrowings
48
28
Interest on lease liabilities
363
343
Other finance related costs
31
23
Total financing costs
442
394
Financing costs
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.
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Coles Group 2024 Annual Report
1.6 Income tax
The major components of income tax expense in the Income Statement are set out below:
2024
53 weeks
2023
52 weeks
Note
$m
$m
Current income tax expense
471
443
Adjustment in respect of current income tax of previous periods
(12)
(34)
Deferred income tax relating to origination and reversal of
temporary differences
18
17
Adjustment in respect of deferred income tax of previous periods
6
25
483
451
Income tax expense is attributable to:
Profit from continuing operations
487
423
(Loss)/profit from discontinued operations
5.3
(4)
28
483
451
The components of income tax expense recognised in Other Comprehensive Income (‘OCI’) are set out below:
2024
53 weeks
2023
52 weeks
$m
$m
Deferred tax related to items recognised in OCI during the period:
Net profit/(loss) on revaluation of cash flow hedges
1
(4)
Deferred income tax charged to OCI
1
(4)
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
• calculated using tax rates enacted or substantively enacted at
the reporting date
• inclusive of any adjustment to income tax payable or
recoverable in respect of previous periods
• recognised using the liability method
• based on temporary differences between the carrying
amounts of assets and liabilities for financial reporting
purposes and the amounts for taxation purposes
• 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.
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Reconciliation of the Group’s applicable tax rate to the effective tax rate
2024
53 weeks
2023
52 weeks
$m
$m
Profit before tax from continuing operations
1,615
1,465
(Loss)/profit before tax from discontinued operations
(14)
84
Profit before income tax
1,601
1,549
At Australia’s corporate tax rate of 30.0% (2023: 30.0%)
480
465
Adjustments in respect of income tax of previous periods
(6)
(9)
Share of results of joint venture
6
4
Non-deductible expenses for income tax purposes
9
6
Non-assessable income for income tax purposes
-
(13)
Utilisation of previously unrecognised capital losses
(6)
(8)
Taxable gain on sale of Express business
-
6
Income tax expense reported in the Income Statement1
483
451
1. At an effective income tax rate of 30.2% (2023: 29.1%).
Tax consolidation
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
members to leave the group clear of future group tax liabilities. Members of the group have also entered into a taxation funding
agreement which provides that each member of the tax consolidated group pay a tax equivalent amount to or from the parent in
accordance with their notional current tax liability or current tax asset. Such amounts are reflected in amounts receivable from or
payable to the parent company in their accounts and are settled as soon as practicable after lodgement of the consolidated tax
return and payment of the tax liability.
Global minimum tax
Coles Group Limited expects to be subject to the Organization for Economic Cooperation and Development (“OECD") Pillar Two
model rules (“Pillar Two rules”). Pillar Two draft legislation is currently in Parliament and is expected to be effective for the Group’s
financial year beginning 1 July 2024 ("the 2025 financial year"). Rules have not yet been enacted in foreign jurisdictions where
Coles has a presence, namely China, Singapore and Hong Kong. Pillar Two rules impose a minimum 15% effective tax rate
applicable in each jurisdiction in which the Group has a presence. The Pillar Two rules are not expected to have a material impact
on the Group's income tax expense.
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Deferred income tax balances recognised in the Balance Sheet
Opening
balance
Charged to
profit or loss
Credited
to OCI
Other
Closing
balance
2024
$m
$m
$m
$m
$m
Provisions
78
(12)
-
-
66
Employee benefits
225
15
-
-
240
Trade and other payables
34
14
-
-
48
Inventories
52
8
-
-
60
Property, plant and equipment
180
13
-
-
193
Lease Liabilities
2,355
(251)
-
421
2,525
Other individually insignificant balances
10
(5)
-
-
5
Deferred tax assets
2,934
(218)
-
421
3,137
Accelerated depreciation for tax purposes
130
28
-
-
158
Intangible assets
37
39
-
-
76
Right-of-use assets
1,952
(259)
-
421
2,114
Other assets
7
-
-
-
7
Cash flow hedges
5
-
(1)
-
4
Other individually insignificant balances
63
(2)
-
-
61
Deferred tax liabilities
2,194
(194)
(1)
421
2,420
Net deferred tax assets
740
(24)
1
-
717
Opening
balance
Charged to
profit or loss
Credited
to OCI
Acquisitions
/ (disposals)
Other
Closing
balance
2023
$m
$m
$m
$m
$m
$m
Provisions
67
11
-
-
-
78
Employee benefits
230
3
-
(8)
-
225
Trade and other payables
28
6
-
-
-
34
Inventories
53
-
-
(1)
-
52
Property, plant and equipment
171
16
-
(7)
-
180
Lease Liabilities
2,604
(273)
-
(218)
242
2,355
Other individually insignificant balances
6
5
-
(1)
-
10
Deferred tax assets
3,159
(232)
-
(235)
242
2,934
Accelerated depreciation for tax purposes
125
5
-
-
-
130
Intangible assets
-
44
-
(7)
-
37
Right-of-use assets
2,160
(258)
-
(192)
242
1,952
Other assets
8
(1)
-
-
-
7
Cash flow hedges
1
-
4
-
-
5
Other individually insignificant balances
43
20
-
-
-
63
Deferred tax liabilities
2,337
(190)
4
(199)
242
2,194
Net deferred tax assets
822
(42)
(4)
(36)
-
740
1.6 INCOME TAX (CONTINUED)
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Tax assets and liabilities
Deferred tax assets are recognised to the extent it is probable that taxable profits will be available against which deductible
temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced
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
recovered.
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 $163 million (2023: $169 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 30 June 2024 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.
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2. Assets and Liabilities
This section details the assets used in the Group’s operations and the liabilities incurred
as a result.
2.1 Cash and cash equivalents
Cash and cash equivalents are comprised of the following:
2024
2023
$m
$m
Cash in transit
353
347
Cash on hand
171
164
Cash at bank and on deposit
151
86
Total cash and cash equivalents
675
597
All receivables from EFT, credit card and debit card point of sale transactions during the period are classified as cash equivalents.
For the purpose of the Cash Flow Statement, cash and cash equivalents includes cash on hand and in transit, at bank and on
deposit, net of outstanding bank overdrafts which are repayable on demand.
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits earn interest at the respective
short-term deposit rates.
Reconciliation of profit for the period to net cash flows from operating activities
2024
2023
$m
$m
Profit for the period
1,118
1,098
Adjustments for:
Depreciation and amortisation
1,602
1,558
Net impairment expense/(reversal)
55
(11)
Net gain on disposal of non-current assets
(12)
-
Net loss on disposal of business
-
16
Share of net loss of equity accounted investments
18
13
Share-based payments expense
28
37
Other
10
1
Changes in assets and liabilities net of the effects of acquisitions and disposals of businesses:
(Increase)/decrease in inventories
(372)
39
Decrease/(increase) in trade and other receivables
119
(135)
(Increase)/decrease in prepayments
(18)
11
Decrease in other assets
2
33
Decrease in deferred tax assets
24
46
Decrease in income tax receivable
76
38
Increase in trade and other payables
162
102
(Decrease)/increase in provisions
(29)
30
Increase/(decrease) in other liabilities
10
(69)
Net cash flows from operating activities
2,793
2,807
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2.2 Trade and other receivables
Trade and other receivables are comprised of the following:
2024
2023
$m
$m
Trade receivables1
384
470
Other receivables
136
154
520
624
Allowance for expected credit losses
(24)
(19)
Total trade and other receivables
496
605
1. Includes commercial income due from suppliers of $132 million (2023: $149 million).
Trade receivables and other receivables are classified as financial assets held at amortised cost.
Trade receivables
Trade receivables are initially recognised at the amount due and subsequently at amortised cost using the effective interest
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.
Impairment of trade receivables
The collectability of trade and other receivables is reviewed on an ongoing basis. Individual debts which are known to be
uncollectable are written off when identified.
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:
2024
2023
$m
$m
Prepayments
102
82
Other assets
7
14
Total other current assets
109
96
Prepayments
25
3
Other assets
47
50
Total other non-current assets
72
53
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.
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Coles Group 2024 Annual Report
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.
2.5 Property, plant and equipment
Property, plant and equipment is carried at cost less accumulated depreciation and any recognised impairment. Cost comprises
expenditure that is directly attributable to the acquisition of the item and subsequent costs incurred that are eligible for
capitalisation. Repairs and maintenance costs are charged to the Income Statement during the period in which they are incurred.
Property, plant and equipment is depreciated on a straight-line basis to its residual value over its expected useful life.
Land
Buildings
Plant &
equipment
Leasehold
improvements
Total
$m
$m
$m
$m
$m
Useful life (range)
Not applicable
20 – 40 years
3 – 20 years
Term of lease
2024
Cost
731
151
9,276
1,272
11,430
Accumulated depreciation and impairment
(114)
(4)
(4,956)
(737)
(5,811)
Carrying amount at end of period
617
147
4,320
535
5,619
Carrying amount at beginning of period
447
159
3,874
505
4,985
Additions
223
48
1,009
103
1,383
Transfer to assets held for sale
(3)
-
-
-
(3)
Depreciation
-
(2)
(528)
(71)
(601)
Impairment
(27)
-
(4)
-
(31)
Disposals and write-offs1
(23)
(58)
(29)
(2)
(112)
Transfers
-
-
(2)
-
(2)
Carrying amount at end of period
617
147
4,320
535
5,619
Construction work in progress included above
-
71
797
139
1,007
2.4 INVENTORIES (CONTINUED)
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Land
Buildings
Plant &
equipment
Leasehold
improvements
Total
$m
$m
$m
$m
$m
Useful life (range)
Not applicable
20 – 40 years
3 – 20 years
Term of lease
2023
Cost
534
164
8,437
1,184
10,319
Accumulated depreciation and impairment
(87)
(5)
(4,563)
(679)
(5,334)
Carrying amount at end of period
447
159
3,874
505
4,985
Carrying amount at beginning of period
419
258
3,576
554
4,807
Additions
136
10
960
46
1,152
Transfer to assets held for sale
(53)
(36)
(38)
-
(127)
Depreciation
-
(4)
(507)
(68)
(579)
(Impairment)/Reversal
14
-
(3)
-
11
Sale of Business
-
(2)
(90)
(25)
(117)
Disposals and write-offs1
(69)
(67)
(24)
(2)
(162)
Carrying amount at end of period
447
159
3,874
505
4,985
Construction work in progress included above
-
49
795
138
982
1. Net gain on disposal of property, plant and equipment during the period was $18 million (2023: $2 million net loss).
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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Coles Group 2024 Annual Report
Goodwill
Software
Licences
Total
$m
$m
$m
$m
Useful life (range)
Indefinite
5 - 15 years
Indefinite
2024
Cost
1,151
2,391
34
3,576
Accumulated amortisation and impairment
-
(1,373)
-
(1,373)
Carrying amount at end of the period
1,151
1,018
34
2,203
Carrying amount at beginning of the period
1,115
889
31
2,035
Additions
36
307
3
346
Transfers
-
2
-
2
Disposals and write-offs
-
(6)
-
(6)
Impairment
-
(3)
-
(3)
Amortisation
-
(171)
-
(171)
Carrying amount at end of the period
1,151
1,018
34
2,203
Development work in progress included above
-
387
-
387
2023
Cost
1,115
2,093
31
3,239
Accumulated amortisation and impairment
-
(1,204)
-
(1,204)
Carrying amount at end of period
1,115
889
31
2,035
Carrying amount at beginning of period
1,160
675
29
1,864
Additions
-
373
2
375
Sale of business
(45)
(27)
-
(72)
Amortisation
-
(132)
-
(132)
Carrying amount at end of period
1,115
889
31
2,035
Development work in progress included above
-
435
-
435
2.7 Leases
The Group has lease agreements for properties and various items of machinery, vehicles and other equipment used in its operations.
Set out below are the carrying amounts of recognised right-of-use assets and movements during the period:
2024
2023
Property
leases
Non-
property
leases
Total
Property
lease
Non-
property
leases
Total
$m
$m
$m
$m
$m
$m
At beginning of period
6,409
98
6,507
7,096
103
7,199
Additions
746
342
1,088
388
47
435
Other remeasurements1
Continuing operations
304
-
304
344
-
344
Discontinued operations
-
-
-
16
-
16
Depreciation expense
Continuing operations
(786)
(44)
(830)
(767)
(52)
(819)
Discontinued operations
-
-
-
(28)
-
(28)
Impairment expense
Continuing operations
(21)
-
(21)
-
-
-
Sale of business
-
-
-
(640)
-
(640)
At end of period
6,652
396
7,048
6,409
98
6,507
1. Includes reasonably certain options and remeasurements, net of leases terminated.
2.6 INTANGIBLE ASSETS (CONTINUED)
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Set out below are the carrying amounts of recognised lease liabilities and movements during the period:
2024
2023
$m
$m
At beginning of period
7,849
8,681
Additions
1,087
435
Other remeasurements1
Continuing operations
315
352
Discontinued operations
-
16
Accretion of interest
Continuing operations
363
343
Discontinued operations
-
29
Payments
Continuing operations
(1,197)
(1,146)
Discontinued operations
-
(133)
Sale of business
-
(728)
At end of period
8,417
7,849
Current
911
820
Non-current
7,506
7,029
1. Includes reasonably certain options and remeasurements, net of leases terminated.
The maturity analysis of lease liabilities is disclosed in Note 4.2 Financial risk management.
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
condition that triggers those payments occurs and are generally payable for future periods in the lease term.
The following provides information on the Group’s variable lease payments, including the magnitude in relation to fixed
payments:
2024
2023
Fixed
payments
Variable
payments
Total
Fixed
payments
Variable
payments
Total
$m
$m
$m
$m
$m
$m
Leases with lease payments based on sales
728
88
816
614
70
684
Extension options
Extension options are included in the majority of property leases across the Group. Where practicable, the Group seeks to include
extension options when negotiating leases to provide flexibility and align with business needs. Leases may contain multiple
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 (2023: 92%). Of those leases, 27%1 have an extension option
included in the calculation of the lease liability at 30 June 2024 (2023: 26%).
ERROR
1. 75% of these leases contain one or more future extension options not included in the lease liability (2023:75%).
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Coles Group 2024 Annual Report
The following amounts have been recognised in the Income Statement relating to continuing operations:
2024
2023
$m
$m
Depreciation of right-of-use assets
830
819
Interest expense on lease liabilities
363
343
Expenses relating to short-term leases (included in administration expenses)
2
5
Variable lease payments based on sales (included in administration expenses)
88
70
Other variable lease payments (included in administration expenses)
-
6
Total amount recognised in the Income Statement
1,283
1,243
The Group recognised a total gain of $31 million relating to six sale and leaseback transactions during the period (2023: $25 million
from five transactions).
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.
Extension options are only included in the lease term if the lease is reasonably
certain to be exercised. The assessment 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 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.
Lease liabilities are initially measured at
net present value and comprise the
following:
• 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.
If the interest rate implicit in the lease
cannot be readily determined, the lease
payments are discounted using the
lessee’s incremental borrowing rate at
the lease commencement date.
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
Right-of-use assets are also subject to
impairment testing. Refer to the
accounting policies in Note 4.1
Impairment of non-financial assets.
2.7 LEASES (CONTINUED)
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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:
2024
2023
$m
$m
Within one year
13
18
Between one and five years
32
46
More than five years
25
35
Total
70
99
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 $17 million for the
period with respect to subleasing of its right-of-use assets (2023: $20 million).
2.8 Trade and other payables
Trade and other payables are comprised of the following:
2024
2023
$m
$m
Trade payables
3,414
3,281
Other payables
1,170
1,153
Total trade and other payables
4,584
4,434
Trade payables are non-interest-bearing and are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method.
2.9 Provisions
2024
2023
$m
$m
CURRENT
Employee benefits
757
736
Restructuring provision
68
37
Self-insurance liabilities
104
110
Other
14
22
Total current provisions
943
905
NON-CURRENT
Employee benefits
71
65
Restructuring provision
-
52
Self-insurance liabilities
252
259
Total non-current provisions
323
376
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Coles Group 2024 Annual Report
Movements in restructuring, self-insurance, and other provisions
Restructuring
Self-insurance
Other
Total
$m
$m
$m
$m
At beginning of period
89
369
22
480
Arising during the period
18
120
5
143
Utilised
(34)
(109)
(11)
(154)
Unused amounts reversed
(1)
(32)
(2)
(35)
Unwind / changes in discount rate
(4)
8
-
4
At end of period
68
356
14
438
Current
68
104
14
186
Non-current
-
252
-
252
Provisions are:
• recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that cash will be
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
KEY ESTIMATES
Employee benefits
Provisions for employee entitlements to annual leave, long
service leave and employee incentives (where the Group does
not have an unconditional right to defer payment for at least
twelve months after the reporting date) are 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.
Liabilities for long service leave where the Group has an
unconditional right to defer payment for at least twelve months
after the reporting date are recognised within the non-current
provision for employee benefits.
Employee benefits provisions are based on a number of
estimates including, but not limited to:
• expected future wages and salaries
• attrition (applicable to long service leave provisions only)
• discount rates
• expected salary related payments, interest and on-costs
following a review of the pay arrangements for award-
covered salaried team members
Self-insurance
The Group is self-insured for workers compensation and certain
general liability risks. The Group seeks external actuarial advice
in determining self-insurance provisions. Provisions are
discounted and are based on claims 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.
Self-insurance provisions are based on a number of
estimates including, but not limited to:
• discount rates
• future inflation
• average claim size
• claims development
• risk margin
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
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
2.9 PROVISIONS (CONTINUED)
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3. Capital
This section provides information relating to the Group’s capital structure and financing.
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
2024
2023
$m
$m
NON-CURRENT
Bank debt
-
72
Capital market debt
1,652
1,046
Total non-current interest-bearing liabilities
1,652
1,118
Capital market debt consists of:
2024
2023
Medium term notes
Maturity
$m
$m
$150m
Aug-25
150
150
$300m
Nov-26
299
299
$300m
Nov-29
299
299
$300m
Aug-30
299
298
$350m
Jul-31
352
-
$250m
Nov-33
253
-
Total capital market debt
1,652
1,046
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.
The carrying values of liabilities that are the hedged items in fair value hedge relationships, which are otherwise carried at
amortised cost, are adjusted to record changes in the fair values attributable to the risks that are being hedged. Fair value gains
and losses are recognised in financing costs in the Income Statement.
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Coles Group 2024 Annual Report
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:
2024
2023
m
$m
m
$m
Share Capital
At beginning of period
1,338.4
1,733
1,336.1
1,695
Issue of shares to satisfy the dividend reinvestment plan
1.0
17
1.1
18
Issue of shares to satisfy the employee equity incentive plans
-
-
1.0
18
Issue of shares to satisfy the employee share purchase plan
-
-
0.2
2
At end of period
1,339.4
1,750
1,338.4
1,733
2024
2023
m
$m
m
$m
Shares held in trust
At beginning of period
(5.0)
(89)
(3.5)
(59)
Issue of shares to satisfy the employee equity incentive plans
-
-
(1.0)
(18)
Purchase of shares to satisfy the employee equity incentive plans
(1.5)
(24)
(2.8)
(50)
Transfer of shares to employees under the employee equity
incentive plan
1.3
26
2.3
38
Purchase of shares to satisfy the employee share purchase plan
(0.1)
(2)
-
-
Transfer of shares to employees under the employee share
purchase plan
0.7
11
-
-
At end of period
(4.6)
(78)
(5.0)
(89)
Total contributed equity
1,334.8
1,672
1,333.4
1,644
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.
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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.
Cents per share
Total $m
2024
2023
2024
2023
Fully franked dividends determined and paid during the period
Paid final dividend
30.0
30.0
402
401
Paid interim dividend
36.0
36.0
482
482
66.0
66.0
884
883
Fully franked dividends proposed and unrecognised at
reporting date
Final dividend proposed
32.0
30.0
4291
402
32.0
30.0
429
402
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
2024
2023
$m
$m
Total franking credits available for subsequent periods based on a tax rate of 30%
(2023: 30%)
553
549
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Coles Group 2024 Annual Report
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.
Climate-related risks were considered in assessing the potential financial impacts of climate change on the Group’s CGU
impairment testing through the inclusion of committed initiatives. This review did not indicate any impairment due to the
available headroom in each of the Group's CGUs and scenario anaysis. Management will continue to monitor and assess
the financial impact of climate-related risk.
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.
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Net (impairment)/reversal for the current and prior period is included in ‘Administration expenses’ in the Income Statement as it
relates to the day-to-day management of the Group’s freehold property portfolio and other non-financial assets.
2024
2023
Property
Other
non-financial
assets
Total
Property
Other
non-financial
assets
Total
$m
$m
$m
$m
$m
$m
Impairment
(34)
(28)
(62)
(32)
(3)
(35)
Reversal
7
-
7
46
-
46
Net (impairment)/reversal
(27)
(28)
(55)
14
(3)
11
Recognised impairment
An impairment loss is recognised in the Income Statement if the carrying amount of an asset or a CGU exceeds its recoverable
amount. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill
allocated to the CGU and then to reduce the carrying amount of other assets in the CGU.
Reversal of impairment
Where there is an indication that previously recognised impairment losses may no longer exist or may have decreased, the asset is
re-tested for impairment. The impairment loss is reversed only to the extent that the carrying amount of the asset does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment been recognised.
Impairments recognised for goodwill are not reversed.
Goodwill impairment testing
For the purpose of impairment testing, goodwill is allocated to CGUs or groups of CGUs according to the level at which
management monitors goodwill. The FVLCOD valuation methodology was applied to determine the recoverable amount of
CGUs.
The following table presents a summary of the goodwill allocation and the key assumptions used in determining the recoverable
amount of each CGU:
2024
2023
Supermarkets
Liquor
Supermarkets
Liquor
Goodwill allocation ($m)
986
165
986
129
Indefinite life intangible assets ($m)
-
33
-
31
Post-tax discount rate (%)
7.5%
7.5%
7.5%
7.5%
Terminal growth rate (%)
2.0%
2.0%
2.0%
2.0%
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.
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Coles Group 2024 Annual Report
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.
In the normal course of business, the Group is exposed to various risks as set out below:
RISK
EXPOSURE
MANAGEMENT
Market risks
Interest rate risk
The Group’s exposure to interest rate
risk relates primarily to interest-bearing
liabilities where interest is charged at
variable rates.
The Group manages interest rate risk by having access to both
fixed and variable debt facilities. In line with the Policy, this risk is
further managed by hedging a portion of the interest rate debt
exposures with derivative financial instruments to convert interest
rate debt obligations to either fixed or floating rate obligations.
Foreign
exchange risk
The Group has exposure to foreign
exchange risk principally arising from
purchases of inventory and capital
equipment denominated in foreign
currencies.
To manage foreign currency transaction risk, the Group hedges
material foreign currency denominated expenditure at the time of
the commitment and hedges a proportion of foreign currency
denominated forecast exposures (mainly relating to the purchase
of inventory) through the use of forward foreign exchange contracts
and foreign currency options.
Commodity
price risk
The Group is exposed to changes in
commodity prices in respect to the
price of electricity.
To mitigate the variability of wholesale electricity prices, the
Group utilises Power Purchase Arrangements (‘PPAs’) and
electricity swaps.
Liquidity risk
The Group is exposed to liquidity and
funding risk from operations and
external borrowings.
Liquidity risk is the risk that unforeseen
events cause pressure on, or curtail, the
Group’s cash flows.
Funding risk is the risk that sufficient
funds will not be available to meet the
Group’s financial commitments in a
timely manner.
Liquidity risk is measured under both normal market operating
conditions and under a crisis situation which curtails cash flows for
an extended period. This approach is designed to ensure that the
Group’s funding framework is sufficiently flexible to ensure
liquidity under a wide range of market conditions.
The Group regularly reviews its short, medium and long-term
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 from
its financing activities, 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.
Credit risk for the Group also arises
from various financial guarantees in
which members of the Group act as
guarantor.
The majority of the Group’s sales are on a cash basis, and the
Group’s exposure to credit risk from customer sales is minimal.
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
about counterparty default.
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.
4.2 FINANCIAL RISK MANAGEMENT (CONTINUED)
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Foreign exchange risk
The Group is primarily exposed to foreign exchange risk in relation to the United States dollar (USD), the Euro (EUR) and the British
Pound (GBP). The Group considers its exposure to USD, EUR and GBP arising from purchases to be a long-term and ongoing
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
Weighted average
hedge rate
2024
2023
2024
2023
2024
2023
Buy / sell
$m
$m
$m
$m
USD / AUD
98
103
-
2
0.66
0.68
EUR / AUD
167
197
(3)
5
0.61
0.62
GBP / AUD
43
38
-
1
0.53
0.54
AUD / USD
(1)
(8)
-
-
0.66
0.67
At the reporting date, the Group has the following exposures to USD, EUR and GBP:
USD
$m
EUR
€m
GBP
£m
2024
2023
2024
2023
2024
2023
FINANCIAL ASSETS
Cash and cash equivalents
6
5
2
-
-
-
Trade receivables
17
10
-
-
-
-
Forward exchange contracts
65
71
1021
123
23
21
FINANCIAL LIABILITIES
Trade and other payables
(63)
(68)
(40)
(28)
(5)
(3)
Forward exchange contracts
-
(6)
-
-
-
-
Net exposure
25
12
64
95
18
18
1. EUR forward exchange contracts of $7 million (2023: $56 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:
Post-tax profit increase/(decrease):
Post-tax OCI increase/(decrease):
2024
2023
2024
2023
Rate
Change
$m
$m
$m
$m
AUD / USD
+10%
-
1
(3)
(2)
-10%
(1)
(1)
3
3
AUD / EUR
+10%
-
-
(6)
(10)
-10%
-
-
8
12
AUD / GBP
+10%
-
-
(2)
(2)
-10%
-
-
3
3
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Coles Group 2024 Annual Report
Interest rate risk
At the reporting date, the Group has the following financial assets and liabilities exposed to variable interest rate risk that, with the
exception of interest rate swaps, are not designated as cash flow hedges:
2024
2023
Exposure
Weighted
average
interest rate
Exposure
Weighted
average
interest rate
$m
%
$m
%
FINANCIAL ASSETS
Cash at bank and on deposit
151
3.9
86
3.4
FINANCIAL LIABILITIES
Bank debt
-
-
(75)
(5.5)
Capital market debt
(150)
(5.3)
(150)
(4.9)
Less: interest rate swaps receive floating
(notional principal amount)
150
2.5
150
(2.0)
Interest rate swaps pay floating
(notional principal amount)
(600)
(5.8)
-
-
Net exposure to cash flow interest rate risk
(449)
11
Interest rate sensitivity
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:
Post-tax profit increase/(decrease):
Post-tax OCI increase/(decrease):
2024
2023
2024
2023
$m
$m
$m
$m
IMPACTS OF REASONABLY POSSIBLE MOVEMENTS:
+1.0% (100 basis points)
(3)
-
1
2
-1.0% (100 basis points)
3
-
(1)
(2)
Liquidity risk
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.
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The committed facilities of the Group are set out below:
2024
2023
$m
$m
FINANCING FACILITIES AVAILABLE:
Bank overdrafts
13
13
Revolving multi-option facilities
2,715
2,715
2,728
2,728
FINANCING FACILITIES UTILISED:
Revolving multi-option facilities
-
75
Guarantees issued1
350
350
350
425
FINANCING NOT UTILISED:
Bank overdrafts
13
13
Revolving multi-option facilities1
2,365
2,290
2,378
2,303
1. As at 30 June 2024, bank guarantees totalling $350 million (2023: $350 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 $675 million cash and cash equivalents at the reporting date (2023: $597 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:
< 12 Months
1-2 Years
2-5 Years
> 5 Years
Total
contractual
cash flows
Carrying
amount
$m
$m
$m
$m
$m
$m
2024
Trade and other payables (less accrued interest)
4,568
-
-
-
4,568
4,568
Capital market debt (principal and interest)
65
209
454
1,334
2,062
1,668
Lease liabilities
1,293
1,247
3,398
4,927
10,865
8,417
Forward exchange contracts
3
-
-
-
3
3
Power Purchase Arrangement
4
-
-
-
4
5
Total
5,933
1,456
3,852
6,261
17,502
14,661
2023
Trade and other payables (less accrued interest)
4,427
-
-
-
4,427
4,427
Bank debt (principal and interest)
16
16
93
-
125
74
Capital market debt (principal and interest)
28
28
504
628
1,188
1,050
Lease liabilities
1,175
1,178
3,299
5,326
10,978
7,849
Power Purchase Arrangement
6
5
-
-
11
10
Total
5,652
1,227
3,896
5,954
16,729
13,410
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.
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Coles Group 2024 Annual Report
Changes in liabilities arising from financing activities
At
beginning
of period
Cash flows
Changes in
fair value
Leases
recognised
Other
At end of
period
Note
$m
$m
$m
$m
$m
$m
2024
Bank debt
3.1
72
(78)
-
-
6
-
Capital market debt
3.1
1,046
596
9
-
1
1,652
Lease liabilities
2.7
7,849
(1,197)
-
1,402
363
8,417
Derivatives
4.3
11
-
(2)
-
-
9
Total liabilities from financing activities
8,978
(679)
7
1,402
370
10,078
2023
Bank debt
3.1
50
23
-
-
(1)
72
Capital market debt
3.1
1,045
-
-
-
1
1,046
Lease liabilities
2.7
8,681
(1,279)
-
793
(346)
7,849
Derivatives
4.3
62
-
(51)
-
-
11
Total liabilities from financing activities
9,838
(1,256)
(51)
793
(346)
8,978
4.3 Financial instruments
Financial assets and liabilities measured at fair value
The following table sets out the fair value measurement hierarchy and fair value of the Group’s derivative financial instruments:
2024
2023
Asset
Liability
Asset
Liability
Fair value hierachy
$m
$m
$m
$m
CASH FLOW HEDGES
Forward exchange contracts
Level 2
1
(4)
8
(1)
Interest rates swaps
Level 2
3
-
7
-
Electricity swaps
Level 2
1
-
-
-
Power Purchase Arrangement
Level 3
15
(5)
21
(10)
FAIR VALUE HEDGES
Interest rates swaps
Level 2
9
-
-
-
Total
29
(9)
36
(11)
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.
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Level 1
Fair value is calculated using quoted prices in active markets for identical assets or liabilities
Level 2
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)
Level 3
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.
Derivatives
The Group enters into derivative financial instruments with various counterparties, principally financial institutions with
investment grade credit ratings. Foreign exchange forward contracts, foreign currency options, 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, forward rates and volatilities, 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 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:
Carrying amount
Fair value
2024
2023
2024
2023
$m
$m
$m
$m
FINANCIAL LIABILITIES
Capital market debt
1,652
1,046
1,547
913
Offsetting of financial assets and liabilities
The Group presents its financial assets and liabilities on a gross basis except where there is an enforceable legal right to offset and
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
recognised.
The following table sets out the Group’s financial assets and financial liabilities which have been offset in the Balance Sheet at the
reporting date:
Gross financial assets
/ (liabilities)
Gross financial (liabilities)
/ assets set-off
Net financial assets
/ (liabilities) presented in
the balance sheet
$m
$m
$m
2024
Trade and other receivables
648
(152)
496
Trade and other payables
(4,736)
152
(4,584)
2023
Trade and other receivables
740
(135)
605
Trade and other payables
(4,569)
135
(4,434)
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Coles Group 2024 Annual Report
Hedge accounting
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 and fair value hedging purposes and designates them as such.
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.
The Group uses cash flow 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;
• interest rate fluctuations over the hedging period where the Group has variable rate debt
obligations; and
• energy commodity price fluctuations over the hedging period.
Recognition date
The date the hedging instrument is entered into.
Measurement
Fair value.
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.
Fair value hedge
Derivatives or other financial instruments that hedge the exposure to changes in fair value of a
recognised asset, liability or an unrecognised firm commitment.
The Group uses fair value hedges to mitigate the risk of fair value fluctuations over the hedging
period.
Recognition date
The date the hedging instrument is entered into.
Measurement
Fair value.
Changes in fair value
The carrying values of liabilities that are the hedged items in fair value hedge relationships,
which are otherwise carried at amortised cost, are adjusted to record changes in the fair values
attributable to the risks that are being hedged. Fair value gains and losses are recognised in the
Income Statement.
4.3 FINANCIAL INSTRUMENTS (CONTINUED)
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5. Group Structure
This section provides information relating to subsidiaries and other material investments
of the Group.
5.1 Equity accounted investments
Ownership interest
Name of company
Principal activity
Place of incorporation
Type
2024
2023
Loyalty Pacific Pty Ltd
Operator of the Flybuys loyalty
program
Australia
Joint Venture
50%
50%
Queensland Venue Co.
Pty Ltd (‘QVC’)
Operator of Spirit Hotels and
Queensland retail liquor business
Australia
Associate
50%
50%
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.
KEY JUDGEMENT: CONTROL AND SIGNIFICANT INFLUENCE
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.
Loyalty Pacific Pty Ltd
A reconciliation of the carrying amount of the Group’s investment in Loyalty Pacific Pty Ltd is set out below:
2024
2023
$m
$m
At beginning of period
19
18
Additions
23
14
Loss for the period
(18)
(13)
At end of period
24
19
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Coles Group 2024 Annual Report
Queensland Venue Co. Pty Ltd
In FY19, the Company entered into an incorporated joint venture with Australian Venue Co. (‘AVC’) for the operation of Spirit Hotels
(the ‘Hotel business’) and the retail liquor stores linked to Spirit Hotels venues (collectively the ‘Retail Liquor business’). An
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’).
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 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:
2024
2023
$m
$m
At beginning of period
201
201
Additions
-
-
Profit for the period
-
-
At end of period
201
201
5.2 Assets held for sale
At 30 June 2024, one of the Group’s properties with a total carrying value of $3 million has been classified as held for sale (2023:
four of the Group’s properties with a total carrying value of $127 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
for immediate sale in its present condition. A sale is considered highly probable when actions required to complete the sale
indicate that it is unlikely significant changes to the sale will be made or that the decision to sell will be withdrawn, and where
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.
5.1 EQUITY ACCOUNTED INVESTMENTS (CONTINUED)
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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
held for sale, and:
• represents a separate major line of business or geographical area of operations;
• 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.
Express discontinued operation
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), resulting in a loss on sale after tax of $16 million.
In FY24 additional costs of $10 million net of income tax were recorded relating to transaction costs.
Analysis of profit from discontinued operations
The profit/loss from discontinued operations for the prior period to 1 May 2023 are set out below:
2023
$m
Sales revenue
988
Other operating revenue
246
Total operating revenue
1,234
Expenses
(1,070)
Depreciation and Amortisation
(35)
Earnings before interest and tax (EBIT) before sale of business
129
Loss on sale of Express business
(18)
Earnings before interest and tax (EBIT)
111
Financing costs
(27)
Profit before income tax
84
Income tax expense
(28)
Profit for the period from discontinued operations
56
EPS attributable to equity holders of the Company from discontinued operations:
Basic EPS (cents)
4.2
Diluted EPS (cents)
4.2
Cash flows from/(used in) discontinued operations
The condensed cash flows from/(used in) discontinued operations for the prior period to 1 May 2023 are set out below:
2023
$m
Net cash inflow from operating activities
113
Net cash inflow from investing activities
2671
Net cash outflow from financing activities
(104)
Net increase in cash and cash equivalents from discontinued operations
276
1. Includes $319 million consideration for the sale of the Express business.
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Coles Group 2024 Annual Report
5.4 Subsidiaries
The ultimate parent of the Group is Coles Group Limited, a company incorporated in Australia. Subsidiaries are consolidated from
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.
Set out below are the subsidiaries of the Group. All entities were incorporated in Australia and wholly-owned unless stated
otherwise.
Andearp Pty Ltd
Coles Group Property Developments Ltd *
Australian Liquor Group Ltd *
Coles Supply Services Pty Ltd*
BetaElementCo Pty Ltd
Coles Group Superannuation Fund Pty Ltd
Bi-Lo Pty. Limited *
Coles Group Supply Chain Pty Ltd *
CGBV1 Pty Ltd
Coles Group Treasury Pty Ltd *
Charlie Carter (Norwest) Pty Ltd
Coles Online Pty Ltd *
Chef Fresh Pty Ltd *
Coles Property Management Pty Ltd
CMPQ (CML) Pty Ltd
Coles Supermarkets Australia Pty Ltd *
CNSCE Pty Ltd
Coles Trading (Shanghai) Co. Limited (incorporated in China)
CNSCV Pty Ltd
Coles WFS Pty Ltd
Coles Ansett Travel Pty Ltd (97.5%)
Eureka Operations Pty Ltd *
Coles Captive Insurance Pte. Ltd. (incorporated in Singapore)
GBPL Pty Ltd
Coles Environmental Services Pty Ltd
Grocery Holdings Pty Ltd *
Coles Export Asia Limited (incorporated in Hong Kong)
Katies Fashions (Aust) Pty Limited
Coles Export Australia Pty Ltd*
Liquorland (Australia) Pty. Ltd *
Coles Financial Services Pty Ltd
Newmart Pty Ltd
Coles Fresh Milk Co. Pty Ltd
Procurement Online Pty Ltd
Coles FS Holding Company Pty Ltd
Property Structures Pty Ltd
Coles Group Business Ventures Pty Ltd
Retail Ready Operations Australia Pty. Ltd *
Coles Group Deposit Services Pty Ltd
Tickoth Pty Ltd
Coles Group Finance Limited *
WFPL Funding Co Pty Ltd
Coles Group Properties Holdings Ltd *
WFPL SPV Pty Ltd
* These entities are parties to the Deed of Cross Guarantee (DOCG) and are members of the Closed Group as at 30 June 2024.
Deed of Cross Guarantee
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (‘ASIC Instrument’) the wholly-owned subsidiaries
denoted by (*) listed above 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’ for the
purposes of the ASIC Instrument.
As a condition of the ASIC Instrument, the Company and these subsidiaries 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.
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An Income Statement, 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
out below:
Income Statement and retained earnings
Closed Group
2024
53 weeks
2023
52 weeks
$m
$m
CONTINUING OPERATIONS
Sales revenue
43,571
40,483
Other operating revenue
113
108
Total operating revenue
43,684
40,591
Cost of sales
(32,299)
(30,034)
Gross profit
11,385
10,557
Other income
165
163
Administration expenses
(9,445)
(8,839)
Share of net loss from equity accounted investments
(18)
(13)
Earnings before interest and tax
2,087
1,868
Financing costs
(441)
(394)
Profit before income tax
1,646
1,474
Income tax expense
(494)
(425)
Profit for the period from continuing operations
1,152
1,049
DISCONTINUED OPERATIONS
(Loss)/profit for the period from discontinued operations, after tax
(10)
56
Profit for the period
1,142
1,105
Items that may be reclassified to profit or loss:
Net movement in the fair value of cash flow hedges
(4)
14
Income tax effect
1
(4)
Other comprehensive income/ (loss) which may be reclassified to profit or loss in
subsequent periods
(3)
10
Total comprehensive income for the period
1,139
1,115
RETAINED EARNINGS
Retained earnings at beginning of period
1,690
1,468
Profit for the period
1,142
1,105
Dividends paid
(884)
(883)
Retained earnings at end of period
1,948
1,690
121
Coles Group 2024 Annual Report
Balance Sheet
Closed Group
2024
2023
$m
$m
ASSETS
CURRENT ASSETS
Cash and cash equivalents
669
592
Trade and other receivables
495
616
Inventories
2,694
2,323
Income tax receivable
-
4
Assets held for sale
3
127
Other assets
109
96
Total current assets
3,970
3,758
NON-CURRENT ASSETS
Property, plant and equipment
5,586
4,980
Right-of-use assets
7,048
6,507
Intangible assets
2,203
2,035
Deferred tax assets
713
737
Investment in subsidiaries
190
190
Investment in joint venture
225
220
Other assets
71
52
Total non-current assets
16,036
14,721
Total assets
20,006
18,479
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
4,619
4,542
Income tax payable
73
-
Provisions
940
903
Lease liabilities
911
820
Other
260
249
Total current liabilities
6,803
6,514
NON-CURRENT LIABILITIES
Interest-bearing liabilities
1,652
1,118
Provisions
321
375
Lease liabilities
7,506
7,029
Other
1
5
Total non-current liabilities
9,480
8,527
Total liabilities
16,283
15,041
Net assets
3,723
3,438
EQUITY
Contributed equity
1,672
1,644
Reserves
103
104
Retained earnings
1,948
1,690
Total equity
3,723
3,438
5.4 SUBSIDIARIES (CONTINUED)
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5.5 Parent entity information
Summary financial information for the Company is set out below:
2024
53 weeks
2023
52 weeks
$m
$m
Profit for the period
325
316
Dividends received
-
-
Profit for the period (after dividends)
325
316
Other comprehensive income
-
-
Total comprehensive income for the period
325
316
2024
2023
$m
$m
ASSETS
Current assets
1,224
2,371
Non-current assets
5,101
5,057
Total assets
6,325
7,428
LIABILITIES
Current liabilities
530
937
Non-current liabilities
2,602
2,769
Total liabilities
3,132
3,706
EQUITY
Contributed equity
1,672
1,644
Reserves
102
100
Retained earnings
1,419
1,978
Total equity
3,193
3,722
As at 30 June 2024, the Company has no guarantees in relation to the debts of its subsidiaries (2023: $nil).
As at 30 June 2024, the Company has no contingent liabilities (2023: $nil). As at 30 June 2024, the Company has bank guarantees
totalling $346 million (2023: $346 million).
As at 30 June 2024, the Company has contractual commitments for the acquisition of property, plant and equipment totalling
$39 million (2023: $162 million).
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Coles Group 2024 Annual Report
6. Unrecognised Items
This section provides information about items that are not recognised in the
consolidated financial statements nor disclosed elsewhere in this report 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:
2024
2023
$m
$m
Within one year
195
268
Between one and five years
5
52
More than five years
64
2
Total capital commitments for expenditure
264
322
The commitment amounts disclosed above represent the maximum amounts that the Group is obliged to pay.
At 30 June 2024, the Group also has commitments relating to lease agreements that have not yet commenced. The commitments
relate to lease agreements associated with new stores and online fulfilment centres. The future lease payments (undiscounted) for
non-cancellable periods are set out below:
2024
2023
$m
$m
Within one year
26
57
Between one and five years
241
469
More than five years
487
1,259
Total commitments for lease agreements not yet commenced (undiscounted)
754
1,785
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6.2 Contingencies
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 has paid $31 million of remediation costs to date.
In addition, at 30 June 2024, a provision of $19 million (25 June 2023: $37 million) is reflected in the 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. 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 intended 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 increasing the provision reflected in the financial statements at
25 June 2023 to $37 million. During the current year remediation payments of $18 million were made against the provision. The
FWO matter was heard in a seven week trial from 5 June 2023 and judgment is pending. 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 this report.
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 potential outcome and total costs associated with this matter remain uncertain as at the date of this report.
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.
125
Coles Group 2024 Annual Report
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.
7.1 Related party disclosures
2024
2023
$m
$m
JOINT VENTURES AND ASSOCIATES
LOYALTY PACIFIC PTY LTD
Sale of goods to members of Flybuys
384
268
Payments for loyalty program to Loyalty Pacific Pty Ltd
392
378
Amounts owing to Loyalty Pacific Pty Ltd
189
240
QUEENSLAND VENUE CO. PTY LTD
Service fees paid to QVC
60
55
Amounts receivable from QVC
43
29
Transactions with Key Management Personnel (KMP)
Compensation of KMP of the Group:
2024
2023
$
$
Short-term employee benefits
10,041,561
11,418,519
Post-employment benefits
251,626
222,526
Other long-term benefits
172,153
389,219
Share-based payments
4,306,562
9,459,571
Total compensation paid to key management personnel
14,771,902
21,489,835
Terms and conditions of transactions with related parties
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 (2023: $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.
The fair value of Performance Rights under each performance measure is determined at grant date by an independent valuation
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.
126
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Financial
Report
Additional
Information
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
For Executives, 25% of their STI is deferred into Restricted Shares (50% for the Managing Director and Chief Executive Officer) and
are subject to a one-year service condition (two years for the Managing Director and Chief Executive Officer). The cost of the
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.
Restricted share offer
Restricted Shares are subject to a continued service condition, a three-year trading restriction period and cessation of
employment provisions. During the trading restriction period, Restricted Shares are held in trust by the Trustee on behalf of the
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
Balance at
25 June 2023
Granted
Forfeited
Vested
Balance at
30 June 2024
Exercisable at
30 June 2024
2024
Nov 2019
81,082
-
-
-
81,082
-
Nov 2020
223,133
-
(111,566)
(111,567)
-
-
Nov 2020
711,110
(355,552)
(355,558)
-
-
Nov 2021
199,016
-
-
-
199,016
-
Dec 2021
734,382
-
-
-
734,382
-
Nov 2022
120,204
-
-
-
120,204
-
Nov 2022
584,647
-
-
-
584,647
-
Nov 2023
-
192,520
-
-
192,520
-
Nov 2023
-
557,884
-
-
557,884
-
Jan 2024
-
70,133
-
-
70,133
-
2,653,574
820,537
(467,118)
(467,125)
2,539,868
-
Grant date
Balance at
26 June 2022
Granted
Forfeited
Vested
Balance at
25 June 2023
Exercisable at
25 June 2023
2023
Nov 2019
955,866
-
-
(874,784)
81,082
-
May 2020
89,528
-
-
(89,528)
-
-
Nov 2020
223,133
-
-
-
223,133
-
Nov 2020
716,279
-
(5,169)
-
711,110
-
Nov 2021
225,976
-
(26,960)
-
199,016
-
Dec 2021
797,696
-
(63,314)
-
734,382
-
Nov 2022
-
218,878
(98,674)
-
120,204
-
Nov 2022
-
667,283
(82,636)
-
584,647
-
3,008,478
886,161
(276,753)
(964,312)
2,653,574
-
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
For Executives, 25% of their STI is deferred into Restricted Shares (50% for the Managing Director and Chief Executive Officer) and
are subject to a one-year service condition (two years for the Managing Director and Chief Executive Officer). The cost of the
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.
Restricted share offer
Restricted Shares are subject to a continued service condition, a three-year trading restriction period and cessation of
employment provisions. During the trading restriction period, Restricted Shares are held in trust by the Trustee on behalf of the
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
Balance at
25 June 2023
Granted
Forfeited
Vested
Balance at
30 June 2024
Exercisable at
30 June 2024
2024
Nov 2019
81,082
-
-
-
81,082
-
Nov 2020
223,133
-
(111,566)
(111,567)
-
-
Nov 2020
711,110
-
(355,552)
(355,558)
-
-
Nov 2021
199,016
-
-
-
199,016
-
Dec 2021
734,382
-
-
-
734,382
-
Nov 2022
120,204
-
-
-
120,204
-
Nov 2022
584,647
-
-
-
584,647
-
Nov 2023
-
192,520
-
-
192,520
-
Nov 2023
-
557,884
-
-
557,884
-
Jan 2024
-
70,133
-
-
70,133
-
2,653,574
820,537
(467,118)
(467,125)
2,539,868
-
Grant date
Balance at
26 June 2022
Granted
Forfeited
Vested
Balance at
25 June 2023
Exercisable at
25 June 2023
2023
Nov 2019
955,866
-
-
(874,784)
81,082
-
May 2020
89,528
-
-
(89,528)
-
-
Nov 2020
223,133
-
-
-
223,133
-
Nov 2020
716,279
-
(5,169)
-
711,110
-
Nov 2021
225,976
-
(26,960)
-
199,016
-
Dec 2021
797,696
-
(63,314)
-
734,382
-
Nov 2022
-
218,878
(98,674)
-
120,204
-
Nov 2022
-
667,283
(82,636)
-
584,647
-
3,008,478
886,161
(276,753)
(964,312)
2,653,574
-
127
Coles Group 2024 Annual Report
Fair value of equity instruments
The assumptions underlying the fair value measurement of the performance rights are:
Share price at
grant date
Expected
volatility in
share price1
Expected
dividend yield
Risk free
interest rate2
Fair value per
instrument
Grant date
Expiry date
$
%
%
%
$
Nov 2019
Aug 2022
16.26
25.0
3.90
0.65
12.58
Nov 2020
Aug 2023
18.26
25.0
3.68
0.10
13.52
Nov 2020
Aug 2023
17.95
25.0
3.68
0.11
12.67
Nov 2021
Aug 2024
17.63
20.0
3.56
0.89
12.61
Dec 2021
Aug 2024
17.85
20.0
3.53
0.95
13.04
Nov 2022
Aug 2025
16.48
20.0
3.92
3.35
11.00
Nov 2022
Aug 2025
17.15
20.0
3.92
3.22
11.50
Nov 2023
Aug 2026
15.45
17.5
4.25
4.28
9.60
Nov 2023
Aug 2026
15.27
17.5
4.25
4.20
9.37
Jan 2024
Aug 2026
15.58
16.5
4.16
3.73
8.85
1. Reflects the assumption that the historical volatility is indicative of future trends.
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.
Additional Information on Award Schemes
Details of grants made under the Plan during the period are set out in the Remuneration Report.
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.
In measuring the fair value of awards issued under the Long-Term Incentive (‘LTI’) plan subject to the relative total
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.
7.2 EMPLOYEE SHARE PLANS (CONTINUED)
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7.3 Auditor’s remuneration
2024
2023
$000
$000
FEES TO ERNST & YOUNG (AUSTRALIA):
AUDIT SERVICES:
Audit or review of the Financial Report of the Group
3,116
2,899
Assurance related
851
1,084
NON-AUDIT SERVICES:
Tax compliance services
125
120
Other compliance services
-
80
Total fees to Ernst & Young (Australia)
4,092
4,183
FEES TO OVERSEAS MEMBER FIRMS OF ERNST & YOUNG:
AUDIT SERVICES:
Audit or review of the Financial Report of any controlled entities
108
55
Total fees to overseas member firms of Ernst & Young
108
55
Total auditor’s remuneration
4,200
4,238
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 $125,000 represent 3.0% (2023: $200,000 or 4.7%) 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, interpretations and standards 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
AASB 18 Presentation and Disclosure in Financial Statements was released in June 2024 and is effective for annual reporting periods
beginning on or after 1 January 2027. AASB 18 replaces AASB 101 Presentation of Financial Statements. The Group is assessing the
impact of the standard, which is expected to result in a change in presentation of the Income Statement and associated Notes to
the Financial Statements.
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.
129
Coles Group 2024 Annual Report
Consolidated Entity Disclosure Statement
Coles Group Limited as at 30 June 2024
Below is a list of all subsidiaries of Coles Group Limited which are included in these consolidated financial statements.
Entity name
Entity type
Place
incorporated
% share capital
held
Tax
residency
Foreign
jurisdiction
Coles Group Limited ('the Company')
Body Corporate
Australia
100%
Australian
N/A
Andearp Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Australian Liquor Group Ltd
Body Corporate
Australia
100%
Australian
N/A
BetaElementCo Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Bi-Lo Pty. Limited
Body Corporate
Australia
100%
Australian
N/A
CGBV1 Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Charlie Carter (Norwest) Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Chef Fresh Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
CMPQ (CML) Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
CNSCE Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
CNSCV Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Ansett Travel Pty Ltd
Body Corporate
Australia
97.5%
Australian
N/A
Coles Captive Insurance Pte. Ltd.
Body Corporate
Singapore
100%
Foreign
Singapore
Coles Environmental Services Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Export Asia Limited
Body Corporate
Hong Kong
100%
Foreign
Hong Kong
Coles Export Australia Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Financial Services Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Fresh Milk Co. Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles FS Holding Company Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Group Business Ventures Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Group Deposit Services Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Group Finance Limited
Body Corporate
Australia
100%
Australian
N/A
Coles Group Properties Holdings Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Group Property Developments Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Group Superannuation Fund Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Group Supply Chain Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Group Treasury Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Online Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Property Management Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Supermarkets Australia Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Supply Services Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Coles Trading (Shanghai) Co. Limited
Body Corporate
China
100%
Foreign
China
Coles WFS Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Eureka Operations Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
GBPL Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Grocery Holdings Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Katies Fashions (AUST) Pty Limited
Body Corporate
Australia
100%
Australian
N/A
Liquorland (Australia) Pty. Ltd
Body Corporate
Australia
100%
Australian
N/A
Newmart Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Procurement Online Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Property Structures Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
Retail Ready Operations Australia Pty. Ltd
Body Corporate
Australia
100%
Australian
N/A
Tickoth Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
WFPL Funding Co Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
WFPL SPV Pty Ltd
Body Corporate
Australia
100%
Australian
N/A
130
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Report
Additional
Information
Directors’ Declaration
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 consolidated entity;
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
(c) the Consolidated Entity Disclosure Statement is true and correct as at 30 June 2024 for the year then ended.
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 30 June 2024.
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.
Leah Weckert
Managing Director and Chief Executive Officer
27 August 2024
James Graham AM
Chairman
27 August 2024
131
Coles Group 2024 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent auditor’s report to the members of Coles Group Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of Coles Group Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated Balance Sheet as at 30 June 2024, the
consolidated Income Statement, consolidated Statement of Changes in Equity and consolidated Cash
Flow Statement for the year then ended, notes to the financial statements, including material
accounting policy information, the Consolidated Entity Disclosure Statement and the Directors’
Declaration.
In our opinion, the accompanying Financial Report of the Group is in accordance with the Corporations
Act 2001, including:
a.
Giving a true and fair view of the consolidated financial position of the Group as at 30 June
2024 and of its consolidated financial performance for the year ended on that date; and
b.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
Financial Report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the Financial Report of the current year. These matters were addressed in the context of
our audit of the Financial Report as a whole, and in forming our opinion thereon, but we do not
provide a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the Financial Report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying Financial Report.
132
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Report
Additional
Information
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
1.
Accounting for Supplier Rebates (‘Commercial Income’)
Why significant
How our audit addressed the key audit matter
Supplier rebates (also referred to in the retail
industry as ‘commercial income’) comprises
discounts and rebates received by the Group from
its suppliers.
Determining the value and timing of when
commercial income is recognised through the
Consolidated Income Statement requires
judgement and the consideration of a number of
factors including:
► The commercial terms of each individual
rebate agreement;
► The nature and substance of the rebate
arrangement to determine whether the
amount reflects a reduction in the purchase
price of inventory, requiring the rebate to be
applied against the carrying value of inventory,
or can be otherwise recognised in the
Consolidated Income Statement; and
► The accurate recognition and measurement of
rebates in accordance with Australian
Accounting Standards and the Group’s
processes and controls related to these
arrangements.
Disclosures relating to the measurement and
recognition of commercial income can be found in
Note 2.4 Inventories.
Our audit procedures included the following:
► We gained an understanding of the nature of each
significant type of commercial income and assessed a
sample of agreements in place to determine whether
the terms of each agreement were appropriately
reflected in the accounting treatment;
► We assessed the design and operating effectiveness of
the Group’s controls in place relating to the recognition
and measurement of amounts related to these
agreements;
► We performed comparisons of the various
arrangements against the prior year, including analysis
of ageing profiles and where material variances were
identified, we obtained supporting evidence;
► We selected a sample of supplier rebate transactions
and assessed whether the agreements or other
documentation appropriately supported the recognition
and measurement of the rebates recorded in the
Financial Report, including an assessment of amounts
recorded before and after the balance date;
► We enquired of the Group including business category
managers, supply chain managers, legal counsel and
procurement managers as to the existence of any non-
standard agreements or side arrangements; and
► We considered the adequacy of the associated Financial
Report disclosures.
2.
Impairment of non-current assets including intangible assets
Why significant
How our audit addressed the key audit matter
The determination of the recoverable amount of
non-current assets including property, plant and
equipment, right of use assets, goodwill and other
intangible assets is complex and requires
significant judgement by the Group.
The impairment assessment completed by the
Group includes numerous assumptions and
estimates that will be impacted by future
performance and market conditions.
Key assumptions, judgements and estimates
applied in the Group’s impairment assessment are
set out in Note 4.1 Impairment of non-financial
assets.
Based upon the disclosed sensitivity analysis, for
the Group’s cash generating units, no reasonably
possible change in a key assumption used in the
determination of the recoverable value is expected
to result in a material impairment.
Given the value of non-current assets including
intangible assets and the judgements and
estimation involved in impairment testing, this was
a key audit matter.
Our audit procedures included an evaluation of the
following assumptions and inputs utilised in the Group’s
impairment assessment:
► Determination of cash generating units;
► Forecast cash flows, which were based on the Group’s
Board approved five-year forecasts;
► Long term inflation and growth rates;
► Discount rates; and
► Other market evidence, including economic and
industry growth rates.
In performing our procedures, we assessed whether the
Group’s impairment models were in accordance with
Australian Accounting Standards and tested the
mathematical accuracy of the calculations.
We considered the adequacy of the Financial Report
disclosures regarding the impairment testing approach, key
assumptions, results and sensitivity analysis.
Where appropriate, we involved our valuation specialists in
performing these procedures.
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Coles Group 2024 Annual Report
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3.
Reliance on automated processes and controls
Why significant
How our audit addressed the key audit matter
A significant part of the Group’s financial
processes are heavily reliant on IT systems with
automated processes and controls over the
capture, valuation and recording of transactions.
We considered this to be a key audit matter due to
the following:
► Complex IT environment supporting diverse
business processes, with varying levels of
integration between them;
► Mix of manual and automated controls;
► Multiple internal and outsourced support
arrangements; and
► Continuing enhancements to the Group’s IT
systems.
Our audit procedures included the following:
► We involved our IT specialists to perform procedures to
understand the IT environment, including procedures to
identify the Group’s manual and automated controls
relevant to financial report; and
► We tested the effectiveness of the key IT controls
relevant to the financial reporting systems of the
Group. This included assessing the key IT controls over
changes made to the material financial reporting
systems and controls over appropriate access to these
systems and related data.
When testing IT controls was not considered an appropriate
or efficient testing approach, alternative audit procedures
were performed on the financial information produced by
those systems.
4.
Inventory existence
Why significant
How our audit addressed the key audit matter
At 30 June 2024, the Group held inventories of
$2,703 million. Being one of the Group’s most
significant assets, its inventory existence
verification process is extensive and occurs
routinely throughout the financial year.
Inventories are held at geographically diverse
locations around Australia at various retail stores
and distribution centres, some of which are
managed by third parties.
The Group’s accounting policy in respect of
inventories is disclosed in Note 2.4 Inventories of
the Financial Report.
Our audit procedures included the following:
► We selected a sample of stores and observed and
assessed the Group’s stocktake processes and controls
throughout the year;
► For the stocktakes we observed, we assessed whether
the required adjustment to inventory determined by the
stocktake was accurate and processed correctly;
► We observed a sample of daily cycle counts at
distribution centres during the year;
► For a sample of stocktakes and cycle counts observed
during the year, we analysed movements in inventory
from count dates through to 30 June 2024; and
► For a select number of distribution centres and
production facilities managed by third parties, we
obtained confirmation of inventories held by those third
parties at year end.
Information other than the Financial Report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2024 Annual Report, but does not include the Financial Report
and our auditor’s report thereon.
Our opinion on the Financial Report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the Financial
Report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
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Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of:
a)
the Financial Report (other than the Consolidated Entity Disclosure Statement) that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001; and
b)
the Consolidated Entity Disclosure Statement that is true and correct in accordance with the
Corporations Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
i)
the Financial Report (other than the Consolidated Entity Disclosure Statement) that gives a true
and fair view and is free from material misstatement, whether due to fraud or error; and
ii)
the Consolidated Entity Disclosure Statement that is true and correct and is free from material
misstatement, whether due to fraud or error.
In preparing the Financial Report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the Financial Report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this Financial Report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the Financial Report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
►
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
►
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
135
Coles Group 2024 Annual Report
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►
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the Financial Report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
►
Evaluate the overall presentation, structure and content of the Financial Report, including the
disclosures, and whether the Financial Report represents the underlying transactions and events
in a manner that achieves fair presentation.
►
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the Financial Report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the Financial Report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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Liability limited by a scheme approved under Professional Standards Legislation
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the Directors’ Report for the year ended 30
June 2024.
In our opinion, the Remuneration Report of Coles Group Limited for the year ended 30 June 2024,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
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Coles Group 2024 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 22 July 2024
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
Number of fully paid shares
Vanguard Group
66,814,399
Blackrock Group
83,226,846
State Street Corporation
82,239,108
Twenty largest ordinary fully paid shareholders as at 22 July 2024
Coles Group Limited
Number of fully
paid shares
% of issued capital
1
HSBC Custody Nominees (Australia) Limited
383,138,669
28.60
2
J P Morgan Nominees Australia Pty Limited
197,084,213
14.71
3
Citicorp Nominees Pty Limited
137,327,521
10.25
4
BNP Paribas Nominees Pty Ltd
40,569,510
3.03
5
National Nominees Limited
30,329,133
2.26
6
BNP Paribas Noms Pty Ltd
14,544,442
1.09
7
HSBC Custody Nominees (Australia) Limited
9,695,824
0.72
8
Australian Foundation Investment Company Limited
8,677,500
0.65
9
Citicorp Nominees Pty Limited
5,903,520
0.44
10 Argo Investments Limited
5,290,027
0.39
11
Netwealth Investments Limited
5,044,269
0.38
12 BNP Paribas Nominees Pty Ltd
4,301,026
0.32
13 IOOF Investment Services Limited
3,250,298
0.24
14 Mutual Trust Pty Ltd
2,852,220
0.21
15 IOOF Investment Services Limited
2,207,338
0.16
16 HSBC Custody Nominees (Australia) Limited – A/C 2
2,080,025
0.16
17 HSBC Custody Nominees (Australia) Limited
1,875,433
0.14
18 BNP Paribas Noms (NZ) Ltd
1,729,925
0.13
19 Mr Peter Alexander Brown
1,555,000
0.12
20 Netwealth Investments Limited
1,541,790
0.12
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Additional
Information
Distribution of shareholders and shareholdings as at 22 July 2024
Size of holding
Number of shareholders
Number of shares
% of issued capital
1 – 1,000
333,615
100,333,008
7.49
1,001 – 5,000
80,937
175,245,441
13.08
5,001 – 10,000
10,544
73,619,195
5.50
10,001 – 100,000
5,075
101,756,160
7.60
100,001 and over
127
888,465,602
66.33
Total
430,298
1,339,419,406
100.00
There were 25,159 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 22 July 2024, 2,543,233 performance rights with 16 holders were on issue pursuant to Coles’ equity incentive plan.
On-market share acquisitions
During FY24, 1,653,278 Coles ordinary shares were purchased on market at an average price of $15.53 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
colesgroup.com.au/corporategovernance.
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Coles Group 2024 Annual Report
Glossary of terms
ADC: Automated Distribution Centre
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
CFC: Customer Fulfilment Centre
CGU: Cash-generating unit
CODB: Costs of doing business.
These are expenses which relate
to the operation of the business
below gross profit and above EBIT
Coles Liquor Own Brand: refers to the
portfolio of product brands owned by
Coles and available in Coles Liquor
stores. It includes liquor products that
are available under Coles Liquor brands
(e.g. Vintage Cellars Collaborations)
and private label brands (e.g. Pensilva,
James Busby, Mr Finch)
Coles Own Brand: refers to the portfolio
of product brands owned by Coles
and available in Coles supermarkets.
It includes grocery, fresh produce,
meat and non-food products that are
available under Coles brands (e.g. Coles
Finest, Coles Nature’s Kitchen, Coles
Simply) and other exclusive own brands
(e.g. KOi, Daley St)
Comparable sales: A measure which
excludes stores that have been opened
or closed in the last 12 months and
excludes demonstrable impact on
existing stores from store disruption
because of store refurbishment or new
store openings
DRP: Dividend reinvestment plan
EBIT: Earnings before interest and tax
EBITDA: Earnings before interest,
tax, depreciation, and amortisation
EPS: Earnings per share
Exclusive brands: refers to the portfolio
of product brands consisting of Exclusive
to Coles in Coles supermarkets and
Exclusive Liquor Brands in Coles
Liquor stores
Exclusive Liquor Brands (ELB): refers
tothe portfolio of product brands
exclusively available in Coles Liquor
stores, including Coles Liquor Own
Brand liquor products and brands that
are owned by or licensed to suppliers
and exclusive to Coles Liquor (e.g.
Coal Pit, Abbey Vale)
Exclusive to Coles: refers to the portfolio
of product brands exclusively available
in Coles supermarkets, and consists
of Coles Own Brand and Exclusive
Proprietary Brand products
Exclusive Proprietary Brands: refers
to the portfolio of product brands
owned by or licensed to suppliers
and exclusively available in Coles
supermarkets (e.g. La Espanola,
Great Ocean Road)
GNFR: Goods not for resale
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: Calculated as gross debt
less cash at bank and on deposit add
lease liabilities divided by EBITDA
MAT: Moving annual total
NPAT: Net profit after tax
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
Scope 1 emissions: Scope 1 greenhouse
gas emissions are emissions released
from the activities from operations
owned or controlled by Coles Group.
For example:
• emissions from the use of refrigerants
in air conditioning units
• emissions from fuels used in transport.
Scope 1 emissions are also referred to as
direct emissions.
Scope 2 emissions: Scope 2 emissions
represent the emissions from the
generation of purchased or acquired
electricity, steam, heating or cooling
consumed by Coles Group but occur at
sources owned or controlled by another
company. Scope 2 emissions are also
referred to as indirect emissions.
Scope 3 emissions: Scope 3 emissions
are indirect emissions (not included in
Scope 2 emissions) that occur in Coles
Group’s value chain including business
travel, procurement, waste and water.
Scope 3 emissions may occur:
• upstream, which are related to
purchased or acquired goods and
services (e.g. waste disposal services)
• downstream, which are related to sold
goods and services (e.g. end-of-life
treatment of sold products).
Sustainability: references to
sustainability (including sustainable
and sustainably) are used with reference
to Coles’ sustainability related policies
and governance procedures, as well as
in the context of Coles’ aim to ensure its
business is sustainable from a long-term
perspective, considering a range of
factors including economic (including
being able to sustain our business in the
long term), environmental (including
considering our environmental impact),
social (including supporting our license
to operate), and regulatory (including
ongoing compliance with relevant legal
obligations).
Use of the terms ‘sustainability’,
‘sustainable’ and ‘sustainably’ is not
intended to imply that Coles will have
no adverse impact on the economy,
environment, or society, or that Coles
will achieve any particular economic,
environmental, or social outcomes.
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
140
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Additional
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Corporate directory
* Timing of events is subject to change.
Registered Office
800–838 Toorak Road
Hawthorn East
VIC 3123 Australia
Telephone
+61 3 9829 5111
Website
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 Andrew Penn AO
Mr Scott Price
Ms Wendy Stops
Shareholder Calendar*
EVENT
DATE
Record date for final dividend
4 September 2024
Final dividend payment date
25 September 2024
Coles Group Limited
Annual General Meeting
12 November 2024
Half-year end
5 January 2025
Year end
29 June 2025
Group 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
141
Coles Group 2024 Annual Report
Coles Group Limited
ABN 11 004 089 936
800-838 Toorak Road
Hawthorn East
VIC 3123 Australia